Arbitration
Confidentiality Agreement Makes Arbitration Deal One-Sided
In Cluck v. GEO Secure Services, LLC, the Fourth District Court of Appeal affirmed an order denying an employer’s motion to compel arbitration of wage and hour claims. Reading the arbitration agreement together with a confidentiality agreement the employee signed the same day, the court held the agreement to arbitrate was unconscionably one-sided and declined to sever the offending terms. The opinion was certified for partial publication.
Background
GEO hired Jeffrey Cluck to work at its El Centro detention facility in July 2022. During onboarding, Cluck electronically signed a two-page arbitration agreement calling for binding arbitration of all disputes arising out of or related to his employment. The agreement included an opt-out provision requiring an employee to mail or fax a signed statement to GEO’s legal department within 30 days.
On the same day, Cluck also signed a confidentiality agreement. In it, he promised to protect GEO’s confidential information, not to compete, and not to solicit GEO’s employees. That agreement provided that any dispute arising from it would be resolved in a Florida court, sitting without a jury.
In December 2023, Cluck and a coplaintiff filed a putative class action alleging wage and hour violations. GEO moved to compel arbitration. The San Bernardino County Superior Court denied the motion, declining to read the two agreements together but finding the arbitration agreement unconscionable on its own. GEO appealed.
What the Court Held on Reading the Agreements Together
While the appeal was pending, the California Supreme Court decided Fuentes v. Empire Nissan, Inc., which addressed how an arbitration agreement and a confidentiality agreement interact in an unconscionability analysis. At the court’s request, the parties briefed its effect.
The Court of Appeal concluded the two agreements had to be construed together under Civil Code section 1642, which provides that agreements relating to the same matters, between the same parties, and made as parts of substantially one transaction are taken together. Both were signed the same day as part of Cluck’s hiring, and both addressed how employment disputes would be resolved. The court found neither the integration clauses nor the theoretical option to opt out changed that result, and it reviewed the question de novo because interpretation turned on the text, not disputed extrinsic evidence.
An arbitration agreement and a confidentiality agreement signed as part of the same hiring may be read together under Civil Code section 1642, and read together here they made arbitration unconscionably one-sided by sending the employee’s likely claims to arbitration while routing the employer’s likely claims to court.
Substantive Unconscionability and Severance
Read as a whole, the arbitration agreement broadly covered the claims Cluck would most likely bring, including compensation, overtime, and rest-period claims. The narrower confidentiality agreement steered GEO’s most likely claims—breach of confidentiality, noncompete, and nonsolicitation duties—to a Florida court without a jury. GEO offered no business justification for the imbalance, so the court assumed it was unconscionable, noting terms that further favored GEO, such as a stipulation to irreparable harm and to injunctive relief.
The court also declined to sever the offending terms. It found the one-sidedness struck at the heart of the overall arrangement and that severance would not serve the interests of justice, so it affirmed the order denying arbitration in full.
What This Means for You
This decision confirms that an arbitration agreement and a confidentiality agreement signed together at hiring may be read as one under Civil Code section 1642. Read together, an arrangement that sends the employee’s likely claims to arbitration while keeping the employer’s likely claims in court can be substantively unconscionable. It touches disputes over whether workplace arbitration agreements are enforceable.
I write these summaries as general information about developments in California employment law. They are not legal advice and don’t create a mediator–client relationship. For guidance on a specific matter, consult a qualified attorney.