Swain v. Laseraway Medical Group ( 2020 )

Filed 10/13/20; modified and certified for publication 11/3/20 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
MIRANDA SWAIN, B294975
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. SC129042)
v.
LASERAWAY MEDICAL GROUP,
INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of
Los Angeles County, Nancy L. Newman, Judge. Affirmed.
Prindle, Goetz, Barnes & Reinholtz, Jack R. Reinholtz,
Douglas S. De Heras and Lauren S. Gafa, for Defendant and
Appellant.
Phillips, Erlewine, Given & Carlin, Nicholas A. Carlin and
Brian S. Conlon, for Plaintiff and Respondent.
INTRODUCTION
Miranda Swain filed a complaint against LaserAway
Medical Group, Inc., alleging she suffered skin injuries as a
result of laser hair removal treatment she received from
LaserAway. LaserAway filed a petition to compel arbitration,
which the trial court denied, ruling the arbitration agreement
between Swain and LaserAway was unenforceable because it was
unconscionable. LaserAway appeals, and we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Swain Sues LaserAway
In March 2018 Swain filed this action against LaserAway,
alleging she received laser hair removal treatment from
LaserAway in June 2017 that caused her “several weeks of pain
and irritation” and hyperpigmentation of her skin. When Swain
received a second round of treatment in August 2017, the
employee performing the treatment used the laser on an area of
skin covered by a tattoo. The laser burned the skin, “mutilated”
the tattoo, left “an open wound,” and caused Swain “months of
pain.”
In addition to making allegations about her specific
experience at LaserAway, Swain complained about several of
LaserAway’s business practices. Swain alleged that LaserAway
falsely advertises that experienced medical professionals perform
laser hair removal treatment, even though qualified physicians
do not perform or supervise the procedures patients receive at
LaserAway, and that LaserAway falsely advertises the treatment
is safe, effective, and causes few side effects. Swain asserted
2
causes of action for negligence, fraud, breach of contract, battery,
unjust enrichment, and violations of the Consumer Legal
Remedies Act, Unfair Competition Law, and False Advertising
Law. Swain sought, among other relief, monetary damages for
her injuries and an injunction prohibiting LaserAway from
continuing its allegedly unlawful practices.
B. The Trial Court Denies LaserAway’s Petition To
Compel Arbitration
LaserAway filed a petition to compel arbitration and
attached a copy of an arbitration agreement purportedly executed
by Swain stating she agreed to arbitrate any dispute “as to
whether any medical services . . . were unnecessary or
unauthorized or were improperly, negligently or incompetently
rendered.”1 Swain claimed that she did not remember executing
the arbitration agreement and that, if she did sign it, the
agreement was unconscionable.
Swain contended the agreement was procedurally
unconscionable because it was a contract of adhesion drafted by
1 LaserAway filed a declaration by Andrea Heckmann, its
corporate counsel and chief compliance officer, who explained all
patients must “create a profile” on LaserAway’s online portal
using a “unique log in ID and password” and then “electronically
execute the Arbitration Agreement” and other documents before
receiving treatment. “Once a patient has checked the box at the
bottom of the Arbitration Agreement, the portal . . . automatically
creates a signature and date step . . . .” Heckmann retrieved
from LaserAway’s online portal the arbitration agreement
attached to LaserAway’s petition, which included an electronic
stamp with Swain’s name and date indicating she consented to
the agreement.
3
LaserAway. She stated that on the day she first received
treatment LaserAway provided her an electronic tablet that “had
a few forms for [Swain] to flip through and sign,” but that no one
at LaserAway explained any of the forms. Swain contended that,
if she signed an arbitration agreement, the agreement was one of
the forms on the tablet. Swain argued the agreement was
substantively unconscionable because it covered “the types of
claims a patient is likely to bring while excepting the types of
claims LaserAway could bring against its patients,” required the
parties to “split arbitration costs on a pro rata basis without
limit,” and prohibited a patient from seeking public injunctive
relief. Swain also filed a declaration stating that her monthly
income was approximately $2,000 and that she could not afford
the fees typically charged by arbitrators.
