Gonzalez sued Hughes Aircraft in a civil court for harassment and Hughes sought arbitration. The court found that the arbitration agreement was unenforceable. The Tribunal justified this decision by the fact that Gonzalez did not have a realistic opportunity to negotiate the terms of the standardized agreement, especially since the formal agreement had been submitted to him two months after his hiring. The agreement was therefore procedurally unacceptable. One of the most important findings of the previous Ontario Court of Appeal decision was that a mandatory arbitration decision constituted an illegal ESA contract because it had the potential to prevent a staff member from using the ESA redress mechanism (although Mr. Heller did not attempt to access this complaint mechanism). After working for the company for two years, De Melo filed a wage lawsuit with the California laboratory commissioner. In response, the company filed a petition in court to have the proceedings brought before the Labour Commissioner and for De Melo to be forced into conciliation. The Labour Commissioner intervened and opposed the petition, and the court rejected the petition and found that the conciliation agreement on the subject was unacceptable.
At Gonzalez v. Hughes Aircraft Employees Federal Credit Union, Gonzalez was hired as a customer service agent. Two months later, Hughes Aircraft asked him to sign a standardized form of work arbitration. The arbitration agreement required employees to use the company`s internal redress procedure for all litigation. If the dispute was not successfully resolved through the appeals process, the staff member had 20 working days to express his right to conciliation. Late claims have been cancelled. The agreement limited the investigation to two filings. Although an employee was required to settle all claims, Hughes Aircraft was allowed to seek legal assistance in court on virtually all employment-related matters. One of the issues before the Supreme Court was whether Mr. Heller`s assertion that the arbitration agreement was invalid should be settled by the courts or by the arbitrator.
The Supreme Court has previously adopted a general rule known as „jurisdiction,“ which states that a challenge to an arbitrator`s jurisdiction should „normally“ be resolved by the arbitrator. The general rule is subject to limited exceptions, for example where the challenge can be resolved on a single question of law or on a question of mixed submersion and law that requires only a cursory examination of the evidence. Applying this analysis to Mr. Heller`s case, the Supreme Court found that the arbitration agreement was unacceptable. Under California law, an arbitration agreement that is procedurally and materially unacceptable can be struck down. A slippery scale is used to judge procedural nenupritism in relation to material impitoyability: the longer the contract is substantial, the less evidence of procedural inadmissibility is required to conclude that the term is unenforceable, and vice versa.