Free Brief - District Court of California - California

Case 3:08-cv-02108-JL

Document 18

Filed 05/28/2008

Page 1 of 4

I

2
a J

4 5 6 7 I 9 10 11

o'This provision...requires employees arbihatethe claimstheyare to mostlikely to assert...wiile permitting[the employer] simultaneously to litigatein courtthe claimsit is mostfik;li to asseri-against ils employees. Claimsfor unpaidwages, wrongfultermination, emplo5rment {igcriqrination andthe like invariably arebroughtby employees, while claimsinvolvingtradesecrets, misuse iiisclosure or of confidentialinformation,andunfair competitiontypically areasserted only by employers." (Id. at 115.)(,See also,Mercurov. Superior Court,96Cal.App 167,175-177 .4th (2002)tin accord with holding);O'Hare v. MunicipalResources Consultants,107 Cal.App.4th (2003) 267 [same].) TheArbitrationAgreement this case substantively in is unconscionable the sarne for reasons in decried Martinez andMercuro. Theonly distinctionhereis that the Arbitration Agreement the AgreementWith RestrictiveCovenants and werepresented the Defendant's to

t2
l3 t4 t5 t6 t7 18

on employees May 17,2005astwo documents instead one. However,in paragraph2,the of With Restrictive incorporated ArbitrationAgreement. Agreement Covenants expressly the both documents werepresented Defendant's Moreover, to employees the same at time aspartof a largerpackage employment-related of documents. This distinctionis oneof form ratherthan (Cal.Civ. Code,$ 3528.) and substance shouldbe disregarded. is in typeof one-sided Because ArbitrationAgreement this case exactlythe same the in condemned Martinez andMercuro,it shouldbe heldto be substantively agteement and unconscionable unenforceable.

19
4.

20 2l 22 23

To The Arbitration AgreementWas Misrepresented Plaintiff In As Being "Just A First Step'n The Event An EmploymentDispute Ever Arose With Defendant

wasnegotiated in concerns manner which the contract the unconscionability Procedural Martin Corp., 120 v. of andthe circumstances the partiesat the time. (Nyulassy Lockheed

of a mayconsidered component procedural 1267,l28l (2004).) Surprise Cal.App.4th 24 whenthe challenged termsare'hiddenin a of arises unconscionability. "The component surprise

25 26 27 28

v. them'." (1d.,citingAbramson to prolix printedform draftedby the partyseeking enforce 638, 656(2004.) Inc., 115Cal.App.4th JuniperNetworks,
Motion for Declaratoryand Injunctive Relief

ll

Case 3:08-cv-02108-JL

Document 18

Filed 05/28/2008

Page 2 of 4

I

In this case, ArbitrationAgreement the shouldalsobe considered procedurally

2 unconscionable because only wasit presented a boilerplate not as agreement all of the former to
J

employees BESTIMAGE, but the natureof the arbitration required of it wasalsomisrepresented by Defendant's representatives the May 17,2005. (,See, at PlaintifPsDeclaration, page2, lines 4-8; Christensen page2, lines 16-25.)These Declaration, circumstances now resulted have in both surprise oppression Plaintiff. and to 5. The Arbitration Agreement Substantively Is Unconscionable

4 5 6 7 8 9

ff:3H.'lJs#ilT:,1ff ::i-'o:ffif, "#"?lf, ilBti;tl'""."
*Of all the typesof biasthat canaffectadjudication, pecuniary interest long received has

1 0 the mostunequivocal condemnation the leastforgiving scrutiny." (Haas v. Countyof San and 1 t Bernardino, Cal.4th1017,1024(2002). "[C]ourtsdo not, whenfacedwith a claim of bias 27 decide whether adjudicator in fact influenced.The was t 2 arisingfrom financialinterest, the instead be...whether adjudicator's financialinterest continues to the would offer a 1 3 standard person judgenot to hold the balance nice,clear andtrue." (Id. to as t 4 possible temptation average not it showthat arbitration advantageous employers only because is to l 5 at 1026.)"Variousstudies is it the the t 6 reduces costof litigation,but alsobecause reduces sizeof the awardthatan employee is t 7 likely to get,particularlyif the employer a'repeatplayer' in the arbitrationsystem." supra,24Cal4th at 116.) 1 8 (Armendariz,

l9

A critical flaw in the arbitrationprogramat issuehereis that it doesnot ensurea neutral

in doesnot allow Plaintiff to participate the 20 adjudicator.Here,the Arbihation Agreement

2l

providerandinstead the mandates useof the AAA. AAA hastakena of selection the arbitration

and a trial lawyers which hascreated conflict of interest bias 22 highlypublicpositionagainst of who aretrial attomeysand,in particular,members the San 23 againstplaintiffs' attorneys Exhibit "C," filed herewith.) Association.(,See, YoungDeclaration, Trial Lawyers 24 Francisco in to doesnot allow employees participate the the because ArbitrationAgreement 25 Therefore,