LaserAway did not dispute it provided Swain an electronic
tablet with several forms before she received treatment, but
argued in its reply memorandum the arbitration agreement was
not procedurally unconscionable because it was a “standalone
agreement” with “prominently featured” terms.2 LaserAway
argued that, although the arbitration agreement did allow
LaserAway to sue patients in court for “unpaid costs for services
rendered,” such a provision did not render the agreement
unconscionable. LaserAway argued the cost-sharing provision
was not unconscionable because it followed the language of Code
2 We augment the record to include LaserAway’s reply in
support of its petition to compel arbitration, filed October 26,
2018. (See Cal. Rules of Court, rule 8.155(a)(1)(A).)
4
of Civil Procedure section 1284.2.3 LaserAway did not dispute
that the provision prohibiting Swain from seeking public
injunctive relief was unconscionable, but argued that the court
could sever that provision from the agreement.
The trial court denied the petition to compel arbitration.
The court ruled that, although LaserAway met its burden to show
Swain agreed to arbitrate her claims, the arbitration agreement
was unconscionable. The court found that Swain “had no
bargaining ability to reject or negotiate the terms of the contract”
and “was given the forms to review and then immediately taken
to [a] room for her procedure” and that no one at LaserAway told
her she could print the forms or opt out of the arbitration
agreement. The court also noted, however, there was no evidence
Swain could not have printed or taken additional time to review
the documents. The court concluded that the agreement had “a
minimal degree of procedural unconscionability,” but that for the
reasons Swain argued the agreement was “permeated by
substantive unconscionability” and unenforceable. LaserAway
timely appealed.
3 Code of Civil Procedure section 1284.2 provides that, unless
the parties otherwise agree, “each party to the arbitration shall
pay his pro rata share of the expenses and fees of the neutral
arbitrator, together with other expenses of the arbitration
incurred or approved by the neutral arbitrator . . . .” Statutory
references are to the Code of Civil Procedure.
5
DISCUSSION
A. Standard of Review
“The party seeking arbitration bears the burden of proving
the existence of an arbitration agreement, and the party opposing
arbitration bears the burden of proving any defense . . . .”
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development
(US), LLC (2012) 55 Cal.4th 223, 236; accord, Baker v. Italian
Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1157-1158;
Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 380.)
“An order denying a petition to compel arbitration is appealable.”
(Perez v. U-Haul Co. of California (2016) 3 Cal.App.5th 408, 415;
see § 1294, subd. (a).)
“‘“[G]enerally applicable contract defenses, such as . . .
unconscionability, may be applied to invalidate arbitration
agreements without contravening” the [Federal Arbitration Act]’
or California law.”4 (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111,
125 (OTO); see Torrecillas v. Fitness International, LLC (2020)
52 Cal.App.5th 485, 492 [“Generally applicable contract defenses,
like unconscionability, can invalidate arbitration agreements.”].)
“Whether an agreement is unconscionable presents a question of
law which we review de novo.” (Williams v. Atria Las Posas
(2018) 24 Cal.App.5th 1048, 1055; accord, Carbajal v. CWPSC,
Inc. (2016) 245 Cal.App.4th 227, 236; see Serpa v. California
Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 702
[“Absent conflicting extrinsic evidence, the validity of an
arbitration clause, including whether it is subject to revocation as
unconscionable, is a question of law subject to de novo review.”].)
4 LaserAway does not argue the Federal Arbitration Act
applies.
6
“But ‘factual issues may bear on that determination. [Citations.]
Thus, to the extent the trial court’s determination that the
arbitration agreement was unconscionable turned on the
resolution of conflicts in the evidence or on factual inferences to
be drawn from the evidence, we consider the evidence in the light
most favorable to the trial court’s ruling and review the trial
court’s factual determinations under the substantial evidence
standard.’” (Williams, at p. 1055; accord, Carbajal, at p. 236;
Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th
619, 630.) As always, it is “‘appellant’s burden to affirmatively
show error.’” (Multani v. Witkin & Neal (2013) 215 Cal.App.4th
1428, 1457; see Jameson v. Desta (2018) 5 Cal.5th 594, 608-609
[“a trial court judgment is ordinarily presumed to be correct and
the burden is on an appellant to demonstrate . . . that the trial
court committed an error that justifies reversal”].)
B. Swain Met Her Burden To Show the Arbitration
Agreement Was Unconscionable
LaserAway contends that it met its initial burden to show
Swain agreed to arbitrate her claims and that Swain failed to
meet her burden to show the agreement was unconscionable. We
assume the former contention and disagree with the latter.
