Another Strike Against an Employer’s Attempt to Force an Unfair Arbitration Agreement Down an Employee’s Throat

Ms. Zullo worked for a newspaper publisher, Inland Valley Publishing Company. The employer’s handbook contained a policy requiring mandatory arbitration of employment disputes. The handbook stated that any arbitration would be governed by the American Arbitration Association rules, but failed to set forth those rules in detail. The handbook did require that an employee who filed an arbitration demand meet strict timelines, altered the law by shortening potential statute of limitations, and required that an employee respond to an arbitrator’s communication within ten business days. The remedy for an employee’s violation of these rules was the dismissal of his or her claims. In order to work for Inland, an employee was required to sign and acknowledge this handbook.

After Ms. Zullo was fired, she filed a lawsuit in court. Inland sought an order to send her case to arbitration. The trial court ordered that the case be sent to arbitration. However, the Court of Appeals reversed, holding that the arbitration agreement was unconscionable. Zullo v. Superior Court, 197 Cal. App. 4th 477 (2011).

It is getting rather tiresome reading all the ways in which employers heavy handedly force employees to “agree” to arbitrate their claims, as well as all the ways in which the employers attempt to manipulate the arbitration process to favor the employer. Even though courts generally keep overturning such overreaching agreements, employers keep promulgating them. The reason is because most employees don’t always have the resources and where-with-all to hold the employer to the letter of the law.
Employees are thus required -again and again – to contest these unfair, unequal and illegal arbitration agreements. Here the Court found that the agreement was procedurally unconscionable where the rules weren’t clear from the face of the handbook and the situation was really a take-it-or-leave-it one. Interestingly, the Court also found that no testimony need be presented to prove this unconscionability as the handbook “speaks for itself.”

The Court also found that the agreement was substantively unconscionable because it altered the law (here the statute of limitations) in favor of the employer, made up timelines (e.g., respond to the employer within 10 business days) to the detriment of the employee, and applied to claims an employee would bring, but not claims an employer might bring.

I can only wish Ms. Zullo the best of luck pursing her claims in state court, where they belong.

Jody LeWitter
September 7, 2011