Dario Martinez-Gonzalez v. Elkhorn Packing Co. LLC ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DARIO MARTINEZ-GONZALEZ, on No. 19-17311
behalf of himself and other
aggrieved employees, D.C. No.
Plaintiff-Appellee, 3:18-cv-05226-
EMC
v.
ELKHORN PACKING CO. LLC; OPINION
D'ARRIGO BROS. CO. OF
CALIFORNIA,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Edward M. Chen, District Judge, Presiding
Argued and Submitted February 1, 2021
San Francisco, California
Filed November 3, 2021
Before: Eugene E. Siler, * Johnnie B. Rawlinson, and
Patrick J. Bumatay, Circuit Judges.
Opinion by Judge Bumatay;
Dissent by Judge Rawlinson
*
The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
2 MARTINEZ-GONZALEZ V. ELKHORN PACKING
SUMMARY **
Arbitration / California Law
The panel reversed the district court’s order refusing to
enforce arbitration agreements between Dario Martinez-
Gonzalez and his former employers in an action alleging
violations of federal and state labor and wage laws.
Elkhorn Packing Company is a farm labor contractor for
D’Arrigo Brothers, a California-based grower of vegetables.
As part of Elkhorn’s orientation for incoming employees,
Martinez-Gonzalez signed employment paperwork that
included arbitration agreements. The district court held that
the arbitration agreements resulted from undue influence and
economic duress, and therefore the agreements were invalid
and unenforceable.
The panel held that under California law, the doctrine of
economic duress did not render the arbitration agreements
unenforceable because Elkhorn did not commit a wrongful
act and reasonable alternatives were available to Martinez-
Gonzalez. Martinez-Gonzalez asserted that Elkhorn
committed a wrongful act by asking him to sign the
arbitration agreement after he made the journey from
Mexico to California, where he was dependent on Elkhorn
housing and had already started harvesting lettuce. The
panel held that, while the circumstances surrounding the
signing of the agreements were not ideal, they did not
constitute a “wrongful act” under California law. The panel
held further that Martinez-Gonzalez also failed to
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
MARTINEZ-GONZALEZ V. ELKHORN PACKING 3
demonstrate a lack of reasonable alternatives where the
agreements themselves did not say they were necessary for
him to keep his job, no one at Elkhorn told Martinez-
Gonzalez that refusing to sign the agreements was a cause
for termination, and Martinez-Gonzalez admitted that no one
at Elkhorn told him he would be terminated if he did not sign
the agreements. With no threat of termination or express
statement that the agreements were mandatory, it was clearly
erroneous for the district court to conclude that Martinez-
Gonzalez lacked a reasonable alternative – such as asking
whether he could decline to sign the agreements.
Furthermore, Martinez-Gonzalez had another reasonable
alternative – to revoke the arbitration agreements.
The doctrine of “undue influence” can be used to rescind
an agreement under California law. The panel held that the
economic duress doctrine is employed only in limited
circumstances, and here there was no reason to invoke this
last resort given the lack of wrongful actions, the existence
of reasonable alternatives, and Martinez-Gonzalez’s
continued ability to vindicate his interests in arbitration.
Martinez-Gonzalez did not show undue susceptibility where
the facts did not support a finding that he was especially
vulnerable to pressure. Given the lack of heightened
susceptibility, Martinez-Gonzalez had to establish that
“extraordinary force” was brought against him to prove
undue influence. The panel held that the conditions here,
while not ideal, were a far cry from actions considered
“oppressive” under California law where: the timing and
place of the orientation did not show that Martinez-
Gonzalez’s will was overborne; the lack of time to consult
with attorneys or read the agreements did not improperly
induce Martinez-Gonzalez’s signatures since Elkhorn did
not interfere with his ability to use either option; Elkhorn’s
representatives’ instructions to sign the agreements quickly
4 MARTINEZ-GONZALEZ V. ELKHORN PACKING
were not insistent demands; and Elkhorn representatives’
general statements to follow the company’s rules and
directions had nothing to do with the arbitration agreements.
Given the totality of the circumstances, the panel held that
the district court clearly erred in finding undue influence
here.
The panel remanded to the district court to determine
whether Martinez-Gonzalez’s claims fell within the scope of
the arbitration agreements.
Judge Rawlinson dissented because the majority
completely disregarded the district court’s comprehensive
factual findings following trial and the clear error standard
of review. She agreed with the district court because the
district court did not clearly err in concluding, after a bench
trial, that the atmosphere surrounding the arbitration
agreements rose to the level of a wrongful act. In addition,
the district court’s finding of economic duress was amply
supported by the evidence developed during trial, and the
majority’s contrary finding was not.
COUNSEL
Regina Silva (argued), Atkinson Andelson Loya Ruud
Romo, La Jolla, California; Geoffrey F. Gega, Law Offices
of Geoffrey Gega, Santa Ana, California; for Defendants-
Appellants.
Karla Gilbride (argued) and Rodolfo Padilla, Public Justice
P.C., Washington, D.C.; Ana Vicente de Castro and
Josephine B. Weinberg, California Rural Legal Assistance
Inc., Salinas, California; for Plaintiff-Appellee.
MARTINEZ-GONZALEZ V. ELKHORN PACKING 5
Bruce Goldstein, Iris Figueroa, and Gabriela Hybel,
Farmworker Justice, Washington, D.C., for Amicus Curiae
Farmworker Justice.
OPINION
BUMATAY, Circuit Judge:
For three consecutive lettuce-harvesting seasons, Dario
Martinez-Gonzalez worked as a farm laborer for Elkhorn
Packing Company and D’Arrigo Brothers (collectively,
“Elkhorn”). After quitting his job in the middle of the third
season, Martinez-Gonzalez sued his former employers,
alleging violations of federal and state labor and wage laws.
Elkhorn later moved to compel arbitration under agreements
signed by Martinez-Gonzalez after he traveled to the United
States and started harvesting lettuce. The district court
refused to enforce the arbitration agreements, holding that
Martinez-Gonzalez signed them under economic duress and
undue influence. We reverse and remand.
I.
Elkhorn Packing Company is a farm labor contractor for
D’Arrigo Brothers, a California-based grower of vegetables.
In 2015, Martinez-Gonzalez resided in Mexicali, Mexico,
supporting his wife and their parents, when he learned about
an opportunity to work for Elkhorn in the United States. A
job at Elkhorn paid up to five times as much as Martinez-
Gonzalez earned in Mexico. In 2016, Elkhorn accepted
Martinez-Gonzalez’s application and helped him obtain an
H-2A temporary agricultural worker visa. Elkhorn then
transported Martinez-Gonzalez to Monterey County,
California, to start the job.
6 MARTINEZ-GONZALEZ V. ELKHORN PACKING
Elkhorn held orientations for incoming employees. For
Martinez-Gonzalez, the orientation did not occur until a few
days after he began harvesting lettuce in the fields. The
orientation took place at the end of the workday, at around
4 p.m., in a hotel parking lot. At the orientation, some
150 workers were asked to sign employment paperwork. To
facilitate the signing of the paperwork, Elkhorn
representatives directed employees to form lines, where they
stood—in at least one case for 40 minutes—and waited to
sign the packages. Once at the front of the line, an Elkhorn
representative told each employee where to sign while
flipping through the pages. Representatives urged
employees to hurry so that others could have a chance to
sign.
The employment package included an arbitration
agreement. The agreement required employees to resolve all
disputes with Elkhorn by arbitration. The agreement was
written in Spanish, Martinez-Gonzalez’s native language.
Martinez-Gonzalez signed the arbitration agreement without
reading it. Elkhorn representatives didn’t explain the
contents of the arbitration agreement to Martinez-Gonzalez, 1
didn’t give him a copy of the agreement, and didn’t tell him
he could consult an attorney before signing it. On the other
hand, Martinez-Gonzalez didn’t ask for a copy of the
agreement, attorney consultation, or time to read the
agreement. All sides agree that Elkhorn never expressly told
Martinez-Gonzalez that he had to sign the agreement to keep
working for the company.
1
The district court credited Martinez-Gonzalez’s testimony that he
received no explanation of the agreement, although Elkhorn disputes
this.
MARTINEZ-GONZALEZ V. ELKHORN PACKING 7
Martinez-Gonzalez completed the 2016 season and
traveled back to Mexico on Elkhorn-funded transportation.
For the 2017 season, Martinez-Gonzalez again harvested
lettuce for Elkhorn in Monterey County, California. 2 He
also signed an arbitration agreement for the 2017 season.
But Martinez-Gonzalez didn’t finish the 2017 season. He
quit Elkhorn mid-season and returned to Mexico on his own.
In 2018, Martinez-Gonzalez sued Elkhorn in California
state court on behalf of himself and other similarly situated
workers, alleging a failure to pay federal minimum wages
under the Fair Labor Standards Act, and state-law claims
related to meals, wages, rest periods, and privacy. Elkhorn
removed the case to federal district court and moved to
compel arbitration under the two arbitration agreements.
