In this case, a former employee of a retail store appealed to the California Supreme Court seeking reversal of an appellate court decision which found that an arbitration agreement in her employment application was not unconscionable.
An employee originally filed a suit against Forever 21 and individual defendants for harassment, race and sex discrimination and retaliation. The defendants moved to compel arbitration based on the arbitration agreement in the employment application which was executed by the employee. The California trial court denied the motion, finding that the agreement was unconscionable. A California Court of Appeal reversed, finding that there was no substantive unconscionability in the agreement. The California Supreme Court granted the employee’s petition to review, and affirmed the Court of Appeal’s judgment.
In its decision, the California Supreme Court found that an arbitration agreement, which authorized the parties to seek provisional relief in a judicial action while still compelling the remainder of the dispute to arbitration, was enforceable, noting that the clause “does no more than restate existing law . . . [and] does not render the agreement unconscionable.” The court also held that an arbitration agreement remains enforceable when the claims it specifically lists that are subject to arbitration are claims that would likely be brought by an employee because the employer’s claims, even though not listed, would also be subject to arbitration. It also found that a provision in the arbitration agreement that required both parties to agree that during arbitration “all necessary steps will be taken” to protect from disclosure the company’s trade secrets and proprietary and confidential information, was not unduly one-sided. Lastly, the court held that the fact that the arbitration agreement stated that the arbitration would be conducted under the model rules of the American Arbitration Association, and the employee was not provided with a copy of the AAA rules, did not make the agreement procedurally unconscionable.
Thus, the California Supreme Court concluded that the arbitration agreement was not unconscionable and was enforceable. Baltazar v. Forever 21, Inc. et al., No. S208345 (Cal. Mar. 28, 2016).