Cruise v. Kroger Co.
233 Cal. App. 4th 390
| Cal. Ct. App. | 2015Background
- In October 2007 Stephanie Cruise signed a Kroger employment application that included an initialed clause stating Kroger’s Mediation & Binding Arbitration Policy (the “Policy”) was incorporated by reference and that employment-related disputes must be submitted to final, binding arbitration.
- Cruise did not receive a copy of the four-page Arbitration Policy at the time she applied; Kroger later submitted an undated four-page document (Ralphs arbitration policy) as the Policy in support of its motion to compel arbitration.
- Cruise was hired in December 2007 and terminated in April 2012; she sued under FEHA and common law theories and demanded a jury trial.
- Kroger moved to compel arbitration and stay judicial proceedings; Cruise opposed, arguing no valid arbitration agreement existed, the incorporated Policy was not provided and was unauthenticated, and the Policy was procedurally and substantively unconscionable.
- The trial court denied the motion, finding Kroger failed to prove the existence of a written arbitration agreement (relying on Metters) and alternatively finding the Policy unconscionable; Kroger appealed.
- The Court of Appeal held the signed employment application containing the arbitration clause alone created a binding agreement to arbitrate employment-related disputes, but because Kroger could not prove the exact contents of the 2007 Policy the arbitration must be governed by the California Arbitration Act (CAA) rather than by Kroger’s Policy; the denial was reversed and arbitration ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid agreement to arbitrate existed | Cruise: no valid arbitration contract because Policy was not provided and employer failed to prove a written agreement | Kroger: signed application (initialed clause) incorporated the Policy and established a binding arbitration agreement | Held: The arbitration clause in the signed application itself established an agreement to arbitrate employment disputes |
| Scope of arbitrability | Cruise: clause was vague and did not cover her claims | Kroger: clause covers all employment-related disputes including FEHA and common-law claims | Held: Cruise’s FEHA and related common-law claims fall within the arbitration clause’s scope |
| Mutuality / employer intent to be bound | Cruise: only employee signed so no mutuality | Kroger: language and company letterhead show employer intended to be bound | Held: Mutuality satisfied; employer intended to be bound (company letterhead and clause language suffice) |
| Enforceability of Kroger’s four-page Arbitration Policy (procedural/substantive unconscionability and evidentiary proof) | Cruise: Policy was not provided, unauthenticated, and unconscionable (procedural and substantive defects) | Kroger: Policy was incorporated and enforceable; unconscionable provisions can be severed | Held: Kroger failed to prove the contents/existence of the 2007 Policy; therefore arbitration is enforceable but must proceed under the CAA (so Policy’s contested procedures cannot be enforced) |
Key Cases Cited
- Metters v. Ralphs Grocery Co., 161 Cal.App.4th 696 (2008) (employer must prove employee received/was informed of arbitration terms incorporated by reference)
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (2000) (standards for enforceability of mandatory employment arbitration agreements, including employer’s obligation to bear arbitration costs)
- Izzi v. Mesquite Country Club, 186 Cal.App.3d 1309 (1986) (arbitration clauses are construed broadly; arbitration upheld unless clause clearly inapplicable)
- Lara v. Onsite Health, Inc., 896 F.Supp.2d 831 (N.D. Cal. 2012) (employer’s intent to be bound can be shown without a manual signature; company letterhead and mutual-language support intent)
- HM DG, Inc. v. Amini, 219 Cal.App.4th 1100 (2013) (when agreement lacks a method for appointing an arbitrator, statutory methods govern)