Plaintiff former employee sued defendant former employer, asserting causes of action arising out of the termination of his employment. The employer filed a motion to compel arbitration. The Alameda County Superior Court, California, denied the motion, concluding the arbitration clause in the parties' employment agreement was unenforceable due to unconscionability. The employer appealed.
The court concluded that the arbitration clause was procedurally and substantively unconscionable. The agreement was prepared by the employer, it was a mandatory part of the agreement, and the employee was not given a copy of the arbitration rules. The arbitration clause was contrary to the California Fair Employment and Housing Act (FEHA) as to its attorney fees and cost recovery provision. The arbitration clause placed the employee at greater risk than if he brought his FEHA claims in court. Enforcing the arbitration clause would lessen the incentive to pursue claims deemed important to the public interest and weaken the legal protection provided to plaintiffs who bring nonfrivolous actions from being assessed fees and costs. The trial Business and corporate attorneydid not err in refusing to sever the unconscionable provisions. The defects in the agreement, when coupled with the procedural unconscionability underlying its formation, led the court to conclude that to enforce the agreement would, in practical effect, impose arbitration on an employee as an inferior forum that worked to the employer's advantage.
The order denying the employer's motion to compel arbitration was affirmed.
Defendant state treasurer appealed the decision of the Superior Court of Los Angeles County (California), which entered judgment in favor of plaintiff taxpayer in plaintiff's suit against defendant to recover an amount of taxes, plus interest, levied against plaintiff and paid under protest, pursuant to Cal. Const. art. XIII, § 16.
Defendant state treasurer levied a tax against plaintiff taxpayer pursuant to Cal. Const. art. XIII, § 16, which provided that all business corporations doing business within the state annually pay a tax measured by their net income. Plaintiff paid the tax, and brought an action against defendant to recover the tax. Defendant demurred to the complaint on the ground that it did not state a cause of action, the court below overruled the demurrer and upon defendant's failure to answer, entered judgment in favor of plaintiff. Defendant appealed, and the court affirmed. The court found that the phrases "doing business" and "business corporation," as used in federal excise tax acts, had acquired a well-defined meaning through judicial interpretation, which precluded its application to a company such as plaintiff, which was organized to hold stock for another company, did not trade in stock, and engaged in no activities outside the receipt and disbursement of dividends. The court held that where legislation was framed in the language of an earlier judicially construed enactment, there was a presumption of intent to adopt the construction as well as the language of the prior enactment.
The court affirmed, holding that plaintiff taxpayer was not a business corporation within the meaning of relevant tax statutes when it was organized to hold the stock of another company, did not trade in such stock, and engaged in no other activities than the receipt and disbursement of dividends; therefore, it was not subject to pay a tax according to or measured by net income.
