Sanchez v. Brown Automotive CA2/1 ( 2021 )

Filed 4/26/21 Sanchez v. Brown Automotive CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
BRIANNA SANCHEZ, B306713
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No.
v. 19STCV46523)
BROWN AUTOMOTIVE, INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Michael L. Stern, Judge. Reversed and
remanded with directions.
Fine, Boggs & Perkins, John P. Boggs, David J. Reese, and
Daniel J. Padova for Defendant and Appellant.
Valiant Law, Raymond Babaian, and Zachary Cavanagh for
Plaintiff and Respondent.
_______________________________
Defendant Brown Automotive, Inc. appeals from an order
denying its petition to compel arbitration of this employment-
related action filed by its former employee, plaintiff Brianna
Sanchez. In denying Brown Automotive’s petition, the trial court
concluded the arbitration agreement Sanchez signed prior to
commencement of her employment with Brown Automotive was
both procedurally and substantively unconscionable. While we
agree the preemployment arbitration agreement Sanchez signed
is procedurally unconscionable, we conclude it is not
substantively unconscionable. Because both procedural and
substantive unconscionability are necessary to invalidate the
arbitration agreement, we reverse the trial court’s order denying
the petition to compel arbitration and remand the matter for
further proceedings consistent with this opinion.
BACKGROUND
I. Sanchez’s Complaint
Sanchez worked as a receptionist at one of Brown
Automotive’s dealerships, Puente Hills Nissan. In December
2019, Sanchez filed this action against Brown Automotive and
two of its male employees,1 alleging she resigned from her
position because she was subjected to “severe sexual harassment,
discrimination, and abusive conduct” in connection with her
employment at the dealership, including, but not limited to: (1)
male employees hugging her from behind without her consent
and holding onto her until she pushed them away; (2) male
1The defendant employees were not parties to Brown
Automotive’s petition to compel arbitration and are not parties to
this appeal. Sanchez had not served them with the summons and
complaint by the time the petition to compel arbitration was filed
and heard.
2
employees asking her on dates and, when she declined the
advances, circulating rumors that she was involved sexually with
someone else; (3) male employees staring at her “in a sexually
suggestive manner” and attempting to “look down her shirt”; (4) a
male employee walking behind her desk chair where she was
sitting and “mimicking ‘humping’ her from behind,” while other
male employees watched and laughed; (5) a male employee
sending her sexually suggestive text messages “at all hours of the
day, but mostly at night,” although she never gave him her cell
phone number; and (6) a male employee making sexually
suggestive comments to her at work. She alleged Brown
Automotive was aware of its employees’ inappropriate conduct
but failed to do anything to prevent or stop it.
Sanchez asserted the following causes of action against
Brown Automotive, based on the alleged conduct described above:
(1) sexual assault; (2) battery; (3) gender discrimination in
violation of the California Fair Employment and Housing Act
(FEHA); (4) sexual harassment and hostile work environment in
violation of FEHA; (5) retaliation in violation of FEHA; (6) failure
to prevent hostile work environment, harassment, retaliation,
and discrimination in violation of FEHA; (7) wrongful
termination (constructive discharge) in violation of public policy;
(8) negligent hiring, retention, and supervision; (9) intentional
infliction of emotional distress; and (10) negligent infliction of
emotional distress.
II. Brown Automotive’s Petition to Compel Arbitration
In February 2020, Brown Automotive filed a petition to
compel arbitration and to stay this action, attaching to the
petition three, separate documents Sanchez signed, that each
contain a lengthy arbitration clause. The first document, dated
3
October 18, 2017, is the employment application Sanchez signed
to apply for the receptionist position at Puente Hills Nissan. The
last page of the five-page employment application is titled
“APPLICANT STATEMENT AND AGREEMENT” and includes
multiple paragraphs under which Sanchez signed the
employment application. This one-page Applicant Statement and
Agreement contains more than 70 lines of single-spaced text in
very small font and covers topics such as following the
Company’s2 rules and regulations, allowing the Company to
contact previous employers, and the nature of the at will
employment. The following text appears just above Sanchez’s
signature: “DO NOT SIGN UNTIL YOU HAVE READ THE
ABOVE STATEMENT & AGREEMENT.” The 37-line
arbitration clause, which is a separate paragraph in the middle of
the Applicant Statement and Agreement, provides:
“I also acknowledge that the Company utilizes a system of
alternate dispute resolution which involves binding arbitration to
resolve all disputes which may arise out of the employment
context. Because of the mutual benefits (such as possible reduced
expense and possible increased efficiency) which private binding
arbitration can provide both the Company and myself, I and the
Company both agree that any claim, dispute, and/or controversy
that either party may have against one another (including, but
not limited to, any claims of discrimination and harassment,
whether they be based on the California Fair Employment and
Housing Act, Title VII of the Civil Rights Act of 1964, as
amended, as well as all other applicable state or federal laws or
regulations) which would otherwise require or allow resort to any
The term “Company” is not defined in the Applicant
2
Statement and Agreement.
