Villagomez v. Tesla, Inc., dba Tesla Motors, Inc.

Background

Before Tesla hired Andre Villagomez, it required him to accept and sign an offer letter containing an arbitration agreement. Villagomez conceded that he signed the letter and that the agreement covers the individual claims he brought against Tesla.

Arguments about the arbitration agreement

Villagomez argued that the arbitration agreement was procedurally unconscionable, meaning unfairly imposed during the contracting process. He said the agreement was a contract of adhesion, or a take-it-or-leave-it contract, and that it did not explain that arbitration involved giving up the right to a jury trial. The court stated that California courts had routinely rejected those arguments.

Villagomez also argued that the Non-Disclosure and Inventions Assignment Agreement in the offer letter was substantively unconscionable, meaning unfair in its terms. He challenged an exemption from arbitration for disputes involving confidential information, the return of company records, and non-solicitation, arguing that the exemption was likely to benefit only Tesla.

Ruling

The court granted Tesla’s motion to compel arbitration. Although the court stated that Villagomez may have a point about the challenged exemption, it ruled that the provision could be severed from the offer letter without affecting the arbitration agreement. The court dismissed the case without prejudice.