Lara v. Onsite Health, Inc.
2012 U.S. Dist. LEXIS 132546
N.D. Cal.2012Background
- Lara, a former Onsite employee in California, signed a Binding Arbitration Agreement on July 30, 2010, covering disputes related to her employment and the offer letter agreement.
- Lara alleges she was a non-exempt employee who regularly worked overtime, while Onsite treated her as salaried and denied overtime.
- In April–May 2011 Lara requested disability leave and indicated belief she was owed overtime; Onsite responded that she was not entitled to overtime due to salaried status.
- Lara’s position was eliminated in June 2011 amid organizational restructuring, shortly after she stated intent to return from disability leave.
- Lara filed suit in June 2012 asserting retaliation, wrongful discharge, failure to accommodate, FEHA, and related California claims; Onsite moved to compel arbitration August 2012.
- The court must decide whether the arbitration agreement is valid, enforceable, and whether any unconscionability and severability issues affect compel-arbitration relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence and scope of arbitration agreement | Lara argues no valid agreement to arbitrate exists or is enforceable against her. | Onsite asserts a valid arbitration agreement signed by Lara binds both parties to arbitrate all claims. | A valid arbitration agreement exists and binds both parties. |
| Conscionability of arbitration agreement (procedural) | Agreement was adhesively drafted, take-it-or-leave-it, and buried in paperwork with no attached rules. | Terms are clearly disclosed, not procedurally unconscionable, and signed by Lara. | Procedural unconscionability established. |
| Conscionability of arbitration agreement (substantive) | Provisions are one-sided, especially injunctive-relief and access to courts. | Arbitration terms are bilateral and injunctive-relief does not render agreement unconscionable. | Arbitration agreement is substantively unconscionable due to injunctive-relief provision. |
| Severability of unconscionable provisions | Injunctive-relief provision cannot be severed because overall unconscionability taints the clause. | Injunctive-relief can be severed, preserving arbitration. | Injunctive-relief provision severable; arbitration compelled consistent with agreement. |
| Effect of severability on stay and enforcement | Arbitration should not proceed due to unconscionability. | Severing unconscionable term preserves arbitration and stay under FAA §3. | Court stays litigation pending arbitration after severing the injunctive-relief term. |
Key Cases Cited
- AT&T Mobility, LLC v. Concepcion, 131 S. Ct. 1740 (U.S. 2011) (federal policy favoring arbitration; contracts enforceable according to terms)
- Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (U.S. 2010) (arbitration agreements severable from broader contracts; absence of validity challenge to entire contract does not block arbitration)
- Armendariz v. Found. Health Psychcare Servs., 24 Cal.4th 83 (Cal. 2000) (procedural and substantive unconscionability; bilateral arbitration requirements; severability standard)
- Circuit City Stores v. Adams, 279 F.3d 889 (9th Cir. 2002) (arbitration clause enforceability; generally applicable contract defenses apply)
- Stirlen v. Supercuts, Inc., 51 Cal.App.4th 1519 (Cal. App. 1997) (adhesion and nonmutual arbitration concerns; bilateral arbitration emphasis)
- Fitz v. NCR Corp., 118 Cal.App.4th 702 (Cal. App. 2004) (injunctive-relief provisions and their impact on arbitration fairness)
- Mercuro v. Superior Court, 96 Cal.App.4th 167 (Cal. App. 2002) (substantive unconscionability and employer-favorable terms)
- Samaniego v. Empire Today LLC, 205 Cal.App.4th 1138 (Cal. App. 2012) (failure to attach arbitration rules supports procedural unconscionability)
- Trivedi v. Curexo Tech. Corp., 189 Cal.App.4th 387 (Cal. App. 2010) (injunctive-relief and attorney-fee considerations in unconscionability analysis)
- Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4th 665 (Cal. 2010) (administrative proceedings in arbitration context; interpretation favors lawfulness)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration as a matter of contract; core federal policy)