Metters v. Ralphs Grocery Company
Filed April 1, 2008, Fourth District, Division 1

Binding Arbitration Found Invalid in Discrimination and Harassment Case

Samuel Metters sued his employer, Ralphs Grocery Company, for racial discrimination and harassment based on the California Fair Employment and Housing Act (FEHA).

In response, Ralphs filed a motion for binding arbitration.

According to court documents, as early as May 2005, Metters responded positively to a question on his annual evaluation form regarding complaints about unlawful harassment, discrimination, or retaliation.

However, Ralphs asserted that in March, the manager of employee relations sent Metters a follow-up letter covering a dispute-resolution form and other materials, which Metters did not respond.

In August, Metters complained again to Ralphs’ company hotline. He was sent another letter covering the same enclosures. Metters signed and returned the dispute form in September, claiming harassment and discrimination based on race, color, and national origin/ancestry since June 2004.

The two-page form was entitled Notice of Dispute & Request for Resolution. The court noted that the close of the second page was notice of the availability of voluntary mediation and of dispute-resolution only through binding arbitration in the event informal means failed.

Further, the text of the employee’s agreement to binding arbitration that appeared just above the signature line referred to a separate policy disclosure that detailed arbitration procedures and covered disputes.

According to Metters, he said he had been complaining about discrimination since August 2004. He added that he had contacted Ralphs’ district manager, its employee-relations department, and the company hotline on the matter.

He also said his efforts became persistent in September 2005. He received the dispute form, but not the policy disclosure. He was told by employee relations, without more, to fill out the form and submit it to Ralphs’ legal office.

In response, Ralphs moved to compel arbitration. Metters responded that he understood that he needed to complete, sign, and submit the dispute form before his claims would be investigated. No one told him about arbitration.

However, he was unaware that he had signed an arbitration agreement although he asserted that he never agreed to arbitrate his claims against Ralphs.

During hearing, the trial court denied Ralphs’ motion, finding that there was “no meeting of the minds” and therefore no valid arbitration agreement.

In review, the Fourth District court of appeal affirmed the trial court’s decision, holding that there was substantial evidence to support the finding that there was no valid agreement to arbitrate Metters’s discrimination claim.

The court explained that generally, one who signs an instrument, which on its face is a contract, is deemed to have assented to all its terms. However, that rule does not apply to a writing that does not appear to be a contract and where the terms were not called to the attention of its recipient.

During the hearing, the trial court found the dispute form, titled Notice of Dispute & Request for Resolution, was not a contract nor did it alert Metters that he was agreeing to a binding arbitration.

Further, the appeals court found that the arbitration provisions of the dispute form were confusing and full of legalistic references to the unattached policy disclosure. The form explained that the policy applied to covered disputes, but did not define such disputes.

Thus, Metters had no choice to avoid arbitration if he wanted some action taken on his complaints, despite the fact that under the Fair Employment and Housing Act, Ralphs’ duty to investigate promptly was “affirmative and mandatory” and not dependent on whether Metters agreed to arbitration.

The Fourth Appellate District therefore affirmed the decision of the trial court, which found the arbitration agreement invalid.