Peleg v. Neiman Marcus Grp., Inc.
| Decision Date | 17 April 2012 |
| Docket Number | No. B231634.,B231634. |
| Citation | 162 Lab.Cas. P 61246,12 Cal. Daily Op. Serv. 4185,204 Cal.App.4th 1425,140 Cal.Rptr.3d 38,2012 Daily Journal D.A.R. 4854 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Amir PELEG, Plaintiff and Appellant, v. NEIMAN MARCUS GROUP, INC., Defendant and Respondent. |
OPINION TEXT STARTS HERE
Shegerian & Associates, Santa Monica, and Carney R. Shegerian for Plaintiff and Appellant.
Jackson Lewis, Los Angeles, Theresa M. Marchlewski and Sherry L. Swieca for Defendant and Respondent.
Under the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1–16), “arbitration is a matter of contract.” ( Steelworkers v. Warrior & Gulf Co. (1960) 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409; accord, 9 U.S.C. § 2.) An arbitration contract typically consists of the parties' mutual promises to arbitrate their claims against each other.
In this employment case, an employer and its at-will employees purportedly entered into a contract requiring the arbitration of claims by both sides. But the contract contains a modification provision stating that the employer may amend, modify, or revoke the arbitration contract on 30 days' written notice; at the end of the 30–day period, a contract change applies to any claim that has not been filed with the American Arbitration Association (AAA). The contract also has a choice-of-law clause stating that the contract shall be governed by Texas law and the FAA. The employee contends that, under the choice-of-law clause, the employer's unilateral right to make contract changes renders the contract illusory. We ultimately conclude that the choice-of-law clause is valid and that the arbitration contract is illusory under Texas law.
In reaching that conclusion, we also examine California law regarding illusory arbitration contracts. On that subject, we determine that an arbitration contract containing a modification provision is illusory if an amendment, modification, or revocation—a contract change—applies to claims that have accrued or are known to the employer. If a modification provision is restricted—by express language or by terms implied under the covenant of good faith and fair dealing—so that it exempts all claims, accrued or known, from a contract change, the arbitration contract is not illusory. Were it otherwise, the employer could amend the contract in anticipation of a specific claim, altering the arbitration process to the employee's detriment and making it more likely the employer would prevail. The employer could also terminate the arbitration contract altogether, opting for a judicial forum if that seemed beneficial to the company.
The allegations and evidence in this appeal are taken from the pleadings as well as the declarations and exhibits submitted in connection with the motion to compel arbitration and the subsequent cross-motions to vacate and confirm the arbitration award.
The complaint alleges that plaintiff, Amir Peleg, is a gay Jewish male of Israeli national origin. He worked at the Neiman Marcus store in Beverly Hills from December 28, 2005, to February 21, 2008. The store is owned by defendant Neiman Marcus Group, Inc. (Neiman Marcus). Peleg's supervisor was an Iranian woman of the Muslim religious faith.
Peleg worked in the fragrances department and performed his duties in an exemplary manner.
On February 21, 2008, Peleg was discharged because of his national origin, religion, and sexual orientation in violation of the Fair Employment and Housing Act (FEHA) (Gov.Code, §§ 12900–12996). He was also harassed and subjected to retaliation for the same reasons. He exhausted his administrative remedies under the FEHA and received a right-to-sue letter. (See Gov.Code, §§ 12960, 12963, 12965, subd. (b).) In addition, his discharge violated an implied-in-fact contract requiring good cause for termination and was contrary to public policy in that the discharge was motivated by his complaints about compensation issues and his disclosure of Neiman Marcus's failure to comply with state and federal laws. Finally, Neiman Marcus falsely stated it had discharged Peleg because he stole samples from the store.
The complaint, filed on October 16, 2008, contained causes of action alleging violations of the FEHA, breach of an implied-in-fact contract requiring good cause for termination, wrongful termination in violation of public policy, and defamation.
