Court Rejects Employer’s Attempt to Prevent a Jury Trial

Sometimes employers have employees sign what are called “arbitration agreements,” which require employees to give up their rights to file any claims against the employers in court. Instead, the employees must use an arbitration process, which is not a jury, but usually one person assigned to decide the case. The use of arbitration instead of the court system sometimes results in smaller awards to employees who sue.

In Baxter v. Genworth North America Corporation, a California appellate court affirmed a trial court’s ruling, which held that a financial services company could not compel arbitration in wrongful termination dispute.

As a condition of her employment with Genworth, Maya Baxter was required to sign an agreement to arbitrate any employment disputes. Genworth filed a motion to compel arbitration after Baxter claimed she was terminated for taking FMLA [CFRA] leave to care for her mother and for protesting Genworth’s practice of evaluating employees based on race, age, and gender (which she considered to be discrimination). The trial court concluded the arbitration agreement was unconscionable and denied the motion.

On October 26, 2017, the California Court of Appeal upheld the trial court’s ruling denying Genworth’s motion, finding that Genworth’s arbitration agreement was “unconscionable and therefore unenforceable.” The decision stated that Baxter did not “have any meaningful choice in the matter” and “lacked equal bargaining power.”

The appeals court also found that the trial court did not abuse its discretion in declining to sever specific terms from the agreement, concluding that the agreement had too many procedural and substantively unconscionable provisions to be saved by simply removing certain provisions.