November 5, 2021

Western Growers Members Prevail in Arbitration Agreement Appeal

Elkhorn Packing Co. is a farm labor contractor for California-based vegetable grower D’Arrigo Brothers, Co., both Western Growers members.  Elkhorn employee Martinez-Gonzalez signed employment paperwork that included arbitration agreements as part of Elkhorn’s new hire orientation process.  Martinez-Gonzalez sued Elkhorn and D’Arrigo Brothers in federal court alleging violations of federal and state labor and wage laws. When Elkhorn asserted the case must be resolved by arbitration, the district court held that the arbitration agreements were invalid and unenforceable because of purported undue influence and economic duress by the employer.

The Ninth Circuit Court of Appeals reversed and remanded to the district court to determine whether Martinez-Gonzalez’s allegations were covered by the arbitration agreements. Under California law, the doctrine of economic duress can be used to rescind an agreement. In this case, the doctrine did not apply because the court found Elkhorn did not commit a wrongful act, reasonable alternatives were available to Martinez-Gonzalez, and Martinez-Gonzalez could still vindicate his interests in arbitration.  Martinez-Gonzalez alleged that as a Mexican resident, he was dependent on Elkhorn for housing and had already started work when presented with the arbitration agreements.  While “not ideal,” the court said the actions were a “far cry” from being considered “oppressive” under California law where: the timing and place of the orientation did not show that Martinez-Gonzalez’s will was overborne; and the lack of time to consult with attorneys or read the agreements did not improperly induce Martinez-Gonzalez’s signatures since Elkhorn did not interfere with his ability to use either option  Since the agreements were not mandatory and Martinez-Gonzalez could not be terminated for refusing to sign, he could have refused to sign or revoked the agreement.. Given the totality of the circumstances, the court panel held that the district court clearly erred in finding undue influence.

In dissent, one judge found the majority disregarded the district court’s factual findings following trial and the “clear error” standard of review.

Congratulations to the successful counsel in this case:

D’Arrigo Bros. Co., of California, Defendant, represented by Geoffrey F. Gega, Law Offices of Geoffrey F. Gega (Member of Western Growers Ag Legal Network)

Elkhorn Packing Co., LLC, represented by Regina Silva, Atkinson, Andelson, Loya, Ruud & Romo

Martinez-Gonzalez v. Elkhorn Packing (9th Cir. 19-17311 11/3/21)