Arbitration agreement enforceable, but court wrong in denying new claims

Employers are becoming very sophisticated in drafting arbitration agreements that comply with procedural and substantive unconscionability standards. In a recent decision, however, even a valid arbitration agreement couldn’t preclude additional litigation to correct a trial court’s refusal to allow adding new Private Attorneys General Act (PAGA) claims.

Rocha brothers employment with U-Haul

Thomas Rocha was hired by U-Haul as a mechanic in 1997. His brother, Jimmy Rocha, was hired in 2003. As further detailed below, their employment was subject to an arbitration agreement. In 2015, both brothers filed administrative complaints with the federal Equal Employment Opportunity Commission (EEOC) alleging their manager, Don Sandusky, harassed them, discriminated against them, and then terminated them in retaliation for lodging complaints. The brothers obtained immediate right-to-sue notices from the Department of Fair Employment and Housing (now named the Civil Rights Department) and proceeded to court.

As a condition of continued employment, U-Haul implemented an employment dispute resolution (EDR) policy in 2003 that all employees were required to sign. The EDR policy was revised in 2007 and again in 2013. The Rocha brothers were required to—and did—sign the updated arbitration agreements and continued to work at U-Haul.