Sanchez v. Carmax Auto Superstores California, LLC
224 Cal. App. 4th 398
| Cal. Ct. App. | 2014Background
- Sanchez sues CarMax for wrongful termination and related statutory claims in Los Angeles Superior Court.
- Sanchez alleges termination on Feb 4, 2011 was pretextual, masking retaliation for safety concerns raised about CarMax vehicles.
- CarMax moved to compel arbitration based on a 2006 dispute resolution agreement and DRRP signed October 26, 2006.
- Sanchez opposed, arguing the arbitration agreement was not a contract and was procedurally and substantively unconscionable.
- The trial court denied arbitration, finding the agreement unconscionable; CarMax appealed.
- Appellate court reviews de novo and held the DRRP and arbitration provisions were not unconscionable; reverses and remands for arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the arbitration agreement unconscionable at formation? | Sanchez argues adhesion and oppression justify unconscionability. | CarMax contends agreement formed a valid mutual arbitration contract. | No; agreement not unconscionable at formation. |
| Are the DRRP discovery limits unconscionable? | Discovery limits hinder vindicating statutory rights. | Discovery limits streamline arbitration and are permissible. | Not unconscionable; discovery framework is permissible. |
| Are DRRP provisions requiring arbitration request form and standard of proof unconscionable? | Form and strict proof standard unfairly burden employees. | Rules apply to both sides and are not unconscionable. | Not unconscionable. |
| Does the DRRP provision on completing arbitrable claims and full force in court violate fairness? | Arbitration awards bind nonarbitrable claims in court improperly. | Severance and stay mechanisms align with law and avoid disruption. | Consistent with California law; not unconscionable. |
| Does the 'no just cause' for discharge provision unfairly favor employer? | At-will language and no just cause undermines employee rights. | Arbitration clause requires reliance on governing law; not unconscionable. | Not unconscionable; at-will employment is permitted. |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (establishes unconscionability framework for arbitration)
- Concepcion v. AT&T Mobility LLC, 563 U.S. 333 (U.S. Supreme Court 2011) (upholds class-action waiver in arbitration under FAA)
- Ajamian v. CantorCO2e, L.P., 203 Cal.App.4th 771 (Cal. App. 2012) (limits on unconscionability and discovery discussed)
- Nelsen v. Legacy Partners Residential, Inc., 207 Cal.App.4th 1115 (Cal. App. 2012) (arbitration provisions not unconscionable where balanced)
- Fitz v. NCR Corp., 118 Cal.App.4th 702 (Cal. App. 2004) (discovery constraints vs. fair opportunity to vindicate claims)
- Cruz v. PacifiCare Health Systems, Inc., 30 Cal.4th 303 (Cal. 2003) (stay and severance principles in arbitration)
- Wade v. Ports America Management Corp., 218 Cal.App.4th 648 (Cal. App. 2013) (arbitration has collateral estoppel effect and res judicata in some contexts)
- Sartor v. Superior Court, 136 Cal.App.3d 323 (Cal. App. 1982) (arbitration and preclusion principles cited)
- Luchini v. CarMax, Inc., 2012 WL 2775483 (E.D. Cal. 2012) (context on timing of arbitration formation)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (procedural and substantive unconscionability framework)