## Facts

- Maribel Baltazar applied for a job at a Forever 21 warehouse and was given an 11-page employment application that included an arbitration agreement.
- Several signature lines were highlighted; Baltazar signed the application but initially refused to sign the arbitration agreement.
- A Forever 21 employee told her “sign it or no job”; Baltazar then signed the arbitration agreement and was hired.
- The agreement required both sides to arbitrate any claim related to hiring, employment, pay, separation, or termination, with an illustrative (nonexclusive) list including wage claims, contract claims, discrimination/harassment/retaliation claims, and termination disputes.
- The agreement allowed either party, if a dispute proceeded to arbitration, to seek preliminary injunctive relief in superior court.
- The agreement referenced arbitration under AAA rules, with a fallback to the California Arbitration Act if the AAA rules were found unenforceable, and included a confidentiality provision aimed at protecting trade secrets and other confidential information.
- After resigning, Baltazar sued alleging workplace harassment, discrimination, and retaliation; Forever 21 moved to compel arbitration, and Baltazar opposed on unconscionability grounds.

## Issues

1. Whether an adhesive employment arbitration agreement is unenforceable for unconscionability when it permits either party to seek preliminary injunctive relief in court.
2. Whether the agreement was substantively unconscionable because its illustrative list of arbitrable claims emphasized employee claims.
3. Whether confidentiality/trade-secret language and the AAA-rules-with-CAA-fallback provision created unfair one-sidedness sufficient to bar enforcement.
4. Whether failure to attach the AAA rules supported a finding of substantive unconscionability on these facts.

## Decision

- The Supreme Court of California affirmed the Court of Appeal and held the arbitration agreement enforceable.
- The clause permitting preliminary injunctive relief in court was not unconscionable because it merely reflected rights already available under California law.
- The employee-oriented examples did not make the agreement one-sided where the operative language required arbitration of any employment-related claim and the list was expressly nonexclusive.
- The confidentiality and trade-secret protections, without a showing of oppressive effect on the employee’s ability to pursue claims, did not establish substantive unconscionability.
- The AAA/CAA provision was treated as a severable procedural mechanism for conducting arbitration, not an attempt to compel arbitration after a court invalidated the agreement.
- The absence of attached AAA rules did not support substantive unconscionability where the challenges concerned terms clearly stated in the agreement itself.

## Legal Principles

- Under California law, unconscionability requires both procedural and substantive elements; adhesion and unequal bargaining power may show procedural unconscionability, but enforcement turns on whether the terms are substantively unfair.
- A contractual provision allowing parties to seek provisional injunctive relief in court is not substantively unconscionable when it tracks statutory authority and applies equally to both sides.
- Mutuality is evaluated from the agreement’s operative scope; a broad, bilateral duty to arbitrate “any” employment-related claim is not rendered one-sided by an illustrative list that highlights claims employees commonly bring.
- Confidentiality provisions aimed at protecting trade secrets and confidential business information are not, standing alone, substantively unconscionable.
- Failure to provide incorporated arbitration rules does not establish substantive unconscionability absent a showing that undisclosed rule terms created unfair surprise or substantive disadvantage.

## Conclusion

The court enforced the employment arbitration agreement, holding that although it was imposed as a condition of employment and therefore had some procedural unconscionability, the challenged terms—provisional-relief language, claim examples, confidentiality protections, and the AAA/CAA mechanism—did not create substantive unfairness sufficient to render the agreement unenforceable.


Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237 (Cal. 2016)