An arbitration agreement that Forever 21 required employees to sign is enforceable, the state's top court held on Monday (even though it allowed the parties to seek certain relief in court, since it merely restated California law). Former Forever 21 warehouse worker, Maribel Baltazar, filed suit against the Los Angeles-based fast fashion giant in 2011, alleging that she was subjected to physical and verbal harassment, gender and race discrimination and retaliation during the three years she worked for the fashion retailer. To this, Forever 21 filed a motion to compel arbitration, in accordance with the agreement Baltazar and other employees signed.
In its latest dive into the validity of arbitration pacts, the California Supreme Court unanimously rejected claims by Baltazar that the agreement she signed in 2007 was unconscionable [read: unjust due to it being extremely one-sided in favor of the party that has the superior bargaining power] because even though it allowed both sides to seek temporary injunctions in court, Forever 21 was far more likely to do so.
According to Reuters: The seven-member court, which has not been shy about striking down arbitration agreements that it has found to be one-sided over the last several years, said California law expressly permits parties to seek injunctions in court regardless of any agreements they have signed. "An arbitration agreement is not substantively unconscionable simply because it confirms the parties' ability to invoke undisputed statutory rights," Justice Leondra Kruger wrote.
A state judge denied Forever 21's motion to compel arbitration several years ago, holding that the parties' bargaining power was unequal because Baltazar was required to sign the pact as a condition of employment and agreeing that it was far less likely that an employee would seek injunctive relief in court. On appeal in 2014, a state appeals court reversed that decision, ruling that the agreement did not restrict Baltazar from exercising any of her rights under state law. The California Supreme Court agreed on Monday, also rejecting Baltazar's claim that a confidentiality provision designed to guard the company's trade secrets was one-sided.