Daily Blast March 28, 2016

Finally, a Supreme Court opinion upholding an employment arbitration agreement! The California Supreme Court issued an opinion in Baltazar v. Forever 21, Inc. (Mar. 28, 2016, S208345) __ Cal.4th __, analyzing whether an arbitration agreement containing a clause authorizing the parties to seek preliminary injunctive relief in the superior court renders the agreement unconscionable, and therefore unenforceable. (Slip opn., p. 1.) The Supreme Court held “that the clause, which does no more than restate existing law (see Code Civ. Proc., § 1281.8, subd. (b) (section 1281.8(b))), does not render the agreement unconscionable.” (Ibid.)

Plaintiff employee sued her employer for verbal and physical harassment, race and sex discrimination, and retaliation. (Slip opn., p. 3.) The trial court denied the employer’s motion to compel arbitration based on procedural and substantive unconscionability. (Ibid.) The Court of Appeal reversed concluding that the arbitration agreement was oppressive and procedurally unconscionable because the employee was required to sign the agreement as a condition of employment. The Court of Appeal, however, determined that the clause permitting either party to seek provisional relief in superior court was not substantively unconscionable. (Id. at p. 4.)

The Supreme Court affirmed. Even assuming that employers are more likely than employees to seek provisional relief during the pendency of an arbitration, “the provisional relief clause does no more than recite the procedural protections already secured by section 1281.8(b), which expressly permits parties to an arbitration to seek preliminary injunctive relief during the pendency of the arbitration.” (Slip opn., p. 11.) Thus, “an arbitration agreement is not substantively unconscionable simply because it confirms the parties’ ability to invoke undisputed statutory rights.” (Ibid.)

Further, the agreement “makes clear that the parties mutually agree to arbitrate all employment-related claims: that is, ‘any claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination of Employee.’” (Slip opn., 13.) As such, “[t]he illustrative list of claims subject to the agreement is just that; the agreement specifically states that such claims ‘include but are not limited to’ the enumerated claims, thus making clear that the list is not intended to be exhaustive.” (Ibid., italics in original.)

Finally, the agreement was not unconscionable based on its provision that “‘all necessary steps will be taken to protect from public disclosure [the employer’s] trade secrets and proprietary and confidential information.’” (Slip opn., p. 14.) “Nothing in the agreement indicates that an employee must accede to any and all demands [the employer] might make for the protection of confidential and proprietary information.” (Ibid.) “Agreements to protect sensitive information are a regular feature of modern litigation, and they carry with them no inherent unfairness.” (Id. at p. 15.) Accordingly, the court held that  the parties’ agreement was not unconscionable. (Id. at p. 16.)

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