Dougherty v. Roseville Heritage Partners ( 2020 )

Filed 3/30/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
LORI DOUGHERTY, Individually and as Successor C087224
in Interest, etc., et al.,
(Super. Ct. No. 34-2017-
Plaintiffs and Respondents, 00215283-CU-PO-GDS)
v.
ROSEVILLE HERITAGE PARTNERS et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Sacramento County, Kevin R.
Culhane, Judge. Affirmed.
Beach Cowdrey Jenkins, LLP, Spencer H. Jenkins, and Darryl C. Hottinger for
Defendants and Appellants.
Newman & Broomand LLP, Daniel S. Newman, Danny A. Barak, and Teresa M.
Boyd for Plaintiffs and Respondents.
1
In January 2017, the 89-year-old father of plaintiffs Lori Dougherty and Julie Lee
(collectively, plaintiffs) died while living in Somerford Place, an elder residential care
facility owned and operated by defendants Roseville Heritage Partners, Somerford Place,
LLC, Five Star Quality Care, Inc., and Five Star Quality Care-Somerford, LLC
(collectively, defendants). In July 2017, plaintiffs sued defendants, alleging elder abuse
and wrongful death based upon the reckless and negligent care their father received while
residing in defendants’ facility.
Defendants appeal from the trial court’s April 2018 order denying their motion to
compel arbitration and stay the action, contending the arbitration agreement does not
contain any unconscionable or unlawful provisions. Alternatively, defendants argue the
court abused its discretion by invalidating the agreement as a whole, rather than severing
the offending provisions. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs’ father, who suffered from dementia, was admitted to Somerford Place
in November 2016. In the two weeks leading up to his admission, he was removed from
two other residential placements due to “aggressive behaviors” and not being a “good
fit.” Between these placements, plaintiffs’ father had to stay in a local hospital.
Plaintiffs’ father was scheduled to be released from the hospital the evening that
Dougherty toured Somerford Place with its marketing director, Jennifer Deal. During the
15- to 20-minute tour, Dougherty told Deal that Somerford Place was “the only feasible
care option” for her father. At the time, Dougherty had power of attorney for her father.
In Dougherty’s affidavit opposing defendants’ motion to compel arbitration, she
stated that immediately after the tour, Deal presented her with 70 pages of admission
documents. Pages 43 through 45 of the packet contained an arbitration agreement (the
Agreement). Deal instructed Dougherty to sign the documents in the packet.
Dougherty was “relieved” to have found a placement for her father; she was “crying” and
“emotionally exhausted” as she signed the admission forms. Deal did not inform
2
Dougherty that she could reject, negotiate or modify any of the documents, which were
provided on preprinted forms. Dougherty therefore “did not believe that [she] could
modify, negotiate, or refuse any part of the admission documents.” Dougherty stated she
did not learn she had signed an arbitration agreement until after she filed the complaint
against defendants.
Shortly after Dougherty finished signing the admission packet, her father arrived
via ambulance. Deal had to stay with him while Dougherty “hurried” to the hospital to
retrieve her father’s belongings.
Deal testified in deposition proceedings that she had never read the arbitration
agreement in its entirety, nor had she received training on it. Although she did not review
each paragraph of the arbitration agreement with a prospective resident, she would give a
“general overview” that it was an arbitration agreement where both sides waived their
rights to a jury trial, and both parties agreed to abide by the arbitrator’s ruling. She
would let a potential resident with questions about the agreement know that he or she
could read it. Of the 20 or so signings she oversaw while working at Somerford Place,
only one person had refused to sign the arbitration agreement. She did not say anything
because it was not a mandatory document, and that individual eventually became a
resident at the facility. Deal was unfamiliar with the American Arbitration Association
(AAA) commercial rules (which must be followed under the Agreement), and she would
not know where to direct someone to find a copy of the rules, especially since there was
no copy at Somerford Place.
1. The Agreement
The Agreement states that all disputes between the parties with more than $25,000
at stake would be resolved through binding arbitration that was not subject to appeal.
The arbitration panel would be composed of either one or three members, with the
number to be chosen by the resident. The members of the panel would be chosen by the
AAA or by mutual agreement by the parties. If a medical issue was “more likely than
3
not” to come before the panel, and the panel consisted of three members, one panel
member would be a physician.