4
court or other governmental dispute resolution forum between
myself and the Company (or its owners, directors, officers,
managers, employees, agents, and parties affiliated with its
employee benefit and health plans) arising from, related to, or
having any relationship or connection whatsoever with my
seeking employment with, employment by, or other association
with the Company, whether based on tort, contract, statutory, or
equitable law, or otherwise, (with the sole exception of claims
arising under the National Labor Relations Act which are
brought before the National Labor Relations Board, claims for
medical and disability benefits under the California Workers’
Compensation Act, and Employment Development Department
claims) shall be submitted to and determined exclusively by
binding arbitration. In order to provide for the efficient and
timely adjudication of claims, the arbitrator is prohibited from
consolidating the claims of others into one proceeding. This
means that an arbitrator will hear only my individual claims and
does not have the authority to fashion a proceeding as a class or
collective action or to award relief to a group of employees in one
proceeding. Thus, the Company has the right to defeat any
attempt by me to file or join other employees in a class, collective
or joint action lawsuit or arbitration (collectively “class claims”).
I and the Company both agree that any challenge to the
prohibition against consolidating the claims of others into a
single proceeding, whether as a class, a representative action or
otherwise, is a gateway issue and shall be determined by the
Superior Court; and any substantive claims shall not be decided
by the arbitrator until after the gateway determination is made
by the Court. I further understand that I will not be disciplined,
discharged, or otherwise retaliated against for exercising my
5
rights under Section 7 of the National Labor Relations Act,
including but not limited to challenging the limitation on a class,
collective, or joint action. I understand and agree that nothing in
this agreement shall be construed so as to preclude me from filing
any administrative charge with, or from participating in any
investigation of a charge conducted by, any government agency
such as the Department of Fair Employment and Housing and/or
the Equal Employment Opportunity Commission; however, after
I exhaust such administrative process/investigation, I understand
and agree that I must pursue any such claims through this
binding arbitration procedure. I acknowledge that the
Company’s business and the nature of my employment in that
business affect interstate commerce. I agree that the arbitration
and this Agreement shall be controlled by the Federal Arbitration
Act, in conformity with the procedures of the California
Arbitration Act (Cal. Code Civ. Proc. sec 1280 et seq., including
section 1283.05 and all of the Act’s other mandatory and
permissive rights to discovery). However, in addition to
requirements imposed by law, any arbitrator herein shall be a
retired California Superior Court Judge and shall be subject to
disqualification on the same grounds as would apply to a judge of
such court. To the extent applicable in civil actions in California
courts, the following shall apply and be observed: all rules of
pleading (including the right of demurrer), all rules of evidence,
all rights to resolution of the dispute by means of motions for
summary judgment, judgment on the pleadings, and judgment
under Code of Civil Procedure Section 631.8. Resolution of the
dispute shall be based solely upon the law governing the claims
and defenses pleaded, and the arbitrator may not invoke any
basis (including, but not limited to, notions of ‘just cause’) other
6
than such controlling law. The arbitrator shall have the
immunity of a judicial officer from civil liability when acting in
the capacity of an arbitrator, which immunity supplements any
other existing immunity. Likewise, all communications during or
in connection with the arbitration proceedings are privileged in
accordance with Cal. Civil Code Section 47(b). As reasonably
required to allow full use and benefit of this Agreement’s
modifications to the Act’s procedures, the arbitrator shall extend
the times set by the Act for the giving of notices and setting of
hearings. Awards shall include the arbitrator’s written reasoned
opinion. If CCP § 1284.2 conflicts with other substantive
statutory provisions or controlling case law, the allocation of costs
and arbitrator fees shall be governed by said statutory provisions
or controlling case law instead of CCP § 1284.2. Both the
Company and I agree that any arbitration proceeding must move
forward under the Federal Arbitration Act (9 U.S.C. §§ 3-4) even
though the claims may also involve or relate to parties who are
not parties to the arbitration agreement and/or claims that are
not subject to arbitration: thus, the court may not refuse to
enforce this arbitration agreement and may not stay the
arbitration proceeding despite the provision of California Code of
Civil Procedure § 1281.2(c). I UNDERSTAND BY AGREEING
TO THIS BINDING ARBITRATION PROVISION, BOTH I AND
THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY.”
