Jackson v. Applied Materials Corporation

Background

Kevin F. Jackson brought a Title VII action against his former employer, Applied Materials Corporation, and its Managing Director of Human Resources, Keith Dupen. Jackson alleged that Applied Materials denied him a transfer, gave him poor performance reviews, constructively discharged him, and took other retaliatory actions because of his race. The complaint asserted race-discrimination and retaliation claims under Title VII of the Civil Rights Act of 1964.

Applied Materials and Dupen moved to compel arbitration under Jackson’s employment agreement and to stay the court case while arbitration proceeded. The agreement stated that claims against Applied Materials or its agents or employees, including Title VII claims, would be resolved through binding arbitration administered by JAMS under its employment arbitration rules. Jackson signed the offer letter and employment agreement on June 1, 2018.

Analysis

The court applied the Federal Arbitration Act, which requires courts to enforce a valid written arbitration agreement when the dispute falls within that agreement’s scope. Under California law, the court examined whether the parties agreed to arbitrate and whether Jackson proved a contract defense such as duress or unconscionability. Unconscionability is a legal doctrine allowing a court to refuse enforcement of an excessively unfair contract or term.

The court found that the employment agreement was an adhesion contract because Applied Materials presented it as a condition of employment on a take-it-or-leave-it basis. The court therefore found minimal procedural unconscionability, meaning some unfairness in how the agreement was presented. But the court found no other indication that Jackson was pressured, deceived, or surprised into signing it.

The court also rejected Jackson’s claim of substantive unconscionability, which concerns whether the agreement’s terms are excessively unfair. Jackson argued that JAMS could not provide a neutral arbitrator because some arbitrators might have conflicts of interest, Applied Materials might be a repeat JAMS customer, and a JAMS arbitrator had sent an email containing racist sentiments about Black people. The court concluded that the agreement required a neutral arbitrator, that JAMS rules allowed conflict disclosures and party participation in selecting an arbitrator, and that the cited incident did not establish that all JAMS arbitrators were biased. The court noted that Applied Materials had no objection to asking JAMS for information that would help the parties avoid arbitrators copied on the email.

The parties did not dispute that the arbitration clause covered Jackson’s Title VII claim. The court therefore found the clause enforceable and concluded that Jackson had to arbitrate that claim.

Ruling

The court granted Applied Materials’s motion to compel arbitration. It stayed the action in its entirety pending the final resolution of arbitration and ordered the parties to file a joint status report within two weeks after arbitration ended. The clerk was directed to administratively close the case. Magistrate Judge Virginia K. Demarchi signed the order.