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Armendariz v. Foundation Health Psychcare Services8/24/2000
n did not provide for equitable relief was rejected because the NYSE Rules did not restrict the types of relief available." (Cole, supra, 105 F.3d at pp. 1481-1482.)
Based on Gilmer, supra, 500 U.S. 20, and on the basic principle of nonwaivability of statutory civil rights in the workplace, the Cole court formulated five minimum requirements for the lawful arbitration of such rights pursuant to a mandatory employment arbitration agreement.
Such an arbitration agreement is lawful if it "(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. Thus, an employee who is made to use arbitration as a condition of employment `effectively may vindicate [his or her] statutory cause of action in the arbitral forum.' " (Cole, supra, 105 F.3d at p. 1482, italics omitted.)
Except for the neutral-arbitrator requirement, which we have held is essential to ensuring the integrity of the arbitration process (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 825 (Scissor-Tail), and is not at issue in this case, the employees claim that the present arbitration agreement fails to measure up to the Cole requirements enumerated above. We consider below the validity of those requirements and whether they are met by the employer's arbitration agreement.
1. Limitation of Remedies
The principle that an arbitration agreement may not limit statutorily imposed remedies such as punitive damages and attorney fees appears to be undisputed. We suggested as much in Broughton when we held that an agreement to arbitrate a statutory claim implicitly incorporates "the substantive and remedial provisions of the statute" so that parties to the arbitration would be able to vindicate their "statutory cause of action in the arbitral forum." (Broughton, supra, 21 Cal.4th at p. 1087.) Similarly, in Graham Oil Co. v. Arco Products Co. (9th Cir. 1995) 43 F.3d 1244 (Graham Oil), the court refused to enforce an arbitration agreement between a petroleum franchiser and franchisee that did not allow for the punitive damages and attorney fees remedies available under the Petroleum Marketing Practices Act, because both of these remedies are "important to the effectuation of the PMPA's policies." (43 F.3d at p. 1248.)
As stated, the arbitration agreement in this case provides in part: "I and Employer further expressly agree that in any such arbitration, my exclusive remedies for violation of the terms, conditions or covenants of employment shall be limited to a sum equal to the wages I would have earned from the date of any discharge until the date of the arbitration award. I understand that I shall not be entitled to any other remedy, at law or in equity, including but not limited to reinstatement and/or injunctive relief." (See ante, at p. 3.) The employees claim that the agreement compels them to arbitrate statutory claims without affording the full range of statutory remedies, including punitive damages and attorneys fees to a prevailing plaintiff, available under the FEHA. (See Commodore Home Systems Inc. v. Superior Court (1982) 32 Cal.3d 211, 221; Gov. Code, ยง 12965, subd. (b).)
The employer does not contest that the damages limitation would be unlawful if applied to statutory claims, but instead contends that the limitation applies only to contract claims, pointing to the language in the penultimate sentence that refers to "my exclusive remedy for violation of the terms, condit
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