Majority Opinion Identified Many State Law Contractual Problems With Arbitration Provision
Plaintiff Sparks sued for wrongful termination, and employer Vista Del Mar Child and Family Services petitioned to arbitrate the dispute. The trial court denied the petition, and the employer appealed. Sparks v. Vista Del Mar Child and Family Services, Case No. B234988 (2nd Dist. Div. 5, July 30, 2012) (partially certified for publication, except for issue concerning timeliness of filed response).
The Court of Appeal affirmed, with Justice Mosk writing the opinion for the majority, Justice Armstrong concurring, and Justice Turner dissenting and concurring.
The majority opinion identified the following problems with arbitration as grounds for affirmance: the arbitration clause was buried within a lengthy employee handbook; the arbitration clause was not called to plaintiff’s attention; plaintiff did not acknowledge or agree to arbitration; the handbook was not intended to create a contract; the handbook could be amended unilaterally by employer, rendering any agreement illusory; the arbitration rules were not provided to plaintiff; and, the arbitration was procedurally and substantively unconscionable (in this case, an adhesion contract that did not provide for discovery).
Justice Turner distinguished between pre- and post-2009 claims, because the employee had been provided a new employee handbook in 2009 that supplanted the earlier handbook. In contrast with the situation regarding the earlier handbook, there was no evidence the employee was advised of the contents of the newer handbook, or that the employee signed acknowledgment of the 2009 handbook. Justice Turner would reverse “the trial court’s findings as to all pre-2009 agreement claims and direct they be arbitrated; allow the trial court to sever the non-arbitrable claims; and order arbitration on the arbitrable claims even though such may be impractical.”
The Sparks case provides plenty of grist for attacking and for defending an arbitration provision in an employee handbook. Want an enforceable provision? Solve the problems identified by the majority, and borrow arguments from Justice Turner’s dissent in support of arbitration. Want to attack arbitration? Follow the majority, and Justice Turner, in the concurring part of his opinion that found no binding provision in the 2009 handbook.
Fellow blogger Kimberly A. Kralowec points out today in the UCL Practitioner that Sparks underscores that the United States Supreme Court in Concepcion did not eliminate state law unconscionability as a defense to the enforcement of arbitration agreements subject to the Federal Arbitration Act (as was the arbitration agreement in Sparks).
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