According to a California appellate court, the "confusing" and "legalistic" inclusion of an arbitration agreement within an instrument that appears to be no more than a required grievance report form is ineffective in binding an employee to arbitrate disputes.

In Metters v. Ralphs Grocery Co., No. G038380, 2008 WL 542838, (Cal. Ct. App. Feb. 29, 2008), Metters brought claims of employment discrimination and harassment against Ralphs. Ralphs moved to compel arbitration of the claims, alleging that Metters had agreed to arbitration by submitting a "Notice of Dispute & Request for Resolution Form" to report his claims to the company.

The trial court held that there was "no meeting of the minds," and therefore no valid arbitration agreement. Specifically, the trial court found that Metters did not understand that completing and signing the Dispute Form constituted an agreement to arbitrate.

The Court agreed with Ralphs that parties who sign an agreement are ordinarily deemed to have assented to all terms of that agreement, but also recognized an exception when the agreement does not appear to be an agreement and when the terms within are not called to the other party's attention.

Here, the Court found substantial evidence that the Dispute Form looked like a report or grievance form, and was represented as a precondition to the submission of Metters's claims for resolution. "Had Ralphs wanted to clarify, rather than obfuscate, the grievance procedure," declared the Court, "it would have told Metters to either fill out the Dispute Form, under which he would agree to binding arbitration, or write a letter detailing his dispute."

Ralphs argued that the Dispute form validly incorporated the company's arbitration policy by reference, but the Court found the incorporation in the Dispute Form to be "confusing and full of legalistic references" that did not adequately warn Metters of the terms of the underlying arbitration policy.