“The general principles of unconscionability are well
established. . . . [T]he 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 bargaining power. [Citations.] Substantive
unconscionability pertains to the fairness of an agreement’s
actual terms and to assessments of whether they are overly harsh
7
or one-sided.’ [Citation.] [¶] 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. . . . ‘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, supra, 8 Cal.5th at
pp. 125-126; see Armendariz v. Foundation Health Psychcare
Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz); Lange v.
Monster Energy Co. (2020) 46 Cal.App.5th 436, 445.)
1. The Arbitration Agreement Was Procedurally
Unconscionable
“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.’” (OTO, supra, 8 Cal.5th at p. 126;
see Armendariz, supra, 24 Cal.4th at p. 113.) “[T]he adhesive
nature of” an arbitration agreement “is sufficient to establish
some degree of procedural unconscionability.” (Sanchez v.
Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915 (Sanchez);
accord, Long Beach Unified School Dist. v. Margaret Williams,
LLC (2019) 43 Cal.App.5th 87, 103; see Baltazar v. Forever 21,
Inc. (2016) 62 Cal.4th 1237, 1244 [“‘Ordinary contracts of
8
adhesion, although they are indispensable facts of modern life
that are generally enforced [citation], contain a degree of
procedural unconscionability even without any notable
surprises’”]; Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th
571, 583 [“‘When the weaker party is presented the clause and
told to “take it or leave it” without the opportunity for meaningful
negotiation, oppression, and therefore procedural
unconscionability, are present.’”].)
There was no dispute the arbitration agreement was an
adhesive contract.5 LaserAway’s chief compliance officer,
Andrea Heckmann, stated in her declaration that “LaserAway’s
customary practice is to require all patients seeking treatment[ ]
to create a profile on the Company’s mylaseraway system . . . and
electronically execute the Arbitration Agreement.” Swain stated
in her declaration that, although she did not recall creating a
profile on LaserAway’s system, when she arrived at LaserAway’s
treatment center an employee presented her with an electronic
tablet that “had a few forms” and that she “understood that if
[she] wanted the laser hair removal treatment” she “had to flip
through the forms and sign and date the last page.” Under both
parties’ version of events, LaserAway, “the party with superior
bargaining power,” presented the pre-drafted arbitration
agreement to Swain, the party with inferior bargaining power,
“‘on a take-it-or-leave-it basis.’” (OTO, supra, 8 Cal.5th at
5 In its reply memorandum in support of the petition to
compel arbitration, LaserAway did not argue that the arbitration
agreement was not adhesive, but argued that, even if it was
“presented on a ‘take-it-or-leave-it’ basis, the fact that [an]
agreement is required does not make it unenforceable absent
other factors.”
9
p. 126.) This establishes a minimal degree of procedural
unconscionability such that “closer scrutiny of [the agreement’s]
overall fairness is required.” (Ibid.; accord, Prima Donna
Development Corp. v. Wells Fargo Bank, N.A. (2019) 42
Cal.App.5th 22, 38.)
LaserAway argues the arbitration agreement is not
procedurally unconscionable because the agreement contains a
provision that allowed Swain to opt out of the agreement within
30 days. LaserAway forfeited this argument by failing to raise it
in the trial court. (See Johnson v. Greenelsh (2009) 47 Cal.4th
598, 603; Colyear v. Rolling Hills Community Assn. of Rancho
Palos Verdes (2017) 9 Cal.App.5th 119, 137, fn. 5.) The argument
is also meritless. For one thing, it is not clear under the terms of
the agreement how Swain could have opted out. The opt-out
provision states: “This agreement may be revoked by written
notice delivered to the physician within 30 days of agreement.”
Swain claimed she never saw a physician, either before or during
treatment (or even knew who her physician was), and LaserAway
did not contend or provide any evidence to the contrary. At best,
this provision was confusing to a consumer like Swain. (See
OTO, supra, 8 Cal.5th at p. 129 [that “the agreement appears to
have been drafted with an aim to thwart, rather than promote,
understanding” supported a finding of procedural
unconscionability]; Long Beach Unified School Dist. v. Margaret
Williams, LLC, supra, 43 Cal.App.5th at p. 104 [same].) For
another, even if Swain could have opted out of the agreement by
other means—for example, by sending notice to the LaserAway
office where she received treatment—an opt out provision does
not insulate an arbitration agreement from a finding of
procedural unconscionability. (See Gentry v. Superior Court
10
(2007) 42 Cal.4th 443, 470 [arbitration agreement had a degree of
procedural unconscionability even though there was a 30-day
opt-out provision].)
