What is the test for determining whether an arbitration agreement is substantively one-sided?

California, United States of America


The following excerpt is from Baltazar v. Forever 21, Inc., 200 Cal.Rptr.3d 7, 367 P.3d 6, 62 Cal.4th 1237 (Cal. 2016):

Baltazar relies heavily on Pinedo v. Premium Tobacco Stores, Inc. (2000) 85 Cal.App.4th 774, 102 Cal.Rptr.2d 435, which concerned an arbitration agreement covering all disputes " relating to Employee's employment by Employer including any changes in position, conditions of employment or pay, or the end of employment thereof. " (Id. at p. 776, 102 Cal.Rptr.2d 435.) The Pinedo court cited this provision, among several others, in concluding that the agreement was substantively one-sided. It explained that the agreement "addresses only" claims "which would normally be brought by the employee against the employer." (Id. at p. 781, 102 Cal.Rptr.2d 435.) We need not decide whether the Pinedo court was correct to read the agreement at issue in that case as "addressing only" claims likely to be brought by employees, since, as explained above, we think it clear that the differently worded agreement at issue in this case addresses both employment-related claims likely to be brought by employees and those likely to be brought by the employer. In any event, the Pinedo court's assessment of the one-sidedness of the agreement at issue in that case rested not only on the provision's list of covered claims, but also on various provisions sharply restricting the damages a prevailing employee could recover (but not the damages a prevailing employer could recover) and requiring that all arbitration costs initially be borne by the employee. (Id. at p. 781, 102 Cal.Rptr.2d 435.) In other words, the Pinedo court treated the wording of the provision governing covered claims as merely

[200 Cal.Rptr.3d 18]

one more bit of evidence indicating that

[62 Cal.4th 1250]

the agreement was substantially one-sided. No comparable circumstances are present here.

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