Because this day of the week ends in the letter "Y," I thought I would focus on another arbitration clause opinion. See what I did there? Anyhow, in Sparks v. Vista Del Mar Child And Family Services (July 30, 2012), the Court of Appeal (Second Appellate District, Division Five) reviewed an order denying arbitration following a petition to compel arbitration in a wrongful termination action. Summarizing the various reasons why the Court, in a split decision, affirmed, the majority opinion said:
We hold that plaintiff is not bound by the arbitration clause because that clause was included within a lengthy employee handbook; the arbitration clause was not called to the attention of plaintiff, and he did not specifically acknowledge or agree to arbitration; the handbook stated that it was not intended to create a contract; the handbook provided that it could be amended unilaterally by defendant and thus rendered any agreement illusory; the specific rules referred to in the arbitration clause were not provided to plaintiff; and the arbitration clause is unconscionable.
Slip op., at 2.
The case raises a number of interesting issues debated by the majority and dissent. Does an employee handbook that disavows that it is intended to create a contract undermine an employer's reliance on an arbitration provision within that handook? Does inadequate access to discovery in the arbitration render the agreement unconscionable?
On that last question, the dissent argued that certain rights are imputed into the agreement:
Sixth, the agreement is not unconscionable because of any problem relating to discovery. Plaintiff argues the American Arbitration Association rules do not permit for the sufficient use of discovery devices. Implied in an employer-employee arbitration agreement is the opportunity to utilize discovery devices in a case which potentially may involve emotional distress damages. (§ 1283.1; Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076-1081; Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 105-106.) Here, there is a cause of action for intentional severe emotional distress infliction. Implied within the arbitration agreement is the right to adequate discovery.
Slip op., dissent, at 3-4. I'm confused. If we are implying terms into agreements, why, again, is the CLRA's ban on class action waivers not implied in every consumer contracts involving transactions in goods or services? (I am referring to Caron and its holdings regarding preemption of the CLRA's anti-class waiver provision by the FAA, if that was not clear.) Oh, I remember now. In that case, the parties contractually agreed that they wouldn't arbitrate if the class waiver provision was not lawful. Now it makes sense. Huh?
The decisions interpreting arbitration provisions have, if anything, become substantially less clear in the last two years. The result is that every conceivable argument on both sides of any arbitration issue will be flung at the wall in every trial court, and recapitualated in the Courts of Appeal after any petition is denied. This is not helping anyone to control the costs and uncertainty of litigation.