This Applicant Statement and Agreement further provides (in a
different paragraph) that the Company may change any term of
Sanchez’s employment at any time, except the arbitration
agreement.
The second document Brown Automotive attached to its
petition to compel arbitration is titled “AGREEMENTS” and is
7
dated October 19, 2017, the day after the date listed on Sanchez’s
employment application. The single-spaced text in this one-page
document is larger than the text in the Applicant Statement and
Agreement at the end of Sanchez’s employment application, but it
is still small. Puente Hills Nissan is defined as the “Company” at
the top of this document, which is divided into two sections with
separate headings. The first heading is “At Will Employment
Agreement.” Thereunder, is a 10-line paragraph followed by
Sanchez’s signature and the date (October 19, 2017). The second
heading is “Binding Arbitration Agreement.” Thereunder, is
a 46-line arbitration agreement followed by Sanchez’s signature
and the same date (October 19, 2017).
The arbitration clause in this second document
(“Agreements”) is identical to the arbitration clause in the
Applicant Statement and Agreement (quoted above), except that
this document omits the following sentence that appears in the
Applicant Statement and Agreement: “I and the Company both
agree that any challenge to the prohibition against consolidating
the claims of others into a single proceeding, whether as a class, a
representative action or otherwise, is a gateway issue and shall
be determined by the Superior Court; and any substantive claims
shall not be decided by the arbitrator until after the gateway
determination is made by the Court.” Moreover, this document
(“AGREEMENTS”) adds the following language at the end of the
arbitration agreement, just before the signature line: “Should
any term or provision, or portion thereof, be declared void
or unenforceable it shall be severed and the remainder of
this agreement shall be enforced. I hereby acknowledge
that I have read the above statements and understand the
same.” Like the Applicant Statement and Agreement, this
8
document also includes the following language at the end of the
arbitration clause: “I UNDERSTAND BY AGREEING TO
THIS BINDING ARBITRATION PROVISION, BOTH I AND
THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY
JURY.”3
The third document Brown Automotive attached to its
petition to compel arbitration is titled “EMPLOYEE
ACKNOWLEDGEMENT AND AGREEMENT” and begins: “This
will acknowledge that I have received my copy of the Employee
Handbook and that I will familiarize myself with its contents.”
The single-spaced text in this three-page document is larger than
that in either of the two documents described above and is
therefore easier to read. The third paragraph of this document,
beginning about a third of the way down page one and concluding
near the bottom of page two, contains the arbitration clause,
which is identical to the arbitration agreement in the second
document described above (“AGREEMENT”), except it adds the
word “representative” in defining “class claims,” and it does not
include the two bolded and italicized paragraphs quoted above
that appear at the end of the arbitration agreement in the
document titled “Agreements.”
The Employee Acknowledgement and Agreement concludes
with the following language: “MY SIGNATURE BELOW
ATTESTS TO THE FACT THAT I HAVE READ,
UNDERSTAND, AND AGREE TO BE LEGALLY BOUND
TO ALL OF THE ABOVE TERMS. [¶] DO NOT SIGN
UNTIL YOU HAVE READ THE ABOVE
3 The font, however, is smaller than the 13-point font used
in this opinion.
9
ACKNOWLEDGEMENT AND AGREEMENT.” Thereunder,
Sanchez’s signature and the date (October 19, 2017) appear.