26 ilt 27 28
Motion for Declaratoryand Relief Injunctive

12

Case 3:08-cv-02108-JL

Document 18

Filed 05/28/2008

Page 3 of 4

I

selection the arbitrationorganization because specifically of and it mandates useof the AAA, the

2 which is biased plaintiffs' attorney, provisionis unconscionable. against the
a J

Contrary whatDefendant to may assert, Armendariz clearlyrecognized danger the the of player"effectandacknowledged needfor safeguards protectagainst "repeat the to it. o'more player'in the arbitration system"andis therefore likely to be a source business the of for arbitrator."(Armendariz, supra,24 Cal.4thlll.) Mercuro alsorecognized danger held this and

4

5 Arrnendariz observed the fact "most likely to inducebias" wasthat "the employer a'repeat that is 6 7 8 9

unconscionable arbitration an clause which did not guarantee neutralarbitrator.(Mercuro, a supra,96Cal.App.4th 178.) Because ArbitrationAgreement at the doesnot guarantee neutral a

1 0 arbitrator, is substantively it unconscionable. l1 6. The Arbitration Agreement ContainsA ChoiceOf Law ProvisionThat ShouldBe Declared Void As AgainstPublic Policy

t2
l3 T4 l5 l6

Unlike manyof the mostcommonly-cited employment cases law involving arbitration agreements, ArbitrationAgreement the herecontains "choiceof law" provisioninparagraphT, a which states: "7. ApplicableLaw. This ArbitrationAgreement to be govemed and is by construed accordance the lawsof the Commonwealth Virginia." in with of

Exhibit "A," filed herewith.) t 7 (See, Plaintiff s Declaration,

18

for This choiceof law provisionpresents in uniqueproblems the Courtto consider ruling

1 9 on Plaintiff s Motion. 20 2l
clause the in the of Most recently, issueof the enforceability a forum selection 138 1286 in arbitration contextarose Olinickv. BMG Entertainment, Cal.App.4th employment

(a and and 22 (2006). There,the employer employee largecorporation lawyer),afterninemonthsof that a into agreement contained choiceof law provision entered an employment 23 negotiations, which stated: 24 similarto the onein the instantcase"

25 26 ilt 27 28
and Motion for Declaratory InjunctiveRelief

13

Case 3:08-cv-02108-JL

Document 18

Filed 05/28/2008

Page 4 of 4

1 2
J

"This Agreementshall be govemedby andconstrued enforcedin and accordance with the laws of the Stateof New York, without regardto conflictsof laws." (Olinich supra,138Cal.App.4th 1291.) at Afterwards,the employerdischarged employee, the employeesuedclaiming age the and discrimination violationof the FEHA. The employer in movedto staythe actionor dismiss on it

4 5

6 forum nonconveniens growds. The employer argued, part,that the choiceof law provision in 7 8 9 l0 just asadequate forum for vindicating shouldbe enforced because New York provided a the plaintifPsclaimsasdid Califomia. Thetrial courtagreed, plaintiff appealed. and After reviewingselected caselaw involvingchoiceof law provisions the commercial in context,theOlinickCourt concluded the choiceof law provisionbeforeit appliedto that

1 1 plaintifPsemployment claims,stating: "lf sophisticatedparties, asthosenow before law such l2 l3 t4 the uso truly intended resultbeingadvocated [plaintiff], they shouldhavespecified by what jurisdiction'slaw applies what issues."(Olinick,supra,138Cal.App (Emphasis to .4th at 1299.) added.)The Courtwent on to rejectplaintiff s publicpolicy argument, holdingthatNew York

plaintifPsagediscrimination 1 5 providedadequate lawsandremedies vindicate to claims. (Id. at 1 6 l 3 0 l - r 3 0 4 .) t7 law Contrary the limited case examined the Olinick Courto to by however, choiceof law

havenot alwaysfaredso well in California. In Hall v. SuperiorCourt,150 t 8 provisions in of a not cases, a 411 1 9 Cal.App.3d (1983), case evenmentioned Olinick'ssurvey commercial parbrers which providedthat any enteredinto a commercialtransaction 20 groupof business

2l

with in would be "governed andenforced accordance the lawsof the Stateof by disputes

tluee filed suit in arose amongtheparties, dispute ." 22 Nevada... (Id.at4l4.) Whena subsequent choice the movedto stayor dismiss litigation,relyingon theNevada 23 California. The defendants motion. defendants' 24 of law provision. Thetrial courtgranted

25 26 27 28

writing: On appeal, Courtreversed, the a "While Californiadoesnot haveanypublicpolicy against choice choiceof appropriate...and of law provision,whereit is otherwise
Motion for Declaratoryand Injunctive Relief

t4