Leos v. Darden Restaurants: Court Reverses Order Denying Motion To Compel Arbitration, Finds Agreement Not Unconscionable

In Leos v. Darden Restaurants, Inc. (6/4/13, pub. 6/24/13) --- Cal.App.4th ---, the Court of Appeal reversed a trial court order denying a defendant's motion to compel arbitration in a sexual harassment, retaliation, and wrongful termination action. The Court held:

• The employer did not present evidence that the plaintiffs' employment or any relevant transaction "involved interstate commerce," and the Federal Arbitration Act (FAA) did not apply, but application of the FAA would not have changed the outcome. Slip op. at 4-6. 
• The arbitration agreement was substantively unconscionable because the employer presented it as a condition of employment, and the plaintiffs could not negotiate it. Slip op. at 8-9. 
• The agreement was not substantively unconscionable: 
• The provision that it "may be updated from time to time as required by law" did not render the agreement illusory. Slip op. at 9-12. 
• Clauses setting limits on discovery, the length of time before the arbitration hearing, and the length of the hearing itself were "subject to change upon the arbitrator's determination of good cause" and did not render the arbitration provision unconscionable. Slip op. at 12-16. 
• The fact that the employees would have to pay for a court reporter, if they wanted one, was not substantively unconscionable. Slip op. at 16-17. 
• Language allowing either party to request "available temporary or preliminary injunctive remedies from an appropriate court" mirrored similar provisions in the California Arbitration Act (CAA) and did not render the agreement "unfairly one-sided." Slip op. at 17-22. 
• The provision prohibiting class and collective actions did not apply to this action by two individuals and in any case did not render the agreement unenforceable. Slip op. at 22-23. Citing Truly Nolen of America v. Superior Court (2012) 208 Cal.App.4th 487, 514–515; Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, 1132–1134. 

It will be interesting to see whether the California Supreme Court grants review or allows the opinion to stand.  The parties did not petition for review in Truly Nolen (discussed here) and the Court denied review in Nelsen v. Legacy Partners (discussed here), but it granted review in Iskanian v. CLS Transportation (discussed here), which held that the NLRB incorrectly decided D.R. Horton.

While we're all waiting, Leos v. Darden is available here.