812 F. Supp. 2d 1079
C.D. Cal.2011Background
- Plaintiff Zenia Chavarria worked for Ralphs Grocery Company as a Service Deli Clerk from Oct 2008 to Mar 2009 in Los Angeles.
- Plaintiff filed a wage-and-hour class-like action alleging unpaid overtime, meal/rest period pay, and wage-statement violations under California law.
- Ralphs moved to compel arbitration on an individual basis and to stay or dismiss the action under the FAA.
- Employment Application indicated Ralphs' Dispute Resolution Program including a Binding Arbitration Policy, purportedly incorporated by reference.
- The Arbitration Policy was provided to Plaintiff after she signed the Application, at a new-employee orientation more than three weeks later.
- The court addressed whether the arbitration agreement was procedurally and substantively unconscionable and thus unenforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration policy is enforceable overall. | Chavarria argues the policy is unconscionable and unenforceable. | Ralphs contends the policy is valid arbitration agreement enforceable under the FAA. | Arbitration policy is unconscionable; not enforceable. |
| Procedural unconscionability of the arbitration contract. | Policy presented as take-it-or-leave-it; terms disclosed after signing; no meaningful negotiation. | Policy available and optional; no coercive conduct in the formation. | Policy procedurally unconscionable. |
| Substantive unconscionability of the arbitration terms. | Arbitrator selection and fee provisions favor Ralphs; no bilaterality; barriers to access to arbitration. | Terms are standard arbitration provisions; no unilateral advantage beyond typical arbitration. | Policy substantively unconscionable. |
| Effect of fee-shifting and arbitrator-selection provisions on access to justice. | Arbitrator fees and upfront payment requirements would price out individual claimants; selective arbitration control. | Fees are allocated per policy and Supreme Court guidance; some flexibility exists. | Fees and selection process render arbitration access unfair and unlawful. |
Key Cases Cited
- Stirlen v. Supercuts, Inc., 51 Cal.App.4th 1519 (Cal. App. 4th Dist. 1997) (court analyzes unconscionability and arbitration under California law)
- Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83 (Cal. 2000) (establishes framework for unconscionability in arbitration)
- Pokorny v. Quixtar, Inc., 601 F.3d 987 (9th Cir. 2010) (arbitration terms must avoid surprise and be bilateral)
- Davis v. O'Melveny & Myers, 485 F.3d 1066 (9th Cir. 2007) (unconscionability framework; procedural and substantive elements)
- Shroyer v. California, 498 F.3d 986 (9th Cir. 2007) (arbitration provisions and access to arbitration examined)
- Kaliroy Produce Co., Inc. v. Pacific Tomato Growers, Inc., 730 F.Supp.2d 1036 (D. Ariz. 2010) (fee structure and enforceability in arbitration context)
- Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) (federal policy favoring arbitration as economical resolution)
- A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d 1401 (9th Cir. 1992) (federal policy favoring arbitration and cost considerations)