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Fischer v. Families For Children2/4/2002
asons. First, the contract provides that only the employee agrees to arbitrate claims. It provides: "I [meaning the employee] agree that any claim or controversy arising out of or relating to employment or termination of employment which cannot be resolved by mutual agreement shall be settled by binding arbitration . . . ." (Italics added.) And second, the remedies available in arbitration, under this contract, are remedies that only an employee would recover -- that is, lost wages. Therefore, on its face, this contract required only plaintiff to submit claims to arbitration.
Defendants concede the provision limiting damages to lost wages and eliminating other remedies, such as "reinstatement, other monetary damages, punitive damages, and/or injunctive relief," "is contrary to public policy and unlawful." We agree. (Armendariz, supra, 24 Cal.4th at p. 104.) While making that concession, defendants assert the provision should have been severed and the arbitration agreement enforced. We disagree.
Defendants fail to recognize that severance is a matter of trial court discretion. Civil Code section 1670.5 "appears to give a trial court some discretion as to whether to sever or restrict the unconscionable provision or whether to refuse to enforce the entire agreement. But it also appears to contemplate the latter course only when an agreement is `permeated' by unconscionability." (Armendariz, supra, 24 Cal.4th at p. 122.) Under this standard, there can be no doubt the trial court properly exercised its discretion in this case.
As noted above, the employment contract is more accurately viewed as a relinquishment of employee rights. Signed after plaintiff was already employed, it extracts from him the right to sue his employer in court and the right to recover any damages except for a limited amount of lost wages. It also provides that he is an at-will employee with no expectation that good cause must support his termination and that he must pay the cost of arbitration if he should lose. On the face of the contract, nothing benefits the employee, except perhaps the acknowledgement that he will be paid a salary as long as he works for Families for Children. Thus, the contract is "`permeated' by unconscionability." (Armendariz, supra, 24 Cal.4th at p. 122.) We cannot say the trial court abused its discretion in refusing to sever the provision limiting damages.
Furthermore, the arbitration provision, which we have concluded lacks mutuality, would also have to be severed as unconscionable. (See Armendariz, supra, 24 Cal.4th at p. 120.) Accordingly, severance to eliminate unconscionability is not available and, in any event, would be of no utility to defendants here.
The conclusion concerning severance in Armendariz applies equally here: "In this case, two factors weigh against severance of the unlawful provisions. First, the arbitration agreement contains more than one unlawful provision; it has both an unlawful damages provision and an unconscionably unilateral arbitration clause. Such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer's advantage. In other words, given the multiple unlawful provisions, the trial court did not abuse its discretion in concluding that the arbitration agreement is permeated by an unlawful purpose." (Armendariz, supra, 24 Cal.4th at p. 124.)
The parties expend significant energy arguing whether the law was settled concerning these matters at the time the contract was written -- defendants arguing that the state of the law was in flux and therefore the provisions were not included in the contract i
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