Salgado v. Carrows Rests., Inc.
244 Cal. Rptr. 3d 849
| Cal. Ct. App. 5th | 2019Background
- Plaintiff Salgado worked for Carrows since 1984 and filed suit for employment discrimination and civil rights violations on November 22, 2016.
- Salgado amended to add Carrows Restaurants, Inc. and Catalina Restaurant Group, Inc. on April 18, 2017.
- Salgado signed an arbitration agreement on December 7, 2016; Carrows moved to compel arbitration on September 5, 2017.
- The arbitration agreement broadly covered "all disputes" arising out of or "related in any way" to employment and stated "any claim, dispute, and/or controversy" between the parties shall be submitted to binding arbitration.
- Salgado argued the agreement was not retroactive (lawsuit preceded signing) and asserted procedural and substantive unconscionability; her counsel submitted a declaration claiming he represented her before the signing but did not witness the signing.
- The trial court denied the motion to compel, ruling defendants failed to demonstrate the agreement applied to a suit filed before its signature; the Court of Appeal reversed in part and remanded for factual findings about counsel representation and enforceability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration agreement applies to a lawsuit filed before the agreement was signed | Salgado: "may arise" language limits coverage to future disputes; agreement is not retroactive | Carrows: broad "related in any way" and "any claim" language covers preexisting disputes and the present suit | The court held the agreement's language is broad enough to encompass the current lawsuit; agreement can apply retroactively |
| Whether the second, broader clause ("any claim, dispute, and/or controversy") covers the suit | Salgado: did not meaningfully contest this clause | Carrows: clause is unequivocal and without temporal limitation, so it covers any claim including existing ones | Held: clause is clear and applies to Salgado's claim |
| Whether retroactive application of an arbitration agreement is permissible | Salgado: dispute preceded signing so arbitration shouldn't apply | Carrows: arbitration can be applied retroactively under contract principles | Held: retroactive application is permissible; prior conduct can be subject to later-signed arbitration agreements |
| Whether arbitration should be denied because Carrows knew or should have known Salgado was represented by counsel when she signed and/or because the agreement is unconscionable or voidable | Salgado: counsel declares he represented her before signing and alleges coercion; argues procedural unconscionability and voidability | Carrows: disputes the facts and argues no grounds for unconscionability; notes plaintiff presented limited evidence | Held: remanded for trial court to determine whether Carrows knew or should have known Salgado was represented by counsel at signing; if so, court must then decide enforceability/unconscionability; factual determinations required |
Key Cases Cited
- Hernandez v. Badger Construction Equipment Co., 28 Cal.App.4th 1791 (interpret contract to effect parties' intent at formation)
- Esparza v. Sand & Sea, Inc., 2 Cal.App.5th 781 (clear, explicit contract language governs interpretation)
- Cruise v. Kroger Co., 233 Cal.App.4th 390 (arbitration upheld unless clearly inapplicable)
- Cione v. Foresters Equity Services, Inc., 58 Cal.App.4th 625 (doubts resolved in favor of arbitration)
- Fiorentino v. City of Fresno, 150 Cal.App.4th 596 (ordinary meaning of "or" indicates alternative terms)
- Hemphill v. Wright Family, LLC, 234 Cal.App.4th 911 (contract interpretation must give effect to all provisions)
- AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (broad arbitration clauses attract a strong presumption favoring arbitration)
- Desert Outdoor Advertising v. Superior Court, 196 Cal.App.4th 866 (broad arbitration language can reach pre-signing disputes)
- Zink v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 13 F.3d 330 (arbitration agreements may be applied retroactively)
- Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (petition to compel arbitration not granted where grounds to rescind exist)
- Carbajal v. CWPSC, Inc., 245 Cal.App.4th 227 (unconscionability doctrine applies to arbitration agreements)