California Legal Brief

The Rule of Stoker v. Blue Origin is that an arbitration agreement containing multiple unconscionable provisions — including overbroad scope beyond employment, lack of mutuality favoring employer, predispute jury trial waiver, and blanket representative action waiver — cannot be enforced and severance is inappropriate where the defects indicate systematic effort to secure an unfairly advantageous forum, under circumstances where the employer imposed the adhesive agreement as a condition of employment.

Appeal from order denying petition to compel arbitration in Superior Court, Los Angeles County.

Defendant Appellant was Blue Origin, LLC — the space exploration company employer that sought to compel arbitration under the employment agreement.

Plaintiff Respondent was Craig Stoker — the former senior director of program management who was terminated after making safety complaints and sued for employment violations.

The suit sounded in employment law violations. The complaint alleged retaliation, sexual/gender discrimination, sexual/gender harassment, failure to prevent discrimination and harassment, breach of contract, negligent hiring, wrongful termination, and intentional infliction of emotional distress.

The key substantive facts leading to the suit were Blue Origin hired Stoker as senior director in August 2020, requiring him to sign an employee agreement with arbitration provisions as a condition of employment. Stoker was terminated in October 2022 after making safety complaints he believed were ignored due to his gender.

The procedural result leading to the Appeal: The trial court denied Blue Origin's motion to compel arbitration, ruling that the EFAA applied to preclude forced arbitration of sexual harassment disputes, and did not reach the unconscionability arguments.

The key question(s) on Appeal: Whether the arbitration agreement was procedurally and substantively unconscionable and unenforceable, and whether unconscionable provisions could be severed.

The Appellate Court held the arbitration agreement was both procedurally unconscionable as an adhesion contract and substantively unconscionable due to overbroad scope covering all claims (not just employment-related), lack of mutuality exempting employer's likely claims while requiring arbitration of employee's likely claims, predispute jury trial waiver, and blanket representative action waiver including PAGA claims, and that severance was inappropriate given multiple defects indicating systematic effort to secure unfair advantage.

The case is inapplicable when the arbitration agreement is limited to employment-related disputes, provides mutual arbitration obligations for both parties, does not contain predispute jury trial waivers, allows representative PAGA actions, or contains fewer unconscionable provisions that can be severed without systematic unfairness.

The case leaves open the application of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) to these specific claims, as the court expressly declined to address EFAA applicability after finding unconscionability.