CA Court Finds Arbitration Agreement with Modification Provisions to be Illusory
1 min read
Apr 23, 2012
The California Court of Appeals recently found an employer's arbitration agreement to be "illusory" because it contained a modification provision which stated that the employer had the right to amend, modify, or revoke the arbitration contract on 30 days' written notice, and at the end of the 30-day period, a contract change applies to any claim that has not been filed with the American Arbitration Association.
Specifically, the Court held that an arbitration contract which contains a modification provision is illusory if an amendment, midfication, or revocation applies to claims that have accrued or are known to the employer. However, if a modification provision contains restrictions so that it exempts all claims, accrued or known, from a contract change, the Court held that this would not be deemed illusory.
The Court noted that the reason it was illusory was because an employer could amend the contract in anticipation of a specific claim, altering the arbitration process to the employee's detriment and making it more likely the employer would prevail in the end. Further, the Court reasoned that it was illusory because the employer could terminate the arbitration agreement altogether, if the Company deemed that to be more beneficial.
Arbitration agreements often come under careful scrutiny here in California, particularly in the wake of cases like AT&T v. Concepcion and Mayers v. Volt Management.
Topics
Featured Insights

Event
Apr 23, 2026
Driving Ahead: Insights from Industry Leaders Auto Finance Seminar

Consumer Crossroads: Where Financial Services and Litigation Intersect
Mar 13, 2026
DOJ Settlement with Car Retailer Highlights SCRA Repossession Risks

Privacy, Cyber & AI Decoded Alert
Mar 11, 2026
Compliance Considerations for GDPR Consent in Biotech Clinical Research

Press Release
Mar 4, 2026
Marcia Mueller Named the 2026 Mentorship Award Winner by YWCA Northwestern Illinois

Press Release
Mar 3, 2026
Hinshaw Announces New Administrative Leadership Appointments

In The News
Feb 27, 2026
Hinshaw Partners Examine Implications for Nursing Homes of New Illinois Aid-in-Dying Law

In The News
Feb 24, 2026
Lucy Wang Authors Law360 “Expert Analysis” on Why Attorney Civility Means More in 2026

Press Release
Feb 13, 2026
Hinshaw Team Wins Appeal in Criminal Indictment of Waukegan City Clerk Janet Kilkelly

Press Release
Feb 10, 2026
Hinshaw Trial Team Secures $0 Defense Verdict in $15 Million Auto Accident Trial

Press Release
Feb 5, 2026
Hinshaw Legal Team Secures Directed Verdict in Florida Equine Fraud Case

Press Release
Feb 4, 2026
Hinshaw Celebrates 17 Consecutive Years of Being Named an Equality 100 Award Winner
![[Video] New Regulatory Priorities Under Mayor Mamdani’s NYC Department of Consumer and Worker Protection](/a/web/oHiTWa7kRy3Ht1brq6k4BT/bkMx39/new-york-city-skyline.jpg)
