Wednesday, July 22, 2020
Page 1
Court of Appeal:
Employment Agreement Requiring Arbitration Not Unconscionable
Opinion by Justice Wiley Reverses Order by Judge Duffy-Lewis
By Sandra Hong, Staff Writer
An employment agreement that required arbitration of disputes and placed restrictions on discovery was not on its face unconscionable, the Court of Appeal for this district held yesterday, reversing a Los Angeles Superior Court judge’s order denying a motion brought by LA Fitness to compel arbitration of an action brought against it by a former company executive.
Justice John S. Wiley wrote the opinion for Div. Eight which orders that plaintiff Jose Torrecillas’s causes of action against the Irvine-based national chain of fitness centers be arbitrated.
Torrecillas was hired as a sales associate in 1998 and eventually reached the position of vice president of marketing and sales in 2013. He was promoted to a different VP-level job in 2014, then fired in 2017. Torrecillas sued the company in 2018.
Wiley’s Opinion
“California courts require both procedural and substantive unconscionability to invalidate a contract,” Wiley wrote. “We reverse because there was little or none of either element.”
Los Angeles Superior Court Judge Maureen Duffy-Lewis denied the motion by LA Fitness based on finding that “the agreement states that if plaintiff refuses to sign, he will not be considered for employment” and that it placed limits on discovery, specifically limiting depositions to a total of five, unless the arbitrator moved for additional discovery.
Wiley held that the agreement was not an adhesion contract because it lacked the elements of procedural or substantive unconscionability.
Procedural Unconscionability
Wiley noted the requirements of surprise and oppression to invalidate contracts as unconscionable. The arbitration provision signed by Torrecillas in 2013 was printed clearly in direct and clear language, as required under the Federal Arbitration Act, 9 USC §1, he noted, observing:
“There is nothing surprising about it.”
Torrecillas’ statement that he was told to sign the agreement in order to keep his VP-level position was not enough to demonstrate oppression, the jurist said.
Wiley pointed to the fact that Torrecillas was paid more than $100,000 a year and given the chance to consult with a lawyer about the agreement. These facts distinguished his case from others where courts found unconscionability dealing with employees in low-paying positions pressured to sign agreements on the spot, he explained.
Substantive Unconscionability
On the issue of substantive unconscionability, Wiley declared that Torrecillas failed to demonstrate the provisions limiting discovery were “shocking.” The deposition limit reasonable under the California Supreme Court’s 2000 decision in Armendariz v. Foundational Health Psychcare Services, Wiley noted.
There, Justice Stanley Mosk (since deceased) said a plaintiff must be permitted “adequate” but not unlimited discovery. Wiley commented:
“Armendariz found adequate discovery when the parties needed the arbitrator’s approval to take any depositions….Here, Torrecillas is entitled to five depositions regardless of the arbitrator’s approval. Armendariz approved of arbitrator discretion. Here, the arbitrator has discretion to allow additional discovery, including more depositions, document requests, or requests for admissions. The discovery procedures are enforceable as a matter of law.
Additionally, Torrecilla failed to show that the discovery limits created barriers to pursuing his claims, Wiley said.
Torrecillas also argued that issue preclusion barred LA Fitness from compelling arbitration based on the unpublished 2017 decision by the Fourth District’s Div. One in Pimpo v. Fitness International LLC, which affirmed a trial court order denying LA Fitness’ motion to compel arbitration. However Pimpo dealt with an arbitration provision as part of a job application that expired before the plaintiff brought her lawsuit, Wiley noted, saying that the facts in that case do not correspond to those in the present case.
The case is Torrecillas v. Fitness International, 2020 S.O.S. 3670.
Fermin H. Llaguno and Oliver B. Dreger of the Irvine office of Littler Mendelson represented Fitness International and Michael J. Bononi, Christy W. Granieri and Rebecca L. Claudet of the Pasadena firm of Bononi Law Group acted for Torrecillas.
Copyright 2020, Metropolitan News Company