Ali v. Daylight Transp., LLC, No. A159104 (D1d2 Dec. 31, 2020)
The California Supreme Court’s decision in Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83, 115 (2000), provides the rule for whether an arbitration clause in an employment agreement is unenforceable because of unconscionability. There’s a dispute here, however, about whether Plaintiff is an employee or an independent contractor. Indeed, that alleged misclassification is the rub of the whole case.
But the Court of Appeal holds that it doesn’t matter. Regardless of Plaintiff’s status, the disparate degrees of bargaining power that animate Armendariz apply equally to the independent contractor relationship.
Applying those rules, the arbitration agreement was unconscionable.
It had procedural unconscionability because it was adhesive and because it adopted a set of arbitration rules (AAA Commercial) that are potentially substantively unconscionable in employment cases, without giving Plaintiff an copy of the rules.
And it was substantively unconscionable because (1) the aforementioned rules require the employee/plaintiff to split the arbitrator’s fee, which Armendariz says isn’t ok; (2) the agreement shortened the statute of limitations to 120 days, down from the three years that otherwise would apply to plaintiff’s claims; and (3) the agreement carved out the ability of the employer, but not the plaintiff, to go to court to seek injunctive relief.
Affirmed.
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