Arbitration Clause on Employment Application Sufficient to Bind Arbitration

The Second Appellate District of the California Court of Appeal reversed a decision refusing to compel arbitration in Cruise v. Kroger Co., et al. (2015 Cal. App. LEXIS 44).  Although Kroger could not establish the actual language of the agreement in effect, provisions of the California Arbitration Act (§1280 et seq.) provided the terms for arbitration. In 2007, Cruise applied for an HR position at Kroger.  The employment application contained an arbitration clause for employment related disputes and referenced Kroger’s Arbitration Policy.  When Cruise was fired 5 years later, she filed suit against Kroger for statutory violations of the FEHA for retaliation, sexual harassment, discrimination, failure to investigate, and common law claims.  Kroger moved to compel arbitration and Cruise opposed.  Cruise argued she never signed the agreement, it was vague, she wasn’t provide with a copy of it, no contract was formed with respect to the undisclosed terms, and the policy was procedurally and substantively unconscionable.  The trial court agreed.

The Court reversed on appeal.  The Court found that the application language clearly indicated the parties’ agreement to arbitrate.  Since all the claims were related to her employment, they fell within the ambit of the agreement.  The Court also rejected Cruise’s argument for lack of mutuality.  The employment application indicated that Kroger intended to be bound by the agreement and the fact that they did not sign it was irrelevant.

However, the Court agreed with Cruise that the terms of the agreement were unclear.  Kroger submitted a four-page document as the policy referenced in the employment application.  The trial court rejected the undated policy.  On appeal, the Court held this only meant that procedures prescribed in the California Arbitration Act governed.

The Court clarified that an employer cannot enforce a non-existent arbitration agreement, but if the agreement is proven to exist and cannot be produced, the employer is precluded from enforcing the provisions from that policy.