III. Sanchez’s Opposition to the Petition to Compel
Arbitration
In her declaration in support of her opposition to the
petition to compel arbitration, Sanchez acknowledged she signed
the three documents Brown Automotive attached to the petition.
She stated: “A few days prior to my employment with Brown
Automotive I was provided numerous onboarding documents to
sign. I was advised that all documents must be completed prior
to obtaining my start date. I signed all the new-hire documents,
including the Arbitration Agreement with the understanding that
if I chose not to sign the forms I would not be hired.” Sanchez
explained she did not recall signing the documents on October 18
and 19, 2017, as the handwritten dates on the documents reflect.
She asserted she began her employment with Brown Automotive
in August 2016.
Sanchez also stated in her declaration: “As a condition of
my employment, I was made to sign Brown Automotive’s
Arbitration Agreement and Employee Handbook. No one ever
explained the contents of the Employee Handbook to me or told
me what I was signing. In addition to the Employee Handbook I
was also provided a separate stack of important documents,
which included [the] Arbitration Agreement, that I was
instructed to sign. When I asked what these documents [were] I
was advised by Human Resources that every new hire for Brown
Automotive was required to sign these documents.” Brown
explained she had no experience or familiarity with arbitration or
the laws governing it.
10
Sanchez further stated in her declaration: “At no point was
I ever given copies of the Employee Handbook or Arbitration
Agreement to take home. I was never given any meaningful
opportunity to read and understand the hiring documents
presented to me. At no point was I ever given the opportunity to
negotiate or change the terms of the documents presented to me
to sign, including this arbitration agreement, or advised that I
could seek legal advice regarding the arbitration agreement.”
She asserted she never received copies of any of the documents
after she signed them.
In her opposition to the petition to compel arbitration,
Sanchez argued: (1) she did not enter into an agreement to
arbitrate because Brown Automotive used deceptive techniques
to hide the arbitration agreement, and she did not knowingly
enter into an arbitration agreement; (2) the arbitration
agreement is procedurally unconscionable because it is a contract
of adhesion that resulted from oppression and surprise and
contains unintelligible legal terms; (3) the arbitration agreement
is substantively unconscionable because it lacks mutuality;4 and
(4) it would shock the conscience to require her to arbitrate her
intentional tort causes of action (sexual assault, battery, and
intentional infliction of emotional distress) because she could not
4 As discussed more fully below, several of the factors
Sanchez cited in her opposition (and in her appellate brief) in
support of her contention the arbitration agreement is
substantively unconscionable relate to procedural
unconscionability and not substantive unconscionability, e.g., her
assertions that the arbitration agreement was hidden in a stack
of new-hire documents, was not written in plain English, and
that she was not afforded a meaningful opportunity to review the
arbitration agreement before she signed.
11
have contemplated or expected she would be subject to such
conduct when she accepted employment with Brown Automotive.
In its reply brief, Brown Automotive urged the trial court to
grant the petition to compel arbitration, arguing: (1) the
arbitration clauses were highlighted for Sanchez in three
separate documents she signed; (2) Sanchez had significant time
to review the documents she signed, based on the statement in
her declaration that Brown Automotive gave her the documents a
few days before her employment commenced; (3) Sanchez
knowingly entered into the arbitration agreement; and (4) the
arbitration agreement is not unconscionable.
IV. Trial Court’s Ruling on Petition to Compel
Arbitration
On July 2, 2020, the trial court issued an order, stating in
pertinent part: “After conferring with counsel, the Court rules as
follows: [¶] The defendant’s Petition to Compel Arbitration and
Stay Proceedings filed by [Brown Automotive] on 2/24/2020 is
Denied. The agreement is both procedurally and substantively
unconscionable.” The trial court did not set forth in its order the
reasons it found the arbitration agreement procedurally and
substantively unconscionable. The appellate record does not
include a reporter’s transcript of the hearing.
DISCUSSION
Brown Automotive contends the trial court erred in
denying its petition to compel arbitration based on procedural
and substantive unconscionability in the arbitration agreement.
For the reasons explained below, we agree.
