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Individual Who Filed Lawsuit Within Eight Months Of Turning 18 Years Old Disaffirmed Arbitration Agreement Entered Into As A Minor Within A Reasonable Time
When Sarah Coughenour was 16 years old, she began working for Del Taco, LLC. At that time, she signed initial hiring documents, including an arbitration agreement, which covered employment-related claims. Coughenour contended she was required to sign all initial hiring documents electronically in a kiosk, did not receive a copy of the documents she signed, did not receive the opportunity to read or understand the documents or negotiate their terms, and did not receive any explanation from Del Taco about the documents.
Coughenour worked for Del Taco until about four months after she turned 18 years old at which time she quit her job. About four months later, Coughenour filed a lawsuit against Del Taco for wage and hour claims under the Labor Code, sexual harassment, and other claims under the Fair Employment and Housing Act (FEHA).
Del Taco filed a motion to compel arbitration of Coughenour’s claims based on the arbitration agreement she signed when she was 16 years old. The trial court denied Del Taco’s motion, and Del Taco appealed.
On appeal, Del Taco argued that Coughenour ratified the arbitration agreement by working for Del Taco for four months after turning 18 years old, and, alternatively, that Coughenour did not disaffirm the arbitration agreement within a reasonable time after turning 18 years old as required by Family Code section 6710. The appeals court granted review.
Family Code section 6700 generally provides that “a minor may make a contract in the same manner as an adult subject to the power of disaffirmance” in Family Code section 6710. Family Code section 6710 allows individuals to disaffirm contracts they entered into when they were minors either before they turn 18 years old or within a reasonable time afterward unless the contract is one that the law prohibits a minor from disaffirming. Minors may disaffirm a contract “by any act or declaration disclosing an unequivocal intent to repudiate its binding force and effect”; filing a lawsuit is sufficient to disaffirm a contract.
The appeals court upheld the trial court’s denial of Del Taco’s motion, concluding that Coughenour had disaffirmed the arbitration agreement within a reasonable time after turning 18 years of age, as permitted by Family Code section 6710, by filing the lawsuit against Del Taco. The appeals court explained that filing the lawsuit within eight months of turning 18 years of age was a reasonable time, and the lawsuit itself served as adequate notice that Coughenour disaffirmed the arbitration agreement.
The appeals court found Del Taco’s contention that Coughenour ratified the arbitration agreement by working for Del Taco for four months after turning 18 years of age was unpersuasive and not supported by the evidence. The appeals court noted that Del Taco did not provide Coughenour a copy of the hiring documents she signed when she was 16 years old nor did they explain the documents to her, which supported Coughenour’s assertion that she was unaware of the significance of the documents she signed. Further, there was no evidence that Del Taco asked Coughenour to reaffirm the arbitration agreement or other hiring documents when she turned 18 years of age. Under these facts, the appeals court noted that finding that Coughenour ratified the arbitration agreement by continuing to work for Del Taco for four months after turning 18 years old was against the important public policy reasons for allowing individuals to disaffirm contracts they entered into while minors, including “to protect a minor against himself and his indiscretions and immaturity.”
Coughenour v. Del Taco, LLC (2020) 57 Cal.App.5th 740, review filed (Dec. 30, 2020).
Schools, universities, and colleges should provide employees, regardless of their age, the opportunity to read, review, and ask questions about contracts employees are required to sign, including employment and arbitration agreements, and should also provide employees with copies of any contracts they sign. For employees who may have signed contracts when they were minors, schools, universities, and colleges should consider having these employees reaffirm these contracts once they turn 18 years of age.