CarMax Argues That Arbitration Clause Is Enforceable
Tuesday, February, 25, 2014
California-based Auto retailer CarMax has argued in a California Appeals Court that the arbitration clause in its employment contracts is enforceable despite a lower court’s finding otherwise. The issue stems from a former employee’s wrongful termination suit. The former employee, Mario Casas, had sought to bring the suit to court despite the arbitration agreement because the arbitration clause was “illusory” due to language that granted CarMax the ability to change its terms at any time.
A lower court agreed with Casas, allowing the lawsuit to proceed without arbitration because the language made the arbitration clause unenforceable. CarMax maintains that simply reserving the right to alter terms at a future point in time – with appropriate notice to all parties – does not in itself negate the enforceability of the arbitration clause itself.
The enforceability of the arbitration clause must be resolved before the actual employee discrimination and wrongful termination suit can be resolved, as it will determine whether the resolution must come via arbitration or the courts.