Evans v. Trope & Trope CA2/5

Filed 9/18/14 Evans v. Trope & Trope CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FIVE
SUSAN E. EVANS, B252833
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC473081)
v.
TROPE & TROPE et al.,
Defendants and Respondents.
APPEAL from orders of the Superior Court of Los Angeles County, John L. Segal
and Suzanne G. Bruguera, Judges. Affirmed in part; reversed in part.
The Law Offices of Robert Kahn and Robert A. Kahn for Plaintiff and Appellant.
Kolodny Law Group, Stephen A. Kolodny; Trope and Trope and Thomas Paine
Dunlap, for Defendant and Respondent Trope and Trope LLP.
James A. Durant, in pro. per. for Defendant and Respondent James A. Durant.
I. INTRODUCTION
Plaintiff, Susan E. Evans, appeals from orders compelling arbitration and
confirming an award against her. Plaintiff claimed her former attorneys, defendant,
Trope & Trope LLP, committed legal malpractice during its representation of her in a
marital dissolution proceeding. Plaintiff also claimed James A. Durant, an attorney with
Trope & Trope and a codefendant, breached his fiduciary duties, intentionally inflicted
emotional distress, and committed battery. For clarity’s sake we will refer to defendant
and its employee, Mr. Durant, collectively as defendants.
Defendants moved for arbitration pursuant to a retainer agreement under Code of
Civil Procedure section 1281.2.1 The motion to compel arbitration was granted by Judge
John L. Segal. An arbitrator, Retired Judge Eli Chernow, ruled in favor of defendants as
to all claims. Defendants filed a petition to confirm the award. Plaintiff filed a petition
to vacate the award. The trial court granted defendants’ petition and denied plaintiff’s.
(Judge Segal granted the motion to compel arbitration. Judge Suzanne G. Bruguera ruled
on the confirmation petition. For clarity’s purposes, we will refer to Judge Bruguera as
the trial court.)
Plaintiff asserts Judge Segal should not have compelled arbitration. Plaintiff
argues the arbitration agreement contains two unconscionable terms: the arbitration
selection method and right to appeal. We affirm Judge Segal’s order compelling
arbitration. Plaintiff also argues the order confirming the award must be reversed on the
ground Judge Chernow failed to disclose matters which would cause a reasonable person
to doubt his impartiality. There is no evidence of bias on Judge Chernow’s part. But as
to one of the failures to disclose, he failed to make a timely disclosure and thus the order
confirming the award must be reversed.
1
Further statutory references are to the Code of Civil Procedure.
2
II. BACKGROUND
A. Trope & Trope’s Representation Of Plaintiff And Her Complaints
On January 11, 2006, plaintiff retained Trope & Trope to represent her in a marital
dissolution proceeding against Michael Lombardi. The action was then dismissed when
it appeared plaintiff and Mr. Lombardi might reconcile. On August 7, 2006, plaintiff
again retained the law firm in a second dissolution proceeding. Her case was initially
assigned to Steven Knowles, a senior lawyer with the law firm. She later requested her
case be transferred to another lawyer. Her case was transferred to another senior lawyer,
Lawrence Leone. Several other law firm lawyers also worked on the action. At a late
time in the case, Mr. Durant, under Mr. Leone’s direction, became substantially involved
in plaintiff’s representation.
The retainer agreement between plaintiff and the law firm contained an arbitration
clause, which provides: “Any and all claims, disputes, allegations, or controversies
arising out of or relating to this retainer agreement and/or Trope and Trope’s
representation of you, or any claimed breach thereof, shall be submitted to binding
arbitration as provided hereafter. This includes, but is not limited to, any claims of Trope
and Trope against you for unpaid fees and costs, and any claims which you may have
against Trope and Trope for, among other things, alleged negligence, malpractice, fraud,
misrepresentation, alleged emotional distress, breach of fiduciary duty, or refund of fees
already paid. The arbitrator shall be a Retired Superior Court Judge or Commissioner
who sat in a family law department in the Los Angeles County Superior Court for at least
three years of the preceding fifteen years before any claim is made and who is currently
active as a reference judicial officer handling family law matters. . . . The arbitration
shall be conducted consistent with the terms of [Code of Civil Procedure section] 1282 et
seq. . . . The reference in this paragraph to ‘binding arbitration’ means that the
determination of the arbitrator is a binding final decision of any claim or controversy at
the trial court level, but each party shall retain a right to appeal from the judgment on the
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award rendered by the arbitrator through the normal California Appellate Court process.”
