The space company's standard employee agreement couldn't survive scrutiny
Blue Origin just lost a court battle over its own arbitration agreement – and every HR team in California should be paying attention.
On April 24, the California Court of Appeal struck down the arbitration clause in Blue Origin's standard employment agreement, finding it unconscionable on four separate grounds and refusing to salvage any part of it. The case landed in the Second Appellate District after the space company tried to force a former senior director into private arbitration rather than let his claims proceed in court.
Craig Stoker joined Blue Origin as a senior director of program management in August 2020. He signed the company's standard employee agreement at the time of hire. According to his account, a company recruiter told him the agreement contained standard terms, that everyone had to sign, and that everyone always did sign. Stoker said he had questions about the documents, but the recruiter did not offer to answer them. Blue Origin did not present any evidence that the agreement's terms were negotiable.
Stoker was terminated in October 2022 after raising complaints about the company's safety practices. He alleged that his safety complaints were ignored because of his gender – that Blue Origin employees believed he should "man up." In November 2023, he filed suit alleging retaliation, sexual/gender discrimination, sexual/gender harassment, wrongful termination, and several other employment claims.
Blue Origin moved to compel arbitration. The trial court blocked the motion, and Blue Origin appealed.
The appellate court affirmed, but it took a different path than the lower court. Rather than wading into the contested question of whether the federal Ending Forced Arbitration Act applied to Stoker's claims, the court went straight to the arbitration agreement itself and found it riddled with problems.
The agreement covered far more than employment disputes. It applied to any and all claims between Stoker and the company, its parent, subsidiaries, affiliates, successors or assigns, as well as their current and former officers, directors, employees, and agents. The court pointed out that under the agreement's plain language, Stoker could have been forced into arbitration if he were injured in an automobile accident with a Blue Origin employee years after his employment ended, or if his house were damaged by debris from a Blue Origin rocket. The court was unimpressed by the company's argument that the scope was narrower than it appeared, noting simply that all means all.
The agreement also lacked mutuality. Claims that employers typically bring – trade secret violations, trademark infringement, breach of fiduciary duty, breach of proprietary information or confidentiality obligations, and breach of non-solicitation agreements – were excluded from mandatory arbitration. Claims that employees typically bring – wrongful termination, wage disputes, discrimination, harassment, retaliation – were all funneled into it. The court found this created a one-sided system that favored the company.
Two additional provisions compounded the problem. The agreement included a predispute jury trial waiver that applied even to claims determined not to be subject to arbitration – a provision California courts have repeatedly held unenforceable as contrary to public policy. It also contained a blanket ban on representative actions, including claims under the Private Attorneys General Act. California law does not permit employees to waive their right to bring PAGA claims before a dispute arises, regardless of whether the employee ever actually files one.
With four unconscionable provisions identified, the court turned to the question of whether it could simply cut out the bad parts and enforce the rest. It declined. Fixing the overbreadth problem would have required adding new language to narrow the clause – something courts are not authorized to do. Removing the one-sided exclusions would have forced both parties into arbitration on terms neither actually agreed to. And even if surgical repair were possible, the court found it would not serve justice. The sheer number of defects, the court reasoned, pointed to a systematic effort to tilt the arbitration framework in the employer's favor. Allowing employers to load agreements with one-sided terms and rely on courts to clean them up later would only encourage more of the same.
The agreement's own severance clause, which directed courts to reform invalid provisions to the minimum extent necessary, did not change the outcome. The court acknowledged the clause but said it could not override judicial discretion when severance would not serve the interests of justice.
For HR professionals, the takeaway is concrete. Arbitration agreements that reach beyond the employment relationship, that channel only employee claims into arbitration, that strip jury trial rights from non-arbitrable disputes, or that categorically ban representative actions are at serious risk of being thrown out entirely – not just trimmed. And when an agreement stacks multiple problematic provisions together, courts are increasingly unwilling to play editor.
