Wednesday, January 4, 2012
Court of Appeal Rules:
Pre-Employment Arbitration Agreement Was Unconscionable
By SHERRI M. OKAMOTO, Staff Writer
The Third District Court of Appeal yesterday ruled that four employees who had signed acknowledgment forms agreeing to binding arbitration of any future work-related claims when they applied for their jobs are entitled to their day in court.
In an opinion by Justice Coleman Blease, the panel concluded that the pre-employment arbitration agreement between AccentCare Inc. and its workers was procedurally and substantively unconscionable.
Six employees had sued the in-home care service provider, asserting claims for breach of implied contract, failure to pay wages and provide an accurate wage statement, unfair business practices, unjust enrichment, and promissory estoppel.
Four of them, however, had signed acknowledgments agreeing to submit any such disputes to arbitration as part of their application for employment, and AccentCare brought a motion to compel arbitration and stay the proceedings asserted by all plaintiffs pending completion of the arbitration.
The plaintiffs objected, contending that they did not negotiate the terms of the application form and that the provisions of that document had not been explained to them. They claimed that the were not aware of the consequences of singing the agreement.
Sacramento Superior Court Judge Steven H. Rodda denied Accent Care’s motion, finding the arbitration clause was unenforceable, and the appellate court yesterday upheld his decision.
Blease said there was “abundant evidence” of procedural unconscionability in the arbitration agreement, since the contract, “being one of adhesions, was oppressive,” as it was given to the plaintiffs upon their application for employment.
“This situation leads to inherent unconscionability because of the unequal bargaining power of the parties and the nature of the relationship,” he reasoned.
The justice further noted that “[t]he agreement itself implies that there was no opportunity to negotiate its terms,” since it “simply directs the applicant to ‘acknowledge your understanding of the following statements and agreements.’ ”
Blease opined that the other “statements and agreements” detailed on that page of the application—“(1) that the statements in the application were true and nothing was withheld, (2) that AccentCare could investigate the applicant’s references, (3) that AccentCare was a smoke-free and drug-free workplace, and (4) that nothing in the application created an employment contract, and that if hired, employment would be at will”—were “all terms that an applicant for employment would not expect would be negotiable.”
Combined with the lack of any evidence that the plaintiffs were sophisticated in legal matters, Blease said, “the non-negotiable, take-it-or-leave-it circumstances surrounding the application for employment” made “a strong showing of procedural unconscionability.”
He also explained that substantive unconscionability was present since the arbitration agreements did not purport to bind AccentCare.
Blease posited that AccentCare “knew how to draft a bilateral agreement,” based on phrasing used in a post-hire agreement issued to one of the plaintiffs after she became employed that repeatedly provided that “Accent Care, Inc. and I agree” to a variety of provisions. He contrasted this language with the arbitrations agreement’s use of the phrases “I hereby agree” and “I further agree,” and reasoned that this language indicated that “only one party is agreeing to submit all disputes to arbitration, and that party is the one whose signature appears at the bottom of the form.”
Joined by Justices M. Kathleen Butz and Louis Mauro, Blease concluded “[t]he arbitration language in the acknowledgment signed by plaintiffs did not create mutual obligations,” and this, “combined with the elements of procedural unconscionability present in the circumstances of the execution of the agreement compel the conclusion that the arbitration agreement was unenforceable.”
The case is Wisdom v. AccentCare, Inc., C065744.
Copyright 2012, Metropolitan News Company