Also, Court Refuses To Sever Because Of Lack Of Mutuality
No sooner did I post about McElroy v. Tenet Healthcare Corporation, a case reversing an order denying arbitration to a healthcare organization sued by a nurse, than I came across our next case, decided on the same day, and affirming an order denying arbitration to a convalescent home sued by a dietician. Serdenia v. Granada Hills Convalescent Hospital Care, Inc., B243074 (2nd Dist. Div. 2 Aug. 21, 2013) (Chavez, J. author 3:0) (unpublished). Both cases involve wage-and-hour claims brought against healthcare organizations; both involve claims of unconscionability.
Matters were simplified in Serdenia, because there was no record of the trial court’s reasoning below. Therefore, the Court of Appeal only addressed “the theory of law which we find presents a basis for upholding the trial court’s decision”: unconscionability.
Most of these wage-and-hour cases involving lower-level employees will also involve contracts of adhesion. As was the case here, it is usually not hard to find some level of procedural unconscionability. (Though there is a considerable fudge factor. For example, in Serdenia, the Court stated: “[t]he contract is undeniably a contract of adhesion and is therefore highly procedurally unconscionable.” Another panel might have concluded that there was adhesion but that it was not “highly” procedurally unconscionable. Compare Nibler v. Monex Deposit Company, G046511 (4th Dist. Div. 3 May 13, 2013) (Moore, Acting P.J., author 2:1, with Justice Fybel concurring) (unpublished), in which the majority found that a contract of adhesion was not procedurally unconscionable, with Justice Aronson dissenting on this very point. See my May 19, 2013 post on Nibler.)
Serdenia turns on the issue of mutuality. The agreement was written so as to limit binding arbitration to employees. Furthermore, “claims covered” turned out to be those “which would logically be brought by an employee against an employer.” This lack of mutuality between employer and employee was the basis for the Court to conclude the provision was substantively unconscionable. And, because the agreement lacked mutuality, the Court further concluded that it was permeated with unconscionability, such that the severability would not suffice to cure the problem.