The district court held a two-day bench trial to determine the
enforceability of the agreements and concluded that they
resulted from undue influence and economic duress. The
district court accordingly held the agreements invalid and
unenforceable and denied the employers’ motion to compel.
Elkhorn appeals to this court.
II.
The Federal Arbitration Act provides that arbitration
agreements “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. In determining
the enforceability of an arbitration agreement, “generally
applicable contract defenses, such as fraud, duress, or
unconscionability, may be applied to invalidate arbitration
agreements without contravening § 2.” Nagrampa v.
2
In between the two seasons, Martinez-Gonzalez worked another
season for Elkhorn in Yuma, Arizona.
8 MARTINEZ-GONZALEZ V. ELKHORN PACKING
MailCoups, Inc., 469 F.3d 1257, 1268 (9th Cir. 2006)
(simplified). State contract law governs this inquiry.
Revitch v. DIRECTV, LLC, 977 F.3d 713, 716 (9th Cir.
2020). We review the enforceability of an arbitration
agreement de novo, but the factual findings underlying the
district court’s decision for clear error. Nagrampa, 469 F.3d
at 1267–68.
A.
In California, a contract signed under economic duress
may be rescinded. See Cal. Civ. Code § 1689(b)(1).
Economic duress occurs when one party commits a
(1) “wrongful act” and (2) that act “is sufficiently coercive
to cause a reasonably prudent person faced with no
reasonable alternative” to agree to an unfavorable contract.
Perez v. Uline, Inc., 157 Cal. App. 4th 953, 959 (2007)
(simplified). Economic duress also requires (3) causation:
“[a] contract cannot be rescinded when it appears that
consent would have been given . . . notwithstanding the
duress[.]” In re Cheryl E., 161 Cal. App. 3d 587, 600 (1984);
see also Judicial Council of California Civil Jury
Instructions § 333, Affirmative Defense—Economic Duress
(2020) (establishing three elements for economic duress).
The doctrine of economic duress does not prohibit
“[s]imple hard bargaining.” Sheehan v. Atlanta Int’l Ins.
Co., 812 F.2d 465, 469 (9th Cir. 1987). Instead, it is
“designed to preclude the wrongful exploitation of business
exigencies to obtain disproportionate exchanges of value.”
Id. (simplified). While the doctrine guards against
“economic exploitation,” it doesn’t interfere with the “notion
of freedom of contract” or “the desirability of finality of
private dispute resolution.” Id. The doctrine is one of “last
resort,” to be used only absent “conventional alternatives
and remedies.” Rich & Whillock, Inc. v. Ashton Dev., Inc.,
MARTINEZ-GONZALEZ V. ELKHORN PACKING 9
157 Cal. App. 3d 1154, 1159 (1984); see Grace M. Giesel, A
Realistic Proposal for the Contract Duress Doctrine, 107 W.
Va. L. Rev. 443, 463–64 (2005) (noting that, in the
88 published cases nationwide on economic duress between
1996 and 2003, only nine were decided in favor of the
claim). The party seeking rescission bears the burden of
proving economic duress. See Saheli v. White Mem. Med.
Ctr., 21 Cal. App. 5th 308, 324 (2018).
Because Elkhorn did not commit a wrongful act and
reasonable alternatives were available to Martinez-
Gonzalez, we hold that the doctrine of economic duress does
not render the arbitration agreements unenforceable.
1.
Martinez-Gonzalez has not established that Elkhorn
engaged in any “wrongful act” under California law. While
“wrongful acts” for economic duress need not be unlawful
or tortious, Chan v. Lund, 188 Cal. App. 4th 1159, 1173
(2010), they are limited to actions that “make a mockery of
freedom of contract and undermine the proper functioning of
our economic system,” Rich & Whillock, 157 Cal. App. 3d
at 1159. Examples of such wrongful acts include the
assertion of a false claim, a bad faith threat to breach a
contract, and a threat to withhold payment of an
acknowledged debt. CrossTalk Prods. Inc. v. Jacobson,
65 Cal. App. 4th 631, 645 (1998). California courts have
also adopted the Restatement of Contracts’ definition of
wrongful acts:
Impermissible threats include bad faith
threatened use of civil process; threats which
are a breach of the duty of good faith and fair
dealing under a contract with the recipient;
threats which would harm the recipient
10 MARTINEZ-GONZALEZ V. ELKHORN PACKING
without significantly benefitting the party
making the threat; or threats where “what is
threatened is otherwise a use of power for
illegitimate ends.”
Philippine Exp. & Foreign Loan Guarantee Corp. v.
Chuidian, 218 Cal. App. 3d 1058, 1077 (1990) (citing
Restatement (Second) of Contracts, § 176 (Am. L. Inst.
1981)). Thus, wrongful acts require more than hard
bargaining or tough business tactics. Rich & Whillock,
157 Cal. App. 3d at 1159. They must involve actions taken
for a “coercive purpose” or “in bad faith.” Hester v. Pub.
Storage, 49 Cal. App. 5th 668, 679 (2020). Wrongful acts
do not include arrangements that “serve a practical business
function.” Id.Martinez-Gonzalez asserts that Elkhorn committed a
wrongful act by asking him to sign the arbitration agreement
after he made the journey from Mexico to California, where
he was dependent on Elkhorn housing and already started
harvesting lettuce. This conduct doesn’t constitute a
“wrongful act” under California law. First, Martinez-
Gonzalez doesn’t allege that Elkhorn’s actions were
unlawful or tortious. See Chan, 188 Cal. App. 4th at 1173.
Second, the district court did not find that Elkhorn made any
false claim, bad-faith threat, or refusal to repay its debt. See
CrossTalk, 65 Cal. App. 4th at 645. Third, Elkhorn’s actions
do not fit the description of “[i]mpermissible threats”
identified by the Restatement. See Chuidian, 218 Cal. App.
3d at 1077. Finally, while the district court found that the
timing of the orientation program disadvantaged Martinez-
Gonzalez, it didn’t conclude that Elkhorn had a “coercive
purpose” or acted “in bad faith” in asking him to sign the
MARTINEZ-GONZALEZ V. ELKHORN PACKING 11
arbitration agreements after his arrival in the United States.
See Hester, 49 Cal. App. 5th at 679. 3
In sum, while the circumstances surrounding the signing
of the agreements were not ideal, they didn’t make “a
mockery of [the] freedom of contract [or] undermine the
proper functioning of our economic system.” See Rich &
Whillock, 157 Cal. App. 3d at 1159. In fact, the district court
acknowledged that the orientation’s location served a
“practical business function,” Hester, 49 Cal. App. 5th at
679, as a “convenient place” to gather hundreds of farm
workers in a “single, unified orientation.” Martinez-
Gonzalez v. Elkhorn Packing Co., LLC, No. 18-cv-05226-
EMC, 2019 WL 5556593, at *3, *10 (N.D. Cal. Oct. 29,
2019). Construing the signing of the arbitration agreements
here as a wrongful act would place courts in charge of
determining business necessities and would encumber,
rather than promote, the “freedom of contract.” Rich &
Whillock, 157 Cal. App. 3d at 1159.
And contrary to Martinez-Gonzalez’s assertions, Rich &
Whillock doesn’t help his case. There, the contractor forced
a subcontractor to accept a fraction of the full amount of a
debt owed, knowing that the subcontractor needed the
money or would be forced into “imminent bankruptcy.” Id.
at 1160. This was a classic case of economic duress because
the contractor intentionally threatened the subcontractor
3
Contrary to the dissent’s assertion, the district court never found
that Elkhorn acted with a “coercive purpose” in arranging the orientation.
Dissent at 35. While the district court observed that the circumstances
of the orientation made for a “coercive environment,” Martinez-
Gonzalez v. Elkhorn Packing Co., LLC, No. 18-cv-05226-EMC, 2019
WL 5556593, at *11 (N.D. Cal. Oct. 29, 2019), it did not contend that
Elkhorn created this environment for a “coercive purpose” or in “bad
faith,” as California law requires. Hester, 49 Cal. App. 5th at 679.
12 MARTINEZ-GONZALEZ V. ELKHORN PACKING
with “economic disaster” by withholding the total
undisputed debt. Id. at 1161; see also id. at 1157 (noting that
subcontractor believed the threat was “blackmail” and
“sign[ed] it only because [it] had to in order to survive”).
Here, even though Martinez-Gonzalez signed the arbitration
agreement a few days after starting work, Elkhorn never
threatened to withhold his wages.
