Sandoval v. Medway Plastics CA2/4

Filed 12/17/14 Sandoval v. Medway Plastics CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FOUR
ABEL SANDOVAL et al., B252412
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No. BC513170)
v.
MEDWAY PLASTICS
CORPORATION et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los Angeles County, Mary
Ann Murphy, Judge. Reversed and remanded with directions.
Payne & Fears, Daniel F. Fears, Laura Fleming and Philip K. Lem for
Defendants and Appellants.
The Law Offices of Maryann P. Gallagher and Maryann P. Gallagher for
Plaintiffs and Respondents.
________________________________
INTRODUCTION
Medway Plastics Corporation (Medway) and Maria Rodriguez appeal from
an order denying their motion to compel respondents Abel Sandoval and Jesus
Nolasco to arbitrate their employment-related claims against appellants.
Appellants contend the trial court erred in determining that the arbitration
agreements (Agreements) between the parties were unenforceable. For the reasons
stated below, we determine that a substantively unconscionable fee-shifting
provision in the Agreements is severable. After severing that provision, we
conclude the Agreements are enforceable. Accordingly, we reverse and remand
for further proceedings.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On June 25, 2013, respondents filed a complaint for damages against
appellants, alleging claims for intentional infliction of emotional distress, breach of
contract, and age and racial/national discrimination and retaliation under the
California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et
seq.). Respondents alleged they had been employed by Medway for over 14 years,
had been supervised by Rodriguez (a Medway employee), and were wrongfully
terminated due to their age (over 40 years old), their race/nationality (Hispanic)
and their limited ability to speak English (which allegedly had no effect on their
work performance).
In response to the complaint, appellants moved, under Code of Civil
Procedure section 1281.1 et seq., for an order dismissing respondents’ complaint
and compelling respondents to arbitrate the claims in their complaint. In the
motion to compel arbitration, appellants contended that respondents had agreed to
arbitrate all disputes relating to their employment with Medway. Both respondents
had signed a Spanish version of the Agreement on September 21, 2000. In
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addition, respondent Nolasco had signed an English version of the Agreement on
November 8, 2005. In support of the motion, appellants submitted copies of the
signed Agreements and a copy of the 2009 JAMS (Judicial Arbitration and
Mediation Services) Employment Arbitration Rules and Procedure. They also
submitted a declaration by Medway’s vice president, Cheryl McDaniel,
authenticating the signed Agreements. McDaniel stated that employees are
required, as a condition of their continued employment, to sign the Agreements,
that the signed Agreements submitted with the motion were found in respondents’
personnel files, and that she recognized their signatures. She also acknowledged
that respondents spoke Spanish as their first language and were employed as
machine operators.
The English version of the Agreement provided: “I . . . agree [in advance],
as a necessary and material condition of my employment by the Company, that any
issue between myself and the Company or any of its employees, agents, officers,
directors or affiliates, which relates to my employment with the Company,
including, but not limited to any claims of discrimination, harassment, retaliation,
statutory claims, tort claims or contract claims, must be resolved exclusively
through binding arbitration. I understand that this means that I am giving up
significant rights, including but not limited to, the right to a jury trial. I understand
that I must [make a] written [petition] for arbitration to the Company
Administration within the time limits which would apply to the filing of a civil
complaint in court or I will waive my right to pursue any claim. I acknowledge
that I am knowingly and voluntarily waiving my right to pursue such claims in
court and instead will pursue them in arbitration. I further agree that any such
arbitration will be conducted using the Judicial Arbitration and Mediation Services
(“JAMS”). I agree that if I file a complaint which is subject to arbitration with a
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court, I will reimburse the Company’s costs and attorneys’ fees associated with
compelling arbitration of the complaint. If any court of competent jurisdiction
finds any part of this Arbitration Agreement is illegal, invalid or unenforceable,
such a finding will not affect the legality, validity or enforceability of the
remaining parts of the Agreement, and the illegal, invalid or unenforceable part
will be stricken from the agreement.” The Spanish version of the Agreement was
substantially identical.
