Drafting Mistake by Employer Means Employer Must Accept the Consequences

     When the employer drafts an arbitration provision, and the Court of Appeal opines, “[i]t appears that there was a huge drafting mistake,” as it did in the next case, you know that the employer is going to have a bad day in court. Derr v. The Superior Court of Monterey County [Nepenthe/Phoenix Corp., Real Party in Interest], Case No. H037117 (Sixth Dist. Feb. 8, 2012) (not to be published in official reports).

     Petitioner Susan Derr had worked as a server for Nepenthe for 40 years, when she was diagnosed with cancer. The employer sent her a notice by mail indicating that she had voluntarily “quit.” She sued for disability discrimination and wrongful termination in violation of public policy.

     But Ms. Derr was a party to an arbitration provision, and the employer successfully moved to compel arbitration. She then sought a writ of mandate directing the trial court to vacate its order compelling her to arbitrate. (Note: Orders compelling arbitration are considered interlocutory and not directly appealable, but can be attacked with writ review: “(1) if the matters ordered arbitrated fall clearly outside the scope of the arbitration agreement or (2) if the arbitration would appear to be unduly time consuming or expensive.” Zembsch v. Superior Court, 146 Cal.App.4th 153, 160 (2006).)

     The drafting mistake? “[T]here was an agreement to arbitrate disputes ‘arising from or relating to’ the arbitration agreement itself; the arbitration agreement does not describe the types of disputes that could arise from or relate to the agreement — as nonsensical as that is.” In essence, the court is distinguishing between the arbitration agreement, on the one hand, and the employment agreement on the other hand, and saying that, for whatever reason, this arbitration agreement only provided for arbitrating disputes concerning the arbitration agreement itself, not for arbitrating disputes concerning the employment agreement and the employment relationship.

     Justice Elia authored the 3-0 decision.

     Blawg Bonus:  “Nepenthe” is the drug for forgetfulness in ancient Greek literature.  From Wikipedia, three cultural references to Nepenthe:

• H.P. Lovecraft’s "The Outsider", "But in the cosmos there is balm as well as bitterness, and that balm is nepenthe."
• Edgar Allan Poe‘s poem "The Raven": "Quaff, oh quaff this kind nepenthe and forget this lost Lenore!"
• Nathaniel Hawthorne‘s "The Scarlet Letter": "I know not Lethe nor Nepenthe…" (Roger Chillingworth to Hester Prynne)