Moreover, the agreement was procedurally unconscionable
for reasons other than, and in addition to, the adhesive nature of
the agreement. For procedural unconscionability, “‘“‘[o]ppression
occurs where a contract involves lack of negotiation and
meaningful choice, surprise where the allegedly unconscionable
provision is hidden within a prolix printed form.’”’” (OTO, supra,
8 Cal.5th at p. 126; accord, Davis v. TWC Dealer Group, Inc.
(2019) 41 Cal.App.5th 662, 671; see Lange v. Monster Energy Co.,
supra, 46 CalApp.5th at p. 447 [“procedural unconscionability . . .
‘focus[es] on oppression and surprise due to unequal bargaining
power’”].) “‘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 an
attorney.’” (OTO, at pp. 126-127.) At least three of these five
circumstances were present here. The trial court found
LaserAway provided the agreement to Swain to sign
“immediately” before she was “taken to a room for her procedure,”
demonstrating that LaserAway gave Swain little time to review,
and exerted pressure on her to sign, the agreement. As the trial
court also found, Swain did not have an attorney to assist her
when she signed the agreement.
11
There were also elements of surprise. The trial court found
LaserAway gave Swain the agreement, along with other forms for
her to review, when she arrived for treatment. Although the
arbitration agreement was only four pages long, it was buried
among other forms Swain had little time to review. The court
also found that no one provided Swain with a copy of the forms
she signed or explained she had the right to opt out of the
arbitration agreement. (See Wherry v. Award, Inc. (2011)
192 Cal.App.4th 1242, 1247 [that “no one described the
agreement’s contents and plaintiffs were given but a few minutes
to review and sign it” supported a finding of procedural
unconscionability]; Higgins v. Superior Court (2006)
140 Cal.App.4th 1238, 1252 [that defendants “made no effort to
highlight the presence of the arbitration provision” supported a
finding of procedural unconscionability].) The coercive manner in
which LaserAway presented the agreement, and LaserAway’s
failure to explain its terms or offer Swain a copy, significantly
decreased the likelihood Swain would realize she could opt out of
the agreement (assuming she understood she had agreed to
arbitrate in the first place). And Swain’s description of her
experience at LaserAway’s treatment center was substantial
evidence supporting the trial court’s findings. (See Williams v.
Atria Las Posas, supra, 24 Cal.App.5th at p. 1055.)
On appeal, LaserAway points out that the date stamp on
the arbitration agreement, which purports to show Swain
executed the agreement on June 16, 2017, is six days before
June 22, 2017, the date Swain alleged in her complaint she
received her first round of laser hair removal treatment.
LaserAway, however, did not argue in the trial court Swain
signed the arbitration agreement days before she went to the
12
LaserAway treatment center, nor did LaserAway identify for the
trial court the apparent discrepancy between the arbitration
agreement, Swain’s declaration, and the complaint. In fact,
LaserAway did not present any evidence of the date Swain
received her treatment. Therefore, LaserAway forfeited any
argument based on these facts. (See Johnson v. Greenelsh, supra,
47 Cal.4th at p. 603; Colyear v. Rolling Hills Community Assn. of
Rancho Palos Verdes, supra, 9 Cal.App.5th at p. 137, fn. 5.) And
even if LaserAway had not forfeited the argument, we defer to
the trial court’s resolution of any factual dispute over the
circumstances in which Swain signed the arbitration agreement.
(See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th
951, 972 [in “proceeding to resolve a petition to compel
arbitration” the trial court “sits as a trier of fact, weighing all the
affidavits, declarations, and other documentary evidence, as well
as oral testimony received at the court’s discretion”]; Gamma Eta
Chapter of Pi Kappa Alpha v. Helvey (2020) 44 Cal.App.5th 1090,
1097 [“When reviewing a trial court’s ruling on a motion to
compel arbitration, we accept the trial court’s resolution of
disputed facts when supported by substantial evidence.”].)