Respondents opposed the motion to compel arbitration. They argued (1) that
there were no valid agreements to arbitrate, as the Agreements were not signed by
a Medway representative; (2) that the Agreements were procedurally
unconscionable, as respondents were compelled to sign the Agreements and were
never provided a copy of the JAMS arbitration rules, either in English or Spanish;
and (3) that the Agreements were substantively unconscionable, as they were one-
sided -- forcing only employees to arbitrate all claims arising out of their
employment, imposing improper fee-shifting, and failing to provide for adequate
discovery on FEHA claims.
In reply, appellants argued that a signature of a Medway representative was
not needed to form a valid contract between Medway and appellants. As to
procedural unconscionability, appellants contended the failure to provide the
JAMS rules did not render the Agreements unconscionable. They conceded that a
contract of adhesion may present some procedural unconscionability, but argued
that the level of unconscionability would be exceedingly low. As to substantive
unconscionability, appellants argued there was none. According to appellants, the
Agreements evidenced a mutual agreement to arbitrate, based on the language in
the Agreements that “any issue” relating to the employee’s employment with
Medway must be resolved via arbitration. On the issue of fee-shifting, appellants
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argued that the fee-shifting was proper, as it applied not to the unique costs and
fees of the arbitration, but only to the enforcement of the Agreement. Finally, on
the issue of adequate discovery, appellants argued that the JAMS arbitration rules
provided adequate discovery, as the rules permitted at least one deposition and
additional depositions as determined by the arbitrator.
On October 25, 2013, the trial court denied appellants’ motion for an order
compelling respondents to arbitrate their claims. In its oral ruling, the court
determined that the Agreements were unconscionable and unenforceable, as (1) the
JAMS arbitration rules were not attached or referenced; (2) the fee-shifting
provision improperly permitted an award of fees to the prevailing defendant on the
FEHA claims without the requisite factual findings required under the FEHA and
illegally chilled employees’ access to the courts; and (3) the discovery provision in
the JAMS arbitration rules provided inadequate discovery. The court declined to
reform the Agreements, finding that unconscionability permeated them.
Notice of the trial court’s ruling was served on October 29, 2013.
Appellants timely noticed an appeal from the order.
DISCUSSION
A. Standard of Review
Under Code of Civil Procedure section 1281.2, a party to an arbitration
agreement may petition the trial court to order the parties to the agreement to
arbitrate a dispute. “The petitioner bears the burden of proving the existence of a
valid arbitration agreement by the preponderance of the evidence, and a party
opposing the petition bears the burden of proving by a preponderance of the
evidence any fact necessary to its defense. [Citation.]” (Engalla v. Permanente
Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) “We will uphold the trial court’s
resolution of disputed facts if supported by substantial evidence. [Citation.]
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Where, however, there is no disputed extrinsic evidence considered by the trial
court, we will review its arbitrability decision de novo.” (Nyulassy v. Lockheed
Martin Corp. (2004) 120 Cal.App.4th 1267, 1277; accord, Giuliano v. Inland
Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.)
B. Existence of Agreements to Arbitrate
Although the trial court never addressed whether the parties validly formed
contracts to arbitrate employee disputes, respondents contend the court’s order
denying appellants’ motion to compel arbitration may be affirmed on the basis that
appellants failed to prove valid contracts to arbitrate existed. (See Day v. Alta
Bates Medical Center (2002) 98 Cal.App.4th 243, 252, fn. 1 [appellate court may
affirm a trial court’s ruling “on any basis presented by the record whether or not
relied upon by the trial court”].) Specifically, respondents contend no valid
Agreements existed, because (1) appellants failed to prove that respondents signed
the Agreements; and (2) there was no mutual intention to form a contract, as only
the employees were obligated to arbitrate their claims and waive their right to jury
trial. We disagree.
The trial court impliedly found that respondents signed the Agreements, as it
determined that respondents were given Spanish versions of the Agreements to
sign and there was no “language issue.” More important, the declaration of
McDaniel, was sufficient to authenticate the signed Agreements. McDaniel
testified that she was familiar with Medway’s business practice of requiring
employees to sign Agreements, that she had located the signed Agreements in
respondents’ personnel files, and that she recognized respondents’ signatures. In
light of this uncontradicted testimony, appellants have met their burden of showing
respondents signed the Agreements.