Finally, we question whether extracting an arbitration
agreement could constitute a “wrongful threat” under
California law. A wrongful threat involves “the wrongful
exploitation of business exigencies to obtain
disproportionate exchanges of value.” Id. Here, Elkhorn
didn’t ask Martinez-Gonzalez to work for disproportionately
low wages, to forgo earned wages, or to disclaim any claims
against it. Instead, it asked him to sign a commonplace
agreement to bring disputes to an arbitrator—a lawful
agreement encouraged by California law. See Desert
Outdoor Advert. v. Sup. Ct., 196 Cal. App. 4th 866, 872
(2011) (providing that California “courts will indulge every
intendment to give effect to arbitration clauses”). Martinez-
Gonzalez doesn’t allege, and it’s difficult to surmise, what
“value” he lost from entering such an agreement. In the few
California cases finding a “wrongful threat,” the exploitation
involved the disproportionate loss of economic value, such
as the loss of over $20,000 on a $72,000 debt, Rich &
Whillock, 157 Cal. App. 3d at 1156–57, 1161; the extraction
of an easement and fees totaling over $339,000, Uniwill v.
City of Los Angeles, 124 Cal. App. 4th 537, 539–40, 545
(2004); or an attempt to foreclose on a person’s home,
Leeper v. Beltrami, 53 Cal. 2d 195, 203–05 (1959). On the
other hand, a California court found no “wrongful threat”
when a company invoked a “null and void” clause to rescind
a sale when the clause served a “practical business
function”—even if it caused significant economic harm to
MARTINEZ-GONZALEZ V. ELKHORN PACKING 13
the buyer. Hester, 49 Cal. App. 5th at 679. We are aware of
no case under California law in which the signing of an
arbitration agreement was considered so “disproportionate”
as to require the last resort of economic duress.
So, even without disturbing any of the district court’s
findings of fact, Martinez-Gonzalez has not shown a
“wrongful act” under California law. The dissent disagrees
largely based on Martinez-Gonzalez’s socioeconomic
background. See Dissent at 32–34. Like the dissent, we are
sympathetic to Martinez-Gonzalez’s economic situation and
in no way diminish his circumstances. But we must be
guided by the law, not our sympathies. Our review of
California law shows that the above facts do not amount to
“wrongful conduct.” Neither the district court nor the
dissent cite a single California authority showing that similar
facts constitute wrongful conduct. And our role is to follow
California law, not make up our own. Sonner v. Premier
Nutrition Corp., 971 F.3d 834, 839 (9th Cir. 2020)
(“[F]ederal courts exercising diversity jurisdiction must
follow state substantive law[.]”).
2.
Martinez-Gonzalez also failed to demonstrate a lack of
reasonable alternatives, and it was clearly erroneous for the
district court to find otherwise. A reasonable alternative is
one that “a reasonably prudent person would follow” to
avoid a coerced agreement. CrossTalk Prods., 65 Cal. App.
4th at 644. When such alternatives are available, a party
cannot establish economic duress because there is “no
compelling necessity” to submit to the inappropriate
pressure. Id. “Merely being put to a voluntary choice of
perfectly legitimate alternatives is the antithesis of duress.”
In re Exec. Life Ins. Co., 32 Cal. App. 4th 344, 391 (1995).
14 MARTINEZ-GONZALEZ V. ELKHORN PACKING
It is not a reasonable alternative to be forced into
bankruptcy, financial ruin, or selling one’s home. Rich &
Whillock, 157 Cal. App. 3d at 1159; Leeper, 53 Cal. 2d
at 205. But the need for “a job and . . . the money offered
under the agreement . . . does not equate to economic
duress.” Uline, 157 Cal. App. 4th at 960. Otherwise,
economic duress would apply to “almost any case.” Id.
Even if rejecting an agreement leads to the loss of some
income, that is not enough to establish the lack of reasonable
alternatives since a party “could presumably make up for
the[] lost . . . opportunities elsewhere.” Hester, 49 Cal. App.
5th at 680. And speculation about unfavorable outcomes
cannot show economic duress—nor can the failure to revoke
an agreement when doing so is permitted. Lanigan v. City
of Los Angeles, 199 Cal. App. 4th 1020, 1034 (2011).
Whether a party “acted as a reasonably prudent person is a
question of fact.” Leeper, 53 Cal. 2d at 205.
The district court found that Martinez-Gonzalez lacked
reasonable alternatives to signing the arbitration agreements
because his challenging financial situation required him to
keep his job with Elkhorn. In the district court’s view,
Martinez-Gonzalez’s options were limited because he
(mistakenly) believed his work visa only allowed him to
work for Elkhorn and he was dependent on Elkhorn for
housing and transportation back to Mexico. Elkhorn’s
repeated admonishments to follow its rules, the district court
said, also demonstrated the lack of reasonable alternatives.
But these circumstances do not show a lack of reasonable
alternatives since Martinez-Gonzalez could have simply
asked whether signing the arbitration agreements was
necessary for him to keep his job. First, the agreements
themselves did not say that they were mandatory. Second,
no one at Elkhorn told Martinez-Gonzalez that refusing to
MARTINEZ-GONZALEZ V. ELKHORN PACKING 15
sign the agreements was a cause for termination. In fact, the
district court found otherwise—while the district court said
that some of the trial testimony “suggest[ed] that it was
implied to workers that signing the Arbitration Agreement
was mandatory,” Martinez-Gonzalez, 2019 WL 5556593,
at *6, it found that Elkhorn never expressly told Martinez-
Gonzalez that he had to sign the agreement to keep his job.
Id. at *33. Third, Martinez-Gonzalez himself admitted that
no Elkhorn representative ever told him he would be
terminated if he did not sign the agreements. Instead, he
testified that he signed the agreements, not out of fear of
losing his job, but because he was tired and hungry and told
to hurry. But “[e]ncouragement is a far cry from coercion or
denial of choice.” In re Exec. Life Ins. Co., 32 Cal. App. 4th
at 391. At his deposition, Martinez-Gonzalez conceded it
was his “assumption” that the agreements were mandatory.
We do not think a “reasonably prudent person” would just
assume an agreement is mandatory—at least not without
someone saying so or even asking. 4
With no threat of termination or express statement that
the agreements were mandatory, it was clearly erroneous to
conclude that Martinez-Gonzalez lacked a reasonable
alternative—such as asking whether he could decline to sign
the agreements. The district court and dissent contend that
these facts don’t matter because Martinez-Gonzalez
subjectively believed the arbitration agreements were
mandatory. Dissent at 37–38. But, under California law, a
4
The dissent concludes that Martinez-Gonzalez “had no meaningful
opportunity to ask questions” about the arbitration agreements. Dissent
at 41. But this factual finding is nowhere in the district court’s order. To
the contrary, the district court acknowledged that “Elkhorn supervisors
stated that . . . employees were invited to ask questions about the
documents.” Martinez-Gonzalez, 2019 WL 5556593, at *6.
16 MARTINEZ-GONZALEZ V. ELKHORN PACKING
party’s speculation about his termination, even if justified or
“highly likely,” cannot be used to prove the lack of
reasonable alternatives. See Lanigan, 199 Cal. App. 4th at
1034 (economic duress cannot be established when an
officer signed a settlement agreement because of fear of
losing his job and livelihood, when his termination was “not
a certainty”). After all, California law applies a “reasonably
prudent person” standard—an objective standard. See
14 Cal. Jur. 3d Contracts § 131 (“[U]nder California law,
courts employ an objective test to determine whether a
reasonable alternative was available.”). 5
Furthermore, Martinez-Gonzalez had another reasonable
alternative—to revoke the arbitration agreement. As the
district court found, the arbitration agreements expressly
allowed Martinez-Gonzalez to revoke the contract within ten
days. Nothing shows that Elkhorn interfered with Martinez-
Gonzalez’s right to revoke the agreements if he felt that the
orientation’s setting was too coercive. Under California law,
economic duress cannot be met when a party had the option
to—but failed to—revoke an agreement within the
revocation period. See Lanigan, 199 Cal. App. 4th at 1034.
Martinez-Gonzalez claims he didn’t know he could revoke
the agreements because he never read them, but a “cardinal
rule of contract law” in California is that “a party’s failure to
read a contract . . . before signing it is no defense to the
contract’s enforcement.” Desert Outdoor Advertising,
5
It is unfortunate that the dissent misconstrues this analysis as our
suggesting that “‘facts don’t matter’ to [her].” Dissent at 38. We would
never criticize our dissenting colleague in such a manner. We respect
her too much. Our point was merely to highlight our disagreement in
analyzing the facts. Here, the dissent and district court think Martinez-
Gonzalez’s subjective beliefs are more important than the objective lack
of threats of termination. As stated above, this contradicts California
law.
MARTINEZ-GONZALEZ V. ELKHORN PACKING 17
196 Cal. App. 4th at 872; see also Brown v. Wells Fargo
Bank, N.A., 168 Cal. App. 4th 938, 959 (2008) (“[I]t is not
reasonable to fail to read a contract[.]” (emphasis omitted)). 6
As an appellate court, we hesitate to overturn a district
court’s factual findings. But where, as here, we are firmly
convinced the district court overlooked key facts, it is our
duty to reverse. See Myers v. United States, 652 F.3d 1021,
1036 (9th Cir. 2011) (holding that findings of fact were
clearly erroneous where the district court “simply ignored”
contrary evidence in the record). 7
* * *
The economic duress doctrine is employed
“reluctant[ly]” and “only in limited circumstances.” Uline,
157 Cal. App. 4th at 959. Here, there is no reason to invoke
this “last resort” given the lack of wrongful actions, the
existence of reasonable alternatives, and Martinez-
Gonzalez’s continued ability to vindicate his interests in
arbitration. See Rich & Whillock, 157 Cal. App. 3d at 1159
(holding that economic duress does not apply when
“conventional alternatives and remedies” are still available).
