Limited Discovery And Lack Of Mutuality Were Important To Result.
The Court of Appeal affirmed orders denying motions to compel arbitration in Scott Davis v. Stefan Kozak et al. and Scott Davis v. Red Bull North America, Inc., A156234 & A156238 (1/3 8/19/20) (Fujisaki, Siggins, Jackson), a consolidated appeal arising from an employee's lawsuit against Red Bull executives for age and sex harassment and related tort claims. The Court agreed that the underlying arbitration agreement was adhesive, and that it was substantively unconscionable.
Substantive unconscionability was the result of overly restrictive discovery, limiting the fifteen-year employee plaintiff to two depositions, and to a "lack of mutuality." We'd guess it was the discussion of mutuality in connection with an exemption for arbitration involving "obligations under the Employee Confidentiality Agreement with Red Bull" that made the opinion publishable.
The Employee Confidentiality Agreement defined "Confidential Information" as information relating to the Company, and explained it did not apply to inventions of the employee developed entirely on the employee's own time without the Company's help. Therefore, the Court reasoned that the carve-out for "obligations under the Employee Confidentiality Agreement" only applied to the obligation of the employee to protect the Company's Confidential Information, not to inventions created by the employee on the employee's own time. Hence, the lack of mutuality.
This lack of mutuality was burdensome in two ways: first, theoretical claims of the employee to protect his intellectual property were not exempted from arbitration by the carve-out, second, the arbitration agreement exempted from arbitration the types of claims Red Bull was most likely to bring against an employee.
Comment: Because the discussion of unconscionability looks at the arbitration agreement at the time it was entered into, rather than at the time the employer seeks to enforce it, the discussion is theoretical, considering mutuality with respect to hypothetical claims that an employee might have brought, rather than actual claims that Davis did bring.
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