Serafin v. Balco Properties Ltd., LLC
235 Cal. App. 4th 165
| Cal. Ct. App. | 2015Background
- Serafin, formerly employed by Balco Properties Ltd., LLC, signed a two-page Mandatory Arbitration Policy shortly after starting work in 2009.
- Balco sought to compel arbitration after Serafin alleged employment claims; the trial court stayed litigation pending arbitration.
- An AAA arbitration was held (2011–2013) resulting in an award in Balco’s favor on all claims and a finding Balco could recover an overpayment.
- The trial court confirmed the arbitration award and judgment was entered for Balco; Serafin appealed challenging the arbitration.
- Serafin contends there was no binding agreement or it was unconscionable; Balco contends the arbitration agreement is mutual and enforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of arbitration agreement | Serafin did not consent to arbitration. | Balco's signed acknowledgment created mutual assent. | Agreement exists; mutual, binding, enforceable. |
| Procedural unconscionability | Adhesion form; AAA rules not attached; unconscionable drafting. | Acknowledgment highlighted the policy; HR explained terms; advertisement of rules provided. | Minimal procedural unconscionability; not enough to void agreement. |
| Substantive unconscionability | One-sided; employee arbitration of claims but not balanced by employer; attorney-fee clause burdens employees. | Arbitration covers all claims; severability preserves balance; mutual obligation exists. | Arbitration not substantively unconscionable; severance of fee provision permitted; remaining terms enforceable. |
| Mutuality | No parallel obligation on Balco; lack of reciprocal commitment. | Agreement applies to all disputes between the parties; Balco initiated arbitration. | Bilateral obligation established; agreement mutual. |
| Severability of unconscionable provision | Severance cannot cure pervasive unconscionability. | Trial court properly severed the attorney-fee provision and enforced the rest. | Severance upheld; rest of arbitration agreement enforced. |
Key Cases Cited
- Mitri v. Arnel Management Co., 157 Cal.App.4th 1164 (2007) (handbook arbitration not binding without separate agreement)
- Sparks v. Vista Del Mar Child & Family Services, 207 Cal.App.4th 1511 (2012) (buried arbitration clause in handbook lacks mutuality)
- 24 Hour Fitness, Inc. v. Superior Court, 66 Cal.App.4th 1199 (1998) (modification rights do not render contract illusory)
- Trivedi v. Curexo Technology Corp., 189 Cal.App.4th 387 (2010) (failure to provide AAA rules can render arbitration procedurally unconscionable)
- Tiri v. Lucky Chances, Inc., 226 Cal.App.4th 231 (2014) (context matters for delegation clause unconscionability; AAA rules relevance discussed)
- Banner Entertainment, Inc. v. Superior Court, 62 Cal.App.4th 348 (1998) (agreement need not be signed by both parties to be binding; conduct can show agreement)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000) (foundational unconscionability standards for arbitration agreements)