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As to lack of mutuality, parties may validly form a contract where each party
has different obligations. For example, an employer may agree to hire a worker in
return for the worker’s promise to arbitrate employment-related disputes. The lack
of a mutual obligation to arbitrate is distinct from a mutual intention to form an
agreement. The lack of mutuality in an arbitration provision of a contract does not
render the contract illusory. (Armendariz v. Foundation Health Psychcare
Services, Inc. (2000) 24 Cal.4th 83, 117 (Armendariz).) Indeed, our Supreme
Court has noted that an arbitration agreement that requires only employees to
arbitrate their claims may be enforceable if the employer can show a business
justification for the unilateral arbitration provision. (Id. at pp. 117-118.) In short,
appellants have shown the existence of agreements to arbitrate between the
1
parties.
C. Enforceability of Arbitration Agreements
Although agreements to arbitrate existed between the parties, the trial court
refused to enforce the Agreements. It denied appellants’ motion to compel
arbitration on the basis that the Agreements were unconscionable. In determining
whether an arbitration agreement is unconscionable and unenforceable, we draw
upon the following principles enunciated by our Supreme Court: “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.”’ (Armendariz, supra, 24 Cal.4th at p. 114.) ‘[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
1
Whether the Agreements actually lacked mutuality in the obligation to
arbitrate employment-related claims is discussed in Part C.2.
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unenforceable, and vice versa.’ [Citation.]” (Pinnacle Museum Tower Assn. v.
Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247 (Pinnacle).)
“[P]rocedural unconscionability requires oppression or surprise. ‘“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.”’” (Ibid., quoting Morris v. Redwood Empire Bancorp (2005)
128 Cal.App.4th 1305, 1317.) “Substantive unconscionability pertains to the
fairness of an agreement’s actual terms and to assessments of whether they are
overly harsh or one-sided. [Citations.] A contract term is not substantively
unconscionable when it merely gives one side a greater benefit; rather, the term
must be ‘so one-sided as to “shock the conscience.”’” (Pinnacle, supra, at p. 246,
quoting 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199,
1213.)
1. Procedural Unconscionability
The trial court found procedural unconscionability because the Agreements
neither attached nor referenced the JAMS arbitration rules. Although we have held
that the failure to attach arbitration rules referenced in an agreement, by itself, is
insufficient to sustain a finding of procedural unconscionability (Lane v. Francis
Capital Management, LLC (2014) 224 Cal.App.4th 676, 690), in this case, no
arbitration rules were referenced in the Agreements. Instead, the Agreements
simply stated that the arbitration would be conducted by JAMS. Even were the
Agreements interpreted to provide that the JAMS arbitration rules would be used,
nothing suggests that a Spanish version of the JAMS rules was easily accessible to
the employees. Thus, there was an element of surprise present in this case which
would support a finding of procedural unconscionability. (Cf. ibid. [“The failure to
attach a copy of arbitration rules could be a factor supporting a finding of
8
procedural unconscionability where the failure would result in surprise to the party
opposing arbitration.”].)
In addition, the record shows oppression. As attested to by McDaniel, the
Agreements were presented to the employees in an adhesive context -- they were
required to sign the contract as a condition of continued employment. Moreover,
respondents -- machine operators with limited English language skills -- do not
appear to fall within the category of “sought-after employees,” who would be in a
position to refuse a job because of an arbitration requirement. (See Armendariz,
supra, 24 Cal.4th at p. 115.) In short, due to the high disparity in bargaining power
between Medway and respondents, the degree of procedural unconscionability was
more than minimal. (Cf. Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981
(Dotson) [procedural unconscionability was minimal where employee was not “an
uneducated, low-wage employee without the ability to understand that he was
agreeing to arbitration,” but “the opposite -- a highly educated attorney, who
knowingly entered into a contract containing an arbitration provision in exchange
for a generous compensation and benefits package”].)
