Tiri v. Lucky Chances, Inc.
226 Cal. App. 4th 231
| Cal. Ct. App. | 2014Background
- Tiri signed a standalone mutual arbitration agreement with Lucky Chances, including a delegation clause that grants the arbitrator exclusive power to decide enforceability of the agreement.
- The agreement covers all disputes between the parties, subject to limited worker’s-compensation and unemployment-benefits exceptions.
- Tiri was later fired and sued for wrongful discharge in superior court; Lucky Chances moved to compel arbitration.
- The trial court denied arbitration, citing unconscionability and failure to attach AAA rules, among other reasons.
- The appeal centers on whether the delegation clause is valid and whether all enforceability questions must be decided by an arbitrator, not a court.
- The court ultimately holds that the delegation clause is clear and not revocable under state law, so the arbitrator must decide enforceability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the delegation clause valid and enforceable to compel arbitrability? | Tiri argues delegation is unconscionable and invalid. | Lucky Chances argues delegation is clear and enforceable, forcing arbitrability to the arbitrator. | Delegation clause valid and enforceable; arbitrator must decide enforceability. |
| Did procedural unconscionability apply to the delegation clause? | Tiri contends the clause is procedurally unconscionable due to adhesion and take-it-or-leave-it presentation. | Lucky Chances contends procedural unconscionability is insufficient to render the clause unenforceable. | Delegation clause procedurally unconscionable but not substantively so; delegation still valid. |
| Is the delegation clause substantively unconscionable? | Tiri asserts the clause imposes unfair burdens or lacks mutuality against the employee. | Lucky Chances maintains the clause is mutual and not unduly harsh. | Delegation clause not substantively unconscionable; mutual and enforceable. |
| What is the effect of Rent-A-Center/Concepcion on California unconscionability analysis? | Tiri relies on Ontiveros/Murphy limits to delegation clauses in adhesion contracts. | Lucky Chances cites Rent-A-Center/Concepcion to support enforceable delegation. | Rent-A-Center and Concepcion support enforcement of clear delegation clauses; state unconscionability rules do not bar enforcement here. |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clauses valid when clearly and unmistakably intended; arbitrator decides enforceability)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence needed for delegation to be effective)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000) (arbitration contracts require mutuality and fair terms; sliding scale of unconscionability)
- Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (unconscionability framework; procedural vs substantive elements; arbitration policy considerations)
- Concepcion v. Discover Bank, 563 U.S. 333 (2011) (federal policy favoring arbitration; state-law rules cannot undermine arbitration terms)