LaserAway also argues that the arbitration agreement was
not adhesive because laser hair removal treatments are
“nonessential services” and that Swain had “ample opportunity to
look elsewhere for a more favorable contract or seek services
elsewhere.” Again, LaserAway forfeited this argument by failing
to make it in the trial court. And LaserAway’s argument is again
wrong on the merits. While the “nonessential nature” of the
goods or services in a contract (Lhotka v. Geographic Expeditions,
Inc. (2010) 181 Cal.App.4th 816, 822) and “[t]he availability of
similar goods or services elsewhere” (Szetela v. Discover Bank
13
(2002) 97 Cal.App.4th 1094, 1100) are relevant to evaluating
whether an arbitration agreement is unconscionable, they do not
negate the procedural unconscionability of an otherwise adhesive
contract. (See Gatton v. T-Mobile USA, Inc., supra, 152
Cal.App.4th at p. 583 [“we reject the contention that the
existence of market choice altogether negates the oppression
aspect of procedural unconscionability”]; id. at p. 585 [“absent
unusual circumstances, use of a contract of adhesion establishes
a minimal degree of procedural unconscionability
notwithstanding the availability of market alternatives”].) These
factors may increase the degree of substantive unconscionability
required to avoid enforcement of the agreement, but “courts are
not obligated to enforce highly unfair provisions that undermine
important public policies simply because there is some degree of
consumer choice in the market.” (Ibid.; see Lhotka, at p. 824
[“plaintiffs made a sufficient showing to establish at least a
minimal level of . . . procedural unconscionability” where the
company that led a mountaineering expedition “presented its
[arbitration] terms as both nonnegotiable and no different than
what plaintiffs would find with any other provider” (italics
omitted)]; Gatton, at p. 586 [plaintiffs showed “a minimal degree
of procedural unconscionability arising from the adhesive nature
of [a cellular subscriber] agreement” notwithstanding market
alternatives]; see also Sanchez, supra, 61 Cal.4th at p. 914
[arbitration agreement was adhesive even though the plaintiff
purchased a “luxury item” and could “negotiate the price”].)
Finally, even if, as LaserAway contends (for the first time
on appeal), Swain signed the arbitration agreement before she
went to the LaserAway treatment center and the agreement
allowed Swain to opt out, and even if laser hair removal
14
treatment is a nonessential service that Swain could have
received elsewhere, the arbitration agreement would still have at
least a minimal degree of procedural unconscionability. Because
LaserAway drafted the agreement and required Swain to sign the
agreement before receiving treatment, the agreement was
adhesive, warranting further review of the agreement’s
substantive terms. (See OTO, supra, 8 Cal.5th at p. 126.)
2. The Agreement Had a High Degree of
Substantive Unconscionability, Rendering It
Unenforceable
“Substantive unconscionability examines the fairness of a
contract’s terms. . . . [The] ‘doctrine is concerned not with “a
simple old-fashioned bad bargain” [citation], but with terms that
are “unreasonably favorable to the more powerful party.”’
[Citation.] Unconscionable terms ‘“impair the integrity of the
bargaining process or otherwise contravene the public interest or
public policy”’ or attempt to impermissibly alter fundamental
legal duties.” (OTO, supra, 8 Cal.5th at p. 130; accord, Baltazar
v. Forever 21, Inc., supra, 62 Cal.4th at pp. 1244-1245; Lange v.
Monster Energy Co., supra, 46 Cal.App.5th at p. 448.)
In her opposition to LaserAway’s petition to compel
arbitration, Swain argued the agreement was substantively
unconscionable because it required Swain to arbitrate the claims
she was likely to bring—claims alleging LaserAway’s services
“were unnecessary or unauthorized or were improperly,
negligently or incompetently rendered”—but did not require
LaserAway to arbitrate the claims it was likely to bring—claims
“to collect fees from patients.” LaserAway admitted “the
[a]rbitration agreement in the present case contains a single
15
limitation” that allows LaserAway to file an action in court “to
recover unpaid costs for services rendered,” but asserted, without
further explanation, the provision was reasonable. The trial
court ruled that, because the “provision expressly permits the
exclusion of claims likely to be brought by” LaserAway, it was
“one-sided[ ]” and substantively unconscionable.
In its opening brief on appeal, LaserAway does not mention
or address this portion of the trial court’s order; LaserAway
addresses only the trial court’s discussion of the fee-splitting
provision and the prohibition on Swain seeking injunctive relief.