The marital dissolution judgment was entered on December 29, 2008. Trope & Trope
provided no further legal services to plaintiff. All legal proceedings in the marital
dissolution action occurred in Los Angeles County Superior Court.
On November 8, 2011, plaintiff filed a legal malpractice complaint against: the
law firm; Sorrell Trope; Mr. Durant; and Mr. Leone. The complaint alleges the
settlement agreement and stipulated judgment was “below the standard of care.” The
individually named defendants were dismissed because the law firm agreed to accept full
responsibility for the alleged acts or omissions of its members and attorneys in the course
of their employment. The agreement, dated November 22 and 23, 2011, was in the form
of a stipulation which states: “IT IS HEREBY STIPULATED by and between Plaintiff
SUSAN A. EVANS and Defendants TROPE AND TROPE LLP, SORRELL TROPE,
JAMES A. DURANT, and LAWRENCE E. LEONE, that in consideration of Plaintiff
SUSAN A. EVANS dismissing the complaint against Defendants, SORRELL TROPE,
JAMES A. DURANT, and LAWRENCE E. LEONE, Defendant, TROPE AND TROPE
LLP agrees that it is responsible for any of the claims acts or omissions committed by
SORRELL TROPE, JAMES A. DURANT, LAWRENCE E. LEONE and any other of its
members or employees in the course and scope of their employment with the firm.”
(Italics added.) On November 30, 2011, plaintiff dismissed the claims against
Mr. Durant without prejudice.
On January 12, 2012, plaintiff filed a first amended complaint. In addition to the
legal malpractice claim, plaintiff alleged defendants Trope and Mr. Durant breached their
fiduciary duty and committed battery and intentional infliction of emotional distress.
Plaintiff contended Mr. Durant engaged in sexual harassment and a sexual relationship
with her.
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B. The Motion To Compel Arbitration
On December 20, 2011, the law firm filed its petition to compel arbitration.
Plaintiff filed her opposition on January 10, 2012. Plaintiff did not oppose arbitration.
However, plaintiff did oppose one provision in the arbitration agreement. Plaintiff
objected to the requirement that the arbitrator be a former Los Angeles County Superior
Court family law judge or commissioner. Plaintiff argued the retainer agreement was an
adhesive contract and the arbitrator selection provision was unconscionable. Plaintiff’s
attorney, Robert A. Kahn, submitted a declaration which stated he did not believe his
client could get an impartial arbitrator who previously served on the Los Angeles
Superior Court. Mr. Kahn based this assertion on Trope & Trope’s “influence” in the
family law community. The declaration fails to identify a single retired judge or other
bench officer by name who would be affected by Trope & Trope’s influence in the family
law community. Also, Mr. Kahn asserted, under oath: “It is likely that any proposed
arbitrator who is a retired Los Angeles County Superior Court judge or commissioner
has been hired by [Trope & Trope] as a mediator or arbitrator, and if not, will be
influenced by the effect an award against [Trope & Trope] would have on their potential
retention as an arbitrator or mediator in the future.” Trope & Trope filed its reply on
January 13, 2012. One of Trope & Trope’s lawyers, Mark S. Patt, declared the law firm
had received mixed results from retired Los Angeles County Superior Court family law
judges and commissioners. On January 24, 2012, Trope & Trope’s motion to compel
arbitration was granted. At the hearing on the motion to compel arbitration, defendant
represented Mr. Durant. Plaintiff subsequently agreed to have the entire matter,
including her claims against Mr. Durant, heard in the same arbitration as her allegations
against Trope & Trope.
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C. Retired Judge Chernow’s Selection And Disclosures
Mr. Kahn, plaintiff’s attorney, suggested Judge Chernow be selected as the
arbitrator. Defendants agreed to the selection. Judge Chernow confirmed his selection
and on January 31, 2012, made written disclosures. Judge Chernow disclosed he
conducted two one-day family mediations in which a party was represented by Trope &
Trope. In addition, Mr. Leone had appeared before Judge Chernow for numerous matters
on and off the bench. None of those matters had occurred in the past five years. In the
“Prior Engagements” section of his January 31, 2012 disclosure letter, Judge Chernow
concluded, “To the best of my knowledge, there is no relationship between me and any of
the parties, lawyers or law firms that would impair my ability to act fairly and impartially
in this matter.”
