Important California Supreme Court Arbitration Decisions

Binding Mandatory Arbitration is a practice by which disputes are resolved without a jury or court trial. In fact, most of the arbitration process occurs outside of a court. While this is fine when two parties of equal bargaining power and sophistication knowingly agree to arbitrate disputes between them, binding mandatory arbitration should never be forced on a person. In America, there is a constitutional right to a jury trial in most instances. No one should have their constitutional rights taken away from them by means of economic duress or trickery. Yet, that is what occurs every day across the Unites States. Big Business uses its money, lawyers, and oppressive tactics to trick people into giving up their constitutional right to jury trial in favor of binding mandatory arbitration. This is unfair and must be stopped. To this end, there is a movement afoot to legislatively limit the manner in which arbitration may be forced on consumers and employees.

Please contact your legislature to let them know you support a ban on the use of binding mandatory arbitration by businesses against consumers and employees! For more information see NELA.

In California, often after a lawsuit is filed by an employee, the employer will surprise the employee by filing a Motion (or Petition) to Compel Arbitration to force the employee to arbitrate a dispute covered by an agreement the employer claims the employee agreed to under Code of Civil Procedure section 1281.2. The court will usually determine whether the agreement is enforceable. If there is a dispute as to the existence of an agreement or whether the agreement is enforceable, an evidentiary hearing is required. There are a number of California Supreme Court cases dealing with these issues under California law; links to a few of the more important ones are set forth below.

California Supreme Court Decisions Regarding Mandatory Binding Arbitration

Armendariz v. Foundation Health Psychare Services, Inc, (2000) - Employees entitled to certain minimum protections in connection with arbitration provisions covering employment relationship.

Boghos v. Certain Underwriters of Lloyds of London (2005) - Arbitration clause in a contract of disability insurance should have been enforced by lower courts; reversed.

Little v. Auto Stiegler (2003) - (1) suit claiming wrongful termination in violation of public policy should be subject to the requirements set forth in Armendariz; (2) appellate arbitration provision applying allowing for appeal in the courts only of arbitration awards over $50,000 is unconscionable; (3) provision should be severed and the rest of the arbitration agreement enforced; and (4) United State Supreme Court in Green Tree does not require that modification of Armendariz’s cost requirements.

Gentry v. Superior Court (2007) - Presence of waiver of right to class relief in arbitration provision before court renders provision unconscionable and unenforceable.

Check here frequently for new arbitration related decisions. 

Arbitration Related Cases Rcently Decided by the California Supreme Court:

Pearson Dental Supplies, Inc. v. Superior Court (Turcios) - Supreme Court's Decision

In this case, Plaintiff Luis Turcios sued his former employer, defendant Pearson Dental Supplies, Inc., for age discrimination under the California Fair Employment and Housing Act (FEHA), among other claims. His employment agreement with defendant contained a mandatory arbitration clause for employment-related claims, and provided that any such claim is waived, unless submitted to arbitration within one year from the date the dispute arose or from the date plaintiff first became aware of facts giving rise to the dispute. Applying this provision in court-ordered arbitration, the arbitrator found that plaintiff had failed to timely submit his FEHA claim to arbitration. On this basis, the arbitrator granted summary judgment for defendant. The trial court, however, vacated the arbitration award on the ground, inter alia, that the one-year limitation period impermissibly infringed on plaintiff’s unwaivable statutory rights under the FEHA, and that therefore the arbitrator had exceeded his power in enforcing the one-year limit. (Code Civ. Proc., § 1286.2,subd. (a)(4).)1 Defendant petitioned for a writ of mandate to compel the trial court to confirm the award, and the Court of Appeal issued an order to show cause. In the published portion of the opinion, the Court of Appeal held that on the facts of this case, the one-year limitation period did not unreasonably restrict plaintiff’s ability to vindicate his rights under the FEHA. The Supreme Court of California granted review.

The states issues before the Supreme Court were:

(1) What standard of judicial review applies to an arbitrator's decision on an employee's anti-discrimination claim under the Fair Employment and Housing Act (Gov. Code, section 12900 et seq.) that is arbitrated pursuant to a mandatory employment arbitration agreement?

(2) Can such a mandatory arbitration agreement restrict an employee from seeking administrative remedies for violations of the Act?

The Supreme Court held that if an arbitrator has "clearly erred" in ruling that the employee's claim was time-barred, as under the particular circumstances of this case, thereby depriving the employee of a hearing on the merits of an unwaivable statutory employment claim, a trial court does not err in vacating the award. In a second issue, the Supreme Court held that when there is language in an arbitration agreement indicating the employee is relinquishing not only the right to go to court but also to access administrative remedies, but the language in question is reasonably susceptible to a lawful interpretation, the arbitration agreement is not rendered unenforceable due to unconscionability.

Prior Court of Appeal Opinion in Pearson Dental Supplies v. Superior Court (Turcios) - Note: Case Not Citeable - Superseded by the Decision of the California Supreme Court - Case No. S167169

The parties' Supreme Court briefs are below.

Luis Turcios' Petition for Review
Pearson Dental's Answer to Petition for Review
Luis Turcios' Reply to Answer to Petition for Review
Luis Turcios' Opening Brief on the Merits
Pearson Dental's Answer Brief on the Merits
Luis Turcios' Reply Brief on the Merits

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Last Updated: August 2009

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