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Tuesday, June 24, 2014

Sanchez v. Carmax: Court Finds Arbitration Agreement Not Unconscionable

In Sanchez v. CarMax Auto Superstores (2/6/14, pub. 3/4/14) --- Cal.App.4th ---, the plaintiff, Sanchez, sued his former employer, CarMax, for wrongful termination in violation of public policy and a number of other employment law violations. CarMax moved to compel arbitration, the trial court denied the motion, and CarMax appealed. The Court of Appeal reversed, holding: 

The arbitration agreement was an enforceable contract, even though it stated that it did not form a contract of employment. The agreement was "is not a contract of employment, but rather a contract agreeing to arbitrate disputes." Slip op.  at 2-3. 

The agreement was procedurally unconscionable to some degree because it was a contract of adhesion, but Sanchez did not demonstrate oppression or surprise. Slip op. at 3-4. "The stand-alone arbitration agreement was not hidden, but prominently featured as part of the employment application, and there are no 'other indicia of procedural unconscionability.'" Slip op. at 4. 

The agreement was not substantively unconscionable. Slip op. at 4-11. Sanchez did not show that the agreement's limitations on discovery would prevent him from vindicating his rights. Slip op. at 4-7. The following provisions also were not unconscionable: requiring the employee to file an arbitration request form to initiate arbitration; requiring the employee to demonstrate that CarMax violated "applicable law" in order to prevail; staying litigation of any nonarbitrable claims while the arbitration proceeded; prohibiting the arbitrator from requiring CarMax to show "just cause" for any discipline or discharge of an employee; not requiring findings of fact and conclusions of law; requiring confidentiality of the arbitration proceedings; and prohibiting consolidation of more than one employee's claims. 

Sanchez v. CarMax Auto Superstores is available here

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