Fieldworker signed arbitration document voluntarily, panel finds

An arbitration agreement a farmworker signed with his employer after he already began harvesting lettuce is enforceable because he was not forced to sign it, a divided federal appeals court panel ruled Wednesday.

The majority of the three-judge 9th U.S. Circuit Court of Appeals panel reversed a ruling by U.S. Judge Edward M. Chen, who refused to enforce arbitration for an employee who sued Elkhorn Packing Co. in 2018 alleging state and federal labor law violations. Chen, of the Northern District of California, ruled after a two-day bench trial that Dario Martinez-Gonzalez signed the agreement under economic duress which resulted in undue influence and pressure.

But the 9th Circuit found Elkhorn never coerced Martinez-Gonzalez, nor did it threaten to withhold his pay if he refused to sign the agreement.

"Because Elkhorn did not commit a wrongful act and reasonable alternatives were available to Martinez-Gonzalez, we hold that the doctrine of economic duress does not render the arbitration agreement unenforceable. Martinez-Gonzalez has not established that Elkhorn engaged in any 'wrongful act' under California law," the opinion states. Martinez-Gonzalez v. Elkhorn Packing Co., 2021 DJDAR11442 (9th Cir. 2021).

Judge Patrick J. Bumatay, an appointee of President Donald Trump, wrote the opinion and was joined by 6th U.S. Circuit Court of Appeals Judge Eugene E. Siler, an appointee of President George H. W. Bush sitting by designation. Judge Johnnie B. Rawlinson, an appointee of President Bill Clinton, dissented.

The majority ruled it was wrong to conclude Martinez-Gonzalez couldn't ask whether he could decline to sign the agreements. While the circuit was sympathetic to Martinez-Gonzalez's economic circumstances, "we must be guided by the law, nor our sympathies," Bumatay wrote.

"The district court and dissent contend that these facts don't matter because Martinez-Gonzalez subjectively believed the arbitration agreements were mandatory. But, under California law, a party's speculation about his termination, even if justified or 'highly likely,' cannot be used to prove the lack of reasonable alternatives."

In dissent, Rawlinson said her colleagues focused solely on the fact that Martinez-Gonzalez signed the agreement and oversimplified the details found at trial. "The majority's suggestion that 'facts don't matter' to me or to the district court, is nothing short of gaslighting," Rawlinson wrote.

In a footnote, Bumatay wrote that he and Siler would "never criticize our dissenting colleague in such a manner," and that they "respect her too much."

Martinez-Gonzalez had no chance to ask for a copy of the agreement for review, and was rushed through the process, Rawlinson wrote. He was lined up at a hotel parking lot with 140 other workers waiting to sign after a long day's work, the judge wrote. Rawlinson said employees had to sign the documents before they started working.

Regina Silva, partner at Atkinson, Andelson, Loya, Ruud & Romo and Geoffrey F. Gega of the Law offices of Geoffrey F. Gega represented Elkhorn Packing and co-defendant D'Arrigo Bros.

"The 9th Circuit applies California law with respect to the doctrines of undue influence and economic duress to find that so long as an employer does not exert coercion or make threats against an employee, the employee regardless of his/her status as a foreign/H-2A worker is held to the same standards of proof with respect to assertion of these defenses," they said in a statement.

Karl Gilbride and Rodolfo Padilla of Public Justice PC, along with Ana Vicente de Castro and Josephine B. Weinberg of the California Rural Legal Assistance Inc. represented Martinez-Gonzalez. They could not be reached for comment.

Gilbride said in an email Wednesday, "The district court heard from six witnesses over two days and found that the facts they described, an assembly-line process where workers were lined up after a full day of work in the fields and told to sign a packet of documents they didn't have a chance to read or take with them after signing, met the standard for economic duress and undue influence under California law. We're disappointed that the panel majority failed to defer to those findings of fact and seemed to ignore the economic realities of the situation -- that our client and his co-workers were dependent on their employer for their housing, food and transportation, and had not yet been paid for any of their work, when they were presented with the documents to sign. We don't believe the clear error standard of review was properly applied here."