It was not until Swain pointed out in her respondent’s brief this
(the primary) basis of the trial court’s substantive
unconscionability ruling that LaserAway addressed it. And when
LaserAway finally did address the issue, LaserAway changed its
position and argued, for the first time in its reply brief on appeal,
that the arbitration agreement did not exempt LaserAway’s
claims for unpaid fees. LaserAway, however, forfeited this
argument by failing to make it in its opening brief.6 “‘Even when
our review on appeal “is de novo, it is limited to issues which
have been adequately raised and supported in [the appellant’s
opening] brief. [Citations.] Issues not raised in an appellant’s
brief are [forfeited] or abandoned.”’” (Golden Door Properties,
LLC v. County of San Diego (2020) 50 Cal.App.5th 467, 557;
accord, State Water Resources Control Bd. Cases (2006) 136
Cal.App.4th 674, 836; see California Building Industry Assn. v.
6 LaserAway’s new argument in its reply brief on appeal is
that the provision is actually an anti-waiver provision providing
that, if LaserAway “files an action in court to collect the fees, it
does not waive the right to compel arbitration of any malpractice
claim” by the patient.
16
State Water Resources Control Bd. (2018) 4 Cal.5th 1032, 1050
[appellant forfeited an argument it failed to make in the trial
court and in its opening brief]; Safeway Wage & Hour Cases
(2019) 43 Cal.App.5th 665, 687, fn. 9 [appellant forfeited an
argument made for first time in its reply brief on appeal].)
Because the trial court’s order “is presumed to be correct” and the
appellant has the burden to affirmatively show the trial court
erred (Jameson v. Desta, supra, 5 Cal.5th at p. 608-609),
LaserAway’s failure to address a basis of the court’s substantive
unconscionability ruling requires us to affirm the court’s order.
(See Golden Door Properties, LLC, at p. 558 [appellant’s “failure
to address” court’s “ruling in its opening brief compels the
conclusion the trial court’s ruling on that point must be
affirmed”]; State Water Resources Control Bd., at p. 836 [“Where
the trial court based its judgment on the determination that
petitioners failed to exhaust their administrative remedies,
petitioners could not simply overcome the presumption of
correctness by ignoring that issue in their opening briefs.”].)
Even if LaserAway had not forfeited the argument on
appeal, we would not consider it because LaserAway took the
opposite position in the trial court, conceding the arbitration
agreement allowed LaserAway to file a claim in court for unpaid
fees. “‘The rule is well settled that the theory upon which a case
is tried must be adhered to on appeal. A party is not permitted to
change his position and adopt a new and different theory on
appeal. To permit him to do so would not only be unfair to the
trial court, but manifestly unjust to the opposing litigant.’”
(Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334,
1350, fn. 12; accord, Vasquez v. SOLO 1 Kustoms, Inc. (2018)
27 Cal.App.5th 84, 96.)
17
LaserAway admitted in the trial court that the arbitration
agreement lacks mutuality, which indicates a high degree of
substantive unconscionability. Indeed, such a one-sided
provision in favor of the stronger party imposing an adhesive
arbitration agreement on a weaker party is a hallmark of
substantive unconscionability. (See Armendariz, supra,24 Cal.4th at p. 118 [“the doctrine of unconscionability limits the
extent to which a stronger party may, through a contract of
adhesion, impose the arbitration forum on the weaker party
without accepting that forum for itself”]; Carmona v. Lincoln
Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 86 [“the
arbitration agreement is lacking in mutuality in that it
‘requir[es] arbitration only for the claims of the weaker party but
a choice of forums for the claims of the stronger party’”]; Fitz v.
NCR Corp. (2004) 118 Cal.App.4th 702, 725 [arbitration
agreement was “unfairly one-sided because it compel[led]
arbitration of the claims more likely to be brought by . . . the
weaker party, but exempt[ed] from arbitration the types of claims
that [were] more likely to be brought by . . . the stronger party”].)
Moreover, the arbitration agreement had additional indicia
of substantiative unconscionability, including the provision that
required Swain to pay arbitration fees she could not afford.
Courts may use the unconscionability doctrine to protect
“consumers against fees that unreasonably limit access to
arbitration.” (Sanchez, supra, 61 Cal.4th at p. 920.) A consumer
seeking to avoid an arbitration agreement must make “a showing
that . . . fees and costs in fact would be unaffordable or would
have a substantial deterrent effect” on his or her decision to seek
relief, which the court must determine “on a case-by-case basis
. . . .” (Ibid.; see Penilla v. Westmont Corp. (2016) 3 Cal.App.5th
18205, 218 [“‘it is substantively unconscionable to require a
consumer to give up the right to utilize the judicial system, while
imposing arbitral forum fees that are prohibitively high’”];
Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 90 [same].)
