Jara v. JPMorgan: Arbitration Agreement Held Unconscionable, Despite Concepcion

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In a recent ruling involving employer-employee arbitration agreements, the California Court of Appeal has again demonstrated the continuing vitality of California’s unconscionability doctrine, despite the U.S. Supreme Court’s aggressively pro-arbitration ruling in AT&T Mobility v. Concepcion. See Jara v. JP Morgan Chase Bank, No. B234089 (Cal. Ct. App. Jul. 30, 2012) (order affirming denial of motion to compel arbitration) (available here).

Just as it did in Sparks v. Vista Del Mar, the Second Appellate District upheld a trial court ruling that an arbitration agreement between the defendant employer and plaintiff employee was both procedurally and substantively unconscionable. Order at 5-7. The plaintiff, then 60 years old and of Mexican and Filipino background, filed a complaint against her former employer, JPMorgan, alleging harassment and wrongful termination. JPMorgan moved to compel arbitration based on a company-drafted arbitration agreement which was among the many papers signed by Jara at the outset of her employment. The trial court denied JPMorgan’s motion and the Court of Appeal affirmed.

The panel found that the at-issue arbitration agreement lacked mutuality and impermissibly limited discovery, to the extent that “[t]he discovery limits imposed upon Jara here, combined with other one-sided and harsh terms, constituted substantive unconscionability.” Id. at 7. The court also agreed that the plaintiff’s assent to the standard JPMorgan arbitration agreement was obtained by procedurally unconscionable means: “We conclude that the agreement is procedurally unconscionable because it was presented on a take it or leave it basis and did not include copies of the arbitration rules.” Id.

While the panel acknowledged that the evidence as to procedural unconscionability was rather meager, they nonetheless found that, “[w]here, as here, the arbitration agreement is permeated with substantive unconscionability, a minimal showing of procedural unconscionability is sufficient to render the agreement unenforceable.” Id.