Strilen v. Supercuts, Inc.

60 Cal.Rpti.2d 138 (1997)

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Nature of the Case

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Facts

D employed Stirlen (P) as its vice-president and chief financial officer from January 1993 until March 1994, when he was terminated. On numerous occasions in late 1993 and early 1994 P informed D of various operating problems he felt contributed to the general decline in Supercuts' retail profits and of 'accounting irregularities' he feared might be in violation of state and federal statutes and regulations. After P brought these concerns to the company's auditor, D reprimanded him, accused him of being a 'troublemaker' and told him that if he did not reverse his position on the issues taken to the auditor he would no longer be considered a 'member of the team.' At the end of February 1994, P was suspended him from his job. He was terminated the following month. P commenced this wrongful discharge case in December 1994. P alleged seven causes of action for (1) a judicial declaration that an arbitration clause in his employment contract was null and void in certain particulars and unenforceable; (2) wrongful termination in violation of public policy; (3) defamation; (4) intentional misrepresentation; (5) violation of Labor Code section 970, governing certain knowingly false representations inducing workers 'to change from one place to another'; (6) breach of contract; and (7) breach of the implied covenant of good faith and fair dealing. D moved for the dispute to be submitted to binding arbitration, as specified in the employment contract. Paragraph 11 of the agreement is entitled 'Submission to Jurisdiction; Arbitration.' It consists of four subparagraphs. It provides: 'Any action initiated by D seeking specific performance or injunctive or other equitable relief in connection with any breach or violation of Paragraphs 7, 8, 9, or 10 of this Agreement may be maintained in any federal or state court. Subparagraph (b) states that any disagreement that P has must be submitted to arbitration. Subparagraph (c) restricts the remedies available in arbitration to a money award not to exceed the amount of actual damages for breach of contract, less any proper offset for mitigation of such damages, and the parties shall not be entitled to any other remedy at law or in equity, including but not limited to other money damages, exemplary damages, specific performance, and/or injunctive relief. Subparagraph (d), prescribes the method for choosing an arbitrator and provides that the arbitrators decision 'will be final and binding on the parties,' the arbitrator's fees will be shared by the parties, the arbitration shall be held in Marin County, and 'the arbitrator shall not have the power to alter, amend, or modify any of the provisions of the agreement.' The trial court found subparagraph (c) restricting the arbitration to a money award not to exceed the amount of actual damages for breach of contract, and specifically excluding, among other things, exemplary damages that these restrictions were violative of Civil Code section 1668. It found 'D can use the court system for certain claims, but P must use arbitration for all his, with very limited damages. The trial court held that the arbitration clause was 'so one-sided as to be unconscionable.' D appealed.