6
The dissent asserts that Elkhorn did not allow Martinez-Gonzalez
to read the arbitration agreements. Dissent at 33. This is simply not
accurate. The district court never made such a finding, and for good
reason: Martinez-Gonzalez testified that no one from Elkhorn ever told
him he could not read the agreements. In fact, he even said he had no
intent to read the agreement at the time.
7
Because Martinez-Gonzalez’s economic duress argument fails
under the wrongful act and reasonable alternative elements, we do not
reach the doctrine’s causation requirement. See In re Marriage of
Baltins, 212 Cal. App. 3d 66, 84 (1989) (“The coercion must induce the
assent of the coerced party, who has no reasonable alternative to
succumbing.”).
18 MARTINEZ-GONZALEZ V. ELKHORN PACKING
As a result, we disagree with the district court that Martinez-
Gonzalez established economic duress.
B.
Like economic duress, the doctrine of “undue influence”
can be used to rescind an agreement under California law.
See Cal. Civ. Code § 1689(b)(1). By statute, undue
influence results from three scenarios:
(1) In the use, by one in whom a confidence
is reposed by another, or who holds a real or
apparent authority over him, of such
confidence or authority for the purpose of
obtaining an unfair advantage over him;
(2) In taking an unfair advantage of another’s
weakness of mind; or
(3) In taking a grossly oppressive and unfair
advantage of another’s necessities or distress.
Cal. Civ. Code § 1575. Undue influence, however, “cannot
be used as a pretext to avoid bad bargains or escape from
bargains which refuse to come up to expectations.” Odorizzi
v. Bloomfield Sch. Dist., 246 Cal. App. 2d 123, 132 (1966).
Courts must instead undertake the “difficult[]” task of
“determining when the forces of persuasion have overflowed
their normal banks and become oppressive flood waters.”
Id.Essentially, undue influence involves “the use of
excessive pressure to persuade one vulnerable to such
pressure.” Id. at 131. The doctrine consists of two elements:
(1) “undue susceptibility in the servient person” and
(2) “excessive pressure by the dominating person.” Id.; see
MARTINEZ-GONZALEZ V. ELKHORN PACKING 19
also Das v. Bank of Am., 186 Cal. App. 4th 727, 743 (2010)
(undue influence requires one party to “t[ake] some
advantage of the mental weakness or incapacity of the other
party”). The two elements act in balance. If either exists to
a large degree, the second need not be so great. See Odorizzi,
246 Cal. App. 2d at 132 (“Whether a person of subnormal
capacities has been subjected to ordinary force or a person
of normal capacities subjected to extraordinary force, the
match is equally out of balance.”). The result, however,
must be that the “will of the servient person being in fact the
will of the dominant person.” Id. at 131.
Once again, the party seeking rescission bears the burden
of proving undue influence. Saheli, 21 Cal. App. 5th at 324.
Undue influence is a question of fact. See Keithley v. Civ.
Serv. Bd., 11 Cal. App. 3d 443, 451–52 (1970).
1.
We first turn to the “undue susceptibility” element.
Susceptibility means “a lessened capacity” of a party “to
make a free contract.” Odorizzi, 246 Cal. App. 2d at 131. It
may consist of wholesale mental incapacitation, but also
extends to “a lack of full vigor due to age, physical condition,
emotional anguish, or a combination of such factors.” Id.
(simplified). These situations “usually involve[] elderly,
sick, [or] senile persons.” Id. The result is the “inability to
act with unencumbered volition.” Keithley, 11 Cal. App. 3d
at 451. Martinez-Gonzalez cannot show such undue
susceptibility.
The district court made no explicit finding that Martinez-
Gonzalez was especially vulnerable to pressure. And the
facts don’t support such a finding. As the district court
found, Martinez-Gonzalez had a secondary-school
education and could read and write in Spanish. Martinez-
20 MARTINEZ-GONZALEZ V. ELKHORN PACKING
Gonzalez had been an agricultural worker since he was six-
years old and was the bread winner for his family. Martinez-
Gonzalez provided housing and medical care for his wife,
his mother, his now-deceased stepfather, and his diabetic
mother-in-law.
So, Martinez-Gonzalez’s financial situation didn’t show
that he was unable “to act with unencumbered volition.” Id.
While Martinez-Gonzalez may come from a modest
socioeconomic background, he was able to support himself
and his family prior to working for Elkhorn. And the record
doesn’t reflect that he couldn’t continue to do so after
working for Elkhorn. Indeed, the fact that Martinez-
Gonzalez voluntarily quit his Elkhorn job in 2017 confirms
that he had no undue susceptibility. So, without more, his
economic situation doesn’t establish a “weakness of mind,”
significant “necessities or distress,” or the placement of such
“confidence” in Elkhorn to establish a claim for undue
influence. See Cal. Civ. Code § 1575.
2.
Next is the “excessive pressure” element. Given the lack
of any heightened susceptibility, Martinez-Gonzalez had to
establish that “extraordinary force” was brought to bear
against him to prove undue influence. See Odorizzi, 246 Cal.
App. 2d at 132. Factors that may show the presence of
excessive pressure include:
(1) discussion of the transaction at an unusual
or inappropriate time, (2) consummation of
the transaction in an unusual place,
(3) insistent demand that the business be
finished at once, (4) extreme emphasis on
untoward consequences of delay, (5) the use
of multiple persuaders by the dominant side
MARTINEZ-GONZALEZ V. ELKHORN PACKING 21
against a single servient party, (6) absence of
third-party advisers to the servient party,
(7) statements that there is no time to consult
financial advisers or attorneys.
Id. at 133. Although excessive pressure “usually involves
several” of these factors, id., “there are no fixed definitions
or inflexible formulas.” Keithley, 11 Cal. App. 3d at 451.
Instead, courts analyze “the entire context” to determine
whether “one’s will was overborne.” Id.
On this element, the district court found excessive
pressure. In making this finding, the district court relied on
(1) the unusual time and place of the orientation—both
because it was held after Martinez-Gonzalez traveled to the
United States and because it occurred in a hotel parking lot
with no chairs; (2) the lack of time to read the agreement in
advance or consult an attorney; (3) the pressure to sign the
agreements quickly after a long day’s work; and
(4) statements from Elkhorn supervisors exhorting workers
to follow the company’s rules. 8
We find it implausible that these facts amount to
“excessive pressure.” The conditions here, while not ideal,
8
We disagree with the dissent that this inquiry can be reduced to a
simple box-checking exercise of Odorizzi factors. See Dissent at 44.
Even if the district court made findings on five of the seven Odorizzi
factors, we still must determine whether the facts can support a finding
of undue influence under California law.
On appeal, Martinez-Gonzalez also claims that Elkhorn falsely
represented that the agreements related to “Social Security.” This is a
contested factual dispute, and the district court made no finding that
Elkhorn made any fraudulent or false statements. We therefore do not
consider this argument.
22 MARTINEZ-GONZALEZ V. ELKHORN PACKING
are a far cry from actions considered “oppressive” under
California law. Compare Odorizzi’s three examples of
oppressive actions:
• Approaching a pregnant woman about her
late husband’s estate four days after he was
shot to death, while she was still in shock;
• Seeking the release of claims from a patient
who was confined to a cast in a hospital,
hysterical, and in significant pain; and
• Arriving at a person’s home at 1 a.m.
unannounced and insisting on the signing of
a document immediately or letting a real
estate transaction fall apart.
Odorizzi, 246 Cal. App. 2d at 133–34. When viewing the
entire context, the conditions in this case don’t come close
to those examples. 9
First, the timing and place of the orientation do not show
that Martinez-Gonzalez’s will was overborne. While it may
be atypical for workers to sign employment documents in a
hotel parking lot, Elkhorn runs an agricultural business,
growing vegetables in remote farmlands, and the parking lot
was conveniently located at the workers’ hotel. And as
discussed above, the business practicalities of employing
9
Despite the dissent’s assertion to the contrary, we do not suggest
that these examples represent “the universe of circumstances”
constituting undue influence. Dissent at 44–45. Rather, they illustrate
the sort of extreme pressure that California courts consider as
“extraordinary force.” Odorizzi, 246 Cal. App. 2d at 132. Once again,
we must follow California law, not our own view of what the law should
be.
MARTINEZ-GONZALEZ V. ELKHORN PACKING 23
over a hundred foreign workers easily explain why Elkhorn
waited for the workers to arrive in the United States before
asking them to sign the employment packets. Nothing
indicates that the orientation was a “high pressure” tactic—
“a pressure which works on mental, moral, or emotional
weakness”—aimed at extracting arbitration agreements.