Here, the arbitration agreement not only included a cost-
splitting provision for the arbitration fees, but called for the most
expensive kind of arbitration: one with a three-arbitrator panel.7
Swain’s attorney presented evidence of the hourly rates for
arbitrators in Southern California, which ranged from $375 to
$1,000, and daily rates of up to $10,000. In her declaration
Swain stated that her monthly salary was approximately $2,000
and that she could not afford to pay the fees charged by
arbitrators. The cost of such an arbitration panel would not only
deter Swain from seeking relief, it would effectively prohibit it.
Even if Swain’s “party arbitrator” and the “neutral arbitrator”
charged fees on the low end of those typically charged by
arbitrators, Swain would incur at least $562.50 in fees for each
hour of the arbitration ($375 for her party arbitrator, plus half
the cost of the neutral arbitrator). Even a few hours of the
arbitrators’ time would exceed Swain’s monthly income, not to
mention the other administrative fees and costs Swain would
7 The agreement stated: “Each party shall select an
arbitrator (party arbitrator) within thirty days and a third
arbitrator (neutral arbitrator) shall be selected by the arbitrators
appointed by the parties within thirty days of a demand for a
neutral arbitrator by either party. Each party to the arbitration
shall pay such party’s pro rata share of expenses and fees of the
neutral arbitrator, together with other expenses of the
arbitration incurred or approved by the neutral arbitrator, not
including counsel fees or witness fees, or other expenses incurred
by a party for such party’s own benefit.”
19
incur. And the agreement did not include any kind of protection
for a patient like Swain, such as a provision that would “limit the
amount of arbitration fees” a party could incur, allow a “waiver”
or “allocation of such fees at the discretion of the arbitrator[s],” or
permit Swain “to bring an otherwise arbitrable claim in small
claims court.” (Penilla v. Westmont Corp., supra, 3 Cal.App.5th
at p. 219; see Gutierrez v. Autowest, supra, 114 Cal.App.4th at
p. 91 [“Despite the potential for the imposition of a substantial
administrative fee, there is no effective procedure for a consumer
to obtain a fee waiver or reduction.”].) Thus, the fee-splitting
provisions were also highly unconscionable. (See Penilla, at
pp. 218-219 [arbitration agreement was unconscionable where
the arbitrators charged hourly rates of $500 to $800, and the
plaintiffs’ monthly salary was less than $3,000]; Parada v.
Superior Court (2009) 176 Cal.App.4th 1554, 1582-1583
[arbitration agreement requiring a three-arbitrator panel was
unconscionable where the arbitrators’ hourly rates were at least
$400, and the plaintiffs’ annual salaries ranged from $55,000 to
$70,000]; see also Gutierrez, at pp. 90-91 [arbitration agreement
was unconscionable where the plaintiff could not afford the
$8,000 administrative fee required to initiate arbitration].)
LaserAway argues the fee provision is not unconscionable
because section 1284.3, subdivision (b)(1), provides that “[a]ll fees
and costs charged to or assessed upon a consumer party by a
private arbitration company in a consumer arbitration, exclusive
of arbitrator fees, shall be waived for an indigent consumer.”
Section 1284.3, however, specifically excludes waiver of arbitrator
fees—the fees Swain showed she could not afford. Section 1284.3
therefore would provide little relief to Swain here. (See Penilla v.
Westmont Corp., supra, 3 Cal.App.5th at p. 220 [“section 1284.3
20
does not render arbitration affordable” because it “does not affect
the prohibitively high cost of arbitrator fees”].)
Thus, under the sliding scale unconscionability analysis,
the trial court did not err in ruling LaserAway could not enforce
the arbitration agreement against Swain. Although the
agreement may have had only a minimal degree of procedural
unconscionability, there was a high degree of substantive
unconscionability. LaserAway conceded the agreement required
only Swain to arbitrate the claims she was likely to bring, with
no explanation of why this one-sided, archetypically
unconscionable provision was reasonable. The provision
requiring Swain to pay half the fees of a three-arbitrator panel
(plus arbitration costs), well above what she could afford,
effectively prohibited her from bringing her claims. And, as
stated, LaserAway conceded the prohibition on seeking injunctive
relief, though severable, was unconscionable. These provisions
were “unreasonably favorable” to LaserAway, the party that
drafted and conditioned its services on Swain signing the
agreement, and were “sufficiently unfair” to “withhold
enforcement” of the agreement. (OTO, supra, 8 Cal.5th at
pp. 125-126.)8
8 LaserAway does not argue the cost-splitting provision or
three-arbitrator provision is severable from the remainder of the
agreement, nor did LaserAway seek to enforce the agreement
absent those terms. (See Nguyen v. Applied Medical Resources
Corp. (2016) 4 Cal.App.5th 232, 255-256 [trial court did not abuse
its discretion by severing substantively unconscionable cost-
splitting provision from the arbitration agreement].)
