Murrey v. Superior Court

• Decision Date: 30 January 2023
• Docket Number: G061329
• Parties: CASANDRA MURREY, Petitioner, v. THE SUPERIOR COURT OF ORANGE COUNTY, Respondent; GENERAL ELECTRIC COMPANY et al., Real Parties in Interest.
• Court: California Court of Appeals Court of Appeals

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CASANDRA MURREY, Petitioner, v. THE SUPERIOR COURT OF ORANGE COUNTY, Respondent;

GENERAL ELECTRIC COMPANY et al., Real Parties in Interest.

G061329

California Court of Appeals, Fourth District, Third Division

January 30, 2023

Petition for extraordinary writ from an order of the Superior Court of Orange County, No. 30-2021-01191732 Nathan R. Scott Judge. Petition granted.

Hannemann Law Firm and Brian G. Hannemann; McNally Law Firm Bryan L. McNally and Kathleen Doherty for Petitioner.

Littler Mendelson, Gregory Iskander and Renee C. Feldman for Real Party in Interest General Electric Company.

No appearance for Real Party in Interest Joseph P. Gorczyca, III.

OPINION

O'LEARY, P. J.

In March 2022, President Joseph R. Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the Act) (9 U.S.C. §§ 401, 402), representing the first major amendment of the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) since its inception nearly 100 years ago. This legislation, having bipartisan support, voids predispute arbitration clauses in cases, such as the one before us now, involving sexual harassment allegations. We regret that this new legislation does not apply retroactively to Casandra Murrey's complaint filed in March 2021. Nevertheless, we will consider Murrey's writ petition because the highly secretive and one-sided provisions of her arbitration agreement make it both procedurally and substantively unconscionable. The agreement is factually distinguishable from existing case authority upholding employment adhesion contracts and exemplifies why the legislature drafted House Bill No. 4445. We conclude the trial court erred by enforcing an unconscionably void arbitration agreement.

FACTS

Murrey a single, 46-year-old female, worked for General Electric Company (GE) as a product sales specialist for ultrasound equipment. According to her complaint, GE "is a multinational conglomerate" that in 2020 had a gross revenue of $79.6 billion and employed over 200,000 people. The complaint alleged GE hired Murrey in early 2018 and she was a "top performer."

In 2019, GE hired Joseph P. Gorczyca, III. In January 2020, he became Murrey's direct supervisor, and he engaged in continuous sexual harassment in the workplace with Murrey and others. Gorczyca apparently liked to talk about his sex life, sexual acts, and made unwanted sexual advances. During an organized team dinner, Murrey claimed Gorczyca groped her, and as she tried to walk away, Gorczyca stopped her and tricked her into eating THC-laced chocolate. She eventually reported the misconduct to GE and participated in a telephone interview with one of its human resources (HR) employees. She alleged GE "never properly completed an immediate [n]or appropriate investigation or took any . . . corrective action. Instead, [GE] later informed [her] that Gorczyca was 'no longer with the company.'" Thereafter, GE "commenced an illegal pattern of retaliatory behavior against Murrey because [she] engage[ed] in protective activity" that included "denying appropriate support for [her] sales position" and refusing to promote her.

Murrey's complaint contained causes of action for unlawful harassment based on gender and sex, failure to prevent harassment, labor code violations, and retaliation for opposing discrimination and harassment. In addition to emotional distress, Murrey alleged she suffered substantial losses in earnings, bonuses, deferred compensation, and other employment benefits.

Eight months after Murrey filed the complaint, GE filed a motion to compel arbitration. In support of the motion, GE's lead HR specialist Michelle Thayer submitted a declaration explaining the company had an electronic onboarding system. GE sent all new hires a "welcome e-mail" to the new hire's personal e-mail address that contained a link to GE's electronic onboarding system/portal. GE's welcome e-mail also provided the new hire with a unique username and temporary password to access the onboarding portal via the link. Next, new hires were prompted to create a new personal password of their choosing. After selecting a new personal password, the new hire was directed to the "GE Hire home page," which contained several more links "to the tasks assigned to the new hire." Each document was assigned a separate task and the new hire signed employment-related agreements using his or her electronic signature.