Keithley, 11 Cal. App. 3d at 451. Indeed, although Martinez-
Gonzalez said he was tired and hungry when he signed the
agreements, we do not think this amounts to the “oppressive”
conditions required for undue influence.
Second, the lack of time to consult with attorneys or read
the agreements did not improperly induce Martinez-
Gonzalez’s signature since Elkhorn didn’t interfere with his
ability to use either option. While it would have been better
to affirmatively offer each worker time to read the agreement
or to consult an attorney, Elkhorn did not preclude Martinez-
Gonzalez from asking for such time or consultation. See
Robison v. City of Manteca, 78 Cal. App. 4th 452, 458
(2000) (holding that circumstances did not “approach[]
undue influence” when nothing prevented a party from
taking the time to read the agreement or consult an attorney).
Moreover, Martinez-Gonzalez testified that he did not
believe he needed to read the agreement or consult an
attorney before signing the agreement.
Third, Elkhorn representatives’ instructions to sign the
agreements quickly were hardly “insistent demand[s] that
the business be finished at once.” Odorizzi, 246 Cal. App.
2d at 133. As the district court found, Elkhorn urged the
workers to hurry in signing the paperwork, not out of some
bad-faith pressure tactic, but to accommodate other
employees also waiting to complete the forms. See
Martinez-Gonzalez, 2019 WL 5556593, at *6 (“The
supervisors who were present and assisting in the collection
24 MARTINEZ-GONZALEZ V. ELKHORN PACKING
of signatures in both 2016 and 2017 urged employees to
hurry so that the people behind them in line could also sign
the documents.”). Elkhorn’s action, then, is nothing like the
excessive pressure described in Odorizzi, when a party was
told that an entire real estate transaction “would fall through
if she did not sign then and there.” 246 Cal. App. 2d at 134.
It certainly doesn’t reach an “extreme emphasis on [the]
untoward consequences of delay”—another Odorizzi factor
that may signal undue influence. Id. at 133.
Fourth, Elkhorn representatives’ general statements to
follow the company’s rules and directions had nothing to do
with the arbitration agreements. As the district court found,
on Martinez-Gonzalez’s first day on the job, an Elkhorn
representative told him and other employees that it was a
privilege to work for the company, that they should work
diligently, and that they were free to return to Mexico if they
did not want to work hard. Other supervisors cautioned the
employees to follow the company’s rules. We do not see
how these standard first-day instructions could be construed
as oppressive extortions to sign an arbitration agreement.
Given the totality of circumstances, we fail to see the
extraordinary force needed to establish undue influence here.
The district court clearly erred in finding otherwise.
* * *
At bottom, the undue influence question is whether
Martinez-Gonzalez’s “will has been overcome against [his]
judgment.” Odorizzi, 246 Cal. App. 2d at 132. Under
California law, parties “must abide [by] the consequences of
the risks inherent in managing [their] own affairs.” Id.
(noting that a real estate purchase may not be rescinded
simply because the seller “cultivated” the buyer’s
expectation—later shown to be mistaken—that the land
MARTINEZ-GONZALEZ V. ELKHORN PACKING 25
would “become another Palm Springs”). Because neither
undue susceptibility nor excessive pressure appears here to
any significant degree, it is implausible and unsupported by
the record to find undue influence here.
III.
Martinez-Gonzalez has not shown that he signed the
arbitration agreements under economic duress or undue
influence. We therefore reverse and remand to the district
court to determine whether Martinez-Gonzalez’s claims fall
within the scope of the arbitration agreement.
REVERSED AND REMANDED.
RAWLINSON, Circuit Judge, dissenting:
The majority reverses the district court’s finding,
following a bench trial, that Dario Martinez-Gonzalez
(Martinez-Gonzalez), a migrant worker, was subjected to
economic duress and undue influence in the circumstances
surrounding his signing of Arbitration Agreements with his
employer, Elkhorn Packing Company (Elkhorn).
Because the majority opinion gives short shrift to the
standard of review, I will begin with a discussion of the
applicable standard of review and then proceed to apply it to
the compelling facts of this case.
We have set forth clear error as the applicable standard
of review when considering a factual determination that an
arbitration agreement was obtained through the use of
economic duress or undue influence. See Stover v. Experian
Holdings, Inc., 978 F.3d 1082, 1085 (9th Cir. 2020). We
26 MARTINEZ-GONZALEZ V. ELKHORN PACKING
also review findings of fact following a bench trial for clear
error. Olson v. United States by & through Dep’t of Energy,
980 F.3d 1334, 1337 (9th Cir. 2020). Credibility
determinations made by the judge presiding over the trial are
afforded “special deference.” Allen v. Iranon, 283 F.3d
1070, 1078 n.8 (9th Cir. 2002).
After hearing extensive testimony, the district court
found that Martinez-Gonzalez and another Elkhorn migrant
worker testified credibly regarding the circumstances
surrounding their employment with Elkhorn and the signing
of the Arbitration Agreements. See Martinez-Gonzalez v.
Elkhorn Packing Co., LLC, No. 18-cv-05226-EMC, 2019
WL 5556593, at *2 (N.D. Cal. Oct. 29, 2019). That
testimony and other evidence established the following facts
as found by the district court:
1. Martinez-Gonzalez signed Arbitration
Agreements in 2016 and 2017.
2. Martinez-Gonzalez signed the
Arbitration Agreements in the United
States after he was transported from
Mexico for a period of approximately
twelve hours in a bus provided by
Elkhorn.
3. Martinez-Gonzalez was not presented
with the Arbitration Agreements while in
Mexico, and was never provided an
explanation of the import of the
Arbitration Agreements.
4. During his employment with Elkhorn, the
company provided Martinez-Gonzalez
MARTINEZ-GONZALEZ V. ELKHORN PACKING 27
with housing at a hotel and transportation
between the fields and the hotel.
5. In 2016 and 2017, Martinez-Gonzalez
and the other migrant workers were
directed to sign a stack of “new hire
documents” that included the Arbitration
Agreements.
6. No “real explanation” was provided of
the documents the migrant workers were
directed to sign.
7. The Arbitration Agreements were
included within a stack of documents that
also contained IRS forms, a food safety
form, a workers compensation
agreement, and other documents.
8. The stack of documents was signed in the
parking lot of the hotel where the
migrant workers resided.
9. The stack of documents was signed at the
end of the day after the workers had
worked a full day in the fields and when
Martinez-Gonzalez was tired and hungry.
10. No seating was provided for the migrant
workers, although the supervisors
collecting the signatures were seated.
11. The migrant workers were directed to
stand in a line and wait their turn to sign
the documents.
28 MARTINEZ-GONZALEZ V. ELKHORN PACKING
12. Martinez-Gonzalez stood in line for
approximately forty minutes before he
reached the table where the documents
were located.
13. Elkhorn supervisors flipped through the
pages of the documents and directed
Martinez-Gonzalez where to sign.
14. Elkhorn supervisors urged the migrant
workers to hurry so that those still waiting
could also sign the documents.
15. Martinez-Gonzalez was not provided
copies of the Arbitration Agreements to
review in advance or given an
opportunity to read the Arbitration
Agreements before signing them.
Neither was he provided with copies of
the documents after signing them.
Rather, the documents were collected
after they were signed.
16. The Arbitration Agreements contained no
language indicating that the agreements
were optional, and none of the Elkhorn
supervisors informed Martinez-Gonzalez
that the Arbitration Agreements were
optional.
17. Martinez-Gonzalez was never informed
that he could consult with an attorney
before signing the Arbitration
Agreements.
MARTINEZ-GONZALEZ V. ELKHORN PACKING 29
18. Martinez-Gonzalez reasonably believed
that he had no option but to sign the
documents presented to him to continue
working for Elkhorn. He also believed
that the H-2A visa limited him to working
at Elkhorn. 1
19. The testimony from several Elkhorn
supervisors that the migrant workers were
not required to sign the Arbitration
Agreements to remain employed was not
credible.
20. In the United States, Martinez-Gonzalez
was able to earn five times as much as he
would earn in Mexico.
21. Martinez-Gonzalez supported his wife,
his mother, his step-father, and his
mother-in-law.
Id. at *2–*7.
Because these factual findings were made by the district
court after observing and listening to the witnesses testify,
they are entitled to “special deference.” Allen, 283 F.3d
at 1078 n.8. And because the factual findings are rooted in
the record developed during trial, they cannot be clearly
erroneous. See United States v. Bontemps, 977 F.3d 909,
917 (9th Cir. 2020) (explaining that factual findings by a
1
Amicus Farmworker Justice described vividly and in detail the
systematic exploitation of migrant workers for the H-2A visa program.
30 MARTINEZ-GONZALEZ V. ELKHORN PACKING
district court are not clearly erroneous unless “illogical,
implausible, or without support in the record”).
After setting forth its extensive and detailed factual
findings, the district court reached the legal conclusion that
the Arbitration Agreements were unenforceable because
they were the product of economic duress and undue
influence. See id. at *8–*11.
