Background
Cinnamon Juergensmeyer and Victor H. Sanchez, inmates in Arizona’s prison system, worked for Hickman’s Egg Ranch through a prisoner labor program. Each signed a one-page volunteer agreement containing a bold, underlined clause requiring final and binding arbitration of disputes related to the agreement or program participation.
Juergensmeyer slipped while cleaning cages and Sanchez injured his thumb in a machine. They sued Hickman’s for negligence. The superior court denied Hickman’s motions to compel arbitration, finding the clauses procedurally unconscionable because the company’s comparatively high wages and benefits strongly incentivized inmates to sign, and because the agreements were presented among other orientation paperwork without an explanation of arbitration.
The Court’s Holding
The Arizona Court of Appeals reversed and directed the superior court to compel arbitration. It held that neither agreement was procedurally unconscionable under Arizona law and the Federal Arbitration Act.
The court emphasized that procedural unconscionability addresses unfair surprise, deception, or compulsion—not a signer’s decision not to read an agreement. The arbitration provisions appeared in separate one-page agreements, in conspicuous bold and underlined text, and each claimant had time to review the paperwork and ask questions. Hickman’s was not required to explain arbitration or read the agreements aloud.
Although the inmates faced limited work options and Hickman’s paid much more than other prison jobs, the court held that disparity did not eliminate meaningful choice. Hickman’s did not wrongfully create the inmates’ limited alternatives, and each could decline the job and work elsewhere for lower pay.
Key Takeaways
- A conspicuous arbitration clause in a separate, signed agreement is not procedurally unconscionable merely because the employer does not explain arbitration.
- Unequal bargaining power and a take-it-or-leave-it contract do not alone invalidate an arbitration agreement.
- High compensation relative to available alternatives does not establish coercion when the employer did not create the constrained circumstances through wrongful conduct.
Why It Matters
The decision reinforces Arizona’s distinction between genuine unfairness in contract formation and economic incentives to accept a deal. For employers using arbitration agreements, the opinion highlights the value of a conspicuous clause, a separate agreement, and a meaningful opportunity to review and ask questions.
It also rejects a rule that would make arbitration clauses more vulnerable simply because an employer offers unusually favorable pay or benefits to workers with limited alternatives.