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Packin v. Astra USA1/29/2002
ts in two categories. First, the agreement limits the employee's recovery of attorney fees and punitive damages, which are available to a prevailing plaintiff under the FEHA. "The principle that an arbitration agreement may not limit statutorily imposed remedies such as punitive damages and attorney fees appears to be undisputed." (Armendariz, supra, 24 Cal.4th at p. 103.) Neither an employee's at-will status nor the employer's disciplinary methods can be challenged under the agreement, and the arbitrator is restricted to specific remedies. Furthermore, the agreement mandates the application of either the Federal Arbitration Act or Massachusetts law, thus depriving an employee of the rights and protections provided by California.
Second, the agreement requires the employee to shoulder half of the fees associated with the arbitration, resulting in forum costs greater than the usual litigation costs. The Supreme Court determined this requirement could deter employees from bringing FEHA claims and is thus impermissible. "We therefore hold that a mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obliges the employer to pay all types of costs that are unique to arbitration." (Armendariz., supra, 24 Cal.4th at p. 113.)
Astra's arbitration agreement not only fails to meet the minimum standards for arbitration of FEHA claims as set forth in Armendariz, it also fails the more general contractual validity test: unconscionability. (Civ. Code, § 1670.5; Code Civ. Proc., § 1281.) An unconscionable agreement typically is one of adhesion, i.e., "a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it." (Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 694.) If an adhesion contract is contrary to the expectations of the weaker party or oppressive as applied to him, the courts will refuse to enforce it against him. (See A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 484.)
The concept of unconscionability includes both procedural and substantive elements, both of which are generally present to some degree. The procedural element involves the absence of meaningful choice due to inequality in bargaining power or hidden terms. (See Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1329.) The substantive element focuses on the terms of the agreement and whether they are unjustifiably one-sided and unreasonably harsh. (See Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532.) The two elements work together in a sliding scale relationship. " he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa." (Armendariz, supra, 24 Cal.4th at p. 114.)
The agreement here is clearly an adhesion contract; Packin had only the choice to sign it or forfeit his right to participate in profit-sharing. And the consequences of the agreement were, if not actually hidden from the employees, substantially obscured by the way it was presented to them. The explanatory memorandum distributed with the agreement touted arbitration as quicker and less expensive than litigation and every bit as fair. But " hile arbitration may have its advantages in terms of greater expedition, informality, and lower cost, it also has, from the employee's point of view, potential disadvantages: waiver of a right to a jury trial, limited discovery, and limited judicial review. Various studies show that arbitration is advantageous to employers not only because it redu
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