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Armendariz v. Foundation Health Psychcare Services, Inc. - 24 Cal. 4th 83

Rule:

Where appropriate and to the extent authorized by law, the use of alternative means of dispute resolution, including arbitration, is encouraged to resolve disputes arising under the acts or provisions of federal law, amended §118 of the Civil Rights Act of 1991, 42 U.S.C.S. § 1981.

Facts:

Plaintiff employees sued defendant employer, alleging violations of the California Fair Employment and Housing Act, on the ground  they were terminated because of their perceived heterosexual orientation. Defendant petitioned to compel arbitration, since both plaintiffs had signed pre-employment application forms containing mandatory arbitration clauses. The trial court held the entire agreement unenforceable. On appeal, the court held the agreement was enforceable except the limitation for damages.

Issue:

Are the claims under the California Fair Employment and Housing Act subject to arbitration?

Answer:

No

Conclusion:

The court reversed and  \held that the claims were arbitrable if arbitration permitted vindication of plaintiffs' statutory rights. The court further held the arbitration agreement involved was unenforceable because the agreement contained so many unconscionable provisions that it was not possible to make the agreement enforceable by severing the offending provisions.

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