The crux of the district court’s determination was that
Elkhorn’s conscious decision to direct the migrant workers
to sign the Arbitration Agreements after transporting them
twelve hours from home, staging the signings in a parking
lot with no seating after a day in the fields, and providing no
explanation or opportunity to review the documents
constituted the wrongful act required to support a claim of
economic duress. See id. at *8–*10. The majority disagrees,
concluding that Elkhorn committed no wrongful act, and that
“reasonable alternatives were available to Martinez-
Gonzalez.” Majority Opinion, p. 9.
I disagree with the majority and agree with the district
court, primarily because the district court did not clearly err
in concluding, after a bench trial, that the atmosphere
surrounding the signing of the Arbitration Agreements rose
to the level of a wrongful act. Martinez-Gonzalez, 2019 WL
5556593, at *8. It is important to keep in mind that under
California law, the wrongful act required to establish
economic coercion need not constitute a tort or a crime. Rich
& Whillock, Inc. v. Ashton Dev., Inc., 157 Cal. App. 3d 1154,
1158 (1984). Rather, all that is required is a “wrongful act
which is sufficiently coercive to cause a reasonably prudent
person faced with no reasonable alternative to succumb to
the perpetrator’s pressure.” Id. (citations omitted).
MARTINEZ-GONZALEZ V. ELKHORN PACKING 31
California courts have described the economic duress
doctrine as “equitably based.” Id. (citation omitted). As a
matter of policy, “there is an increasing recognition of the
law’s role in correcting inequitable or unequal exchanges
between parties of disproportionate bargaining power and a
greater willingness to not enforce agreements which were
entered into under coercive circumstances.” Id. (citation
omitted).
In determining whether the party asserting economic
duress had a reasonable alternative available, courts examine
“whether a reasonably prudent person would follow the
alternative course, or whether a reasonably prudent person
might submit.” CrossTalk Prods., Inc. v. Jacobson, 65 Cal.
App. 4th 631, 644 (1998). “Clearly this inquiry is a factual
one. . . .” Id. (emphasis added); see also Doe 1 v. Morrison
& Foerster, LLP, No. 18-cv-02542-JSC, 2019 WL
11806485, at *4 (N.D. Cal. May 1, 2019) (same). Indeed,
“the existence of economic duress raises a number of factual
inquiries,” Doe 1, 2019 WL 11806485, at *4, including
whether the individual “faced no reasonable alternative [but]
to succumb to the perpetrator’s pressure.” Hicks v. PGA
Tour, Inc., 897 F.3d 1109, 1119 (9th Cir. 2018).
The district court determined that Martinez-Gonzalez
had no reasonable alternative but to succumb to Elkhorn’s
pressure to sign the Arbitration Agreements. Martinez-
Gonzalez, 2019 WL 5556593, at *8. The court’s factual
inquiry focused on the following facts established during the
bench trial:
• The Arbitration Agreements were presented
to Martinez-Gonzalez for signature after a
twelve-hour bus ride from Mexico to the
United States.
32 MARTINEZ-GONZALEZ V. ELKHORN PACKING
• Martinez-Gonzalez was living in housing
controlled by Elkhorn.
• Martinez-Gonzalez was provided with no
information about the Arbitration
Agreements.
• Martinez-Gonzalez was transported to the
United States under the auspices of an H-2A
visa obtained through Elkhorn and had
already begun working for Elkhorn.
• Martinez-Gonzalez reasonably believed that
he could not seek work with another
employer.
• Martinez-Gonzalez had no other place to live.
• Martinez-Gonzalez had no means of
transportation to return to Mexico.
• Martinez-Gonzalez was admonished by
Elkhorn supervisors to follow Elkhorn’s rules
and instructions or risk being sent back to
Mexico.
• Elkhorn representatives were aware of and
acknowledged “the economic vulnerabilities
of their agricultural workers.”
See id. at *8–*9.
Based on the evidence presented during trial, the district
court concluded that no reasonable migrant worker with
Martinez-Gonzalez’s “significant financial obligations,” and
“without alternative employment prospects, an alternative
MARTINEZ-GONZALEZ V. ELKHORN PACKING 33
place to live . . . and no practical way to return to Mexico,”
would have refused to sign the Arbitration Agreements. Id.
at *9.
The majority opinion articulates no real issue with the
findings of fact made by the district court but concludes,
nevertheless, that Martinez-Gonzalez was not subjected to
economic duress. In the majority’s view, this case boils
down to whether Elkhorn “committed a wrongful act by
asking [Martinez-Gonzalez] to sign the arbitration
agreement after [Martinez-Gonzalez] made the journey from
Mexico to California.” Majority Opinion, p. 10. However,
that oversimplification of the district court’s ruling ignores
the detailed factual findings upon which the district court
predicated its ruling, including: 1) the fact that Martinez-
Gonzalez faced challenging economic circumstances; 2) the
fact that Martinez-Gonzalez was dependent on Elkhorn for
housing and transportation; 3) the fact that Martinez-
Gonzalez reasonably believed that he could only work for
Elkhorn on the H-2A visa; 4) the fact that Martinez-
Gonzalez was directed to sign the Arbitration Agreements
without being allowed to read them and with “no
explanation” of them; and 5) the fact that Martinez-Gonzalez
was never provided with a copy of the Arbitration
Agreements. Martinez-Gonzalez, 2019 WL 5556593, at *2–
*7.
The majority admits that “the circumstances of the
signing of the arbitration agreements were not ideal,” but
concludes that those circumstances “didn’t make a mockery
of [the] freedom of contract [or] undermine the proper
functioning of our economic system.” Majority Opinion,
p. 11. However, this conclusion by the majority
impermissibly conflicts with the detailed factual findings
made by the district court. See Allen, 283 F.3d at 1078 n.8
34 MARTINEZ-GONZALEZ V. ELKHORN PACKING
(directing “special deference” to factual findings made by
the trial court) (quoting Rich & Whillock, 157 Cal. App. 3d
at 1159). This is not a case of “simple hard bargaining.”
Majority Opinion, p. 8 (quoting Sheehan v. Atlanta Int’l Ins.
Co., 812 F.2d 465, 469 (9th Cir. 1987)) (alteration omitted).
Rather, this case is a prime example of the “inequitable or
unequal exchanges between parties of disproportionate
bargaining power” the economic duress doctrine aims to
rectify. Rich & Whillock, 157 Cal. App. 3d at 1158. In
Mexico, Martinez-Gonzalez earned the equivalent of $150 a
week while financially supporting his wife, mother-in-law,
mother, and stepfather. He could earn five times more in the
United States. Elkhorn knew that “behind every employee,
there are three, five, even up to eight people from their
families who depend on that worker.” Martinez-Gonzalez,
2019 WL 5556593, at *9. It is not difficult to contemplate
the desperate circumstances that would compel Martinez-
Gonzalez to leave his family, travel twelve hours by bus to
another country, and work in a field six days a week for nine-
plus hours. What is difficult to understand is how the
majority can consider Rich & Whillock, which involved a
contractor “only” obtaining 70% of what was owed, a
“classic case of economic duress” while reducing the
compelling facts of this case to the signing “of a
commonplace agreement.” Majority Opinion, pp. 11–12.
The majority accuses the dissent of making up California
law regarding what constitutes wrongful conduct. See
Majority Opinion, pp. 12–13. Not so. California law clearly
establishes that “[e]conomic duress does not necessarily
involve an unlawful act, but may arise from an act that is so
coercive as to cause a reasonably prudent person, faced with
no reasonable alternative, to agree to an unfavorable
contract.” Tarpy v. Cnty. of San Diego, 110 Cal. App. 4th
267, 277 (2003) (citations and internal quotation marks
MARTINEZ-GONZALEZ V. ELKHORN PACKING 35
omitted). My colleagues in the majority cannot quarrel with
that proposition, given their acknowledgment that lawful
acts may constitute economic duress if done with “coercive
purpose or in bad faith.” Majority Opinion, p. 10 (internal
quotation marks omitted).
Where the majority takes a wrong turn is in proclaiming
that the district court “never found that Elkhorn acted with a
‘coercive purpose’” in directing Martinez-Gonzalez to sign
the arbitration agreements during the mass orientation. Id.at 11 n.3. Indeed, the entire thrust of the district court’s
factual findings was that Elkhorn acted with a coercive
purpose: that Elkhorn created a “coercive environment”
aimed at robbing Martinez-Gonzalez of the ability to say no
to arbitration. Martinez-Gonzalez, 2019 WL 5556593,
at *11. The majority must ignore these factual findings to
conclude otherwise.
The majority even “question[s] whether extracting an
arbitration agreement could constitute a ‘wrongful threat’
under California law.” Majority Opinion, p. 12. This is a
strawman argument. Martinez-Gonzalez did not seek to
invalidate his employment agreement on the basis that
making him sign an arbitration agreement was improper.
