Olvera v. El Pollo Loco (April 27, 2009) 173 Cal.App.4th 447

Plaintiff was the general manager of a restaurant owned and operated by El Pollo Loco.  Salvador Amezcua filed a class action complaint against El Pollo Loco.  A first amended complaint was filed, adding another Plaintiff to the action.  The suit alleged failure to pay overtime, failure to provide meal breaks, unlawful deductions from earnings, failure to provice accurate itemized wage statements, unfair business practices, and conversion.  Defendant moved to compel arbitration.  The trial court ruled that the arbitration agreement was procedurally and substantively unconscionable.  Following Gentry, the Court of Appeal  (2nd App. Dist., Div. 3) readily identified procedural unconscionability.  The court concluded that inequality in bargaining power between the low-wage employees and their employer makes it likely that the employees felt at least some pressure to sign the acknowledgment and agree to the new dispute resolution policy, whatever they understood that policy to be.  Also, the employee’s agreement to be bound by the new dispute resolution policy was not an informed decision.  The explanatory materials provided to the employees stated that the new dispute resolution policy was that employees should first contact management to resolve any problem and then, if the problem was not resolved in that manner, mediation was required.  The Court of Appeal also found substantive unconscionability. 

This is another example of the courts recent decisions to marginalize employer-drafted arbitration agreements .