Washington D.C. Bicycle Rental Shop. 1942. Marjory Collins, photographer. Library of Congress.
Plaintiff Corbin sued her employer Specialized Bicycle Components, Inc. and its president for harassment, discrimination, and wrongful termination. The trial judge, who commented about the defendant’s failure to provide the JAMS rules, found the agreement unconscionable, and refused to compel arbitration. Defendants appealed, arguing that the employee could not show substantive unconscionability, because the agreement met all the requirements of Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000) for a valid arbitration provision. Corbin v. Specialized Bicycle Components, Inc., No. H037212 (6th Dist. July 17, 2013) (Mihara, J. author 3:0) (unpublished).
A seeming “carve-out” for injunctive relief, which would favor the employer, was construed by the Court of Appeal to simply provide for the availability of injunctive relief within the arbitral forum, rather than to provide a carve-out for a judicial action for injunctive relief. Qualifying language that arbitration costs “shall be divided equally between [the parties], unless otherwise required by law” removed “the threat that Corbin might have to pay half the arbitration forum costs, since the law clearly requires ‘otherwise’ in cases brought by employees seeking to vindicate their public rights.” And a seemingly harsh attorney’s fees provision was saved by an express qualifying reference to “provisions of the applicable law.” How can a provision that must comply with applicable law ever be substantively unconscionable? [There’s a drafting tip].
Concluding there was no substantive unconscionability, the Court did not need to address the procedural unconscionability prong (and presumably that is why it did not discuss in depth the missing JAMS rules).
Though not a signatory to the arbitration agreement, the company president fell within the rule that a defendant alleged to be an agent of the party to the arbitration agreement could compel arbitration.
Agreeing with the employer, the Court of Appeal reversed the order denying the employer’s motion to compel arbitration.
Comments