calwages.com

Archive for the ‘Mutuality’ Category

Non-Mutual Arbitration Agreement Saved by Reference to Mutual Agreement to Arbitrate in Employee Handbook

In Arbitration, Employee Handbook, Mutuality on April 19, 2013 at 4:41 pm
Handbook

Handbook (Photo credit: Jeff Hester)

The Second District ordered published today an opinion reversing the denial of a motion to compel arbitration. Serpa v. California Surety Investigations, Inc., et al., No. B237363, __ Cal. App. 4th __ (filed Mar. 21, 2013, modified Apr. 19, 2013).  The case involved an agreement to arbitrate that was non-mutual, but which referenced an employee handbook’s arbitration clause.

At the trial court level, the court denied defendants’  motion to compel arbitration, finding the agreement to arbitrate lacked mutuality.  Defendants argued that the requisite mutuality was provided by the bilateral arbitration provisions in the employee handbook, incorporated by reference into the arbitration agreement.  The trial court rejected this argument because defendant could change the handbook at its sole discretion and without notice.  The Second District reversed.

Because the agreement incorporated the arbitration policy in the employee handbook, the Court concluded that this “salvages the agreement by establishing an unmistakable mutual obligation on the part of [employer and plaintiff] to arbitrate ‘any dispute’ arising out of her employment.”  Plaintiff argued that the while the arbitration policy in the handbook establishes a bilateral obligation to arbitrate, she insisted that the mutual obligation is illusory because, the employer is authorized to alter the terms of any policy contained in the handbook at its sole discretion and without notice.  The Court disagreed, reasoning that the right to alter the terms was limited by the covenant of good faith and fair dealing implied in every contract.

You can read more here.

By CHARLES H. JUNG