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

In The News
Jul 16, 2026
Jennifer Driscoll Anticipates Epic Battle Between “Titans of the Antitrust Bar”

Press Release
Jul 15, 2026
Two Hinshaw Partners Recognized in Minnesota Monthly's 2026 Top Lawyers in Minnesota

Event
July 13-15, 2026
Hinshaw Proudly Sponsors 2026 Lavender Law Conference and Career Fair

Webinar
Jul 14, 2026
Scott Seaman Presents on Horizontal vs. Vertical Exhaustion of Insurance

Healthcare Alert
Jul 8, 2026
A New Era of Compliance Standards for California DSOs and MSOs After the Aspen Dental Settlement

Insights for Insurers Alert
Jul 7, 2026
What Insurers Need to Know About California’s FAIR Plan Assessment Recoupment Guidance

In The News
Jul 6, 2026
Francesco Palanda’s Practical Guide for Mitigating AI-Related Business Interruption Risk

Lawyers' Lawyer Newsletter
Jun 29, 2026
Beyond Malpractice: The Rising Threat of Privacy and Statutory Claims Against Lawyers



