©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 87 prejudice that litigation is inherently superior to arbitration—thus convey an anti-arbitration bias that conflicts with the FAA, which requires courts to place arbitration contracts on an equal footing with contracts generally. Inventing the “free peek” doctrine to undermine arbitration agreements. Parties contemplating a potential dispute might reasonably agree to seek mediation before escalating their differences. But that’s not so easy in California. Several appellate decisions have faulted arbitration agreements for requiring mediation as a pre-condition to arbitration, particularly when this contractual provision obliges only the employee, not the employer. The leading (2004) decision held that an arbitration agreement was substantively unconscionable for requiring only the employee—not the employer—to engage in a prearbitration “employer-controlled dispute resolution” process. The Court of Appeal reasoned that this prearbitration provision was substantively unconscionable because while it superficially seemed “a laudable mechanism for resolving employment disputes informally, it connotes a less benign goal. Given the unilateral nature of the arbitration agreement, requiring plaintiff to submit to an employercontrolled dispute resolution mechanism (i.e., one without a neutral mediator) suggests that defendant would receive a `free peek’ at plaintiff’s case, thereby obtaining an advantage if and when plaintiff were to later demand arbitration.”61 Hostility toward default discovery limitations. The Court of Appeal has held that provisions in an arbitration agreement that limit discovery are unconscionable where “the default discovery allowed … is low, the burden placed on [the claimant] to justify additional discovery is somewhat greater than a simple showing of need or good cause, and [the claimant] has established as a factual matter that she will likely need to conduct at least three to five times the number of depositions allowed[.]”62 A 2020 Court of Appeal decision affirmed a trial court refusal to enforce an arbitration agreement in a case where the agreement’s limit of two depositions would make it impossible for a 15-year employee to vindicate FEHA claims for age and sexual harassment, even though the agreement empowered the arbitrator to authorize more discovery upon a showing of sufficient cause.63 Hostility toward shortened statutes of limitations. Employers often seek to have employees agree to shorten the time in which the employee can sue. California courts, being hostile to those efforts, have struck down one-year limitations periods that appear in arbitration agreements, reasoning that such a short limitations period would unfairly preclude an employee from relying on legal theories that could extend the deadline for suing.64 While one court upheld a six-month limit on employee claims measured from the termination of employment,65 another court found such a provision unenforceable, where it limited an otherwise-applicable four-year statute of limitations to six months.66 A 2008 Court of Appeal decision upheld, with respect to a FEHA claim, a one-year limitations period imposed by an arbitration agreement, where the period did not unreasonably restrict the plaintiff’s ability to vindicate his FEHA rights, but then the California Supreme Court took that decision off the books by granting review of the case.67 The Supreme Court’s own decision, in 2010, declined to address the viability of the one-year limitations period.68 The Court of Appeal has held that even a one-year limitations period imposed by an arbitration agreement would be unreasonably short for a FEHA claim.69 And it was not enough that the agreement authorized the arbitrator, for good cause, to extend the limitations period: the employer “cannot rely on that provision to excuse an otherwise substantively unconscionable limitations provision … . A provision delegating authority to the arbitrator to resolve questions of unconscionability is itself unconscionable.”70 Meanwhile, employees reneging on promises to arbitrate need not fear that their arbitration claim-filing deadline looms while they pursue a court action to evade arbitration. In California, if an arbitration agreement requires that arbitration be initiated by a deadline, commencing a court action by that deadline tolls the arbitration claim-filing
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