California Court of Appeal Rejects Blue Origin’s Employment Arbitration Agreement as Unconscionable
Employment arbitration agreements remain enforceable in many California cases, but only when they are drafted with care and basic fairness. A new published decision from the California Court of Appeal shows how an arbitration agreement can fail when it reaches too broadly, favors the employer too heavily, and tries to waive rights California law does not allow employees to waive in advance.
In Stoker v. Blue Origin, LLC, the Court of Appeal affirmed an order denying Blue Origin’s motion to compel arbitration against former employee Craig Stoker. The court did not decide whether the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 barred arbitration. Instead, it held the arbitration agreement was procedurally and substantively unconscionable under California law and could not be saved by severing the unlawful provisions.
The Employment Relationship and the Arbitration Agreement
Blue Origin hired Craig Stoker in August 2020 as a senior director of program management. As part of his employment, Stoker signed an employee agreement containing an arbitration provision. The agreement required arbitration of a broad range of disputes between Stoker and Blue Origin, including claims related to his application, hiring, employment, termination, wage and hour issues, discrimination, harassment, retaliation, whistleblower claims, and other employment-related claims.
The agreement also defined “Company” broadly. It included Blue Origin, its parent, subsidiaries, affiliates, successors, assigns, and their current and former officers, directors, employees, and agents. That language became important because the court concluded the agreement was not confined to employment disputes. In the court’s view, the agreement’s use of “any and all claims” swept in disputes beyond the employment relationship.
The arbitration agreement excluded certain claims from arbitration, including unemployment benefits, workers’ compensation benefits, sexual harassment or sexual assault claims unless the employee voluntarily chose arbitration, claims federal law prohibited from arbitration, and certain claims for equitable relief involving trade secrets, trademarks, fiduciary duties, confidentiality obligations, proprietary information, and non-solicitation agreements.
The agreement also contained a class, collective, representative, consolidated, and multi-party action waiver. It further stated even claims excluded from arbitration had to proceed on an individual basis only. In addition, the agreement waived the right to a jury trial for claims not subject to arbitration.
Stoker’s Lawsuit and Blue Origin’s Motion to Compel Arbitration
Stoker was terminated in October 2022 after making complaints about Blue Origin’s safety practices. In November 2023, he sued Blue Origin and related defendants, asserting claims for retaliation, sexual/gender discrimination, sexual/gender harassment, failure to prevent discrimination and harassment, breach of contract, negligent hiring, wrongful termination, and intentional infliction of emotional distress.
Blue Origin moved to compel arbitration. It acknowledged sexual harassment claims were excluded from mandatory arbitration under the agreement and the federal Ending Forced Arbitration Act, but argued Stoker’s allegations were too bare to qualify as sexual harassment as a matter of law. Stoker opposed arbitration, arguing the case involved a sexual harassment dispute under the federal statute and, separately, the arbitration agreement was unconscionable.
The trial court denied Blue Origin’s motion, concluding the federal Ending Forced Arbitration Act applied. Blue Origin appealed. The Court of Appeal affirmed, but on a different ground. It held the arbitration agreement was unenforceable because it was both procedurally and substantively unconscionable, and because severance was not appropriate.
Why the Court Found Procedural Unconscionability
Procedural unconscionability focuses on how the agreement was presented and formed. In employment cases, courts pay particular attention to standardized agreements presented by employers with superior bargaining power.
Stoker submitted a declaration stating Blue Origin’s recruiter told him he would have to sign the employment agreement as a condition of employment. According to Stoker, the recruiter described the agreement as containing “standard terms,” said “everyone has to sign to these terms,” and said “everybody always signs to these terms.” Stoker also stated he had questions about the documents, but the recruiter did not offer to answer them.
Blue Origin did not present evidence Stoker could negotiate the arbitration provision. On that record, the Court of Appeal concluded the agreement was a contract of adhesion. The court acknowledged adhesion alone often creates only a low degree of procedural unconscionability, but because this was an employment agreement, the court examined the contract terms closely.
For employers, this part of the decision is a reminder standard employment arbitration agreements are not invalid merely because they are standardized. But when the agreement is presented as mandatory and nonnegotiable, any one-sided terms will receive sharper judicial scrutiny.
The Agreement Was Too Broad
The first major substantive problem was overbreadth. The court relied heavily on the agreement’s language requiring arbitration of “any and all claims, disputes, or controversies” between Stoker and Blue Origin, while defining Blue Origin to include a wide network of related entities and individuals.
The court compared the agreement to the arbitration provision held unconscionable in Cook v. University of Southern California. In Cook, the agreement was not limited to employment-related claims and could have required arbitration of unrelated future disputes. The same problem appeared here. The court reasoned Blue Origin could have limited the provision to claims arising out of or relating to Stoker’s employment or termination, but did not do so.
The court gave practical examples. As written, the agreement could potentially apply if Stoker were later injured in an automobile accident with another Blue Origin employee, or if his house were damaged by debris from a Blue Origin rocket. The court rejected Blue Origin’s argument the agreement was limited to employment-related claims, stating: “all means all.”
That part of the decision is especially important for employers. Broad language can seem protective when drafting an agreement, but in California employment arbitration agreements, broader is not always better. An agreement tied to employment claims is more defensible than one attempting to capture every conceivable future dispute involving the employee, the employer, affiliates, and personnel.
