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A California appellate court has held that an employment arbitration agreement’s discovery, cost, and scope provisions unconscionably restricted a former employee’s ability to vindicate his statutory claims, rendering it wholly unenforceable under California law.
In Rondeau v. Ducommun Aerostructures, Inc., No. B198379, 2008 WL 4381304 ( Cal. Ct. App. Sept. 29, 2008), Rondeau sued former employer Ducommun, alleging wrongful termination and age discrimination. Ducommun moved to compel arbitration under an agreement between the parties. The trial court denied the motion, finding the agreement unconscionable and unenforceable under Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 102 ( Cal. 2000) (specifying minimal requirements for arbitration agreements involving certain unwaivable civil rights).
On appeal, the Court affirmed that the agreement was both procedurally and substantively unconscionable. The Court noted that the adhesive nature of the agreement, with no opportunity for the employee to negotiate its terms, indicated procedural unconscionability.
As to substantive unconscionability, the Court held that three provisions were problematic. First, limiting the parties to one deposition was even more restrictive than provisions found unconscionable in prior cases. While the agreement permitted the arbitrator to expand discovery, the Court found this insufficient because the “right” to discovery was limited to a single deposition.
Second, the Court determined that the agreement unconscionably proscribed attorney fee awards, specifically by requiring each side to “pay [its] own attorneys’ fees and expenses associated with the arbitration.” Because a prevailing plaintiff is entitled to recover such costs and fees under California’s Fair Employment and Housing Act (FEHA), Cal. Gov. Code § 12965(b), the Court found the cost provision unconscionable and unenforceable.
Third, the Court decided that the agreement lacked mutuality in that it preserved litigation for equitable and injunctive remedies most likely to be brought by the employer, such as trade secret and confidentiality claims.
Agreeing that more than one provision in the agreement was unconscionable, the Court held that the trial court was well within its discretion under Armendariz to refuse to sever the offending provisions, and, instead, affirmed the trial court’s holding that the agreement was wholly unenforceable.
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