The California Court of Appeal, Fourth Appellate Division has provided employees another basis to avoid arbitration of employment disputes. See Mayers v. Volt Management Corp (2/2/2012) No. G045036, as decided by our own Orange County based appellate panel.
Volt provided for arbitration of employment disputes by "notice" in its Application form, its Employment Agreement, and its Acknowledgment of employee handbook. An employee claiming he was not bound by the Arbitration Agreement had a week to consider the Agreement, and asked no questions about the Agreement. All the versions of notice referred to "final and binding arbitration pursuant to the Federal Arbitration Act, in accordance with the applicable rules of the American Arbitration Association in the state where you are were last employed" [by Volt].
This case would cause a normal lay person to go into convulsions in the reading of the technical reasons for invalidating the arbitration provision. The quick and dirty statement the reasons is as follows:
1. There is no conflict between California and federal law on the matter of whether the contract for arbitration is enforceable. Why? Because the "savings clause" [9 U.S.C. Sec. 2] of the Federal Arbitration Act states that the States may declare arbitration agreements as unenforceable by "generally applicable contract defenses, such as fraud, duress or unconscionability."
2. The employment contract in Mayers was unconscionable because obtained by "duress," that is, on a "take it or leave it" basis; AND because
3. The employment contract was procedurally unconscionable because it referred to "rules of the American Arbitration Association" without providing Mayers a copy of those rules, or informing him how to obtain them, for review before signing the Agreement; AND because
4. The employment contract was "substantively" unconscionable because it provided authority for the Arbitrator to award the employer attorney fees if the employer prevailed in defending the discrimination suit, an outcome not ordinarily granted to the employer under prevailing interpretations of the Fair Employment and Housing Act.
Now, I find the ruling to be one of those head scratchers. If a contract is actually obtained under duress, that is, "take it or leave it" in an unequal balance of power, what difference does it make that the party signing does not have the full contract terms for review (in this case the AAA rules)? Logically, the employee would have signed anyway, still under "duress." Practically, I cannot imagine any employee actually taking the time to read the catalogue of rules and procedures for Arbitration, even if provided.
I am convinced of one of two theories here: 1) Lawyers, and the judges they become, really are in an alternate Universe, or 2) this whole intellectual exercise is built upon a fiction intended to have a good civic purpose: to avoid employers gaining forums more favorable to themselves, and less fair to employees.
As my daughter a few years back would say: "Whatever!" I am happy for my clients that they are given the "Section 2 Savings Clause" by which to get their cases before a jury.
Volt provided for arbitration of employment disputes by "notice" in its Application form, its Employment Agreement, and its Acknowledgment of employee handbook. An employee claiming he was not bound by the Arbitration Agreement had a week to consider the Agreement, and asked no questions about the Agreement. All the versions of notice referred to "final and binding arbitration pursuant to the Federal Arbitration Act, in accordance with the applicable rules of the American Arbitration Association in the state where you are were last employed" [by Volt].
This case would cause a normal lay person to go into convulsions in the reading of the technical reasons for invalidating the arbitration provision. The quick and dirty statement the reasons is as follows:
1. There is no conflict between California and federal law on the matter of whether the contract for arbitration is enforceable. Why? Because the "savings clause" [9 U.S.C. Sec. 2] of the Federal Arbitration Act states that the States may declare arbitration agreements as unenforceable by "generally applicable contract defenses, such as fraud, duress or unconscionability."
2. The employment contract in Mayers was unconscionable because obtained by "duress," that is, on a "take it or leave it" basis; AND because
3. The employment contract was procedurally unconscionable because it referred to "rules of the American Arbitration Association" without providing Mayers a copy of those rules, or informing him how to obtain them, for review before signing the Agreement; AND because
4. The employment contract was "substantively" unconscionable because it provided authority for the Arbitrator to award the employer attorney fees if the employer prevailed in defending the discrimination suit, an outcome not ordinarily granted to the employer under prevailing interpretations of the Fair Employment and Housing Act.
Now, I find the ruling to be one of those head scratchers. If a contract is actually obtained under duress, that is, "take it or leave it" in an unequal balance of power, what difference does it make that the party signing does not have the full contract terms for review (in this case the AAA rules)? Logically, the employee would have signed anyway, still under "duress." Practically, I cannot imagine any employee actually taking the time to read the catalogue of rules and procedures for Arbitration, even if provided.
I am convinced of one of two theories here: 1) Lawyers, and the judges they become, really are in an alternate Universe, or 2) this whole intellectual exercise is built upon a fiction intended to have a good civic purpose: to avoid employers gaining forums more favorable to themselves, and less fair to employees.
As my daughter a few years back would say: "Whatever!" I am happy for my clients that they are given the "Section 2 Savings Clause" by which to get their cases before a jury.
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