When the plaintiff was 16, he was employed by Kmart as a cashier. At the end of his training, he was required to read Kmart’s policy agreement, which included an agreement to submit all employment disputes to arbitration, and click online to acknowledge the agreement or click another button to opt out. After clicking on the confirmation, the employee receives the following message: “By clicking below, I acknowledge that I have reviewed and agreed to the terms and conditions set forth in the Arbitration Policy/Agreement. I also understand that I may change my mind and opt out of the Agreement within 30 days of today’s date by returning the Arbitration Policy/Agreement Opt Out form located at the end of the Agreement.” Lopez did not opt out of the agreement.
One month after his eighteenth birthday, Lopez joined a putative class action case against Kmart for failure to provide accurate written wage statements as California Labor Code required. Kmart filed a motion to compel arbitration consistent with the Agreement that Lopez electronically signed. Lopez contended that there was never any valid agreement in the first instance because Plaintiff was a minor when he acknowledged receipt of the Agreement, or, in the alternative, because Plaintiff was a minor when he acknowledged the Agreement, he disaffirmed it one month after his eighteenth birthday when he filed his class action.
JUDGE JACQUELINE SCOTT CORLEY California law plainly provides that a minor has the capacity to contract, with the exception of those contracts specifically prohibited… a minor may make a contract in the same manner as an adult, subject to the power of disaffirmance…. a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards Disaffirmance “may be made by any act or declaration” indicating intent to disaffirm; in other words, “express notice to the other party is unnecessary… and “[n]o specific language is required to communicate an intent to disaffirm… The policy behind disaffirmance is clear: it “shields minors from their lack of judgment and experience and confers upon them the right to avoid their contracts in order that they may be protected against their own improvidence and the designs and machinations of other people…. At the same time, the disaffirmance statute also reflects a policy “of discouraging adults from contracting with minors.”
The parties have not cited any California case in which a court considered a minor’s right to disaffirm an employment contract or arbitration agreement with an employer, and this Court has found none. However, no case law is required when the relevant statute spells out the answer: the plain language of Section 6710 entitles Plaintiff to disaffirm the Agreement… Filing the instant action was sufficient to disaffirm the contract…. Plaintiff did so within one month of reaching the age of majority, which by any measure is sufficiently soon to constitute the “reasonable time” that the statute envisions.
Kmart next contends that Section 6710 only applies to contracts for goods and services, not contracts that govern the employment relationship… Section 6710 refers to “a contract of a minor” generally, without reference to the type of contract. Instead, the only limitations the statute includes are the express statutory exceptions in Section 6711 and contracts for necessaries.
In short, although Plaintiff entered into a valid arbitration agreement with Kmart, he has exercised his statutory right of disaffirmance, thereby rescinding the contract and rendering it a nullity.
Defendant’s Motion to Compel Arbitration DENIED.
CRITICAL THINKING:
Kmart’s attorneys argued unsuccessfully that by allowing the minor to disaffirm the employment, the court was discouraging employers from hiring minors in the future. Do you think the court should have given more weight to this argument?
ETHICAL DECISION MAKING:
What values were in conflict when the court made this decision?
BUT WHAT IF …
WHAT IF THE FACTS OF THE CASE OPENER WERE DIFFERENT?