Should Sanchez be compelled to submit to arbitration to resolve his complaint? Explain.
Octavio Sanchez worked as a delivery driver at a Domino’s Pizza restaurant owned by Western Pizza. He drove his own car in making deliveries. His hourly wage ranged from the legal minimum wage to approximately $0.50 above minimum wage. Western Pizza reimburses him at a fixed rate of $0.80 per delivery regardless of the number of miles driven or actual expenses incurred. Sanchez brought this class action against Western Pizza, alleging that the flat rate at which drivers were reimbursed for delivery expenses violated wage and hour laws and that the drivers were paid less than the legal minimum wage. Sanchez and Western Pizza are parties to an undated arbitration agreement. The agreement states that (1) the execution of the agreement “is not a mandatory condition of employment”; (2) any dispute that the parties are unable to resolve informally will be submitted to binding arbitration before an arbitrator approved by both parties and “selected from the then-current Employment Arbitration panel of the Dispute Eradication Services”; (3) the parties waive the right to a jury trial; (4) the arbitration fees will be borne by Western Pizza, and except as otherwise required by law, each party will bear its own attorney fees and costs; (5) small claims may be resolved by a summary small claims procedure; and (6) the parties waive the right to bring class arbitration. Should Sanchez be compelled to submit to arbitration to resolve his complaint? Explain.
The following are the basis on which Individual S cannot be compelled:
Procedural unconscionability deals with oppression or unfair surprise, while substantive unconscionability deals with terms that are very harsh or are one-sided. There are two instances in this case that indicate procedural unconscionability.
First is the difference in the bargaining power of an employer as compared to that of a worker on a low-wage scale. This makes the workers feel pressured to sign the agreement of arbitration.
Second is the failure of the agreement to mention that there is only one designated arbitrator, even if there is the freedom to choose one out of multiple. This fact gives an advantage to Organization W, in this case, which results in a confined decision to be categorized under oppression. Under oppression be termed as unfair, which is procedural unconscionability. So the court should inspect the one-sidedness of the agreement.
The selection of an arbitrator, in presence of only one arbitrator, results in a lack of alternatives and an unfair system. However, another option can be to impose this on a take-it-or-leave-it basis. Otherwise, the compulsion made by Organization W represents the untrue appearance of neutral decision-making, which also gives the organization a chance to gain an advantage by being acquainted with the arbitrator.
The agreement in this case waives off a class arbitration that clashes with the public policy. The class arbitration, when unchallenged, can be substantially disadvantageous to the workers seeking an adequate claim. The illicit motive, supported by the agreement, combined with distinctive advantages, grants the employer the denial of proper compelling arbitration.
No, the arbitration agreement is unethical and unconscionable, procedurally and substantively. Both unconscionabilities need to be present to justify the denial of the contract enforcement or the clause based on it. The less the procedural unconscionability, the more substantive unconscionability is needed to decide the enforceability of a contract or a clause and vice versa.