The panel would follow the current AAA commercial arbitration rules. The rules
were not attached to the Agreement, and the Agreement failed to state where they could
be found. The panel could direct discovery, including, per the AAA commercial rules,
the exchange of documents between the parties. In addition, in exceptional cases and
“upon good cause shown and consistent with the expedited nature of arbitration,” the
arbitrator had the discretion to order depositions. There was no provision in the rules for
interrogatories or requests for admissions.
The panel could grant equitable relief and award economic and noneconomic
damages, including for pain and suffering and mental anguish. However, the panel had
“no authority” to award punitive or exemplary damages.
The parties were to bear equally the costs and expenses of any arbitration
proceedings. However, if the resident supplied an affidavit stating an inability to pay
such expenses, defendants would pay the resident’s share of the costs and expenses. In
such a situation, the defendants would acquire the right to choose whether the panel
would be comprised of one or three arbitrators.
The parties waived their right in advance to a trial by jury for any claims,
controversies, or disputes for which arbitration was not allowed by law. The Agreement
was to be construed and enforced under the Federal Arbitration Act (FAA) and its
provisions were severable, should any portion be declared unenforceable.
The Agreement also provided that it could be amended by the facility upon 30
days’ written notice, and the resident would have 30 days upon receipt of the proposed
amendment to terminate the agreement. Finally, each party agreed and acknowledged
that it was entering into the Agreement voluntarily, had carefully read it, had asked any
necessary questions, and had an opportunity to seek the advice of an attorney before
signing it.
4
The Agreement was signed by Deal (on behalf of Somerford Place) and Dougherty
(as her father’s “authorized representative” under a power of attorney).
2. Trial court’s denial of defendants’ motion to compel arbitration
In November 2017, defendants filed a motion to compel arbitration. Plaintiffs
opposed the motion, arguing the Agreement was unconscionable and therefore
unenforceable, and asked the court to strike the entire agreement. Plaintiffs argued the
Agreement was procedurally unconscionable because it was “buried in the middle of” 70
pages of admission documents. Deal also did not go over the Agreement with
Dougherty, and plaintiffs were not provided a copy of the AAA commercial rules which
would govern the arbitration proceedings. Plaintiffs also pointed to a provision in the
Agreement that allowed defendants to modify the Agreement on 30 days’ notice.
According to plaintiffs, if the resident did not agree with the modifications, the resident
would then have to notify defendants of his or her intention to move out. In addition,
plaintiffs argued, Dougherty was under considerable stress when she signed the
documents and “was given no meaningful choice but to accept all terms presented by
Deal as they were.” (Original italics.)
Plaintiffs also argued the Agreement was substantively unconscionable because it
“sharply curtail[ed]” plaintiffs’ discovery rights. Although the governing AAA
commercial rules allowed for document exchange, plaintiffs noted there was no provision
allowing for form or special interrogatories, and depositions were only allowed in
“ ‘exceptional cases . . . [and] upon good cause shown.’ ” According to plaintiffs, these
restrictions were unfair because the Elder Abuse and Dependent Adult Civil Protection
Act (the Act) (Welf. & Inst. Code, § 15600 et seq.) requires a plaintiff to “prove
systematic elder abuse as opposed to isolated mistakes by a facility.” Plaintiffs argued
the discovery limitations would prevent them from investigating systematic abuse,
including defendants’ staffing practices, training, oversight, and regulatory compliance.
5
Plaintiffs also argued the Agreement unfairly prohibited any arbitration panel from
awarding punitive or exemplary damages, even though such damages were available
under the Act, and that the Agreement unfairly deprived them of the ability to seek
attorney fees.
In addition, plaintiffs argued the Agreement unfairly hid the high cost of the AAA
administrative fee schedule, which plaintiffs estimated would exceed $57,000. Finally,
plaintiffs argued that defendants had waived their right to enforce the Agreement by
breaching their promise to pay plaintiffs’ share of the arbitration costs after plaintiffs
provided an affidavit stating they could not afford the costs and expenses of arbitration.
After hearing argument, the trial court denied the motion to compel arbitration.
By the time of the hearing, defendants had agreed to pay plaintiffs’ share of the
arbitration expenses, thus the court rejected plaintiffs’ waiver argument. But the court
ruled that the Agreement was procedurally unconscionable because it was part of a 70-
page stack of documents that Dougherty lacked time to review because her father was
arriving “imminently” in an ambulance after having been found not suitable for other
facilities. Given the circumstances, the trial court did not find it dispositive that the
Agreement was a separate document, or that the volume of documents was “necessitated”
by statutory requirements. In addition, plaintiff was never told that she could modify,
negotiate, or refuse to sign any of the admission documents. The court also noted that
Dougherty did not even know there was an arbitration agreement until after the lawsuit
was filed. The court found that plaintiffs had established that Dougherty had “no
opportunity to negotiate the [A]greement.”