I. General Principles and Standard of Review
A trial court must grant a petition to compel arbitration
based on a written arbitration agreement unless grounds exist to
12
revoke the agreement. (Code Civ. Proc., §§ 1281, 1281.2, subd.
(b).) Both the California Arbitration Act (CAA; Code Civ. Proc.,
§ 1280 et seq.) and the Federal Arbitration Act (FAA; 9 U.S.C. § 1et seq.) favor enforcement of valid arbitration agreements.
(Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
24 Cal.4th 83, 97-98 (Armendariz).) Under California and federal
law, an arbitration agreement, including one made in an
employment contract, “may only be invalidated for the same
reasons as other contracts.” (Id. at p. 98.) Unconscionability is
one such reason. (Id. at p. 99.) Generally, an unconscionability
defense “ ‘ “may be applied to invalidate arbitration agreements
without contravening” the FAA’ or California law.” (OTO, L.L.C.
v. Kho (2019) 8 Cal.5th 111, 125 (OTO, L.L.C.).)5
“The general principles of unconscionability are well
established. A contract is unconscionable if one of the parties
lacked a meaningful choice in deciding whether to agree and the
contract contains terms that are unreasonably favorable to the
other party. [Citation.] Under this standard, the
unconscionability doctrine ‘ “has both a procedural and a
substantive element.” ’ [Citation.] ‘The procedural element
addresses the circumstances of contract negotiation and
formation, focusing on oppression or surprise due to unequal
5 Brown Automotive argues the FAA applies to this dispute,
as set forth in the arbitration clauses in the documents Sanchez
signed. Sanchez argues the FAA does not apply because Brown
Automotive did not meet its burden of showing the agreements at
issue substantially affected interstate commerce. We need not
resolve this issue because our analysis of the enforceability of the
arbitration agreement in this case is the same regardless of
whether the FAA or the CAA applies. (See Armendariz, supra,24 Cal.4th at p. 99.)
13
bargaining power. [Citations.] Substantive unconscionability
pertains to the fairness of an agreement’s actual terms and to
assessments of whether they are overly harsh or one-sided.’ ”
(OTO, L.L.C., supra, 8 Cal.5th at p. 125.)
“Both procedural and substantive unconscionability must
be shown for the defense to be established, but ‘they need not be
present in the same degree.’ [Citation.] Instead, they are
evaluated on ‘ “a sliding scale.” ’ [Citation.] ‘[T]he more
substantively oppressive the contract term, the less evidence of
procedural unconscionability is required to’ conclude that the
term is unenforceable. [Citation.] Conversely, the more
deceptive or coercive the bargaining tactics employed, the less
substantive unfairness is required. [Citations.] A contract’s
substantive unfairness ‘must be considered in light of any
procedural unconscionability’ in its making. [Citation.] ‘The
ultimate issue in every case is whether the terms of the contract
are sufficiently unfair, in view of all relevant circumstances, that
a court should withhold enforcement.’ ” (OTO, L.L.C., supra, 8
Cal.5th at pp. 125-126.) Sanchez bears the burden of proving her
unconscionability defense. (Id. at p. 126.)
“ ‘ “[W]e review the arbitration agreement de novo to
determine whether it is legally enforceable, applying general
principles of California contract law.” ’ [Citation.] Thus,
unconscionability is a question of law we review de novo.
[Citation.] To the extent the trial court’s determination on the
issue turned on the resolution of contested facts, we would review
the court’s factual determinations for substantial evidence.”
(Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226
Cal.App.4th 74, 82.)
14
The amount of time Sanchez had to review the documents
before she signed them is a contested issue of fact. Brown
Automotive asserts Sanchez had several days to review the
documents, based on the statement in her declaration that
Puente Hills Nissan personnel gave her the documents a few
days before her employment commenced. Sanchez asserts her
declaration indicates she was forced to sign the documents on-
the-spot at Puente Hills Nissan, based on the statement in her
declaration that Brown Automotive never gave her copies of the
Employee Handbook or other new-hire documents to take home.
In concluding the arbitration agreement was procedurally
unconscionable, to the extent the trial court made an implied
factual finding that Sanchez was required to sign the documents
on-the-spot at Puente Hills Nissan, that finding is supported by
substantial evidence, based on Sanchez’s statement in her
declaration that she never received copies of the documents to
take home.
