Nyulassy v. Lockheed Martin Corp.

Fred Nyulassy (plaintiff) had been employed for about 20 years at a company (the predecessor) when the company was acquired by Lockheed Martin Corp. (Lockheed) (defendant). In 1994, the predecessor terminated Nyulassy’s employment, and in turn, Nyulassy, represented by an attorney, sued for age discrimination. In November 1997, Nyulassy entered a confidential settlement agreement with the predecessor in which Lockheed agreed to hire Nyulassy under the terms of a new employment contract that was attached as an exhibit to the settlement agreement. The new employment contract was a standard-form document to which the parties had made certain modifications, including that Nyulassy could be terminated only for “good cause” for a period of three years. The employment contract contained an arbitration clause, requiring Nyulassy to submit disputes concerning employment to arbitration before the American Arbitration Association. As a precondition to arbitration, Nyulassy had to engage in unmediated discussions with various levels of management. The employment contract also required arbitration to be initiated within 180 days of an employment dispute. The statute of limitations for contract disputes was normally four years. Thereafter, the parties had an employment dispute, with Nyulassy alleging that he had been wrongfully demoted in 2002 in retaliation for making certain legitimate complaints. In May 2003, Nyulassy sued Lockheed in superior court, alleging violations of the Labor Code and breach of contract. Lockheed filed a motion to compel arbitration, which the trial court denied on the ground that the arbitration agreement was unconscionable. Lockheed appealed.