The court further found the Agreement was substantively unconscionable because
of its restrictions on discovery, limitations on damages, and advance waiver of jury trial
rights for any nonarbitrable causes of action. The discovery provisions were particularly
unconscionable in the context of plaintiffs’ elder abuse claims because they “limit the
statutory rights provided by the [Code of Civil Procedure] that are necessary to vindicate
6
the statutory rights provided by the Elder Abuse Act.” Because the contract was
“permeated with unconscionable provisions,” the court declined defendants’ request to
sever the offending provisions and instead declared the entire Agreement void.
DISCUSSION
I
Defendants argue that the trial court erred in finding the Agreement to be both
procedurally and substantively unconscionable and therefore unenforceable.
Alternatively, defendants argue that the trial court abused its discretion in invalidating the
Agreement rather than simply severing the offending provisions.
Arbitration agreements are “valid, enforceable and irrevocable, save upon such
grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)
California and federal law each favor enforcement of valid arbitration agreements.
(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 97
(Armendariz).) However, we will not enforce an arbitration agreement that functions as
an advance waiver of a claimant’s statutory rights. (Id. at pp. 99-100.) If an arbitration
agreement contains provisions that are unconscionable, courts may (1) refuse to enforce
the agreement or (2) sever the offending provisions and enforce the remainder of the
agreement. (Id. at p. 114.)
Unconscionability “ ‘ “refers to ‘ “an absence of meaningful choice on the part of
one of the parties together with contract terms which are unreasonably favorable to the
other party.” ’ [Citation.] As that formulation implicitly recognizes, the doctrine of
unconscionability has both a procedural and a substantive element, the former focusing
on oppression or surprise due to unequal bargaining power, the latter on overly harsh or
one-sided results.” ’ ” (Baltazar v. Forever 21, Inc. (2016) 62 Cal. 4th 1237, 1243.)
“Oppression arises from an inequality of bargaining power that results in no real
negotiation and an absence of meaningful choice. Surprise involves the extent to which
the supposedly agreed-upon terms are hidden in a prolix printed form drafted by the party
7
seeking to enforce them. [Citation.] The substantive element has to do with the effects
of the contractual terms and whether they are overly harsh or one-sided. [Citations.]”
(Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal. App. 4th 846, 853 (Flores), italics
omitted.)
“The party resisting arbitration bears the burden of proving unconscionability.
[Citations.] Both procedural unconscionability and substantive unconscionability must
be shown, but ‘they need not be present in the same degree’ and are evaluated on ‘ “a
sliding scale.” ’ [Citation.] [T]he more substantively oppressive the contract term, the
less evidence of procedural unconscionability is required to come to the conclusion that
the term is unenforceable, and vice versa.” (Pinnacle Museum Tower Assn. v. Pinnacle
Market Development (US), LLC (2012) 55 Cal. 4th 223, 247 (Pinnacle).)
The unconscionability of an arbitration agreement is a question of law that we
review de novo, applying general principles of California contract law to determine the
agreement’s enforceability. (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226
Cal. App. 4th 74, 82.) To the extent the trial court relied on contested facts in making its
determination, we review the court’s factual determinations for substantial evidence.
(Ibid.) We will only reverse a trial court’s refusal to sever any unconscionable portions
upon a showing of abuse of discretion. (Id. at p. 83.)
1. Procedural unconscionability
Defendants argue the Agreement was not procedurally unconscionable because it
was incumbent upon Dougherty to read the contract before signing it, and there was no
evidence that Somerford Place was the only option for plaintiffs’ father. Also, the
Agreement was a separate document within the admission packet, and it was separately
signed by Dougherty. The Agreement explained the primary rights Dougherty would be
giving up and contained a clause whereby Dougherty agreed that she was voluntarily
entering into the Agreement. Defendants also point to Deal’s “practice” of telling
8
prospective residents that he or she does not have to sign the arbitration agreement,
although they cite no evidence for this factual proposition.
In addition, according to defendants, it would be unfair to consider the size of the
admission packet as evidence of procedural unconscionability because the Legislature
requires facilities like Somerford Place to “provide an extensive amount of information in
its admission agreement.” Defendants further argue it would be unfair to refuse to
enforce the Agreement when plaintiffs are seeking to enforce other admission documents.
