Sparks v. Vista Del Mar Child & Family Services
207 Cal. App. 4th 1511
| Cal. Ct. App. | 2012Background
- Vista Del Mar distributed a lengthy employee handbook in which an arbitration clause stated all disputes would be arbitrated under AAA rules, with defendant bearing arbitration costs.
- Plaintiff Sparks acknowledged receipt of the 2006 Handbook and agreed to be governed by its contents, including arbitration provisions, though the form of acknowledgment did not reference arbitration specifically.
- A subsequent 2009 Handbook was issued that also contained an arbitration clause and required signing for receipt and a separate signed arbitration agreement, which Sparks did not acknowledge in writing.
- The 2006 Handbook stated it did not create a contract and could be amended unilaterally by the employer, potentially rendering any agreement illusory.
- The trial court denied the petition to compel arbitration, concluding there was no enforceable arbitration agreement with Sparks.
- The appellate court affirmed, holding the arbitration clause unenforceable due to lack of conspicuous notice, lack of explicit assent, the handbook’s non-contractual language, unilateral amendment, and procedural/substantive unconscionability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there a valid agreement to arbitrate between Sparks and Vista Del Mar? | Sparks did not knowingly assent to arbitration; acknowledgment did not bind him to arbitration. | Sparks was governed by the handbook containing an arbitration clause and signed acknowledgment binds him to arbitration. | No valid agreement to arbitrate. |
| Did the acknowledgment of receipt suffice to bind Sparks to the arbitration clause? | Acknowledgment did not reference arbitration and did not indicate consent to arbitrate. | Acknowledgment to be governed by handbook implies acceptance of arbitration terms. | Acknowledgment did not constitute knowing consent to arbitrate. |
| Does unilateral unilateral amendment of the handbook render the arbitration clause illusory? | Employer can modify the handbook at will, making arbitration illusory and unenforceable. | Employer may reasonably amend terms; arbitration clause remains enforceable absent contrary proof. | Arbitration clause illusory due to unilateral amendments; unenforceable. |
| Is the arbitration clause procedurally or substantively unconscionable, or is discovery adequately provided for under AAA rules? | Lack of access to specified AAA rules and discovery rights; clause is procedurally/substantively unconscionable. | Arbitration clause complies with law; limits are appropriate and AAA rules apply. | Clause is procedurally and substantively unconscionable; unenforceable. |
Key Cases Cited
- Mitri v. Arnel Management Co., 157 Cal.App.4th 1164 (Cal. Ct. App. 2007) (handbook arbitration clause not enforceable without employee consent to separate arbitration agreement)
- Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756 (9th Cir. 1997) (acknowledgment of receipt insufficient to waive rights under ADA; no knowing agreement to arbitrate)
- Kummetz v. Tech Mold, Inc., 152 F.3d 1153 (9th Cir. 1998) (handbook arbitration clause not binding where acknowledgment did not address arbitration)
- Douglass v. Pflueger Hawaii, Inc., 135 P.3d 129 (Haw. 2006) (acknowledgment lacking reference to arbitration clause cannot create binding arbitration)
- Adajar v. RWR Homes, Inc., 160 Cal.App.4th 563 (Cal. Ct. App. 2008) (supports requiring explicit consent and conspicuous arbitration terms to bind to arbitration)