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Court of Appeal:
GE’s On-Screen Arbitration Agreement Is ‘Highly Secretive’
Panel Notes, in Denying Enforceability of Provision, That Employee Coming on Board Must Agree to Arbitration
Before Unnamed Outfit With Rules Not Provided and With Location of Proceedings Not Divulged
By a MetNews Staff Writer
Div. Three of the Fourth District Court of Appeal has accused the General Electric Company of sneakiness in the way it secures new employees’ assent to arbitrate any employment disputes, ordering that the Orange Superior Court vacate its order compelling arbitration of a sexual harassment/retaliation action brought by a product sales specialist.
Presiding Justice Kathleen O’Leary authored the opinion, filed Monday. It grants a petition for a writ of mandate sought by plaintiff Casandra Murrey, who wants to conduct her battle in court.
The electronic document she signed containing an arbitration clause is titled, “SOLUTIONS: An Alternative Dispute Resolution Procedure.” Murrey said in a declaration:
“During the onboarding process...I was required to sign multiple documents within a short period of time. My hiring manager...informed me that my future employment with GE was contingent upon me signing all onboarding documents including a document entitled Solutions. When seeing all of the onboarding documents, including Solutions, I felt pressured to sign quickly. I did not understand the unfair and one-sided nature of GE’s Solutions process.”
Orange Superior Court Judge Nathan R. Scott found that agreement was, except as to one provision, enforceable. He snipped out a proviso that each party would pay the “reasonable cost of compliance” with discovery requests before ordering the case to arbitration.
O’Leary’s Opinion
O’Leary said:
“In March 2022, President Joseph R. Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021…representing the first major amendment of the Federal Arbitration Act…since its inception nearly 100 years ago. This legislation, having bipartisan support, voids predispute arbitration clauses in cases, such as the one before us now, involving sexual harassment allegations. We regret that this new legislation does not apply retroactively to Casandra Murrey’s complaint filed in March 2021.”
She continued:
“Nevertheless, we will consider Murrey’s writ petition because the highly secretive and one-sided provisions of her arbitration agreement make it both procedurally and substantively unconscionable. The agreement is factually distinguishable from existing case authority upholding employment adhesion contracts and exemplifies why the legislature drafted House Bill No. 4445. We conclude the trial court erred by enforcing an unconscionably void arbitration agreement.”
Unfair Provisions
The presiding justice noted that under the arbitration agreement, the company’s “designated dispute resolution organization” (“DRO”) must be used without specifying its identity; she was not given a copy of the dispute-resolution company’s rules, and was not told where the arbitration would take place. “There was no guarantee the arbitration would be close to Murrey’s home or workplace,” she pointed out.
“The amount of information withheld from Murrey in this case is what sets it apart from those where a copy of the American Arbitration Association’s (AAA) rules, or the Judicial Arbitration and Mediation Service’s (JAMS) rules, were omitted and simply incorporated by reference,” O’Leary wrote.
She additionally cited GE’s failure to show that it “gave Murrey sufficient time to consider the Solutions manual, inquire about the DRO, and access the arbitration rules at the time of contracting.”
O’Leary drew the conclusions that “Murrey showed a heightened degree of procedural unconscionability beyond the agreement’s adhesive nature” and “case authority validating an arbitration agreement incorporating AAA/JAMS rules is inapplicable here.”
Workplace Harassment
Among other provisions O’Leary addressed was one mandating that the employee not “publish or disseminate” what the arbitration award was or what was discussed with GE or at the mediation. O’Leary declared that “in the context of a workplace sexual harassment complaint…[t]he notion that courts should condone requirements keeping the outcome of forced arbitration proceedings confidential is out of step with federal and sister state case authority.
Alluding to the bill Biden signed in March 2022, she said:
“Congress and President Biden were convinced the Act was necessary due to growing evidence the secretive nature of arbitration was fostering ‘the growth of office cultures that ignore harassment and retaliate against those who report it, prevent future victims from being warned about dangerous companies and individuals, and create incentives for the corporate protection of rapists and other serial harassers.’ ”
The quotation was from a House of Representatives report. O’Leary remarked:
“GE’s confidentiality provision serves no purpose other than to benefit GE. Future employees cannot take advantage of findings in past arbitrations or prove a pattern of discrimination and/or retaliation. Solutions expressly provides an arbitrator cannot include in the award any requirement that GE change or revise its policies, procedures, rules and/or practices. In addition, ‘keeping past findings secret undermines an employee’s confidence in the fairness and honesty of the arbitration process and thus potentially discourages that employee from pursuing a valid discrimination claim.’…Therefore, we hold that this confidentiality provision added to this agreement’s substantively unconscionability.”
Limits on Discovery
O’Leary went on to note that GE’s own guidelines placed drastic limits in discovery, commenting:
“Murrey’s complaint contains 10 complex causes of action requiring different types of documentary evidence related to GE’s alleged workplace retaliatory tactics. We agree with Murrey, the default level of discovery provided for in the arbitration agreement appear to be inadequate to vindicate her rights.”
The case is Murrey v. Superior Court (General Electric), 2023 S.O.S. 434.
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