After Trial Court Found 2013 Agreement To Arbitrate "Unconscionable", Employer Turned To A 2008 Agreement.
After employee Hackney left Arbitech and went to work for a competitor, PNH, Arbitech sued Hackney and PNH for misappropriation of trade secrets and other claims, and the defendants cross-complained. Hackney filed an individual and class action alleging employment-related claims against Arbitech. Relying on a 2013 agreement to arbitrate, Arbitech sought to compel arbitration of Hackney's claims, but the trial court found the 2013 arbitration agreement to be "unconscionable." In opposing the motion to compel arbitration, Hackney introduced a 2008 agreement.
Four months after the trial court ruled the 2013 agreement was unenforceable, Arbitech filed a second motion to compel arbitration, this time relying on the 2008 agreement. The trial court ruled that the 2008 agreement, which required both parties to arbitrate their claims, was not enforceable. Because Arbitech continued to litigate its claims, while seeking to arbitrate Hackney's claims, Arbitech waived its right to arbitrate. Arbitech appealed. Arbitech, LLC v. Hackney, G053744 (4/3 9/28/17) (O'Leary, Ikola, Thompson) (unpublished).
The Court of Appeal agreed that waiver had occurred, as a result of delay, and prejudice to Hackney. Hackney had suffered prejudice by being "forced to reveal her litigation strategies in answering the complaint, engage in mediation, and fight Arbitech's efforts to have the case deemed complex." The parties battled at length over discovery issues. "Consequently, over the course of 14 months Hackney completely lost any benefit associated with a more streamlined arbitration process."
COMMENT: Though unpublished, this case addresses an inconsistency in the law of novation, and applies its analysis of the correct theory of novation to the 2008 and 2013 agreements.
Comments