II. Agreement to Arbitrate
In support of its petition to compel arbitration, Brown
Automotive satisfied the requirement of presenting a written
arbitration agreement. Sanchez’s assertion there is no
arbitration agreement is without merit. This is not a case—like
that on which Sanchez relies in support of her assertion—in
which an employee signed an acknowledgement of receipt of an
Employee Handbook containing an arbitration provision, but the
acknowledgement the employee signed did not itself include the
arbitration provision. (See Nelson v. Cyprus Bagdad Copper
Corp. (9th Cir. 1997) 119 F.3d 756, 761.) Here, Sanchez signed
three separate documents, each containing the arbitration clause
15
requiring arbitration of all employment-related claims.6 Whether
grounds exist to revoke the arbitration agreement, as the trial
court concluded, is a separate issue that we address next.
III. Procedural Unconscionability
In its appellate briefing, Brown Automotive characterizes
the arbitration agreement as minimally procedurally
unconscionable. This characterization understates the
procedural unconscionability of this arbitration agreement, for
the reasons explained below.
“A procedural unconscionability analysis ‘begins with an
inquiry into whether the contract is one of adhesion.’ [Citation.]
An adhesive contract is standardized, generally on a preprinted
form, and offered by the party with superior bargaining power ‘on
a take-it-or-leave-it basis.’ [Citations.] Arbitration contracts
imposed as a condition of employment are typically
adhesive . . . .” (OTO, L.L.C., supra, 8 Cal.5th at p. 126.) Brown
Automotive acknowledges the preemployment arbitration
agreement is a contract of adhesion and therefore bears some
degree of procedural unconscionability. “The pertinent question,
then, is whether circumstances of the contract’s formation
created such oppression or surprise that closer scrutiny of its
overall fairness is required.” (Ibid.) Brown Automotive fails to
acknowledge the other ways in which the arbitration agreement
6We generally refer to the arbitration agreement as a
singular agreement, although Sanchez signed three separate
documents, because there are no material differences in the
arbitration clauses in the three documents that are pertinent to
our analysis. The differences relate to the class claims
provisions, which Sanchez has not challenged.
16
is procedurally unconscionable, which go to the elements of
oppression and surprise.
“ ‘The circumstances relevant to establishing oppression
include, but are not limited to (1) the amount of time the party is
given to consider the proposed contract; (2) the amount and type
of pressure exerted on the party to sign the proposed contract; (3)
the length of the proposed contract and the length and complexity
of the challenged provision; (4) the education and experience of
the party; and (5) whether the party’s review of the proposed
contract was aided by any attorney.’ [Citation.] With respect to
preemployment arbitration contracts, [our Supreme Court has]
observed that ‘the economic pressure exerted by employers on all
but the most sought-after employees may be particularly acute,
for the arbitration agreement stands between the employee and
necessary employment, and few employees are in a position to
refuse a job because of an arbitration requirement.’ ” (OTO,
L.L.C., supra, 8 Cal.5th at pp. 126-127.)
Here, circumstances establish oppression. Personnel at
Puente Hills Nissan provided Sanchez with a stack of documents
and instructed her to sign them as a prerequisite to employment.
She understood that she was required to sign the documents
onsite, on-the-spot. She was not given copies of the documents to
take home before or after she signed them. The arbitration
clause in each of the three documents was very lengthy and
complex (and, in two of the three documents, in very small print),
and Sanchez had no experience or familiarity with arbitration or
the rules governing it. Sanchez “need not show [she] tried to
negotiate [the] standardized contract terms to establish
procedural unconscionability.” (OTO, L.L.C., supra, 8 Cal.5th at
p. 127.)
17
Surprise occurs “ ‘ “ ‘where the allegedly unconscionable
provision is hidden within a prolix printed form.’ ” ’ ” (OTO,
L.L.C., supra, 8 Cal.5th at p. 126.) In OTO, L.L.C., the California
Supreme Court reviewed the enforceability of an arbitration
agreement in a document similar to the one-page “Agreements”
document Sanchez signed (the document with the headings, “At
Will Employment Agreement” and “Binding Arbitration
Agreement,” with a signature line under each of the two
sections). (Id. at p. 119.) The Supreme Court concluded the
“agreement is a paragon of prolixity,” with “complex” sentences,
“filled with statutory references and legal jargon.” (Id. at p. 128.)