The Agreement Favored Employer Claims Over Employee Claims
The court also found a lack of mutuality. California law does not require perfect symmetry in every arbitration agreement, but an employer cannot require employees to arbitrate the claims they are most likely to bring while preserving court access for the claims the employer is most likely to bring.
That was the problem here. The agreement directed employee-side claims, including wage and hour, discrimination, harassment, retaliation, whistleblower, and other statutory employment claims, into arbitration. At the same time, the only non-statutory carveout from arbitration covered claims for trade secret violations, trademark infringement, breach of fiduciary duty, breach of proprietary information or confidentiality obligations, and breach of non-solicitation agreements. The court concluded those claims were most likely to be brought by Blue Origin, not Stoker.
The court relied on California Supreme Court authority, including Armendariz v. Foundation Health Psychcare Services, Inc., Ramirez v. Charter Communications, Inc., and Fuentes v. Empire Nissan, Inc. Those cases stand for the principle employers cannot use arbitration as an inferior forum for employee claims while preserving judicial remedies for claims the employer prefers to litigate in court.
For employers, this is one of the most practical drafting lessons from the case. Carveouts for injunctive relief, trade secrets, confidentiality, and intellectual property claims must be written carefully. If the carveouts appear to reserve court access mainly for employer claims, the agreement may be vulnerable.
The Predispute Jury Trial Waiver Created Another Problem
The agreement also stated claims excluded from arbitration or determined not to be subject to arbitration would be tried to the court, with any right to jury trial waived. The Court of Appeal held that provision was substantively unconscionable.
California law generally prohibits predispute contractual jury trial waivers. The court cited Grafton Partners v. Superior Court, Lange v. Monster Energy Co., and Dougherty v. Roseville Heritage Partners for the rule that a predispute agreement waiving jury trial in court is contrary to California public policy and unenforceable.
This is a common drafting trap. An employer may try to preserve a bench trial if arbitration fails. But under California law, a predispute jury waiver for court proceedings may create an additional unconscionability problem rather than a fallback litigation structure.
The Representative Action Waiver Also Went Too Far
The agreement prohibited class, collective, representative, consolidated, and multi-party claims, including for claims excluded from arbitration. The Court of Appeal recognized class action waivers may be enforceable in cases governed by the Federal Arbitration Act, but representative PAGA waivers remain a separate issue.
The court explained a predispute categorical waiver of the right to bring a representative PAGA action is unenforceable under California law. It cited Adolph v. Uber Technologies, Inc., Fuentes, Hasty v. American Automobile Association, and Alberto v. Cambrian Homecare for that point. Even though Stoker had not brought a PAGA claim, the court still considered the waiver because unconscionability is evaluated based on the agreement at the time it was made.
That portion of the decision reinforces a drafting point employers should already know after several recent California cases: PAGA language must be precise. Blanket waivers of representative PAGA claims continue to create risk.
Why the Court Refused to Sever the Problem Provisions
Blue Origin’s agreement contained a severance clause. In many cases, employers argue any unlawful provision should simply be severed, leaving the rest of the arbitration agreement intact. The Court of Appeal declined to do that here.
The court acknowledged some provisions, such as the jury trial waiver and representative action waiver, might theoretically be severed. But the court found the core arbitration provision itself was infected by overbreadth and lack of mutuality. Fixing those problems would require rewriting the agreement. California courts may sever unlawful terms, but they may not reform and augment an arbitration agreement by adding new terms the parties did not include.
The court also concluded severance would not serve the interests of justice. It found at least four unconscionable elements in the agreement: overbreadth, lack of mutuality, the jury waiver, and the representative action waiver. Citing Ramirez, the court explained multiple defects may show a systematic effort to impose arbitration in a way that secures a forum advantageous to the stronger party. The court declined to incentivize employers to draft one-sided agreements and then rely on courts to clean them up later.
Practical Lessons for Employers
The decision does not mean California employers cannot use arbitration agreements. It does mean arbitration agreements should be drafted with discipline. The agreement should be tied to employment-related claims, should avoid sweeping language covering unrelated disputes, should not reserve court remedies mainly for employer claims, should not include predispute jury trial waivers for non-arbitrable claims, and should not contain blanket representative PAGA waivers.
The case also illustrates how recent California Supreme Court decisions are shaping arbitration enforcement. Courts re examining the agreement as a whole, including whether the employer drafted a balanced dispute resolution procedure or a structure that channels employee claims into arbitration while preserving employer advantages.
For employers, the safer course is regular review. Arbitration agreements should be updated after major decisions such as Ramirez, Fuentes, Cook, and now Stoker. An agreement drafted even a few years ago may contain provisions that looked common at the time but now create meaningful enforceability risk.
Stoker v. Blue Origin, LLC was filed on April 24, 2026, by the California Court of Appeal, Second Appellate District, Division Three, Case No. B344945. The Court of Appeal affirmed the Los Angeles County Superior Court’s order denying Blue Origin’s motion to compel arbitration. The court held the arbitration agreement was procedurally and substantively unconscionable and refused to sever the unlawful provisions, leaving the arbitration agreement unenforceable.