Neiman Marcus responded to the complaint with a motion to compel arbitration of the entire case. The company established that, at the time of hire, Peleg was given a “Mandatory Arbitration Agreement” (Agreement). Over a year later, he signed a form acknowledging (1) he had received the Agreement and had an opportunity to review it, (2) he understood that he and the company had to submit all disputes to binding arbitration, and (3) the Agreement was a mandatory condition of employment.
The first three pages of the Agreement indicate that the parties agreed to arbitrate “claims” against each other.
The Agreement defines “Covered Employees” as
On page 1, the Agreement recites: (Italics added.)
Section 3, which appears on pages 2 and 3, sets forth a list of “Covered Claims.” Those claims are divided into 10 general categories and include the names of specific statutes where pertinent, as follows: (1) “ Discrimination or harassment on the basis of race, color, gender, sexual orientation, religion, national origin, age, disability, or any other unlawful basis,” citing, among other laws, the Age Discrimination in Employment Act of 1967 (29 U.S.C. §§ 621–634), title VII of the Civil Rights Act of 1964 (42 U.S.C. §§ 2000e to 2000e–4), the Americans with Disabilities Act of 1990 (42 U.S.C. §§ 12101–12117), and the Family and Medical Leave Act of 1993 (29 U.S.C. §§ 2601–2654); (2) “Violations of any common law or constitutional provision, federal, state, county, municipal, or other governmental statute, ordinance, regulation, or public policy relating to workplace health and safety, voting, meal or rest breaks, state service letters, and [wage and hour issues]”; (3) “Violations of any common law or constitutional provision, federal, state, county, municipal, or other governmental statute, ordinance, regulation, or public policy, including, but not limited to, claims alleged under the following statutes: ... Employee Polygraph Protection Act of 1988 [ (29 U.S.C. §§ 2001–2009) ]; Employee Retirement Income Security Act of 1974 [ (29 U.S.C. §§ 1001–1461) ]; Fair Credit Reporting Act [ (15 U.S.C. §§ 1681–1681x) ]; ... The Occupational Safety and Health Act [of 1970 (29 U.S.C. §§ 651–678) ]; ... and Worker Adjustment and Retraining Notification Act [ (29 U.S.C. §§ 2101–2109) ]”; (4) “Personal injuries except those covered by workers' compensation”; (5) “Retaliation for filing a protected claim for benefits ... or exercising rights under any statute”; (6) “Breach of any express or implied contract, breach of a covenant of good faith and fair dealing, and claims of wrongful termination or constructive discharge”; (7) “ Breach of any common law duty of loyalty or its equivalent”; (8) “Exceptions to the employment-at-will doctrine”; (9) “Any common law tort claim, including, but not limited to, wrongful discharge, malicious prosecution, wrongful arrest/wrongful imprisonment, negligence, gross negligence, defamation, slander, fraud, misrepresentation, invasion of privacy, tortious interference, trespass to chattel, conversion, negligent and intentional infliction of emotional distress, or ‘whistleblowing’ ”; and (10) “All other employment-related legal disputes, controversies, or claims arising out of, concerning, or relating in any way to, employment or cessation of employment with the Company.”
A choice-of-law clause, in section 16, states that the Agreement is to be governed by Texas law and the FAA.
Section 20 of the Agreement declares:
The Agreement is 10 pages long and is not part of another document such as an employee handbook or manual. It is a stand-alone agreement that addresses only one subject: arbitration.
Peleg opposed the motion to compel arbitration, arguing that the Agreement was unconscionable based on several allegedly invalid provisions. In the alternative, he asserted the Agreement was illusory and unenforceable in light of the following provision: ...
To continue reading
Request your trial
-
Annual Update of Alternative Dispute Resolution Cases
...U.S. 79, 84 (2002).2. See Tiri v. Lucky Chances, Inc., 226 Cal. App. 4th 231, 242 (2014).3. See Peleg v. Neiman Marcus Grp., Inc., 204 Cal. App. 4th 1425 (2012), 1442-45; Parada v. Sup. Ct., 176 Cal. App. 4th 1554 (2009).4. See Hartley v. Sup. Ct., 196 Cal. App. 4th 1249, 1257 (2011).5. See......