Rather, he sought to invalidate the arbitration agreement on
the basis that he signed it under economic duress and as a
result of undue influence. Neither the district court,
Martinez-Gonzalez, nor I proposed that signing an
arbitration agreement is wrongful in and of itself.
The majority also concludes that Martinez-Gonzalez
“failed to demonstrate a lack of reasonable alternatives” to
signing the arbitration agreements. Majority Opinion, p. 13.
Again, the majority takes no real issue with the factual
findings made by the district court. Instead, the majority
concludes, contrary to those findings, that a reasonable
36 MARTINEZ-GONZALEZ V. ELKHORN PACKING
migrant worker facing the circumstances confronted by
Martinez-Gonzalez would have declined to sign the
Arbitration Agreements. Id. at pp. 14–15. However, the
majority’s conclusion is belied by the evidence presented
during trial, including the testimony of another migrant
worker who corroborated Martinez-Gonzalez’s version of
events. In addition, it was undisputed “that of the thousands
of employees hired, no employee has ever refused to sign the
Arbitration Agreement.” Martinez-Gonzalez, 2019 WL
5556593, at *6. In the face of this considerable and
persuasive evidence, I cannot fathom how one could
logically conclude that Martinez-Gonzalez had reasonable
alternatives to signing the Arbitration Agreements,
especially given the deference we are required to give the
trial court’s findings of fact.
The majority’s diminishing of Martinez-Gonzalez’s
compelling situation as the need for “a job and . . . money,”
Majority Opinion, p. 14, turns a blind eye to the factual
findings regarding Martinez-Gonzalez’s dire circumstances,
as well as the realities of migrant workers. Even Elkhorn,
who recognized that “three, five, even up to eight people
from their families . . . depend on [a] worker,” Martinez-
Gonzalez, 2019 WL 5556593, at *9, was not so dismissive
of the financial weight borne by migrant workers.
The majority maintains that my dissent is “largely based
on Martinez-Gonzalez’s socioeconomic background” and
guided by “sympathies” and not the law. Majority Opinion,
p. 13. The opposite is true: my paramount guides are the
district court’s factual findings, to which we must defer, and
California law, both of which I faithfully apply to the
particular circumstances of this case, including Martinez-
Gonzalez’s socioeconomic background. In contrast, as
pointed out, the majority strays from both the district court’s
MARTINEZ-GONZALEZ V. ELKHORN PACKING 37
detailed factual findings regarding Martinez-Gonzalez’s
circumstances and California law.
The majority raises three points in support of its
conclusion that Martinez-Gonzalez had reasonable
alternatives. See Majority Opinion, pp. 14–15. But these
three points cannot withstand the force of the district court’s
factual findings.
Majority Point 1: “No one at Elkhorn told
Martinez-Gonzalez that refusing to sign the
agreements was a cause for termination.”
The Rest of the Story: The district court
expressly “[did] not credit” testimony from
Elkhorn that the agreements were “not
mandatory” or that failure to sign would not
lead to termination. Martinez-Gonzalez
5556593, at *6. The district court found that
despite the lack of an express threat of loss of
employment, Martinez-Gonzalez credibly
testified regarding his belief that if he refused
to sign the Arbitration Agreements, “he
would not be given work and would be sent
back to Mexico.” 2 Id. The district court gave
the following examples of why Martinez-
Gonzalez “had numerous reasons to believe
that signing the [Arbitration Agreements]
was mandatory”: 1) Martinez-Gonzalez was
told to hurry through signing the Arbitration
2
This finding is consistent with the amicus’ explanation of the H-
2A visa program: “[a]n H-2A guestworker generally may only work for
the individual employer that obtained the visa for him. When the job
ends, or if a worker quits, he must return home or risk deportation.”
38 MARTINEZ-GONZALEZ V. ELKHORN PACKING
Agreements; 2) The migrant workers stood in
lengthy lines to sign the Arbitration
Agreements after working in the fields all
day; 3) The migrant workers were tired and
hungry; 4) Elkhorn supervisors repeatedly
“emphasized the importance of following the
rules, while raising the specter of being sent
back to Mexico if employees did not work
hard”; and 5) The migrant workers “were in
the United States on an H-2A visas procured
through Elkhorn.” The district court
specifically did not credit the testimony of
Elkhorn supervisors that the Arbitration
Agreements were not mandatory and that no
employee would be terminated for refusing to
sign them. See id.Moreover, “no employee was told signing
[the Agreements] was optional.” Id. To the
contrary, an Elkhorn representative “testified
that the Arbitration Agreements were NOT
voluntary,” that the “documents were
REQUIRED for the employees to begin
working,” and that “he would look for any
worker [who] did not sign all the
documents.” Another Elkhorn representative
testified that the Arbitration Agreement was
presented as a document “you ARE going to
sign.” Id. (bolding added).
The majority’s suggestion that “facts don’t
matter” to me or to the district court, Majority
Opinion, p. 15, is nothing short of
MARTINEZ-GONZALEZ V. ELKHORN PACKING 39
gaslighting.3 The district court heard the
testimony, weighed the conflicting evidence,
and issued detailed factual findings,
including credibility assessments. We may
not disturb those detailed factual findings
unless they are clearly erroneous. See
Bontemps, 977 F.3d at 917. Because the
district court’s factual findings are anchored
in the record developed during trial, the
majority is actually the side ignoring the
facts.
Majority Point 2: Martinez-Gonzalez did not
ask if the arbitration agreements were
mandatory, and he could have asked to
review the documents.
The Rest of the Story: The district court
found, after hearing testimony, that Martinez-
Gonzalez had “no real opportunity to review
the new-hire documents” or “read the
Arbitration Agreement[s].” Martinez-
Gonzalez, 2019 WL 5556593, at *4, *7.
Rather, Martinez-Gonzalez was rushed
through the process and presented with a
stack of documents to sign, none of which
was even identified as an arbitration
agreement. See id. at *6–*7. The supervisors
3
The term “[g]aslighting is . . . used informally to describe someone
who persistently puts forth [a] false narrative” in an effort to cause
“another person to doubt [her] own perceptions. . . .”
https:en.m.wikipedia.org. 9/19/2021. I do not question my colleagues
respect for me and I respect them equally. But the words written by the
majority say what they say.
40 MARTINEZ-GONZALEZ V. ELKHORN PACKING
flipped through the stack of documents and
directed the migrant workers where to sign,
with no opportunity to view the documents. 4
See id. Martinez-Gonzalez and the other
migrant workers were also tired and hungry
from having worked a full day in the fields.
See id.The majority is correct that Elkhorn
representatives testified that workers “were
invited to ask questions about the
documents.” Majority Opinion, p. 15 n.4.
But the district court did not credit this
testimony. Rather, the district court noted
that one Elkhorn representative testified that
no workers had ever asked him any
questions. See Martinez-Gonzalez, 2019 WL
5556593, at *6. Moreover, Martinez-
Gonzalez’s co-worker testified that when he
did ask questions about the documents he was
signing, he was told that they concerned
“insurance.” Id. The district court credited
the testimony that Martinez-Gonzalez was
not allowed to read the Arbitration
Agreements, they were not explained to him,
and he was never provided copies of the
agreements. See id. at *5–*6. In fact, one
Elkhorn representative testified that even if a
worker inquired, “he would not have been
4
Moreover, it strains credulity that the Arbitration Agreements were
voluntary when, as amicus further noted, the lack of limits for H-2A visas
create an “unlimited supply of guestworkers” and “[i]f one worker
decides conditions are too dangerous or pay is too low, another H-2A
worker can quickly take his place.”
MARTINEZ-GONZALEZ V. ELKHORN PACKING 41
able to explain the rights [migrant] workers
were waiving by signing the Arbitration
Agreement[s].” Id. at *6. Based on those
facts and others, the district court concluded
that Elkhorn’s position that it never told
workers they could not review the documents
“did not negate the coercive environment
created by the circumstances and the
reasonably perceived risks facing [Martinez-
Gonzalez] and his co-workers.” Id. at *11.
In other words, Martinez-Gonzalez had no
meaningful opportunity to ask questions
about the Arbitration Agreements.
Majority Point 3: “[T]he arbitration
agreements expressly allowed Martinez-
Gonzalez to revoke the contract within ten
days.”
The Rest of the Story: According to the
district court’s factual findings, there was no
way that Martinez-Gonzalez would have
known about the revocation provision in the
Arbitration Agreements. Martinez-Gonzalez
was not allowed to read the Arbitration
Agreements, they were not explained to him,
and he was never provided copies of the
agreements. See id. at *5–*6. Because the
documents were gathered up by the
supervisors immediately after signing, there
was no opportunity to request a copy to
review later, particularly as the testimony
reflected that the supervisors rushed the
workers through the process, with no
opportunity for questions. See id.42 MARTINEZ-GONZALEZ V. ELKHORN PACKING
California appellate courts and federal district courts
applying California law uniformly agree, without
controversy, that whether reasonable alternatives exist, and
whether duress is present in general, are factual questions.
See CrossTalk, 65 Cal. App. 4th at 644 (“Clearly, this
inquiry is a factual one.”); accord Est. Of Bennett, 163 Cal.
