Court of Appeal Renders Yet Another Arbitration Provision Unconscionable and Unenforceable

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The Court of Appeal of the State of California, First Appellate District, Division Four, has held that an arbitration clause in an employment agreement was unconscionable because, among other things, the agreement did not attach the AAA’s National Rules for the Resolution of Employment Disputes and purported to expand the rights of the employer to recover attorneys’ fees. Trivedi v. Curexo Technology Corp., ___ Cal. App. 4th ___ (October 20, 2010).

Trivedi involved a former President and Chief Executive Officer's lawsuit against his former employer for wrongful termination, asserting various causes of action, including age, national origin and race discrimination in violation of the Fair Employment and Housing Act (“FEHA”) and breach of the parties? employment agreement. In affirming the trial court's denial of defendant's motion to compel arbitration of plaintiff's employment-related claims, the court held that the trial court's determination that the arbitration clause was procedurally and substantively unconscionable is supported by uncontroverted facts. The court also held that the trial court did not err in refusing to sever the unconscionable provisions.

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