D. Judge Black, Trope & Trope’s Witness
On July 31, 2012, Trope & Trope served its expert witnesses designation, which
included Retired Judge Kenneth A. Black. Judge Black was a retired Los Angeles
County Superior Court judge with many years of experience in the family law field. On
August 15, 2012, plaintiff objected to the fees charged by Judge Black. Plaintiff
requested that Judge Chernow rule on the amount charged by Judge Black to act as an
expert witness. Judge Chernow first became aware of Judge Black’s designation as an
expert witness at that time.
E. Mr. Knowles
As noted, plaintiff retained Trope & Trope on January 11 and August 7, 2006.
Attached to the retainer agreement is a listing of the hourly billing rates in 2006 for
attorneys employed by Trope & Trope. Mr. Knowles’s billing rate was $575 per hour
which was the third highest in the firm. According to Judge Chernow’s original and
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corrected awards, Mr. Knowles was, for some time, the lead attorney representing
plaintiff in the marital dissolution action. Later, plaintiff requested that another attorney
replace Mr. Knowles. Judgment was entered in the marital dissolution action on
December 29, 2008. In 2009, Mr. Knowles left Trope & Trope’s employ.
After the arbitration commenced, on June 13, 2012, Judge Chernow was advised
there was an issue concerning Mr. Knowles’s deposition. In a June 13, 2012 e-mail to
Judge Chernow’s assistant, plaintiff’s counsel, Mr. Kahn, wrote in part: “[W]e have
more discovery issues that need to be addressed, regarding the depositions of Steven
Knowles and James Dunlap that were taken on Monday and Tuesday respectively.”
Plaintiff’s counsel suggested a date for resolution of the dispute. Later on in June 13,
2012, Michael Trope (Mr. Trope), one of Trope & Trope’s attorneys, sent an e-mail to
Mr. Kahn and Judge Chernow suggesting a conference to resolve the dispute. In part,
Mr. Trope wrote, “Mr. Kahn wants to see the settlement agreement between [Trope &
Trope] and Steve Knowles so that he can determine if the agreement requires him to not
make disparaging comments about [Trope & Trope], thus requiring him essentially as
Mr. Kahn put it; to give willfully false testimony while under oath at his deposition . . . .”
At 5:04 p.m., Mr. Kahn sent the following e-mail to Judge Chernow concerning
the discovery issues: “[J]ust so there are no surprises, when we do have a telephone
conference, I will be providing Judge Chernow with quotes from various deposition
transcripts that will show Mr. Trope’s extremely unprofessional behavior towards me.
The coup de grâce was yesterday, after our telephone conference (so it was off the
record), when Mr. Trope called me a ‘lying sack of sh-t.’ I have a pretty thick skin, but I
am getting fed up with his behavior and would like Judge Chernow to admonish
Mr. Trope to conduct himself more professionally. I might add that Mr. Dunlop has been
a perfect gentleman at all times.”
Later in the early evening of June 13, 2012 at 6:00 p.m., Mr. Trope sent a lengthy
e-mail relating to the pending discovery disputes. The e-mail begins: “I don’t like to pull
punches, I wear my emotions on my [sleeve]. I have never had a monetary sanction
imposed upon me by any judicial officer; nor have I ever been reported for misconduct to
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the [S]tate [B]ar other than [by] a client about 15 years ago complain[ing] that I had not
returned their phone calls.” After discussing another discovery dispute, Mr. Trope wrote
about a dispute involving Mr. Knowles deposition. There is an unintelligible discussion
about Mr. Trope referring to plaintiff’s counsel as a “lying sack of s . . . .” (Ellipses in
original.) Mr. Trope continued: “And believe me when I tell [Y]our [H]onor that I really
wanted to say something much stronger. And let me explain why, since my integrity is
now being questioned. The deposition of Steve Knowles was to take place on June 4,
2012. Without going into all the gory details, I informed Mr. Kahn that Mr. Knowles had
a problem with lack of sleep and having lost his glasses which prevented him from
appearing on June 4. Mr. Kahn indicated [in a written e-mail] that unless Mr. Knowles
agreed to pay the court reporte[r] the for a non appearance certificate, and agreed that if
he did not appear a week later for his deposition that he would automatically pay a
$5,000 sanction and agree to be adjudicated, in advance, to be in criminal contempt of
court, that he would not agree to continue the deposition for a week. I then informed
Mr. Kahn that I was representing Mr. Knowles and to direct his communications to me
only [I’ve known Mr. Knowles for 43 years, introduced him to [Trope & Trope] over 30
years ago, and we had a pre-existing [attorney-client] relationship dating back to 1977
when he was my attorney in numerous transactional matters].”