In addition, defendants argue that courts have made clear that the failure to attach any
governing AAA rules does not render an arbitration agreement procedurally
unconscionable, especially since Dougherty claimed she did not even realize she had
signed an arbitration agreement at the time. Finally, defendants argue that a party has no
affirmative duty to tell another party that the terms of a proposed agreement are
negotiable. Defendants’ contentions lack merit.
As courts have explained, the initial question regarding procedural
unconscionability is whether the contract was one of adhesion, namely, a “ ‘standardized
contract, which, imposed and drafted by the party of superior bargaining strength,
relegates to the subscribing party only the opportunity to adhere to the contract or reject
it.’ ” (Armendariz, supra, 24 Cal.4th at p. 113; see also Pinnacle, supra, 55 Cal.4th at p.
247 [“ ‘ “Oppression occurs where a contract involves lack of negotiation and meaningful
choice, surprise where the allegedly unconscionable provision is hidden within a prolix
printed form” ’ ”]; Cubic Corp. v. Marty (1986) 185 Cal. App. 3d 438, 449 [“[i]n the
characteristic adhesion contract, the stronger party has drafted the contract and given the
weaker party no opportunity to negotiate its terms and the weaker party may have no
realistic opportunity to look elsewhere for a more favorable contract, but must adhere to
the standardized agreement”].) “A finding of a contract of adhesion is essentially a
finding of procedural unconscionability. [Citations.]” (Flores, supra, 93 Cal.App.4th at
p. 853.)
9
For example, in Flores, the court found procedural unconscionability where a set
of preprinted loan documents that included arbitration clauses was presented by
defendant for plaintiffs’ signature. (Flores, supra, 93 Cal.App.4th at pp. 849-850, 853-
854.) The documents were cast in generic language, and the plaintiffs were never
informed that the documents or arbitration provisions were negotiable. (Id. at p. 853.)
The documents indicated that to establish the loan the plaintiffs sought, they had to sign
the loan documents. In addition, the defendant’s representative told the plaintiffs that
defendant was the only company in California who offered the type of loan that the
plaintiffs sought, indicating that the plaintiffs had “no real choice of alternate lenders.”
(Ibid.) Because the facts indicated the arbitration agreement was imposed upon the
plaintiffs on a “ ‘take it or leave it’ basis,” the court concluded it was a contract of
adhesion and therefore procedurally unconscionable. (Id. at p. 854.)
Similarly here, the arbitration agreement was provided on a preprinted form to
Dougherty as part of a 70-page packet of admission documents for her father, who was
being released from the hospital and needed to find a care facility that day. Although
being pressed for sufficient time to thoroughly read and understand an arbitration
agreement is not, standing alone, an indicator of procedural unconscionability (see
Brookwood v. Bank of America (1996) 45 Cal. App. 4th 1667, 1674 [a plaintiff may be
bound by the provisions of an arbitration agreement “ ‘regardless of whether [she] read it
or [was] aware of the arbitration clause when [she] signed the document’ ”]), the situation
here was more complicated because two other facilities had already found Dougherty’s
father to be unsuitable. Dougherty communicated her family’s predicament and her
accompanying lack of bargaining power to Deal, telling Deal that Somerford Place was
“the only feasible care option.”
Although the admission documents may have been required by law to include
multiple disclosures, the Agreement was still buried within the packet at pages 43
through 45. In addition, defendants failed to make available a copy of the governing
10
AAA commercial rules which contain the guidelines for the limited discovery available
under the Agreement. (See, e.g., Lane v. Francis Capital Management LLC (2014) 224
Cal. App. 4th 676, 690 [the failure to attach incorporated arbitration rules is not “by itself”
sufficient to sustain a finding of procedural unconscionability, but it “could be a factor
supporting a finding of procedural unconscionability where the failure would result in
surprise to the party opposing arbitration”].) Despite Deal’s testimony that the
Agreement was not a “force[d]” (mandatory) document, Dougherty stated in her
declaration that Deal instructed her to sign the admission documents. Dougherty
perceived she did not have the ability to “modify, negotiate, or refuse any part of the
admission documents.”
Based on the adhesiveness of the agreement, and the oppression and surprise
present, we conclude the trial court properly found the Agreement was imposed on a
“take it or leave it” basis and evinced a high degree of procedural unconscionability.
