Baltazar v. Forever 21, Inc.
62 Cal. 4th 1237
| Cal. | 2016Background
- Baltazar signed a preprinted arbitration agreement as a condition of employment with Forever 21 after being told "sign it or no job." She later resigned and sued for workplace harassment, discrimination, retaliation, and related claims.
- The agreement required arbitration of "any claim or action arising out of or in any way related to" her employment and expressly allowed either party to seek provisional relief (TRO/preliminary injunction) in superior court pursuant to Cal. Code Civ. Proc. § 1281.8(b).
- The agreement included a confidentiality clause protecting Forever 21's trade secrets and stated that if AAA Model Rules were unenforceable, arbitration would proceed under the California Arbitration Act (CAA).
- The trial court found the agreement procedurally unconscionable (adhesion) and substantively unconscionable (provisional relief clause favored employer, one-sided illustrative list of claims, AAA/CAA fallback), and denied the motion to compel arbitration.
- The Court of Appeal agreed the contract was adhesive but reversed on substantive unconscionability, rejecting Trivedi's analysis about provisional relief and finding the other clauses not sufficiently one-sided to void the agreement.
- The Supreme Court affirmed the Court of Appeal: procedural unconscionability existed (adhesion) but none of the challenged provisions rendered the agreement substantively unconscionable; it disapproved Trivedi to the extent it held otherwise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration clause permitting provisional relief in superior court is substantively unconscionable | Clause favors employer because employers more often seek injunctive relief (e.g., to protect trade secrets) | Clause merely restates statutory right under §1281.8(b) and confers no drafting-party advantage | Not unconscionable; clause mirrors existing statute and is permissible (Trivedi disapproved) |
| Whether illustrative list of employee claims makes agreement one-sided | Listing only employee-typical claims suggests employers’ claims might be exempt, creating asymmetry | Agreement text broadly covers "any claim" related to employment; list is illustrative and non-exhaustive | Not unconscionable; language clearly covers both employer and employee claims |
| Whether confidentiality provision is unduly one-sided | Vague duty to take "all necessary steps" to protect employer info could allow unilateral restrictions and chill employee rights | Provision reasonably aims to protect legitimate commercial trade secrets and does not preclude arbitrator or court rulings on scope | Not unconscionable; confidentiality clauses protecting trade secrets are common and commercially legitimate |
| Whether failing to attach AAA rules increased procedural unconscionability | Not providing AAA rules prevented informed assent and merits closer scrutiny | Cases that fault nondisclosure involve challenges tied to the omitted rules; here the challenge concerns terms in the written agreement itself | No increased scrutiny required here because plaintiff's arguments did not depend on unknown AAA rules |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (2000) (establishes procedural/substantive unconscionability sliding scale in employment arbitration)
- Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (discusses formulations and standards for substantive unconscionability)
- Gentry v. Superior Court, 42 Cal.4th 443 (2007) (adhesion contracts and degrees of procedural unconscionability)
- Sanchez v. Valencia Holding Co., LLC, 61 Cal.4th 899 (2015) (clarifies substantive unconscionability standards and limits on "shock the conscience" language)
- Trivedi v. Curexo Technology Corp., 189 Cal.App.4th 387 (2010) (Court of Appeal case invalidating a provisional relief clause; disapproved to the extent it treats statute-based provisional relief as substantively unconscionable)
- Fitz v. NCR Corp., 118 Cal.App.4th 702 (2004) (cases noting nondisclosure of arbitration rules can support procedural unconscionability when rules are material to the challenge)
- Mercuro v. Superior Court, 96 Cal.App.4th 167 (2002) (addresses one-sided arbitration clauses that compel employee claims but exempt employer claims)
- Pinedo v. Premium Tobacco Stores, Inc., 85 Cal.App.4th 774 (2000) (example of an agreement treated as substantively one-sided when combined with other restrictive provisions)