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Samaniego v. Empire Today, LLC | 140 Cal. Rptr. 3d 492 (2012)
Generally, an arbitration clause, which is a contract provision where parties agree to submit their disputes to binding arbitration instead of going through litigation, is subject to the same rules of enforceability as other contracts. Consequently, an arbitration clause may be unenforceable if it is unconscionable, that is, oppressive or unreasonably favorable to one party. In Samaniego versus Empire Today, the California Court of Appeal considered whether an arbitration clause in an employment contract of adhesion — that is, a take-it-or-leave-it deal — was unconscionable.
Empire Today is a national carpet and flooring business that operates in many states, including California. In addition, Flooring Install, Incorporated, is a subsidiary or affiliate of Empire.
Around 2011, Salome Samaniego and Juventino Garcia worked as carpet installers for Flooring Install. When Samaniego and Garcia were hired, and during their employment, they were given form contracts and told they needed to sign them if they wanted to work for Empire. Both contracts were provided only in English, which was Samaniego and Garcia’s second language, and offered as nonnegotiable, take-it-or-leave-it contracts of adhesion.
Importantly, the second contract, which was titled Subcontractor Installer Agreement, was eleven pages long, single-spaced, in a small font, with tons of legal terminology. The agreement also included an arbitration clause providing that disputes must be submitted to binding arbitration pursuant to the commercial rules of the American Arbitration Association. However, those rules were never attached to the agreement or provided to Samaniego and Garcia. Further, several claims typically brought by employers were exempted from the arbitration clause.
Subsequently, Samaniego and Garcia filed a putative class action against Empire in state superior court, alleging violations of labor laws. In response, Empire moved to stay the action and compel arbitration under the agreement. The court denied Empire’s motion, concluding that the agreement was procedurally unconscionable and had strong indications of substantive unconscionability. Empire filed a request for reconsideration, which the court denied. Empire then appealed to the California Court of Appeal.
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