The California Supreme Court stated in Armendariz v. Foundation Health Psychare Services, Inc., that 5 factors must be available for arbitration agreements to be enforced, in addition to contract law requirements. 3 These requirements are as follows: Yes, there is some kind of class arbitration procedure. To be clear, that`s not what Inter-State Oil wanted. It wanted a decision that the employee could not maintain a group action and that he had to proceed on an individual basis in the context of an arbitration procedure. Haven`t the High Courts already confirmed binding arbitration agreements? California is not the only state to have attempted to ban mandatory arbitration agreements, nor is it the only state to have been shut down for pre-emption reasons. Just two years ago, the U.S. Supreme Court overturned an anti-arbitration decision of the Kentucky Supreme Court. There, the Kentucky court attempted to invalidate by jury the arbitration agreements on the basis of the state Constitution`s statement on the right of access to the court and the «sacred» and «inviolable» nature of the trial. The U.S.
Supreme Court overturned the State Court`s decision, reinforcing its long-standing precedent for the application of arbitration agreements under the FAA. Recently, the California Supreme Court dealt with Armendariz v. Foundation Health Psychcare Services Inc. (August 24, 2000) 00 C.D.O.S. 7127. In Armendariz, two staff members filed a complaint of unlawful dismissal, including charges of sexual harassment, discrimination and breach of contract. The two staff members filled out application forms containing a compromise clause and then entered into a separate work agreement. In general, the agreement required the worker to submit all employment-related rights to binding arbitration proceedings under California`s arbitration status (the clause did not require the employer to settle the claims he had initiated).
The agreement also limited workers` remedies to the wages they deserved between the date of dismissal and the date of arbitration. The clause expressly excluded the award of wages, psychological difficulties, punitive damages, rights of re-institution and/or omission. When the employees filed their complaint, the employer filed a motion to force the arbitration. The court rejected the application in which the arbitration contract was a zero «responsibility contract» (in which the worker had no opportunity to negotiate his terms) and also found that several provisions of the contract were «so one-sided that it shocked the conscience of the court». The court placed great importance on the fact that only workers who filed claims against the employer were required to settle their claims, but no visa versa. In addition, the court was insulted by the limitation of the damage and the lack of detection (de facto investigation) under the terms of the arbitration agreement. In California, a treaty is unacceptable if the manner in which it was negotiated (called «procedural inadmissibility») and the terms of the agreement (so-called «unacceptable») unduly favour the editorial party that is thought to be in a higher negotiating position. According to the doctrine of impitoyability, an arbitration contract is not applicable if there are elements of procedural and substantive impitoness. Thus, even an agreement with evidence of material scruples is obtained if it cannot be proven that procedural nenupritus is not demonstrated. Almost all rights may be subject to an arbitration agreement if they arise from the employment relationship between the employer and the worker.