• Kevin Salute

Court Of Appeal Finds Genworth Arbitration Agreement Unfair


A court may invalidate an arbitration agreement if it determines that the agreement is unconscionable. There are two kinds of unconscionability -- procedural unconscionability and substantive unconscionability. Procedural unconscionability refers an unfairness in the manner in which the employee signed the arbitration agreement. Substantive unconscionability refers to unfairness in the terms of the agreement.

Background

Plaintiff Maya Baxter sued her former employer, defendant Genworth North America Corporation (Genworth), for wrongful termination and related causes of action arising out of her employment. Genworth moved to compel arbitration of the dispute. The trial court denied the Genworth's motion. Genworth appealed.

Court of Appeal Decision

The Court of Appeal agreed with Baxter and found that both types of unconscionability were present. Consequently, the Court of Appeal affirmed the trial court's ruling and held that the arbitration agreement was unenforceable. MAYA BAXTER, Plaintiff and Respondent,v.GENWORTH NORTH AMERICA CORPORATION, et al., Defendants and Appellants.No. A144744.Court of Appeals of California, First District, Division Three.Filed October 26, 2017.

On appeal from an order denying its motion to compel arbitration, Genworth contended that the trial court erred in concluding the arbitration agreement is unconscionable and in refusing to sever any provisions the court considered to be unconscionable. However, the Court of Appeal disagreed. First, the Court of Appeal found procedural unconscionability because Baxter did not have the power to bargain with Genworth over the terms of the agreement or whether to sign it at all. It was presented as a take it or leave it. Second, the Court of Appeal found substantive unconscionability because the agreement significantly limited Baxter's rights -- she was prohibited from communicating with other employees about her claims, she was not allowed to conduct certain types of discovery during the prosecution of her claims, and other limitations. Because both procedural and substantive unconscionability were present, the Court of Appeal held that the arbitration agreement was invalid and Baxter was allowed to pursue her claims in Court.

Conclusion

Arbitration agreements can be complicated and difficult to understand. By signing an arbitration agreement, you are giving up significant legal rights. So, before you sign an agreement, make sure that you understand what you are signing. Even if you have signed an arbitration agreement, you may still have the ability to pursue your claims against your employer in Court and before a jury.

Questions

If you have any questions about this article or any other matter, please feel free to give us a call.

Disclaimer: The foregoing is provided for informational purposes only, is not an advertisement, does not constitute legal advice or legal opinion, and does not create an attorney-client relationship. The content may not apply to the specific facts or a particular matter. You should not act or rely on any information contained in this article without first seeking the advice of an attorney licensed to practice in your jurisdiction.

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