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Courts, Not Arbitrators, Decide an Arbitration Agreement's Validity

A provision giving the arbitrator the authority to decide the enforceability of the arbitration agreement itself is unenforceable. Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App .4th 494. The determination of the arbitration agreement's enforceability belongs to the courts, not the arbitrator, as the existence of other unconscionable provisions may rendered the entire arbitration agreement voidable under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. 

Defendant DHL Express (USA), Inc. appeals the trial court’s order denying its motion to compel arbitration after plaintiff Gina Ontiveros filed a lawsuit against defendant DHL and four other defendants, raising various claims related to sex discrimination, harassment, and retaliation arising from her employment with defendant. Defendant claims that plaintiff’s lawsuit is precluded by an arbitration agreement previously entered into by both parties. Because we conclude the trial court properly found the arbitration agreement was unconscionable, and therefore unenforceable, we shall affirm the order.

An agreement to have the arbitrator decide enforceability is invalid. "[T]he potential for the inequitable use of such arbitration provisions in areas, such as employment, where the parties are not at arm’s length and do not have equal bargaining power.  In such situations, in which one party tends to be a repeat player, the arbitrator has a unique self-interest in deciding that a dispute is arbitrable.” Other improper terms in the agreement included limiting depositions to one percipient witness per side plus any expert witnesses, and requiring the parties to share the costs of arbitration. The cumulative effect of these improper provisions justified the trial court's determination that the entire agreement was unconscionable.

You can download the Ontiveros opinion here in PDF or Word format.


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