California Supreme Court ups limits on arbitration agreements
- California’s high court ruled that arbitration agreements can’t be used to waive public injunctive relief, reports SHRM. The ruling is an additional limitation on arbitration agreements.
- The California Supreme Court’s decision is from McGill v. Citibank, N.A., in which it said public injunction relief is meant to prevent activities that “threaten future injury to the general public."
- The plaintiff, Sharon McGill, charged Citibank with false advertising and wanted a ruling that would prevent Citibank from engaging in false advertising in the future. Citibank wanted the case handled through arbitration, but lost the case on that grounds.
As SHRM noted, McGill v. Citibank is a consumer arbitration case, but it has implications for HR professionals. Debate around arbitration agreements has created uncertainty about whether mediation can hold up against legal challenges.
The U.S. Supreme Court will likely have the final word on this issue, with three related cases on its docket. The addition of Justice Neil Gorsuch to SCOTUS, backed by a GOP-led Congress, means legal challenges against arbitration agreements could lose out in future cases.
In the meantime, employers should review their own arbitration agreements to ensure they don’t impede on the rights of the parties involved. Recent challenges to arbitration clauses contained in employee agreements at several startups have brought the issue to the forefront.