Armendariz v. Foundation Health Psychcare Services, Inc.

2000 California Supreme Court

• As condition of employment, employee had to sign contract requiring arbitration of wrongful termination disputes.
• Plaintiff employees claims sexual harassment/discrimination and want to sue in Court.
• Disagreement between trial and appeals court on whether arbitration provision is severable.
• Agreements now tend to have severability clause. Still depends on how integral provision is to agreement.
• Agreements included ceiling on damages to back-pay, part of Unconscionability .
• Issue of procedural vs. substantive Unconscionability . If one is particularly strong, the other doesn’t need to be as present, but both should be present in some degree.
• Employer wasn’t required to arbitrate while employee was. Lacks fairness and mutuality to some degree.
• Advantages of arbitration: more efficient. But when only available to one party, suggests that efficiency is not the motivation.
• Employee could argue that she signed contract for arbitration because she expected she might be terminate for performance rather than sexual harrasment. Would expect to arbitrate performance disputes, but not harrasment.
• Employer might be suing for trade secrets; could then be suing more than just former employee, thus arbitration would not work.
• Foundation claimed they would bring wrongful termination case to arbitrator as well. Not explicit, however, thus court discounted this claim.
• Problem with arbitration and sexual harrasment: often need multiple plaintiffs.
• To revise contracts, would want to have arbitration bind both parties on similar issues.

Author: international

Mentioned in these Entries

Unconscionability.