In yet another chapter of the saga involving California and its treatment of employment arbitration agreements, a Court of Appeals recently issued two decisions examining the state's legal standard for determining unconscionable arbitration clauses.
Fuentes v. Empire Nissan, Inc., ' Cal. Rptr. 3d. ', No. B314490, April 21, 2023, 2023 WL 3029968 (Apr. 21, 2023) and Basith v. Lithia Motors, Inc., ' Cal. Rptr. 3d ', No. B316098, 2023 WL 3032099 (Apr. 21, 2023), involved employees of unrelated Nissan dealerships in southern California, who signed similar form arbitration clauses when hired (Fuentes signed a paper agreement; Basith signed a digital version). Both employees were terminated from their employment, and sued the dealerships for alleged violations of the California Labor Code. Both dealerships filed motions to compel arbitration of the disputes, and the respective trial courts denied the motions to compel, ruling the arbitration agreements were substantively unconscionable. Both dealerships filed appeals in the Second Appellate District, and the Court of Appeals reversed both decisions because the agreements were not substantively unconscionable.
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