Iyere v. Wise Auto Group
303 Cal.Rptr.3d 835
Cal. Ct. App.2023Background
- Plaintiffs Leroy Iyere, Phillip Derbigny, and Michael Worlow worked for Wise Auto Group and were given a stack of onboarding documents on their first day; Wise produced a binding arbitration agreement dated and bearing each plaintiff's apparent handwritten signature.
- Plaintiffs declared they were rushed to sign the stack, did not receive copies, do not recall reading or signing an arbitration agreement, and would not have signed if they had known it waived litigation rights.
- Wise moved to sever and compel individual arbitration, submitting the signed arbitration agreement and a declaration from its HR custodian authenticating company records.
- The trial court denied the motion, finding Wise failed to prove signature authenticity and holding the agreement procedurally and substantively unconscionable — principally because it invoked the FAA (allegedly violating Cal. Lab. Code § 925) and allowed the party against whom a claim is made to choose the arbitration provider.
- The Court of Appeal reversed: it held plaintiffs did not produce admissible evidence disputing the authenticity of their handwritten signatures, and that the FAA clause and forum/provider choice did not render the agreement substantively unconscionable; it remanded with directions to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did plaintiffs’ declarations create a factual dispute over authenticity of handwritten signatures sufficient to shift burden to Wise? | Plaintiffs said they do not recall signing the arbitration agreement and were rushed, so their statements create a factual dispute. | Wise produced the signed agreement and custodian declaration; plaintiffs never denied physically signing and thus failed to dispute authenticity. | No — plaintiffs’ statements that they signed a stack of documents and do not recall signing the arbitration form do not create a factual dispute; Wise met its burden. |
| Was the arbitration agreement procedurally unconscionable? | Plaintiffs argued high-pressure onboarding and lack of meaningful choice/support shows procedural unconscionability. | Wise acknowledged pressure evidence but argued procedural flaws alone insufficient without substantive unconscionability. | Trial court assumed procedural unconscionability; Court of Appeal accepted plaintiffs’ procedural showing but required some substantive defect too. |
| Was the agreement substantively unconscionable because it invoked the FAA and thus violated Lab. Code § 925? | Plaintiffs: invoking FAA deprives employees of California substantive protections in violation of § 925. | Wise: FAA does not displace California substantive law; invoking FAA does not waive California protections. | No — FAA choice does not by itself strip California substantive law; § 925 targets forum/state-law choice provisions, not mere invocation of the FAA. |
| Was the forum/provider-selection clause (party-against-whom-choice) or silence re: Armendariz elements substantively unconscionable? | Plaintiffs: giving the likely defendant the power to select the provider and not expressly guaranteeing Armendariz protections is one-sided and unfair. | Wise: providers are reputable; choice between providers is not shown to favor employer; silence permits courts to infer Armendariz protections and Wise offered to incorporate required terms. | No — plaintiffs offered no evidence the provider choice gave Wise a practical advantage; courts may infer Armendariz elements where agreement is silent. |
Key Cases Cited
- Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (Cal. 1996) (party seeking to compel arbitration bears burden to prove agreement exists)
- Espejo v. Southern California Permanente Medical Group, 246 Cal.App.4th 1047 (Cal. Ct. App. 2016) (three-step burden-shifting framework for signature authenticity)
- Fisher v. MoneyGram International, Inc., 66 Cal.App.5th 1084 (Cal. Ct. App. 2022) (unconscionability is a defense to enforcement)
- Ruiz v. Moss Bros. Auto Group, Inc., 232 Cal.App.4th 836 (Cal. Ct. App. 2014) (electronic-signature authentication under UETA requires proof the electronic act was that of the signatory)
- Bannister v. Marinidence Opco, LLC, 64 Cal.App.5th 541 (Cal. Ct. App. 2021) (electronic-signature disputes and evidentiary limits of memory alone)
- Gamboa v. Northeast Community Clinic, 72 Cal.App.5th 158 (Cal. Ct. App. 2021) (case holding memory lapse can create a signature-authenticity dispute — court here disagreed with that application)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (minimum fairness requirements for FEHA mandatory arbitration)
- Little v. Auto Stiegler, Inc., 29 Cal.4th 1064 (Cal. 2003) (silence on Armendariz elements permits court to infer required terms)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (U.S. 2001) (arbitration preserves substantive statutory rights; forum change affects procedure, not substantive rights)
- Condee v. Longwood Management Corp., 88 Cal.App.4th 215 (Cal. Ct. App. 2001) (initial production of the agreement shifts production burden to opposing party)