(2015) 60 Cal.4th 909
Supreme Court of California · Decided January 29, 2015
01. Facts
Power Toyota, one of a group of automobile dealerships, hired Avery Richey as an at-will employee; his employment manual stated that outside work while on approved CFRA leave was prohibited, and there was a general understanding at Power Toyota that outside employment (including self-employment) during leave violated company policy and had led to other terminations (60 Cal.4th at p. 913). As a condition of hiring, Richey signed an agreement requiring that employment disputes be arbitrated (id. at p. 913). While on approved medical leave, Richey opened and worked at a family restaurant; Power Toyota, believing he had violated its policy against outside employment during leave, terminated him (id. at pp. 913–914). An arbitrator, applying the federal “honest belief” defense, ruled for the employer (id. at p. 913).
02. Procedural posture
The Court of Appeal vacated the arbitrator’s award. The Supreme Court reversed, reinstating the award (60 Cal.4th at p. 913).
03. Issue
Whether an arbitrator’s award denying a CFRA reinstatement claim must be vacated because the arbitrator applied the federal “honest belief” defense — that is, whether that asserted legal error deprived the employee of an unwaivable statutory right.
Holding
The arbitrator’s award was upheld. Under the narrow standard of review governing arbitration awards, the court declined to decide whether the “honest belief” defense applies to CFRA claims; even assuming the arbitrator erred in invoking it, the error did not deprive the employee of an unwaivable statutory right, so the award could not be vacated.
05. Reasoning
The court emphasized the limited judicial review of arbitration awards: even a legal error generally does not justify vacatur unless it deprives a party of an unwaivable statutory right or otherwise contravenes a well-defined public policy. The arbitrator had found Richey was dismissed for violating a uniformly applied outside-employment policy — not for taking leave — and that finding rested on substantial evidence. Because any error regarding the honest-belief defense did not strip Richey of his core CFRA protections, the award stood.
Practice Pointer
Richey is a cautionary tale about arbitration finality, not an endorsement of the “honest belief” defense — the court pointedly did not adopt it. For plaintiff’s counsel, the lessons are practical: in arbitration, build the record so that any legal error implicates an unwaivable statutory right (the narrow path to vacatur), and attack the employer’s factual basis directly, because deferential review will otherwise insulate the award.
06. Open questions
Richey expressly left open whether the federal “honest belief” defense applies to CFRA claims in California, deciding only that the issue did not warrant vacating this arbitration award — so the validity of that defense under the CFRA remains unsettled.
Cite this entry
Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909.
“Plaintiff received an employment manual noting that outside work while on approved CFRA leave was prohibited.” — 60 Cal.4th at p. 913
Source: California Official Reports – [insert durable courts.ca.gov / Official Reports link at verification].