In Grey v. American Management Services 2012 DJDAR 4075, the Second Appellate District reversed an arbitration award in favor of the employer, where the Appellant/Plaintiff contended that he was not required to submit his claims to arbitration.
The facts of the case are somewhat unique. Respondent, American Management Services (AMS), provided all job applicants, including Plaintiff Grey, an application packet, containing an Issue Resolution Agreement (IRA), which the applicants were required to sign prior to consideration for an employment position. The IRA contained a very broad arbitration procedure providing that applicants would agree to settle, with final and binding arbitration, all previously-unasserted claims arising out of, or related to, the application for employment or employment. Plaintiff signed the IRA and ultimately obtained employment.
After he was hired, Plaintiff also signed an employment contract that provided for final and binding arbitration of all disputes arising out of an alleged breach of any provision of the employment contract. The employment contract contained an integration clause, providing that the employment contract superseded all prior agreements and was the entire agreement between Plaintiff and AMS regarding his employment.
Plaintiff filed suit in Superior Court, alleging employment discrimination, harassment and retaliation on the basis of sexual orientation. In response, AMS filed a petition to compel arbitration under the IRA, which was granted. AMS obtained an award in its favor, which Plaintiff challenged in Court to no avail. The arbitration award became the judgment of the lower court.
Upon reversal of the lower court’s order and judgment, the Court of Appeal agreed with Plaintiff/Appellant that the post hire employment contract superseded the pre-employment IRA by its own terms. Plaintiff’s claims were statutory in nature and not related to the contract. Therefore, since the scope of the arbitration clause in the employment contract only applied to claims arising from a breach of that contract, and did not include all claims an employee may have against AMS, Plaintiff should not have been forced to arbitrate his statutory claims.
Employers should take away a valuable lesson from this case. If an employer intends to arbitrate all claims related to employment, it is critical that the arbitration provision in the post-hire employment agreement specifically state the nature of the claims to be arbitrated and meet the requirements for arbitration set forth in Armendariz v. Foundation Health Psych Care Services, Inc. (2002) 24 Cal 4th 83. Providing both a pre-employment agreement and a post-employment agreement is simply asking for problems.
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