Monday, May 12, 2014
Appeals Court Orders Publication of Opinion on Arbitration Agreement
Panel Calls Pact With Workers Who Didn’t Read English Unconscionable
By a MetNews Staff Writer
The Court of Appeal for this district Friday ordered publication of its April 21 opinion holding that form arbitration agreements entered into between the owners of two car washes and a number of Spanish-speaking employees was unconscionable and unenforceable.
The court found that the agreement possessed a high degree of procedural unconscionability, and that many of its substantive provisions were unconscionable as well. In particular, the court criticized the fact that while some provisions were translated into Spanish, key provisions were in English only.
Justice Madeleine Flier wrote the opinion for Div. Eight, which affirmed Los Angeles Superior Court Judge Yvette M. Palazuelos’ order denying the defendants’ motions to compel arbitration.
The plaintiffs, represented by the Mexican American Legal Defense and Educational Fund, brought a putative wage-and-hour class action against the owners of Millennium Car Wash and Santa Monica Car Wash and Detailing. When the defendants moved to compel arbitration based on agreements they had signed, they responded that they read little Spanish and no English, and that they had no idea what the agreements said but signed them because they understood they would be hired if they did.
The documents included clauses requiring arbitration before the American Arbitration Association if they employees raised a dispute with the employers. The employer reserved a choice of arbitration or litigation, however.
The plaintiffs also signed confidentiality agreements, as part of the same document, saying that “all information relating to [the car wash] and my employment” is confidential, and that nothing about the car wash could be disclosed to anyone outside without first discussing it with management.
Flier said the arbitration clauses and the confidentiality agreements, read together, constituted a one-sided, unconscionable agreement due to lack of mutuality. There was also a high degree of procedural unconscionability because of the “element of surprise,” the justice said.
“[The plaintiffs] could not read English, and yet the car wash companies provided the enforceability clause in English only. The car wash companies evidently knew the plaintiffs required Spanish translations because they provided some translation. The record does not reveal why the car wash companies did not translate the entirety of the employment agreement. In sum, with both oppression and surprise present, there is no question the arbitration agreement was procedurally unconscionable.”
The justice went on to agree with the trial judge that the agreement was substantively unconscionable.
It has long been held that lack of mutuality renders an agreement substantively unconscionable, Flier noted.
“Moreover, the car wash companies have not justified the lack of mutuality with reference to business realities….The confidentiality subagreement simply states the car wash companies’ position is ‘highly dependent on the Confidential Information.’ This conclusory statement is no explanation, and neither the record nor the briefing in this case offers facts justifying the one-sidedness.”
Attorneys on appeal were Blank Rome’s Howard M. Knee and Kathy PourSanae for the car washes and MALDEF’s Victor Viramontes and Jorge M. Castillo for the plaintiffs.
The case is Carmona v. Lincoln Millennium Car Wash, Inc., 14 S.O.S. 2369.
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