Friday, July 22, 2016

A Little Less Illusory

Harris v. Tap Worldwide, LLC, No. B262504 (D2d5 Jun. 22, 2016)

This decision reverses a trial court’s denial of a motion to compel arbitration based on an arbitration provision in an employee handbook. The employee signed an acknowledgement that he received both the handbook and the arbitration agreement, and that they would apply to him if he continued to work after their effective date. That was sufficient to create a contract. Moreover the contract was not illusory by virtue of the fact that the employer retained the right to modify the handbook. There was a specific term in the arbitration provision that limited modifications to written changes necessary to comply with developments in the law for which the employee would be given thirty days written notice and which would apply only prospectively. That limitation governed over the handbook’s general right to modify, and because it prevented any “unfettered or arbitrary right to modify or terminate the parties’ understandings concerning the duty to arbitrate,” it kept the arbitration agreement from being illusory. In the course of making this ruling, the court backs away from an earlier decision of the same division.


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