For the foregoing reasons, the arbitration agreement is
procedurally unconscionable. We need not decide the degree of
procedural unconscionability because, even if it were high, we
would not conclude the arbitration agreement is unenforceable on
unconscionability grounds, because Sanchez has not
demonstrated the arbitration agreement is substantively
unconscionable.
IV. Substantive Unconscionability
As set forth above, “ ‘Substantive unconscionability
pertains to the fairness of an agreement’s actual terms and to
assessments of whether they are overly harsh or one-sided.’ ”
(OTO, L.L.C., supra, 8 Cal.5th at p. 125.) Substantive
“ ‘ “unconscionability requires a substantial degree of unfairness
beyond ‘a simple old-fashioned bad bargain.’ ” ’ ” (Baltazar v.
Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245 (Baltazar).) “ ‘[T]he
paramount consideration in assessing [substantive]
unconscionability is mutuality.’ [Citation.] ‘Agreements to
arbitrate must contain at least “ ‘a modicum of bilaterality’ ” to
18
avoid unconscionability.’ ” (Davis v. Kozak (2020) 53 Cal.App.5th
897, 910.)
In the trial court and on appeal, Sanchez argued the
arbitration agreement is substantively unconscionable because it
“lacks mutuality.” We disagree. The arbitration clause requires
both Brown Automotive (dba Puente Hills Nissan) and Sanchez
to arbitrate all claims arising out of Sanchez’s employment, “with
the sole exception of claims arising under the National Labor
Relations Act which are brought before the National Labor
Relations Board, claims for medical and disability benefits under
the California Workers’ Compensation Act, and Employment
Development Department claims.”7
Sanchez asserts the use of phrases in the arbitration
clause, such as “I understand and agree” and “I acknowledge,”
demonstrates that the obligation to arbitrate only applies to
claims brought by the employee and not claims brought by the
employer. We reject this assertion. The arbitration clause
expressly states, “I and the Company both agree” that any claim
arising out of the employee’s employment must be arbitrated
(except for the claims noted above). “As a whole, the agreement
is thus reasonably construed as both parties consenting to
arbitration of any disputes either party brings involving or
relating to [Sanchez]’s employment . . . .” (Davis v. Kozak, supra,
53 Cal.App.5th at p. 915 [rejecting the plaintiff’s “broad
contention that the entire arbitration agreement lacks mutuality
7 Sanchez argued in the trial court and on appeal that the
arbitration clause requires the employee to arbitrate all claims
but allows the employer to file claims in court. The arbitration
clause includes no such language allowing the employer to
litigate in court claims arising out of Sanchez’s employment.
19
because of repeated phrasing ‘I agree’ ”]; Nguyen v. Applied
Medical Resources Corp. (2016) 4 Cal.App.5th 232, 252 (Nguyen)
[“We also decline to find that ‘the mere inclusion of the words “I
agree” by one party in an otherwise mutual arbitration provision
destroys the bilateral nature of the agreement’ ”].)
Sanchez also argues the arbitration clause lacks mutuality
because “Company” is not defined and no one from Brown
Automotive signed the arbitration agreement. The document
titled “Agreements,” containing the arbitration clause and
signed by Sanchez, defines the “Company” as Puente Hills
Nissan. The references to “Company” in the arbitration clause in
the other two documents Sanchez signed are not confusing, as
those references obviously mean her employer, given the
documents are her employment contract and an agreement
concerning the employee handbook. There is no requirement that
an employer sign the arbitration agreement. (Nguyen, supra, 4
Cal.App.5th at pp. 252-253 [“No separate signature was required
by defendant [employer], as it was the company that set binding
arbitration of all disputes as a condition of plaintiff’s
employment”].)
Sanchez does not argue that any particular term of the
arbitration clause is overly harsh or one-sided.8 She complains
8 Sanchez does not argue the arbitration agreement fails to
meet Armendariz’s requirements of “neutrality of the arbitrator,
the provision of adequate discovery, a written decision that will
permit a limited form of judicial review, and limitations on the
costs of arbitration.” (Armendariz, supra, 24 Cal.4th at p. 91.)
