2016 saw a couple of important cases come out of the
California Supreme Court, including one on arbitration clauses.
In Baltazar v. Forever 21, Inc. (2016) 62 Cal. 4th
1237, the California Supreme Court addressed and resolved some procedural
issues frequently faced in the enforcement of arbitration clauses.
In that case, the Plaintiff, Maribel Baltazar, had
submitted a job application that included a mandatory arbitration agreement
that required the parties to arbitrate all claims arising from her employment.
She later sued Forever 21 alleging constructive discharge and that she was
subject to discrimination and harassment based on race and sex. Forever 21
moved to compel arbitration under the agreement signed when she submitted her
job application. Baltazar sought to invalidate the arbitration provision as
"unconscionable" because: (1) it did not include copy of the
arbitration rules that applied to the arbitration proceedings; (2) the
injunctive relief provision favored the employer; (3) it only pertained to
employee claims; and (4) required her to do anything the employer demanded to
protect its proprietary and confidential information.
The trial court agreed with Baltazar, finding that the
agreement was procedurally and substantively unconscionable, and denied Forever
21’s motion to compel arbitration. The Court of Appeal reversed, rejecting
Baltazar’s argument (and the trial court's rationale) that the clause
permitting the parties to seek provisional relief in superior court was
“substantively unconscionable because such relief serves the interests of
employers than employees.”
The Supreme Court, in a decision authored by Justice
Kruger, noted that Baltazar's argument of procedural unconscionability failed
because she merely attacked the fact that she was not provided with the
arbitration rules rather than challenging the rules themselves. More
importantly, the Court held that that even if employers would be more likely to
seek injunctive relief, the clause “merely confirms, rather than expands” rights
already provided under Code of Civil Procedure § 1281.8(b), which expressly
permits parties to an arbitration to seek preliminary injunctive relief during
the pendency of an arbitration. The Supreme Court explained that it is not
substantively unconscionable to simply confirm a statutory right.