Under the sliding scale approach, only a low level of substantive unconscionability is
therefore required to render the arbitration agreement unenforceable.
2. Substantive unconscionability
Defendants first cite AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 [179
L. Ed. 2d 742] for the proposition that the substantive unconscionability doctrine may not
be invoked under the FAA, which governs the construction and enforcement of the
Agreement. We disagree, given that Concepcion also held that the FAA “permits
agreements to arbitrate to be invalidated by ‘generally applicable contract defenses, such
as fraud, duress, or unconscionability.’ ” (Id. at p. 339.)
Defendants next argue that a finding of substantive unconscionability is not
supported by the factors considered by the trial court. According to defendants, courts
have recognized that limited discovery rights are the hallmark of arbitration. Regardless,
defendants assert, the AAA commercial rules provide for “significant discovery.”
Defendants next argue the jury trial waiver was not at issue because plaintiffs failed to
11
argue that any of their claims (elder abuse and wrongful death) were nonarbitrable. In
addition, the cost-sharing provision was not at issue because (1) no costs had yet been
incurred, and (2) defendants agreed to pay plaintiffs’ share of the costs. Finally,
defendants argue the modification provision was not substantively unconscionable
because it allowed plaintiffs to terminate the Agreement within 30 days if they did not
agree to the changes.
We agree with the trial court’s conclusion that the Agreement was substantively
unconscionable, particularly given the accompanying evidence of procedural
unconscionability.
Plaintiffs allege a claim of neglect pursuant to the Act, which was “adopted to
protect a particularly vulnerable portion of the population from gross mistreatment by
adding heightened remedies to enable interested persons to engage attorneys to take up
the cause of abused elderly persons.” (Benun v. Superior Court (2004) 123 Cal. App. 4th
113, 125.) These heightened remedies include attorney fees and costs for a winning
plaintiff, damages for pain and suffering, and punitive damages. (Welf. & Inst. Code,
§ 15657; see also Delaney v. Baker (1999) 20 Cal. 4th 23, 26; Berkley v. Dowds (2007)
152 Cal. App. 4th 518, 529 [the Act provides for attorney fees, costs, and punitive
damages under certain conditions].) To obtain the available remedies, a plaintiff “must
demonstrate by clear and convincing evidence that [a] defendant is guilty of . . . reckless,
oppressive, fraudulent, or malicious conduct.” (Delaney, at p. 31; see also Carter v.
Prime Healthcare Paradise Valley LLC (2011) 198 Cal. App. 4th 396, 405 [a plaintiff
claiming elder abuse “ ‘must allege conduct essentially equivalent to conduct that would
support recovery of punitive damages’ ”].)1
1 To establish a claim for neglect under the Act, a plaintiff “must allege (and
ultimately prove by clear and convincing evidence) facts establishing that the defendant
(1) had responsibility for meeting the basic needs of the elder or dependent adult, such as
12
As courts have noted, “[t]he denial of adequate discovery in arbitration
proceedings leads to the de facto frustration of” statutory rights such as claims brought
under the Act. (Armendariz, supra, 24 Cal.4th at p. 104.) In addition, an arbitration
agreement “may not limit statutorily imposed remedies such as punitive damages and
attorney fees.” (Id. at p. 103; see also Bickel v. Sunrise Assisted Living (2012) 206
Cal. App. 4th 1, 12-13 [waiver in residency agreement of plaintiff’s statutory remedies
under the Act unenforceable as contrary to public policy].)
We agree with the trial court that the discovery limitations here unfairly and
unreasonably favor defendants. As operators of an elder residential care facility, it is
foreseeable that defendants would face suits under the Act such as the one brought by
plaintiffs. Even though the law requires plaintiffs to establish their elder abuse claims
under the clear and convincing evidence standard, the governing AAA commercial rules
only permit depositions in “exceptional cases” at the discretion of the arbitrator, upon a
showing of good cause, and “consistent with the expedited nature of arbitration.” It is
unclear whether an arbitrator would consider plaintiffs’ case to be “exceptional” with
sufficient “good cause” to warrant depositions. In addition, although the arbitrator has
authority to require document discovery, there is no provision for interrogatories or
nutrition, hydration, hygiene or medical care [citations]; (2) knew of conditions that made
the elder or dependent adult unable to provide for his or her own basic needs [citations];
and (3) denied or withheld goods or services necessary to meet the elder or dependent
adult’s basic needs, either with knowledge that injury was substantially certain to befall
the elder or dependent adult (if the plaintiff alleges oppression, fraud or malice) or with
conscious disregard of the high probability of such injury (if the plaintiff alleges
recklessness) [citations]. The plaintiff must also allege (and ultimately prove by clear
and convincing evidence) that the neglect caused the elder or dependent adult to suffer
physical harm, pain or mental suffering. [Citations.] Finally, the facts constituting the
neglect and establishing the causal link between the neglect and the injury ‘must be
pleaded with particularity,’ in accordance with the pleading rules governing statutory
claims. [Citation.]” (Carter v. Prime Healthcare Paradise Valley LLC, supra, 198
Cal.App.4th at pp. 406-407.)
