Employment Arbitration Agreements Take Another Hit
California's Fourth District Court of Appeal recently dealt another blow to arbitration agreements in the employment context. In Metters v. Ralphs Grocery Company, the court affirmed the denial of a motion to compel arbitration of a discrimination and harassment case. The plaintiff, Metters, had signed a dispute resolution form entitled "Notice of Dispute and Request for Resolution Form," to submit his discrimination and harassment claims to the Company for internal investigation. The dispute resolution form contained an arbitration provision and when the employee eventually sued Ralph's, the company moved to compel the case to arbitration. However, the trial and appellate courts found the dispute resolution form was insufficient evidence of an agreement to arbitrate. The form included plain language explaining that the employee, by submitting the form, was agreeing to mandatory, binding arbitration of any "covered disputes" as defined in a "policy" that was referenced but, according to Metters, not attached to the form or provided to him. The Court found that the document did not look like a contract and did not sufficiently alert the employee that, by signing the form, he was agreeing to binding arbitration. "A transactional attorney sitting in an office somewhere…[might] be able to figure out what it meant," but the Court felt that the employee should not have been expected to figure out that the dispute resolution form bound him to arbitrate his claims. The trial court, finding no "meeting of the minds" between the parties on an agreement to arbitrate disputes, refused to compel the case to arbitration and the California Court of Appeal affirmed.
To avoid the result in Metters, California employers would be well-advised to: 1) create free-standing arbitration agreements that are not buried or hidden within other documents; 2) draft arbitration agreements to make them appear contractual in nature; 3) ensure arbitration agreements do not substantially rely on extraneous documents or policies incorporated by reference; 4) ensure that the language of the arbitration agreement is clear so that the employee is alerted to the arbitration provision; and 5) have arbitration agreements reviewed by competent legal counsel to ensure compliance with California law. While the Metters case is largely limited to very detailed facts, this case is another reminder that arbitration agreements continue to be subject to close scrutiny by California courts.