Thayer explained one task was to review an electronic copy of a document titled "'SOLUTIONS: An Alternative Dispute Resolution Procedure'" (Solutions manual.) Another task was to review and electronically sign the "Acknowledgment Conditions of Employment" (Acknowledgement). Based on this process and GE's other security measures, Thayer concluded Murrey's electronic signature on the Acknowledgment was made by Murrey.

Thayer attached to her declaration a copy of the 29-page Solutions manual. The first page of this document explained: "Solutions provides The General Electric Company ('GE' or 'the Company') and Covered Employees a fair, quick and efficient process to resolve certain claims arising out of or related to their employment relationship with the Company. [¶] This Procedure is not a guarantee of employment . . . [,] however, [it] creates a binding obligation on Covered Employees and the Company for the resolution of employment disputes."

The Solutions manual offered the following summary of the procedures: "Solutions is a structured dispute resolution procedure that consists of two internal levels of review followed by, if necessary and applicable, outside mediation (Level III) and arbitration (Level IV). Levels III and IV apply only to Covered Claims, as defined herein. The levels of Solutions are in a logical sequence, and employees must complete each level of the process before proceeding to the next level."

The first two levels required the employee to meet with members of the management team, and without the assistance of counsel, to discuss the dispute. Level III (mediation), and Level IV (arbitration), mandated the employee use GE's designated dispute resolution organization (DRO) to resolve the dispute. For both mediation and arbitration, the employee could be represented by an attorney.

The Solutions manual explained: "At Level IV, an external arbitrator provides the employee and the Company with a binding decision on the merits of the Covered Claim(s). Both mediation and arbitration under Levels III and IV will be administered by a nationally recognized [DRO]. Employees may obtain information regarding which DRO has been designated to handle proceedings at Level III and IV and the DRO's rules governing such proceedings from the Solutions Administrator or the local HR manager." No information was provided on how to find or contact the Solutions administrator or the HR manager during the onboarding process. As will be discussed anon, the Solutions manual offered confusing definitions about whether Solutions was the name of an independent agency providing dispute resolution administrative services, an entity affiliated with GE, or simply the name of an employee handbook.

Specific details regarding the arbitration process and procedures will be discussed in more detail in the analysis section of this opinion. Suffice it to say, the Solutions manual noted the DRO's rules "may be amended, without notice by the DRO" and some of those standardized rules were superseded by GE's "presumptive guidelines." GE's guidelines (over four pages of the Solutions manual) set forth specific procedures for all aspects of the arbitration proceedings, including initial disclosures, protective orders, discovery limits, timing of discovery, requirements for expert witnesses, discovery disputes, subpoenas, dispositive motions, pre-hearing motions, time restrictions on the hearing, location rules, the number of attendees, the use of evidence, the requirement of no more than five witnesses (including experts), the scope of the award and limits on the arbitrator's authority, and confidentiality of the decision. The discovery guidelines section incorporated multiple subparts restricting discovery to no more than 20 interrogatories, 15 requests for documents, 15 requests for admission, and 3 depositions. GE required the party requesting documents "shall bear the reasonable cost of compliance with the request ...." GE mandated that the arbitrator control the duration of the hearing "and shall seek to limit the length of the arbitration hearing to two 8-hour days (16 hours total)."

Thayer also attached a copy of the two-page Acknowledgment. The first line of this document told the new hire to read the contents as well as "the documents it references carefully." It noted the referenced documents could be reviewed on the eOffer website. The Acknowledgment stated the new hire's offer of employment was "contingent upon your acceptance of the conditions of employment described below." Among the long list of contingencies, paragraph 1(g) stated the new hire must agree to review and accept the dispute resolution procedures set forth in the Solutions manual.

GE argued there was a valid agreement to arbitrate Murrey's dispute. It added the FAA applied and Murrey's claims were covered by the agreement. Murrey opposed the motion arguing the adhesion contract was procedurally and substantively unconscionable. She argued the unconscionable terms could not be severed to make the arbitration agreement enforceable. She submitted her declaration explaining how the agreement was presented to her as a new hire. "During the onboarding process . . . I was required to sign multiple documents within a short period of time. My hiring manager . . . informed me that my future...