Thursday, May 15, 2014

No Arbitration for Car Wash Class

Carmona v. Lincoln Millennium Car Wash, Inc., No. B248143 (D2d8 May 9, 2014)

The case is a wage-and-hour class action against several L.A. area car washes. The class plaintiffs’ employment contracts with defendants include, amongst myriad inscrutable provisions and typos, a really poorly drafted arbitration clause and a strong confidentiality agreement. (Because car wash laborers are obviously privy to all kinds of sensitive commercial information. Did you know they clean the cars with water?!? And soap!?!) The trial court refused to compel arbitration, which the court of appeal affirms on unconscionability grounds. 

The arbitration agreement was procedurally unconscionable because it was adhesive, because key provisions were not translated into Spanish (although plaintiffs were Spanish speakers) and because the AAA arbitration rules that were incorporated into the contract were not provided to the employees. 

It was also substantively unconscionable. In particular, the agreement one-sidedly required employees to arbitrate while giving the car washes the option of seeking relief in court for breaches of the confidentiality agreement. It also unilaterally gave the employer the right to recover its fees, which the court finds unconscionable notwithstanding Civil Code § 1717’s automatic rendering of the obligation as mutual. (You apparently can’t get out of substantive unconscionablity by arguing that the parts of the agreement are so one-sided that they can’t be enforced. Good to know.) Finally, the agreement unilaterally required the employees to consult with the car washes before seeking any kind of judicial relief. This kind of “free peek” provision gives a substantial advantage to the employer that the employee does not have. Under the circumstances, the agreement was unconscionable, so plaintiffs could not be compelled to arbitrate.


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