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Unconscionable Contract Arbitration Agreement

In two cases, California courts have refused to impose labour arbitration procedures. In Gonzalez v. Hughes Aircraft Employees Federal Credit Union (February 23, 1999) and Kinney v. United Healthcare Services, Inc. (March 29, 1999), the courts found that arbitration agreements were unacceptable and therefore invalidated. In particular, organizations that use arbitration agreements should take into account: one year after their hiring, the employer placed Ajamian in a brokerage position and asked them to sign an employment contract with an arbitration provision. Under the employment contract, arbitration was the exclusive means of determining all contentious issues related to the agreement. The arbitration decision required arbitration before a New York Arbitration Tribunal. The provision also stipulated that the New York law and the arbitration rules of an alternative dispute resolution organization chosen by the employer, such as AAA or the National Association of Securities Dealers, would be controlled. It prohibits arbitrators from awarding the worker special, exemplary, punitive or multiple damages, but has authorized liquidated compensation to the employer.

The employment contract also provided that Ajamian could be held liable for the employer`s legal costs if it entered into the agreement and if the agreement was respected. The employment contract contained a separation provision that allowed a court to limit a broad provision to make it applicable. Mr. Heller`s case provided an opportunity for the Supreme Court to address a continuing tension in Canadian law between the application of arbitration agreements and the ability of parties with low-value claims to pursue class actions. We discussed this story and tension in our April 8, 2019 Update, The Future is Arbitration-Friendly: Supreme Court Confirms Arbitration Enforceable for Business Customers in Telus Class Action, including the Supreme Court`s reference to possibly using the safety doctrine in this context in future cases. In addition, the court found that the court did not abuse its discretion when it refused to separate the ruthless terms of the arbitration agreement. Finally, the court found that the court was not wrong in refusing to impose the manual`s arbitration policy. Ajamian never signed or approved the provisions of the manual and nothing in the employment contract linked it to the manual`s arbitration policy. As a result, the court upheld the rejection of the employer`s application for arbitration.

The court then found that the arbitration agreement was procedurally unacceptable because it was a necessary clause in a non-negotiable agreement. The employer`s lack of requirement for a copy of the applicable AAAs or other rules of the arbitration agreement and arbitration agreement so that the worker could bear significant travel costs to participate in arbitration proceedings in New York also supported the conclusion that the agreement was procedurally unacceptable. One of the most important findings of the previous Ontario Court of Appeal decision was that a mandatory arbitration decision constituted an illegal ESA contract because it had the potential to prevent a staff member from using the ESA redress mechanism (although Mr. Heller did not attempt to access this complaint mechanism). Organizations that use arbitration agreements for relatively minor litigation or standard contracts should review their essential agreements and terms of use to ensure that they are not vulnerable to scrupulous attacks.