In Cruise v. Kroger Co., the Court of Appeal held a clear arbitration clause in an employment application, standing alone, was sufficient to establish the existence of an agreement between the employee and employer to arbitrate employment-related disputes.
In 2007, Plaintiff Stephanie Cruise completed and signed an employment application for the position of Human Resources Assistant Manager at Compton Creamery & Deli Kitchen. The employment application included an arbitration provision, which Cruise separately initialed, stating in relevant part:
“MANDATORY FINAL & BINDING ARBITRATION: I acknowledge and understand that the Company has a Dispute Resolution Program that includes a Mediation & Binding Arbitration Policy (the “Policy”) applicable to all employees and applicants for employment … I acknowledge, understand and agree that the Policy is incorporated into this Employment Application by this reference as though it is set forth in full, … the Policy applies to any employment-related disputes that exist or arise between Employees and the Company … and that the Policy requires that any Employee who wishes to initiate or participate in formal proceedings to resolve any Covered Disputes must submit the claims or disputes to final and binding arbitration in accordance with the Policy.”
The “Arbitration Policy” referenced in the provision was not attached to the employment application and Cruise stated the Policy was never provided to her at the time she applied for employment.
In 2012, Cruise’s employment was terminated and she filed suit against her former employer alleging statutory causes of action under the Fair Employment and Housing Act as well as common law claims. The employer then filed a motion to compel arbitration pursuant to the terms of the arbitration agreement. Cruise opposed the motion arguing she never signed an arbitration agreement and the arbitration clause in the employment application was “vague,” “brief” and “unenforceable.” Additionally, the four-page “Arbitration Policy” referenced in the provision was discovered to be an undated, unauthenticated set of pages from a “Ralphs” handbook that was never provided to Cruise when she applied for the position.
Based on the above, the trial court denied the employer’s motion to compel arbitration holding, “the Defendants have failed to meet their burden to prove the existence of a signed arbitration agreement,” “Defendants have failed to prove the existence of a written agreement to arbitrate …” and the “Arbitration Policy,” which was not given to Cruise and was undated, was merely pages from a Ralph’s handbook and was unconscionable.
On appeal, the Court of Appeal disagreed and reversed the trial court’s order holding, “the undisputed evidence establishes the parties agreed to arbitrate their employment disputes.” The Court focused on the threshold question presented by a petition to compel arbitration: “whether there is an agreement to arbitrate.” The Court held the language of the employment application itself clearly established the parties agreed to arbitrate their employment-related disputes. Acknowledging there were clearly numerous problems with the “Arbitration Policy” which purported to include the terms of the arbitration, the Court emphasized the failure to establish the precise terms of the Policy will not invalidate the agreement to arbitrate in the first place. Thus, the Court found the only impact of the nonexistent or defective Arbitration Policy was the employer was precluded from enforcing the specific provisions of the Policy, and the arbitration would instead be governed by the rules and procedures set forth in the California Arbitration Act.
In reversing the trial court’s order denying the motion to compel arbitration, the Court emphasized the important distinction between finding the existence of an agreement to arbitrate, and establishing the specific terms of that agreement. The court was clear that where the parties plainly agree to arbitrate certain disputes, that agreement to arbitrate will be enforced. However, if an employer wishes to dictate the precise terms of the arbitration, the employer must make sure those terms are clearly a part of the agreement and the employee acknowledges and agrees to those terms. Otherwise, while the employer may still be able to compel arbitration, the terms and procedures of the arbitration will be out of the employer’s control.
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