Nor does she challenge the provision precluding her from
bringing class claims (as she did not file any class claims in this
action). To the extent this provision is substantively
unconscionable, it may be severed without rendering the
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that Brown Automotive did not attach the arbitration rules to the
arbitration agreement, but that circumstance does not show
substantive unconscionability, as her substantive
unconscionability claim does not “concern[] some element of the
[arbitration] rules.” (Baltazar, supra, 62 Cal.4th at p. 1246.)
The other circumstances Sanchez cites in support of her
argument the arbitration agreement is substantively
unconscionable relate to procedural unconscionability, and we
discussed them above in the procedural unconscionability section
of this opinion: that the arbitration agreement was hidden in a
stack of new-hire documents, was not written in plain English,
and that she was not afforded a meaningful opportunity to review
the arbitration agreement before she signed.
In the absence of a showing of substantive
unconscionability, the trial court erred in denying the petition to
compel arbitration on unconscionability grounds.
V. Applicability of Arbitration Agreement to
Intentional Tort Causes of Action
In the trial court and on appeal, Sanchez argued it would
shock the conscience to require her to arbitrate her intentional
tort causes of action (sexual assault, battery, and intentional
infliction of emotional distress) because she could not have
contemplated or expected she would be subject to such conduct
when she accepted employment with Brown Automotive. The
arbitration agreement unenforceable. (Dotson v. Amgen, Inc.
(2010) 181 Cal.App.4th 975, 985 [“Where, as here, only one
provision of the [arbitration] agreement is found to be
unconscionable and that provision can easily be severed without
affecting the remainder of the agreement, the proper course is to
do so”].)
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arbitration clause covers tort claims arising out of Sanchez’s
employment. The alleged unwanted hugs and other
inappropriate conduct by her coworkers arose in the context of
her employment and form the basis of her claims for workplace
harassment, discrimination, and retaliation, claims she does not
dispute are covered by the arbitration agreement.
Sanchez’s reliance on Victoria v. Superior Court (1985) 40
Cal.3d 734 is misplaced. There, a hospital patient signed an
arbitration agreement covering “ ‘[a]ny claim arising from alleged
violation of a legal duty incident to [the] Agreement’ ” if the claim
was asserted “ ‘[o]n account of death, mental disturbance or
bodily injury arising from rendition or failure to render services
under this Agreement.’ ” (Id. at p. 738.) Our Supreme Court
concluded the arbitration agreement did not cover the patient’s
tort claims against the hospital arising from the patient’s rape by
a hospital orderly because the orderly’s alleged misconduct “had
nothing to do with providing, or failing to provide, services.” (Id.
at p. 745.)
Here, Sanchez’s intentional tort claims arose from her
employment and relate to the workplace culture she alleges
exists, and was tolerated by management, at Puente Hills
Nissan. The claims are covered by the arbitration agreement,
which requires Sanchez and Brown Automotive to arbitrate all
claims “arising from, related to, or having any relationship or
connection whatsoever with her [her] seeking employment with,
employment by, or other association with the Company, whether
based on tort, contract, statutory, or equitable law, or
otherwise . . . .” (See Bigler v. Harker School (2013) 213
Cal.App.4th 727, 741 [a teacher’s “act of wrapping his arms
around [a student] and hopping up and down to mock her clearly
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was offensive and humiliating, but it occurred within the course
and scope of his role as her teacher, in his classroom on a school
day, concerning an academic performance she had brought to his
attention. If, as the [student’s parents] themselves asserted in
their arbitration claim [against the school], [the teacher’s]
behavior reflected his ‘unfitness and incompetence’ as a teacher,
the allegations of battery are arbitrable as coming within the
relationship of the school to its student” and are covered by the
arbitration clause in the school enrollment contract].)
DISPOSITION
The order denying Brown Automotive’s petition to compel
arbitration is reversed. On remand, the trial court is directed to
grant the petition to compel arbitration and stay the case. The
parties are to bear their own costs on appeal.
NOT TO BE PUBLISHED
CHANEY, J.
We concur:
BENDIX, Acting P. J.
FEDERMAN, J.*
*Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
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