Wisdom v. Accentcare: Employment Agreement Is Unconscionable

The California Court of Appeal has issued a ruling confirming the continuing viability of the doctrine of unconscionability in California, notwithstanding the U.S. Supreme Court’s ruling in AT&T v. Concepcion.  See Wisdom v. Accentcare, No. C065744 (Cal. Ct. App. Jan. 3, 2012) (available here).  In Wisdom, a unanimous Third Appellate District panel held that an arbitration agreement contained in an employment application was both procedurally and substantively unconscionable.  Id.

Relying on the California Supreme Court’s decision in Armendariz v. Foundation Health Psychcare Services, 24 Cal 4th 83 (2000), the Wisdom panel held that the pre-hire agreement at issue was procedurally unconscionable “because its language implied there was no opportunity to negotiate, because the rules of any arbitration were not spelled out in the agreement . . . and because plaintiffs did not understand they were waiving their right to a trial.”  Slip op. at 2.  

Further, the panel concluded that the agreement was substantively unconscionable because it lacked mutuality of obligation.  See Slip op. at 16.  While the job application required the applicant to promise to arbitrate any claims against the defendant, there was no corresponding pledge by the defendant to arbitrate potential claims against the applicant.  Slip op. at 13-14.  To underscore this point, the panel noted the language of another arbitration agreement used by the defendant, which expressly provided that both the company and employee would arbitrate any disputes.  Slip op. at 14.

The panel rejected defendants’ argument that the pre-hire agreement was merely “ambiguous” as to mutuality and therefore enforceable because of public policy favoring arbitration.  Slip op. at 16.