The Court of Appeal's decision in Rebolledo v. Tilly's, Inc. (opinion here) is important for employers who issue revisions to policies and employment agreements. Basically, Tilly's issued several versions of an arbitration agreement and did not adequately manage how the revisions' affected prior ones. A 2001 version of the arbitration agreement excluded wage-hour claims within the jurisdiction of the Labor Commissioner. A 2005 arbitration provision did not contain the exclusion. However, the 2001 agreement said that it required three signatures of company executives to modify it. The 2005 provision did not include those signatures.
Upholding the trial court, the Court of Appeal held that the later arbitration agreement did not supersede the earlier one, and the earlier one did not cover Rebolledo's claims:
We agree with the trial court’s interpretation of the agreement holding arbitration would fall within the broad category of “employment policies” requiring the signature of three executives for any modification. And because the 2005 Agreement contains a material modification of the types of claims that must be arbitrated, it required the signature of three executives to be enforceable.
The employer in Galen v. Redfin Corporation (opinion here) won enforcement of its arbitration agreement, but the plaintiff challenged the arbitration agreement as limited to disputes concerning the interpretation of the arbitration agreement itself.
Paragraph 26 of the Agreement initially states: “In the event that any disputes arise regarding the interpretation or enforcement of this Agreement, such disputes shall be resolved as follows . . . .” (Italics added.) The paragraph goes on to discuss the use of good faith negotiations followed by mediation, if necessary. In the event mediation fails or is refused, the Agreement provides that all disputes “arising out of or related to this Agreement which have not been settled by mediation shall be resolved by binding arbitration within the State of Washington.” (Italics added.)The court ultimately determined that this language included claims concerning whether the plaintiff was an independent contractor agreement, but primarily because the arbitration provision was contained within the plaintiff's independent contractor agreement. The plaintiff would have had a stronger argument if the arbitration agreement was "stand-alone." So, it's important to draft the scope of the arbitration clause carefully. A broader provision might read, for example, "any dispute regarding the [employment] [independent contractor] relationship, and the termination of that relationship or any other matter contained within this agreement."
The court's opinion in Galen is also notable because it held that a mutual attorney's fees provision and a forum selection clause did not render the agreement unconscionable. The attorney's fees discussion did not address the other decisions that hold such agreements are unconscionable unless they explain that employers cannot recover fees under some statutory claims. The forum selection clause discussion ostensibly authorizes employers to require arbitration outside of California if there is a logical relationship between the forum and the contract. So, interesting decision, but one that may be at odds with others already on the books.
