The Latest Battle In the Arbitration Wars

Many employees who call a lawyer expect to be able to sue, even if only as a last resort. But then they sometimes find out that they have signed an arbitration clause which will force their case to be decided by an arbitrator instead of a judge – and an arbitrator paid for by their employer.

A number of cases have been winding their way through the court system on this issue in recent years. A May appellate decision in Tri v. Lucky Chances, Inc., the Plaintiff signed an arbitration agreement which stated that questions about the agreements legality would be decided by the mediator, instead of the Court.

The court found the agreement illegally one-sided in the employer’s favor, and said the case would have to proceed in court.   The Defendant appealed. The appeals court determined that whether or not the agreement was enforceable or not was up to the Court.

The Plaintiff said she had to sign the agreement immediate, and wasn’t explained what it meant, that her signature was optional, or even given a chance to review it. She believed if she didn’t sign, she’d get fired.

The appeals court found it was legal to leave to the arbitrator whether or not the agreement was legal, when analyzed as a contract. Parties can delegate to the arbitrator the question of whether or not the agreement was legal, but only if the language is clear and the delegation of the decision to the arbitrator is not revocable under state contract standards – which ban agreements based on fraud, use of pressure, or that are too one-sided. In this case, it was ruled that the language was clear. But here, there was no disputed evidence outside the agreement itself. The Court determined that merely leaving the delegation of the contract’s decision to an arbitrator wasn’t necessarily overly one-sided. See Tiri v. Lucy Chances, Inc. (CA1/4 A136675 5/14/14)

2016-08-08T22:15:56+00:00 July 21st, 2014|Arbitration|