Arbitration/Unconscionability: CCA 2/8 Finds Arbitration Agreement Unconscionable Where It Overly Limited Discovery And Exempted Employer Claim For Injunctive Relief From Arbitration

But Procedural Unconscionability Was Low.

        After Diaz and Martinez filed suit for various employment-related claims, their employer Hutchinson moved unsuccessfully to compel arbitration, and appealed.  Diaz et al. v. Hutchinson Aerospace & Industry, Inc., et al., B271563 (2/8  10/27/17) (Flier, Bigelow, Rubin) (unpublished).

        The Court of Appeal followed the template for analyzing unconscionability of the arbitration provision:  procedural unconscionability, substantive unconscionability, severance.  

          Procedural unconscionability:  low.  Simple contract of adhesion.

       Substantive unconscionability:  high.  The agreement was lop-sided, because the employer did not need to seek arbitration to obtain injunctive relief to enforce a confidentiality agreement.  And discovery was too limited to allow Diaz and Martinez to adequately vindicate their rights:  the agreement limited discovery to one set of 35 interrogatories, one set of document demands, one deposition, "and it expressly barred any further discovery."

        Severance:  multiple unconscionable provisions (two here) allowed the trial court, acting within an abuse of discretion standard, to refuse to sever unconscionable provisions.

        COMMENTBaltazar v. Forever 21, Inc., 62 Cal.4th 1237 (2016) allows a carve-out for an employer to reserve its statutory rights to seek provisional remedies in court during the pendency of arbitration — after all, that is allowed by Cal. Code of Civ. Proc., section 1281.8(b).  However, Baltazar didn't help the employer here, because the carve-out for injunctive relief was not limited to provisional remedies.

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