2. Substantive Unconscionability
The trial court found two provisions in the Agreements were substantively
unconscionable. It determined (1) that the discovery provided for in the JAMS
arbitration rules was inadequate to vindicate respondents’ FEHA claims, and
(2) that the fee-shifting provision in the Agreements was contrary to California
law. We disagree that the Agreements improperly limited discovery. The
Agreements never addressed discovery. In the absence of an express provision, the
employer impliedly agreed to all discovery necessary to adequately arbitrate
statutory claims. (Armendariz, supra, 24 Cal.4th at pp. 105-106.) Moreover, even
were the JAMS arbitration rules incorporated into the Agreement, the discovery
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provided for in JAMS arbitration rule 17 was adequate. That rule provides that the
parties must produce all relevant, nonprivileged documents. In addition, “[e]ach
party may take at least one deposition of an opposing Party or an individual under
the control of the opposing Party. The Parties shall attempt to agree on the
number, time, location, and duration of the deposition(s). Absent agreement, the
Arbitrator shall determine these issues including whether to grant a request for
additional depositions, based upon the reasonable need for the requested
information, the availability of other discovery, and the burdensomeness of the
request on the opposing Parties and witness.”
A substantially similar discovery provision was found not unconscionable in
2
Dotson. (See Dotson, supra, 181 Cal.App.4th at pp. 982-985.) The Dotson court
specifically rejected the assumption that an arbitrator would not be fair in
determining whether additional depositions were necessary. (See id. at p. 984.) In
short, the absence of an express discovery provision in the Agreements did not
render it substantively unconscionable.
As to the fee-shifting provision, we conclude it is substantively
unconscionable. The fee-shifting provision provides that if an employee files a
complaint which a court thereafter determines is subject to arbitration, the
employee will reimburse the employer for its costs and attorneys’ fees incurred in
2
The discovery provision in Dotson provided: “‘Each party shall have the
right to take the deposition of one individual and any expert witness designated by
the other party. Each party also shall have the right to make requests for
production of documents to any party. The subpoena right specified below in
Paragraph 4 [“[e]ach party shall have the right to subpoena witnesses and
documents for the arbitration”] shall be applicable to discovery pursuant to this
paragraph. Additional discovery may be had where the Arbitrator selected
pursuant to this Agreement so orders, upon a showing of need.’” (Dotson, supra,
181 Cal.App.4th at p. 982.)
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3
compelling arbitration of the complaint. The fee-shifting provision chills
employees’ access to the courts. Under the provision, an employee who
successfully demonstrated the unconscionability of one or more provisions of an
arbitration agreement would nevertheless be compelled to reimburse the employer
if the court found the unconscionable provision(s) severable. Employees with
legitimate challenges to unconscionable provisions in arbitration agreements would
thus be discouraged from challenging them and could be penalized when they did,
even if successful.
Moreover, the provision is one-sided, as it expressly applies only to the
employee. An employee who files “a complaint which is subject to arbitration
with a court” must “reimburse the Company’s costs and attorneys’ fees associated
with compelling arbitration of the complaint.” (Italics added.) Therefore, the fee-
shifting provision is not mutual and unfairly favors the employer. (Cf. Acosta v.
Kerrigan (2007) 150 Cal.App.4th 1124, 1132 [under mutual attorney fee provision,
party may recover attorney fee for successful petition to compel arbitration].)
Appellants contend Civil Code section 1717 saves the provision, as it renders the
provision mutual. (See Civ. Code, § 1717, subd. (a) [rendering reciprocal an
otherwise unilateral contractual provision for attorneys’ fees to a prevailing party
“[i]n any action on a contract”].) However, courts have interpreted such fee
provisions not to be covered by Civil Code section 1717. (See Lachkar v. Lachkar
(1986) 182 Cal.App.3d 641, 648 (Lachkar) [party who filed successful petition to
compel arbitration not entitled to interim award of attorney fees incurred in
connection with petition under Civil Code section 1717 because at time the award
3
We reject the trial court’s determination that the fee-shifting provision
applies to FEHA claims, i.e., it awards costs and attorneys’ fees to a party that
prevails on a FEHA claim. By its plain language, the provision applies only to
successful motions or petitions to compel arbitration.
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was made, “there was no prevailing party pursuant to that statute”]; accord,
Roberts v. Packard, Packard & Johnson (2013) 217 Cal.App.4th 822, 843
(Roberts).) In short, Civil Code section 1717 does not apply, and the fee-shifting
4
provision is unconscionable.
