Gold v. Illumina, Inc.

Background

In January 2022, Albert Mark Gold accepted an employment offer from Verinata Health, Inc., which the opinion identifies as a wholly owned subsidiary of Illumina, Inc. The offer was contingent on Gold signing an arbitration agreement. Gold signed the agreement on February 11, 2022.

The agreement defined the company to include Illumina and its current and future subsidiaries, parents, affiliates, successors, and assigns. It required arbitration of disputes arising from or relating to Gold’s employment. The agreement provided that arbitration would occur in the county where Gold was employed when the dispute arose.

Illumina initiated arbitration with JAMS in San Diego County. Gold objected, arguing that the arbitration should have been initiated in San Mateo County, where he was employed when the dispute arose. The parties later agreed to move the arbitration venue to San Mateo County. Gold then filed this lawsuit against Illumina, asserting claims for retaliation, unfair competition, wrongful termination, and breach of contract.

Defendants filed a motion to dismiss and compel arbitration. The court considered whether the arbitration agreement was valid and enforceable under California law and whether it covered Gold’s claims.

Consideration

Gold argued that the arbitration agreement lacked consideration, meaning an exchange of legally recognized promises supporting a contract. The court rejected that argument. It held that each party’s promise to arbitrate covered disputes and give up a judicial forum for those disputes was sufficient consideration.

Verinata’s Ability to Enforce the Agreement

Gold argued that Verinata could not enforce the agreement because it was not named as a party. The court applied California law governing when a non-signatory may enforce an arbitration agreement. It held that Verinata was a third-party beneficiary—a non-signatory intended to benefit from the contract—and therefore could enforce the arbitration agreement.

The court relied on the agreement’s language covering Illumina’s subsidiaries and its stated application to employment disputes with Illumina or its subsidiaries. The court concluded that the agreement was designed to benefit Verinata, Gold’s employer, by allowing it to compel arbitration of employment-related disputes. Allowing Verinata to enforce the agreement was also consistent with the contract’s objectives and the parties’ reasonable expectations.

Alleged Material Breach

Gold argued that Defendants materially breached the agreement by initially starting arbitration in San Diego County and by continuing to administer the proceeding from San Diego while JAMS issued a second list of proposed arbitrators. A material breach is a serious contract violation that may prevent the other party from receiving substantial performance.

The court held that Gold had not shown a sufficiently serious breach to prevent enforcement of the arbitration agreement. The court emphasized that the parties agreed to change the venue to San Mateo seven days after Gold first raised the objection and more than a week before JAMS issued the second list. It found that the conduct did not preclude substantial performance of the agreement.

Unconscionability

Gold also argued that the arbitration agreement was unconscionable, meaning so unfair when made that a court may refuse to enforce it. Under California law, this defense generally requires both procedural unconscionability, involving oppression or surprise in contract formation, and substantive unconscionability, involving overly harsh or one-sided terms.

The court recognized that the agreement may have been a contract of adhesion because it was a pre-written agreement presented as a condition of employment. But the court found no additional indication of oppression or surprise. Gold was told about the agreement in his offer letter several weeks before signing it, the agreement was a three-page standalone document, nothing indicated that he lacked sufficient time to review it, and the agreement advised him to consult an attorney. The court also found no indication that Defendants concealed the agreement, placed Gold under duress, lied to him, or manipulated him.

The court rejected Gold’s argument that failing to name Verinata specifically made the agreement substantively unconscionable. It concluded that Gold had not shown why the omission was unduly oppressive or unreasonably favorable to Illumina. Because the court found no substantive unconscionability, it held that the arbitration agreement was enforceable.

Disposition

The court found that a valid arbitration agreement existed, that Verinata could enforce it, and that the agreement governed Gold’s claims. The court granted Defendants’ motion to compel arbitration and stayed the case. After the arbitration ends, the parties must jointly submit a report within fourteen days advising the court of the outcome and requesting either dismissal of the case or reopening of the case and a case-management conference. In the meantime, the clerk was directed to administratively close the case.