In Serafin v. Superior Court (2011 Cal. LEXIS 12706) former employee Madeline Serafin sued Balco for wrongful termination, harassment and defamation. Balco moved to stay the suit pending arbitration based on the arbitration agreement Serafin signed when she was hired. The arbitrator found in Balco’s favor on all issues and the trial court confirmed the award and entered judgment in Balco’s favor. Serafin appealed, arguing that she never entered into a binding arbitration agreement, or alternatively, that the agreement was unconscionable.
Similar to other arbitration agreements, the agreement in question subjected “any and all claims arising out of or in any way connected with [employment] to mandatory arbitration.” The agreement also included an acknowledgment to be signed, that the employee “reads and understands” the agreement. Serafin’s main argument focused on the language of the acknowledgment. Serafin cited numerous cases indicating that an acknowledgment of receipt of an employee handbook or agreement to be bound by the handbook’s contents is insufficient to bind arbitration. However, unlike the cases she cited, she actually received the arbitration policy. Furthermore, the policy stated that employees were required to sign the acknowledgment indicating their understanding and agreement to comply with it.
Serafin tried to argue that the agreement was illusory, binding only the employee to arbitration, but her claim was undermined by the fact that Balco authored the agreement on its letterhead and initiated arbitration.
With regards to her unconscionable arguments, the Court only found a minimal degree of procedural unconscionability based on the take-it-or-leave-it nature, but found the fee-bearing provision of the agreement substantively unconscionable. Since the trial court correctly severed the fee-bearing provision, Serafin suffered no substantive unconscionability.
The Court affirmed the judgment.