13
requests for admissions. These discovery restrictions run the risk of frustrating plaintiffs’
statutory rights under the Act. (See Armendariz, supra, 24 Cal.4th at p. 104 [“[t]he
denial of adequate discovery in arbitration proceedings leads to the de facto frustration
of” statutory rights such as claims brought under the Act].)
Defendants cite Coast Plaza Doctors Hospital v. Blue Cross of California (2000)
83 Cal. App. 4th 677 for the proposition that no “case . . . has ever held that an arbitration
provision is substantially unconscionable merely because a party’s discovery rights are
limited in arbitration. Limited discovery rights are the hallmark of arbitration.” (Id. at p.
689.) In fact, courts have made clear that limited discovery rights may be substantively
unconscionable, especially in the context of statutory claims. (See Baxter v. Genworth
North America Corp. (2017) 16 Cal. App. 5th 713, 730 [employment arbitration
guidelines, which set default limitations on discovery that may be conducted in
preparation for arbitration, but which granted arbitrator right to expand discovery “ ‘for
good and sufficient cause shown,’ ” were substantively unconscionable]; see also Fitz v.
NCR Corp. (2004) 118 Cal. App. 4th 702, 716 [curtailment of discovery imposed by
arbitration agreement fell short of minimum standards of fairness required for employee’s
vindication of public rights, where former employee sued for age discrimination in
violation of the Fair Employment and Housing Act].) Moreover, here the Agreement
also limited plaintiffs’ rights to recover remedies made available under the Act, including
punitive damages and attorney fees. (See Armendariz, supra, 24 Cal.4th at p. 103 [an
arbitration agreement “may not limit statutorily imposed remedies such as punitive
damages and attorney fees”].) In addition, the Agreement required plaintiffs to waive in
advance their right to a jury trial for any dispute for which arbitration is not allowed by
law. Regardless of whether plaintiffs have currently filed such a claim, our Supreme
Court has made clear that predispute contractual jury trial waivers are unenforceable
under California law. (Grafton Partners v. Superior Court (2005) 36 Cal. 4th 944, 961
[“Resolving any ambiguity in favor of preserving the right to jury trial, as we must, we
14
conclude [Code of Civil Procedure] section 631 does not authorize predispute waiver of
that right”].)
Under the circumstances, we find that the Agreement was substantively
unconscionable.
3. The trial court did not abuse its discretion in denying severance
In their briefing, and at oral argument, defendants asserted that even if the
Agreement contained provisions that are procedurally or substantively unconscionable,
the proper remedy was to sever those provisions, not invalidate the entire agreement. We
find no abuse of discretion.
A trial court may refuse to enforce an arbitration agreement if it is permeated by
unconscionability. (Armendariz, supra, 24 Cal.4th at p. 122.) “One relevant factor in
assessing severability is whether the agreement contains more than one objectionable
term. [Citation.]” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal. App. 4th 638,
666.) “ ‘An arbitration agreement can be considered permeated by unconscionability if it
“contains more than one unlawful provision . . . . Such multiple defects indicate a
systematic effort to impose arbitration . . . not simply as an alternative to litigation, but as
an inferior forum that works to the [employer’s] advantage.” [Citations.]’ ” (Samaniego
v. Empire Today, LLC (2012) 205 Cal. App. 4th 1138, 1149.)
Given our conclusion that the Agreement suffered from multiple defects rendering
it procedurally and substantively unconscionable, we further conclude that the trial court
did not abuse its discretion in finding that the Agreement was “permeated with
unconscionable provisions,” and therefore refusing to simply sever the offending clauses.
15
DISPOSITION
The order is affirmed. Plaintiffs shall recover their costs on appeal. (Cal. Rules of
Court, rule 8.278(a).)
KRAUSE , J.
We concur:
MURRAY , Acting P. J.
HOCH , J.
16