Language of Arbitration Agreement Permits Court, not Arbitrator, to determine Whether Arbitration Agreement is Enforceable on Facts of this Case, and Court determines that Multiple Unconscionable Provisions Invalidate this Agreement

March 21, 2012

CantorCO2e's mandatory employment agreement was riddled with unconscionable provisions, errors, and bias. No wonder the California Court of Appeals decided that the court should determine the validity of the agreement and then determined that the agreement was not valid. Ajamian v. CantorCO2e, LLP, ___Cal.App.4th ___ (Feb. 16, 2012).

As part of employers' end run around employees' right to a jury trial, not only are employers making employees sign mandatory arbitration agreements, but they are trying to make the courts forfeit their right to even examine these agreements to see if they are illegal. Here CantorCO2e argued that its agreement does just that, but its agreement is so vague and unclear, and its arguments so tenuous, that the court rejected this proposition.

In order for an employer to take away the employee's right to have a court determine whether an arbitration agreement is valid, it must do so in a way that is "clear and unmistakable." Here, there are multiple reasons that the alleged attempt to take away these rights is not clear and unmistakable. It is important to note - for the future - that the court here limited its holding to the facts of this case, leaving employers multiple avenues by which they can strip a court of its right to judge the employer's arbitration agreement and give this right to the employer's hand pick and paid arbitrator. How this plays out in the future remains to be seen, but taking away a court's right to review this important matter is dangerous and should be remedied by legislation if necessary.

After finding that the court has the right to determine whether CantorCO2e's arbitration agreement was unconscionable, the court went ahead and found that it was unconscionable on a number of grounds:

1. Ajamian had no real bargaining power as Ms. Ajamian had already worked for the company for ten years and was required to sign the agreement to obtain compensation she had already been promised;

2. The agreement prohibited Ms. Ajamian from obtaining punitive or special damages which she might be entitled to under the law and permitted CantorCO2e to obtain liquidated damages, which are akin to punitive damages!;

3. The agreement mandated that New York law apply to this California employee without providing any apparent nexus to New York law; and

4. The agreement made Ms. Ajamian liable to the company for fees without making the company mutually liable to Ajamian for fees.

Courts need to stand up for employees' right to basic legal protection by a court of law, and, at the same time stand up for a fair, public, and egalitarian justice system, rather than a hidden private system of justice riddled with favoritism towards employers and companies. This case reached the right holding but could have done with a stronger voice for fairness!

Jody LeWitter

March 21, 2012