Before the trial court and now on appeal, respondents advance the claim that
the Agreements also were substantively unconscionable for lack of mutuality.
According to respondents, under the arbitration clause, only employees are
required to arbitrate employment-related disputes. We find no lack of mutuality in
the obligation to arbitrate employment-related disputes. Under the agreement,
“any issue between [the employee] and the Company or any of its employees,
agents, officers, directors or affiliates, which relates to [the employee’s]
employment with the Company, including, but not limited to any claims of
discrimination, harassment, retaliation, statutory claims, tort claims or contract
claims, must be resolved exclusively through binding arbitration.” (Italics added.)
As the trial court noted, there is no carve-out for claims typically brought by
employers, such as trade secret claims. Nor did the Agreements limit arbitration to
claims brought by the employee, as would be the case had the Agreements, for
example, provided, “I agree to submit my issues with the Company to binding
arbitration.” (Cf. Serpa v. California Surety Investigations, Inc. (2013)
215 Cal.App.4th 695, 704 [contractual language providing, “I understand and
agree that if my employment is terminated or my employment status is otherwise
changed or if any other dispute arises concerning my employment . . . , I will
4
Appellants’ reliance on Goff v. G2 Secure Staff LLC (C.D. Cal. April 22,
2013, CV 12-10008-CAS) 2013 U.S. Dist. LEXIS 59628, *16-*17), is misplaced,
as the Goff court never addressed Lachkar or Roberts when it held that Civil Code
section 1717 applied to a one-sided fee-shifting provision in an arbitration
agreement.
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submit any such dispute . . . exclusively to binding arbitration . . . [,]” lacked
mutuality on its face; when read in conjunction with the employee handbook,
however, there was a mutual obligation to arbitrate “any such dispute”].) In short,
the arbitration clause evidences a mutual obligation to arbitrate all claims related to
5
respondents’ employment with Medway.
Respondents contend that the language in the arbitration clause indicates a
unilateral obligation, as the Agreements use the terms “I agree” and “I
understand,” as opposed to “The Company and I agree,” and require only the
employee’s signature. Respondents’ contention was rejected in Roman v. Superior
Court (2009) 172 Cal.App.4th 1462 (Roman). There, the employee signed a
mandatory predispute agreement containing an arbitration clause that provided: “‘I
agree, in the event I am hired by the company, that all disputes and claims that
might arise out of my employment with the company will be submitted to binding
arbitration.’” (Id. at p. 1466.) The employee argued that the “‘I agree’” language
manifested only a unilateral obligation to arbitrate. The appellate court disagreed:
“Absent some indicia in the agreement that arbitration is limited to the employee’s
claims against the employer, the use of the ‘I agree’ language in an arbitration
clause that expressly covers ‘all disputes’ creates a mutual agreement to arbitrate
6
all claims arising out of the applicant’s employment.” (Ibid.)
5
We note that the issue whether the unconscionability defense to an
arbitration clause, based on lack of mutuality of the obligation to arbitrate, survives
AT&T Mobility LLC v. Concepcion (2011) __ U.S. __ [131 S.Ct. 1740], is
presently pending before our Supreme Court in Sabia v. Orange County Metro
Realty, Inc., review granted September 24, 2014, S220237.
6
Roman distinguished Higgins v. Superior Court (2006) 140 Cal.App.4th
1238, as one in which there were more unconscionable provisions, concluding, “we
simply do not believe the Higgins court intended to hold the mere inclusion of the
13
Like the court in Roman, we 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.” (Roman, supra, 172 Cal.App.4th at
p. 1473.) If the agreement had read “I agree that all disputes shall be settled
according to the law of California,” we would have no difficulty concluding that a
court would apply California law to any dispute, regardless of whether the
employer or the employee initiated it. By agreeing that “any issue” between
plaintiffs and the employer “must be resolved exclusively through binding
arbitration,” plaintiffs were doing no more than acknowledging that all disputes
between them and Medway would be resolved through binding arbitration. No
separate signature was required by Medway, as it was the company that set binding
arbitration of all disputes as a condition of respondents’ employment. In short,
there was a mutual obligation to arbitrate any and all employment-related issues.