21
C. LaserAway Failed To Show the Arbitration
Agreement Was Not Unconscionable Under
Section 1295
LaserAway contends that, even if the arbitration
agreement has some characteristics of unconscionability, the
agreement is not unconscionable as a matter of law because it
complies with section 1295. “Section 1295 provides a procedure
for a patient and a health care provider to enter into an
agreement to waive their rights to a jury trial and resolve
medical malpractice claims by arbitration.” (Rodriguez v.
Superior Court (2009) 176 Cal.App.4th 1461, 1467.) Section
1295, subdivision (e), provides that such an arbitration
agreement “is not a contract of adhesion, nor unconscionable nor
otherwise improper, where it complies with subdivisions (a), (b),
and (c) of this section.”9 Because section 1295, subdivision (e), is
an exception to an otherwise applicable unconscionability
defense, LaserAway, the party relying on the exception, has the
burden to show it applies. (See Acosta v. Glenfed Development
Corp. (2005) 128 Cal.App.4th 1278, 1293 [“[w]ith respect to the
exception” to defendant’s affirmative defense, “plaintiffs, not
defendants, had the burden of production”]; see also Evid. Code,
§ 500 [“Except as otherwise provided by law, a party has the
burden of proof as to each fact the existence or nonexistence of
which is essential to the claim for relief or defense that he is
asserting.”].) LaserAway again forfeited its argument based on
section 1295, subdivision (e), by failing to adequately raise it in
9 Section 1295, subdivisions (a) and (b) require the
agreement to include certain language and formatting.
Subdivision (c) provides the agreement governs “until or unless
rescinded by written notice within 30 days of signature.”
22
the trial court. LaserAway mentioned section 1295 in its petition
to compel arbitration in passing, but did not cite subdivision (e),
much less argue the agreement was not unconscionable because
it complied with subdivisions (a), (b), and (c).
Forfeiture aside, LaserAway did not submit sufficient
evidence that section 1295 applies. Section 1295 applies to
“health care providers,” a term defined in subdivision (g)(1) as a
person, clinic, dispensary, or facility that is licensed or certified
under one of the laws listed in the statute, as well as the
provider’s “legal representatives.” (See § 1295, subds. (a), (g).)
LaserAway made no showing in the trial court, and makes no
showing on appeal, it is licensed or certified under one of the
enumerated laws and therefore is a health care provider for
purposes of section 1295. Although LaserAway asserts
Heckmann “substantiat[ed]” in her declaration “that LaserAway
is a medical group providing patient care within” the meaning of
section 1295, subdivision (g)(1), Heckmann did not provide any
description of the medical services LaserAway offers or identify
the licenses and certifications LaserAway holds.
23
DISPOSITION
The order is affirmed. Swain is to recover her costs on
appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
24
Filed 11/3/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
MIRANDA SWAIN, B294975
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. SC129042)
v.
ORDER MODIFYING OPINION,
LASERAWAY MEDICAL GROUP, AND CERTIFYING OPINION FOR
INC.,
PUBLICATION [NO CHANGE IN
APPELLATE JUDGMENT]
Defendant and Appellant.
THE COURT:
The opinion in this case filed October 13, 2020 is modified as follows:
On page 22, the Section C heading in the Discussion Section, which
states: LaserAway Failed To Show the Arbitration Agreement Was Not
Unconscionable Under Section 1295, is deleted and replaced with: LaserAway
Failed To Show Section 1295 Applied.
The opinion in this case filed October 13, 2020 was not certified for
publication. Because the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c), the non-parties’
requests for publication under California Rules of Court, rule 8.1120(a), are
granted.
IT IS HEREBY CERTIFIED that the opinion meets the standards for
publication specified in California Rules of Court, rule 8.1105(c); and
ORDERED that the words “Not to be Published in the Official Reports”
appearing on page 1 of said opinion be deleted and the opinion herein be
published in the Official Reports.
This order does not change the appellate judgment.
PERLUSS, P. J. SEGAL, J. FEUER, J.