App. 4th 1303, 1310 (2008); see also Doe, 2019 WL
11806485, at *4; Synnex Corp. v. Wattles, No. 11-cv-01496-
YGR, 2012 WL 5524953, at *5 (N.D. Cal. Nov. 14, 2012)
(“Whether a party acted under duress is normally a question
of fact . . .”) (citation omitted); Porsandeh v. Prudential
Prop. & Cas. Ins. Co., No. CV-02-5354-EFS(SHX), 2004
WL 5642440, at *6 (C.D. Cal. Apr. 30, 2004) (“Economic
duress is a question for the jury. . . .”) (citation omitted).
At bottom, the facts in this case were disputed. The
district court conducted a trial and made factual findings, to
which we must defer. See Allen, 283 F.3d at 1078 n.8. The
district court’s finding of economic duress is amply
supported by the evidence developed during trial. The
majority’s contrary finding is not.
The district court’s conclusion that Martinez-Gonzalez
was subjected to undue influence stands on even firmer
footing. Under California law, “undue influence” is defined
as “persuasion which tends to be coercive in nature,
persuasion which overcomes the will without convincing the
judgment.” Odorizzi v. Bloomfield Sch. Dist., 246 Cal. App.
2d 123, 130 (1966) (citation omitted). “The hallmark of
[coercive] persuasion is high pressure. . . . Id. (citation
omitted). See also Cal. Civ. Code § 1575 (“Undue influence
consists . . . [i]n taking a grossly oppressive and unfair
advantage of another’s necessities or distress.”).
Undue influence exists when the “weakness on one side,
or strength on the other, or a combination of the two” results
MARTINEZ-GONZALEZ V. ELKHORN PACKING 43
in the overbearing of the will of the weaker side. Odorizzi,
246 Cal. App. 2d at 132.
California courts examine the following factors to
determine the existence of excessive pressure resulting in the
overbearing of one’s will:
Factor 1 - discussion of the transaction at an
unusual or inappropriate time
Factor 2 - consummation of the transaction in
an unusual place
Factor 3 - insistent demand that the business
be finished at once
Factor 4 - extreme emphasis on untoward
consequences of delay
Factor 5 - the use of multiple persuaders by
the dominant side against a single servient
party
Factor 6 - absence of third-party advisers to
the servient party
Factor 7 - statements that there is no time to
consult financial advisers or attorneys.
Id. at 133. “If a number of these elements are simultaneously
present; the persuasion may be characterized as excessive.”
Id.
A comparison of the district court’s findings to the
applicable factors is informative.
44 MARTINEZ-GONZALEZ V. ELKHORN PACKING
Factors District Court Findings
Unusual or inappropriate At the end of the workday
time after toiling in the fields
Unusual place Parking lot of the hotel
Insistence on speedy Repeatedly admonished to
completion hurry
Consequences of delay No specific factual finding
Multiple persuaders Multiple seated Elkhorn
supervisors present while
migrant workers stood in
line and waited for
directions
Absence of third-party No opportunity to consult
advisers an attorney
Statement of lack of time to No specific factual finding
consult adviser
The district court made specific factual findings directly
corresponding to five of the seven Odorizzi factors.
Therefore, the persuasive force applied by Elkhorn to obtain
Martinez-Gonzalez’s signature on the Arbitration
Agreements was properly characterized by the district court
as “excessive.” Id.
The majority seeks to blunt the force of the district
court’s factual findings that mirror five of the Odorizzi
factors by referencing the specific facts of cases discussed in
Odorizzi. See Majority Opinion, p. 22. However, the court
in Odorizzi foreclosed the majority’s argument by clarifying
in advance that the cases discussed “are illustrative” and in
MARTINEZ-GONZALEZ V. ELKHORN PACKING 45
no way reflect the universe of circumstances that constitute
undue influence. Odorizzi, 246 Cal. App. 2d at 133. The
majority attempts to dodge that clarification by hedging in a
footnote that they “do not suggest that these examples
represent ‘the universe of circumstances’ constituting undue
influence.” Majority Opinion, p. 22 n.9. But the majority
does indeed make such a suggestion by ignoring the district
court’s factual findings on the Odorizzi factors.
Overall, my colleagues in the majority pay lip service to
the deference we owe to the district court’s factual findings,
while simultaneously making their own factual findings
based on their own weighing of the evidence. See Majority
Opinion, pp. 19–25. The majority admits that the Arbitration
Agreements were signed in an “atypical” place, but attempt
to normalize that practice because Elkhorn “grow[s]
vegetables in remote farmlands.” Id. at 22. Any way you
slice it, as the district court found, a hotel parking lot “is an
unusual place to execute legally binding documents.”
Martinez-Gonzalez, 2019 WL 5556593, at *10. Moreover,
the fact that workers “had no place to sit down, no desks
upon which they could review the documents prior to
signing them, and no opportunity or privacy that would
permit them to speak with an attorney or family member
outside of the presence of their employer or co-workers,”
added to the coercive effect of the unusual setting. Id. The
majority also elides the fact that workers signed the
Arbitration Agreements after having “worked a full day in
the fields” and while “tired, hungry, [and] eager to get
cleaned up before going to sleep.” Id.The majority concedes that Elkhorn hurried workers to
sign the new-hire documents, but mischaracterizes that fact
as an accommodation to other workers waiting in line to sign
rather than “some bad-faith pressure tactic.” Majority
46 MARTINEZ-GONZALEZ V. ELKHORN PACKING
Opinion, p. 23. In doing so, the majority blatantly ignores
the district court’s finding that Elkhorn manufactured the
coercive atmosphere by urging tired and hungry workers to
execute an unexplained stack of documents at the end of a
long workday, in a hotel parking lot. The majority’s
“accommodation” euphemism flies in the face of the district
court’s finding, after assessing conflicting evidence and
making credibility determinations, that Elkhorn created an
oppressive and coercive atmosphere.
In addition, the majority relies on the fact that Elkhorn
did not expressly forbid Martinez-Gonzalez from asking for
time to review the documents or to consult an attorney. See
Majority Opinion, p. 23. But as discussed, the district court
found that Elkhorn created an atmosphere that precluded and
discouraged the ability to review documents, ask questions,
and consult advisors. Of course, Elkhorn did not expressly
inform its workers: “sign these documents without reading
them or consulting a lawyer or suffer termination.” If
employers openly displayed such coercive tactics, there
would be no need to apply the multi-factor test developed by
the courts to determine coercion.
Finally, contrary to the majority’s characterization,
neither I nor the district court engaged in a “simple box-
checking exercise.” Majority Opinion, p. 21 n.8. Rather, the
district court applied the Odorizzi factors and I give
appropriate deference to the district court’s application of
those factors to the evidence presented at trial. In contrast,
my colleagues in the majority erased all the boxes, discarded
the district court’s factual findings, and wrote their own
version of the facts based on a manufactured “totality of the
circumstances” review. Id. at 24.
The majority cites Myers v. United States, 652 F.3d 1021(9th Cir. 2011), to support its disregard for the trial court’s
MARTINEZ-GONZALEZ V. ELKHORN PACKING 47
factual findings. See Majority Opinion, p. 17. However, the
panel in Myers concluded that there was clear error because
the factual findings were “without support in inferences that
may be drawn from the facts in the record.” Myers, 652 F.3d
at 1036. The same cannot be said for the findings made by
the district court in this case, each of which was linked to
specific evidence developed during trial.
Under the proper standard of review, far from being
clearly erroneous, the district court’s determination that
Martinez-Gonzalez was subjected to economic duress and
undue influence was firmly tethered to its review of the
witness testimony and evidence presented during trial. As
we have colorfully observed, “[t]o be clearly erroneous, a
decision must strike us as wrong with the force of a five-
week old, unrefrigerated dead fish.” Ocean Garden, Inc. v.
Marktrade Co., Inc., 953 F.2d 500, 502 (9th Cir. 1991)
(citation and alterations omitted).
The district court decision in this case comes nowhere
close to meeting this standard. The “key facts” the majority
contends the district court ignored, Majority Opinion, p. 17,
were, in fact, considered by the district court. The district
court simply reached an opposite conclusion, to which we
must “special[ly] defer[].” Allen, 283 F.3d at 1078 n.8. In
sum, the district court’s finding of economic duress is amply
supported by the evidence developed during the trial. The
majority’s contrary finding is not.
The presence of either economic duress or undue
influence was sufficient to rescind the Arbitration
Agreements. See Nmsbpcsldhb v. Cnty. of Fresno, 152 Cal.
App. 4th 954, 959 (2007) (explaining that under California
law, a contract may be rescinded under various grounds,
including undue influence and duress) (citing Cal. Civ. Code
§ 1689). As the majority completely disregards the district
48 MARTINEZ-GONZALEZ V. ELKHORN PACKING
court’s comprehensive factual findings following trial and
the clear error standard of review in concluding otherwise, I
respectfully dissent.