Just Following The Law, Or Gaslighting?
Farmworker Martinez-Gonzalez, on behalf of himself and other employees, brought a wage and hour lawsuit against a farm labor contractor and a grower. The district court held that defendants could not enforce an arbitration agreement, because the employee had signed under economic duress or undue influence. A Ninth Circuit panel reversed, holding that economic duress or undue influence did not exist, because the employer did not commit a "wrongful act" and because the employee was not unusually susceptible. Judge Rawlinson dissented, arguing the district court provided detailed factual findings on which its decision was based, and the majority failed to give proper deference to the district court's findings. Martinez-Gonzalez v. Elkhorn Packing Co., LLC, et al, No. 19-17311 (9th Cir. 11/3/21) (Bumatay, Siler; Rawlinson (dissent)).
The majority and dissenting opinions make for interesting reading. Judge Bumatay, author of the majority opinion, wrote: "The dissent disagrees largely based on Martinez-Gonzalez’s socioeconomic background." He also insisted it was the court's duty to follow the law, not its sympathies. Judge Rawlinson retorted, "The majority’s suggestion that 'facts don’t matter' to me or to the district court . . . is nothing short of gaslighting." And she includes a definition of gaslighting taken from Wikipedia: "The term “[g]aslighting is . . . used informally to describe someone who persistently puts forth [a] false narrative” in an effort to cause “another person to doubt [her] own perceptions. . . .”
The district court did make detailed factual findings, noting that the employee was transported in a twelve-hour bus trip from Mexico, that he signed the arbitration agreement in a parking lot of the hotel where the employer was putting him up, that no explanation was provided to him, and that he had a reasonable belief that if he did not sign, he would not be able to find another job. The majority points out that the facts do not amount to a crime or a tort, and fall short of other cases in which contracts have been rescinded because of economic duress or undue influence. The dissent points out that a tort or a crime is not required to find undue influence or economic duress, that the district court judge made detailed findings, and that the court should have deferred to the findings and to reasonable inferences from the findings.
COMMENT: The case is interesting because the facts occupy a liminal space: they do not amount to a tort or a crime, and yet as the majority artfully puts it, the circumstances for signing the arbitration agreement were "not ideal." So the question presented is: what facts, falling short of crime or tort, will constitute a wrongful act?
The case is another example of a decision involving a pre-dispute arbitration provision in which the judges' respective views line up with the party of the President who appointed them: Bumatay (Trump), Siler (George H. W. Bush), Rawlinson (Clinton).
The case also provides an example of that much repeated proposition that arbitration is voluntary and consistent with freedom of contract -- a proposition necessary to uphold the enforceability of arbitration agreements, while at the same time serving as a legal fiction.
Finally, it is worth noting that the enforceability of the arbitration provision in this case depends on whether there is undue influence or economic duress. See Cal. Civ. Code § 1689(b)(1). This is different from unconscionability, the more common defense to contract enforceability. In California, unconscionability has two prongs: procedural unconscionability and substantive unconscionability. But rescinding a contract based on economic duress or undue influence does not require substantive unconscionability.
"Visalia (vicinity), Tulare County, California. The Farm Security Administration. Miners's cooperative farm. Ten families have been established on the old ranch of 500 acres, which they operate as a farm unit, raising cotton alfalfa and dairy products for cash crops." Dorothea Lange, photographer. November 1938. Library of Congress.
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