Unconscionable Arbitration Agreements

About a year later, Kho`s employment at the OTO ended and he filed a complaint for unpaid wages with the California Department of Labor Standard (DLSE) application. The concessionaire asked the agency to suspend the DLSE administrative process – on the grounds that Kho was required to settle the dispute through private arbitration under the terms of the signed agreement. The LSD refused to cancel the scheduled hearing and the OTO refused to attend. In the employer`s absence, the hearing officer awarded Kho more than $150,000 in damages. In response, OTO asked the California Superior Court to set aside the administrative award and arbitrate the case. After several years of appeals, the California Supreme Court issued a decision on the case on August 29, 2019. This decision is contrary to similar cases in the United States. Courts that have upheld arbitration agreements in similar terms of use after it has been determined that users have expressly accepted and were aware of the terms of use and that arbitration agreements are not unscrupulous, either procedurally or substantively. [2] In such a case, it is for the arbitral tribunal to determine whether a dispute falls within the scope of the agreement. The recent decision of the First District of Appeal of California concludes that TWC Dealer Group, Inc.`s arbitration agreements were unscrupulous both procedurally and substantively, and highlights certain contractual conditions and elements that may invalidate an arbitration collective agreement. Davis, et al. v TWC Dealer Group, Inc., et al.

(2019) WL 5586867. More and more companies are choosing to include mandatory arbitration clauses in their consumer contracts and in the “terms of use” that consumers must agree to in order to use business services. As described in the film “Lost in the Fine Print”,” these enforced arbitration clauses deprive many consumers of any meaningful remedy if the company commits negligent acts or violates consumers` legal rights. This problem is exacerbated when arbitration clauses require that the arbitration be conducted before an arbitration panel that has a financial or philosophical bias against the consumer. Under California law, an arbitration agreement that is both procedurally and substantially unscrupulous can be declared invalid. A sliding scale is used to assess the lack of procedural scruples versus the lack of material scruples: the more substantial the contractual clause, the less evidence of lack of procedural scruples is needed to conclude that the clause is unenforceable, and vice versa. Armendariz v. Foundation Health Psychcare, 24 Cal. 4th 83, 114 (Cal. 2000). In examining the lack of procedural scruples, a court focuses on the oppression resulting from unequal bargaining power and on surprising the weaker party by hidden terms or the lack of informed choice.

The lack of scruples of content refers to excessively harsh or unjustifiable unilateral results. In Gonzalez v. Hughes Aircraft Employees Federal Credit Union, Gonzalez was hired as a customer service representative. Two months later, Hughes Aircraft asked him to sign a standardized form for labor arbitration. The arbitration agreement required employees to use the company`s internal complaint procedure for all disputes. If the dispute could not be successfully resolved through the appeal process, the employee had 20 business days to notify of a claim to be resolved. The late claims were declared null and void. The agreement limited the discovery to two statements.

Although an employee was required to settle all claims, Hughes Aircraft was allowed to take virtually all employment-related matters to court. Uber Technologies, Inc.c. Heller[1] stems from a class action lawsuit brought by Heller in the Ontario Superior Court. Heller, a driver who offered food delivery services in Toronto using Uber`s apps, claimed Uber was violating applicable labor laws. To be registered with the Uber apps, Heller, like all other drivers in the company, had to agree to Uber`s Terms of Service, which included a dispute resolution clause with an arbitration agreement providing that mediation and arbitration had to be conducted in accordance with the rules of the International Chamber of Commerce (“ICC”) in Amsterdam, the Netherlands, and the application of Dutch law. In a recent decision, the Supreme Court of Canada analyzed and interpreted the validity of an arbitration agreement signed between Uber Technologies Inc. (“Uber”) and one of its drivers. In addition, the court found that the trial court had not abused its discretion by refusing to separate the unscrupulous terms from the arbitration agreement.

Finally, the court found that the trial court did not err in refusing to apply the Manual`s arbitration policy. Ajamian never signed or accepted the provisions of the Manual, and nothing in the employment contract related her to the Manual`s Arbitration Policy. Accordingly, the court upheld the dismissal of the employer`s request for arbitration. When Lena Ajamian joined CantorCO2e, L.P. as an Office Manager, she signed a confirmation that she had read the employer`s policy and procedure manual. .