For the first time on appeal, respondents contend that the Agreements were
substantively unconscionable because (1) the Agreements failed to provide that the
employer would pay the fees or costs unique to arbitration; and (2) the Agreements
denied employees their right to pursue FEHA claims by providing that employees
must make a written petition for arbitration with Medway’s management within
“the time limits that would apply to file a civil complaint in court.” As
respondents did not advance those claims before the trial court in opposing
appellants’ motion to compel arbitration, they have forfeited them. (Pearson
Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 682, fn. 5.) Even
words ‘I agree’ by one party in an otherwise mutual arbitration provision destroys
the bilateral nature of the agreement.’” (Roman, supra, 172 Cal.App.4th at
p. 1473.)
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were we to consider the contentions, we would find no substantive
unconscionability.
On the allocation of arbitral fees and costs, under Armendariz, employers
must pay the fees and costs unique to arbitration. Moreover, where an arbitration
agreement is silent on arbitration costs, the agreement should be interpreted to
provide that the employer will pay all types of fees and costs unique to arbitration.
“The absence of specific provisions on arbitration costs would therefore not be
grounds for denying the enforcement of an arbitration agreement.” (Armendariz,
supra, 24 Cal.4th at p. 113; accord, Fittante v. Palm Springs Motors, Inc. (2003)
105 Cal.App.4th 708, 719.) Although the Agreements are silent on the allocation
of arbitral fees and costs, Medway has asserted that respondents are not required to
pay any of the expenses uniquely associated with the arbitration process. In light
of Medway’s concession, and consistent with Armendariz, we interpret the
Agreements to provide that Medway will pay all fees and costs unique to
arbitration. Therefore, the Agreements do not impose substantively
unconscionable arbitral fees and costs on respondents.
As to the arbitral limitation period provision, the provision simply
incorporated existing statutes of limitations, which the Legislature has determined
to be sufficient time for a plaintiff to bring an action on a claim. Accordingly, the
arbitral limitation period provision provided adequate time for respondents to
vindicate their FEHA claims in arbitration.
In sum, the only substantively unconscionable provision in the Agreements
is the fee-shifting provision. Appellants contend that the fee-shifting provision is
severable, and we agree. The Agreements contain a severability clause, providing
that “If any court of competent jurisdiction finds any part of this Arbitration
Agreement is illegal, invalid or unenforceable, such a finding will not affect the
15
legality, validity or enforceability of the remaining parts of the Agreement, and the
illegal, invalid or unenforceable part will be stricken from the agreement.” We
discern no reason not to sever the fee-shifting provision. The provision may be
severed without affecting the remainder of the Agreement. (See Armendariz,
supra, 24 Cal.4th at p. 124 [“If the illegality is collateral to the main purpose of the
contract, and the illegal provision can be extirpated from the contract by means of
severance and restriction, then such severance or restriction are appropriate.”].)
Additionally, the Agreements are not permeated with illegality or defects. (See
Armendariz, supra, 24 Cal.4th at p. 124 [court may refuse to enforce agreement
permeated with unconscionability].) As indicated above, absent the fee-shifting
provision, we ascertain no other substantively unconscionable provision in the
Agreements. (See, e.g., Lane v. Francis Capital Management, LLC, supra, 224
Cal.App.4th at p. 693 [finding unconscionable provision severable where
arbitration agreement was not permeated with unconscionability].)
Having severed the unconscionable fee-shifting provision, the Agreements
are not substantively unconscionable. As there is no substantive unconscionability,
the Agreements are enforceable. (See Armendariz, supra, 24 Cal.4th at p. 114
[both procedural and substantive unconscionability must be present to support
determination that arbitration agreement was unenforceable as being
unconscionable contract].) Thus, we reverse the trial court’s order denying
appellants’ motion to compel arbitration. We remand the matter to the trial court
to enter an order granting appellants’ motion to compel respondents to arbitrate
their claims.
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DISPOSITION
The order is reversed and remanded for further proceedings consistent with
this opinion. Appellants are entitled to their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
MANELLA, J.
We concur:
WILLHITE, Acting P. J.
COLLINS, J.
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