Michael Ashbey v. Archstone Property Management
612 F. App'x 430
9th Cir.2015Background
- Archstone appeals district court’s denial of its Motion to Compel Arbitration of Ashbey’s claims; the court reverses and orders arbitration.
- California law governs contract formation and interpretation of arbitration agreements; the parties agree California law applies.
- Ashbey signed an acknowledgment that incorporated Archstone’s employment manual and its arbitration policy; the manual’s terms were integrated by reference.
- The acknowledgment disclaimed contractual rights but did so within at-will employment language, which does not negate a contractual arbitration obligation.
- The arbitration clause covers disputes arising out of or related to employment and binds both employee and employer to arbitration; unconscionability arguments are not upheld.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of a valid arbitration agreement | Ashbey contends no valid agreement formed | Archstone argues the acknowledgment and incorporated manual create a binding contract | Agreement exists under California incorporation by reference |
| Scope of arbitration clause | Clause does not cover Ashbey’s dispute | Clause covers any dispute arising from employment | Clause encompasses the dispute at issue |
| Conscionability of the agreement | Agreement substantively or procedurally unconscionable | Unconscionability not proven; doctrine preempted by FAA | Not substantively unconscionable; unconscionability arguments insufficient |
| Consequences for district court’s posture | District court erred in ruling no arbitration agreement | N/A | Reversed; arbitration compelled |
| Remedies for potential modification clauses | Unilateral modification could breach implied covenant | Modifications allowed subject to good faith | Not dispositive; clauses enforceable under implied covenant |
Key Cases Cited
- Avery v. Integrated Healthcare Holdings, Inc., 218 Cal.App.4th 50 (Cal.App.4th 2013) (incorporation by reference of handbook terms; arbitration policy included)
- Dyna-Med, Inc. v. Fair Employment & Housing Comm’n, 43 Cal.3d 1379 (Cal.3d 1987) (noscitur a sociis; contextual interpretation of contract terms)
- Peng v. First Republic Bank, 219 Cal.App.4th 1462 (Cal.App.4th 2013) (contract not unconscionable; substantive analysis required)
- Serpa v. California Securities Investigations, Inc., 215 Cal.App.4th 695 (Cal.App.4th 2013) (implied covenant; unilateral modification not unconscionable absent bad faith)
- Sparks v. Vista Del Mar Child & Family Services, 207 Cal.App.4th 1511 (Cal.App.4th 2012) (handbook language can defeat agreement to arbitrate if not contractual)