Thursday, August 27, 2020
Employer Has No Duty to Point Out the Inclusion of the Provision, Opinion Says; Some Portions Found to Be Unenforceable
By a MetNews Staff Writer
An employee who signs a document acknowledging receipt of the company’s employees’ handbook and agrees to be bound by the terms has assented to an arbitration provision without any need on the part of the employer to draw particular attention to it, the Court of Appeal for this district declared yesterday, though finding provisos relating to arbitrator’s fees and costs and attorney fees to be unenforceable.
The opinion by Justice Elizabeth A. Grimes of Div. Eight reverses an order by Los Angeles Superior Court Judge Steven J. Kleifield denying a motion by the employer, Hula Media Services, LLC, to compel arbitration of an action by its former employee Michael Conyer for alleged violations of the Fair Employment and Housing Act (“FEHA”).
Connor, who went to work for Hula in January 2017, in November of that year received a copy of a revised handbook which contained an arbitration clause. He signed two documents stating:
“This is to acknowledge that I have received a copy of the Employee Handbook. This Handbook sets forth the terms and conditions of my employment as well as the rights, duties, responsibilities and obligations of my employment with the Company. I understand and agree that it is my responsibility to read and familiarize myself with all of the provisions of the Handbook. I further understand and agree that I am bound by the provisions of the Handbook.”
Kleifield concluded that it would be “fundamentally unfair to presume that Plaintiff was aware of the arbitration clause.”
The Court of Appeal disagreed. Grimes wrote:
“Plaintiff insists he was ‘unaware that his signature on the acknowledgment form was intended to create a contract’’ and what he signed was not on its face a contract…That, however, ignores the words on the face of the receipt, in which plaintiff acknowledged the handbook sets forth the terms, conditions, rights, duties, responsibilities and obligations of his employment, and plaintiff expressly agreed he was bound by its provisions. That is a contract.”
“[D]efendants had no obligation to point out to plaintiff that an arbitration clause had been added to the November 2017 employee handbook. t has long been the rule in California that a party is bound by a contract even if he did not read the contract before signing it. That rule applies to all contracts, including arbitration agreements.”
Grimes went on to find that a portion of the provision was unconscionable—but severable. She noted that it provides that the parties would share in paying the arbitrator’s fees and costs.
“But an employer that seeks to compel arbitration of an employee’s FEHA claims cannot require the employee to pay fees and costs greater than the amount to file a claim in court,” she said, citing the California Supreme Court’s 2000 decision in Armendariz v. Foundation Health Psychcare Services, Inc.
There, Justice Stanley Mosk (since deceased) said:
“We do not believe the FEHA contemplates that employees may be compelled to resolve their antidiscrimination claims in a forum in which they must pay for what is the equivalent of the judge’s time and the rental of the courtroom.”
Grimes went on to observe:
“The arbitration clause also provides the arbitrator shall award attorney fees to the prevailing party. But a prevailing defendant in a FEHA case may only recover attorney fees when the plaintiffs action was frivolous, unreasonable or groundless….The attorney fees provision here violates Armendariz because it permits prevailing defendants to recover attorney fees even if plaintiffs action was not frivolous, unreasonable or groundless.”
Unfairness did not so permeate the contract as to render it unenforceable in toto, she said, declaring that the offending portions must be snipped from it by the Superior Court on remand, with an order entered for arbitration.
The case is Conyer v. Hula Media Services, LLC, B296738.
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