In California, a man brought an action against his former employer, alleging claims of employment-related discrimination and retaliation. The Superior Court of Los Angeles County denied the employer’s motion to compel arbitration. The employer appealed.
The employer and employee had signed an arbitration agreement, but neither initialed a jury waiver included in the agreement. The third paragraph of the agreement is the subject of the motion to compel. It consists of two sentences: “Employer and Employee each agree that arbitration, as provided for in this Agreement, shall be the exclusive forum for the resolution of any covered dispute between the parties. In agreeing to arbitration, both employer and employee explicitly waive their respective rights to trial by jury.” Neither the employer nor employee initialed on the line.
The employee opposed the employer’s motion to compel arbitration. In support of his opposition, the employee attached a declaration stating in part: “I remember coming across the arbitration agreement and pausing at the bolded paragraph which asked for an initial in the blank space to waive a jury trial … It was my belief and understanding that arbitration was not as beneficial to employees where employees have exhibited harmful activity. I did not want to initial a statement agreeing to waive jury trial.”
The issue before the court was whether mutual assent existed.
The appeals court said an essential element of any contract is the consent of the parties, or mutual assent. In agreeing to arbitration, both employer and employee explicitly waive their respective right to trial by jury. In signing the agreement, the employee agrees to be legally bound by all of the terms of the agreement. This paragraph was prominently displayed in all capital letters.
The employee claimed that withholding his initials was manifesting his intent not to agree to arbitrate. The court said this does not provide a basis for concluding the parties did not mutually assent to the arbitration agreement. Where the terms of an agreement are set forth in writing, and the words are not equivocal or ambiguous, the writing will constitute the contract of the parties, and one party is not permitted to escape from its obligations.
The Court of Appeal found that the trial court erred in denying employer’s motion; the parties are required to arbitrate.