Summary
The Ninth Circuit reversed a district court order refusing to enforce arbitration agreements signed by a Mexican H-2A farmworker, holding that under California law the agreements were not voidable for economic duress or undue influence. The court found no wrongful act where the employer presented the agreements after the worker traveled to the U.S. and began work, and that the worker had reasonable alternatives—including simply asking whether signing was mandatory, which the employer never threatened. The panel also held that the worker failed to show undue susceptibility or excessive pressure sufficient to overcome his will, and remanded to determine whether the claims fell within the arbitration agreements' scope.
Topics
Practice areas
Questions Presented
- Whether the district court erred in finding that the arbitration agreements were signed under economic duress under California law.
- Whether the district court erred in finding that the arbitration agreements were signed under undue influence under California law.
Key quotations
“Impermissible threats include bad faith threatened use of civil process; threats which are a breach of the duty of good faith and fair dealing under a contract with the recipient; threats which would harm the recipient without significantly benefitting the party making the threat; or threats where 'what is threatened is otherwise a use of power for illegitimate ends.'” (11)
“In sum, while the circumstances surrounding the signing of the agreements were not ideal, they didn't make 'a mockery of [the] freedom of contract [or] undermine the proper functioning of our economic system.'” (12)
“Factors that may show the presence of excessive pressure include: (1) discussion of the transaction at an unusual or inappropriate time, (2) consummation of the transaction in an unusual place, (3) insistent demand that the business be finished at once, (4) extreme emphasis on untoward consequences of delay, (5) the use of multiple persuaders by the dominant side against a single servient party, (6) absence of third-party advisers to the servient party, (7) statements that there is no time to consult financial advisers or attorneys.” (22)
Factual background
Dario Martinez-Gonzalez, a Mexican farmworker, was recruited by Elkhorn Packing Company to work in the United States under an H-2A visa. After traveling by bus from Mexico to California and starting work, he was required to sign employment documents, including arbitration agreements, during a mass orientation held in a hotel parking lot at the end of a workday. The workers stood in line for up to 40 minutes, were urged to hurry, and were given no explanation of the agreements nor time to read them. Martinez-Gonzalez signed the agreements without reading them, believing they were mandatory. He earned significantly more than in Mexico and supported his family. He signed similar agreements for the 2017 season before quitting mid-season. He later sued Elkhorn for wage and hour violations, and the district court found the agreements unenforceable due to economic duress and undue influence.
Procedural history
The district court conducted a bench trial on the enforceability of the arbitration agreements and concluded that they were signed under economic duress and undue influence, thus unenforceable. The defendants appealed.
Remand instructions
to determine whether Martinez-Gonzalez's claims fall within the scope of the arbitration agreement.