Mr. Trope’s e-mail continued: “This led to over 15 e-mail exchanges between
myself and Mr. Kahn between 6:30 and 8:30 [a.m.] on June 4, 2012 in which I was
finally able to get Mr. Kahn to relent and to continue the deposition for a week. Here are
the terms which were imposed[,] all of which [are] in written e-mail exchanges: [a] I
had to pay the certificate for the non- appearance fee [which I did of about $300[]]; and
[b] I had to agree that if Mr. Knowles did not appear for any reason at his deposition that
I would give a $1,000 check to the charity of Mr. Kahn’s choice. That is what I was
required to offer in return for Mr. Kahn’s agreement not to file a contempt against [Mr.]
Knowles and to continue the deposition for a week without intervention from the
arbitrator. Mr. Kahn even sent me an e-mail reminding me to bring my checkbook.”
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In the next paragraph of the June 13, 2012 e-mail, Mr. Trope continued: “On June
11, 2012, Mr. Knowles did appear for his deposition and was deposed until about 11:30
a.m. We took a lunch break. After the lunch break, I had Mr. Dunlop assist in raising
Mr. Knowles’s shirt, so that the court reporter and Mr. Kahn could view the absolutely
horrific bruising covering the majority of Mr. Knowles[’s] backside. We took pictures. I
advised Mr. Kahn that Mr. Knowles took pain meds at the lunch break and we would
have to pick another date to resume. Knowing at that point that Mr. Knowles was in
agony, Mr. Kahn turned to his passive personality.”
The paragraph of Mr. Trope’s declaration which directly refers to Mr. Knowles
states: “Then today the issue is raised about [Mr. Knowles’s] agreement from January of
2009 when he left Trope & Trope’s and started his own business. It apparently has a
confidentiality and non ‘bad mouth’ clause. Mr. Knowles so testified on June 11, 2012.
Mr. Knowles then went on to testify under oath at page 12 of the Rough of his deposition
that[:] ‘Let me add and then volunteer, I know of no disparaging comments that I would
make about anyone in the firm[.’] And Mr. Kahn’s new move today is that he wrote us a
detailed e-mail that he will bring a motion to obtain the 2009 settlement agreement
because he intends to argue at the time of the hearing in this matter that because Steve
Knowles signed a settlement agreement in 2009 in which he receive monetary
compensation that included the no ‘bad mouth’ clause, that Mr. Knowles is being paid in
a manner in which he will give false testimony under oath![]” Mr. Trope’s letter then
concluded with four more paragraphs containing strong criticisms of Mr. Kahn.
On June 18, 2012, Judge Chernow ruled on the issue concerning Mr. Knowles’
deposition: “On the issue of the amount paid to Mr. Knowles on his departure from the
firm, my view is that in light of [Mr. Knowles’s] very long tenure at the firm and his
departure, whatever final compensation there was adds little to the question of his
motivation to give testimony favorable or unfavorable to the firm. The small additional
increment added by this information is outweighed by the policies in favor of
confidentiality of private, personal financial information. [¶] . . . [¶] As to the added
issue of whether Mr. Knowles must answer the question, about the relevance of the
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timing of the date of issuance of [the] stock, he must answer the question and other
questions of family law. However, the question and answer will be understood as calling
not for Mr. Knowles’ opinion as an expert, but rather for his understanding of the issue at
the time he rendered services on the case.” At another point in the June 18, 2012 e-mail,
Judge Chernow issued a patient, dignified and courteous admonition concerning
Mr. Trope’s conduct. Additionally, Judge Chernow indicated there was no need for an
actual hearing on the dispute. On June 19, 2012, Judge Chernow issued another ruling,
“[Trope & Trope] is required to produce the portions of [Knowles’s] termination
agreement relating to non-disparagement and enforcement of [the] non-disparagement
clause, and it apparently has already done so.” The June 19, 2012 e-mail from Judge
Chernow contains another judicious admonition to all counsel to: avoid speaking
objections and arguments during depositions; maintain an attitude of courtesy towards
one another; and avoid inappropriate language. On an unspecified date after his
deposition, Mr. Knowles died.
On November 10, 2012, a “Celebration of Steven Knowles Life” was held at a
restaurant. The notice of the celebration states: “Celebration of Steven Knowles life will
be hosted by Michael Trope, Joel Maniss and Michael Collum. The ‘Celebration’ will
take place on November 10, 2012, from 2:00 P.M. to 5:00 P.M. at Skylight Gardens,
1139 Glendon Avenue, Los Angeles. . . . In the event you have not been to this
unbelievable eatery you have missed something. The food is off the chart, all fresh and
the best part that I love is that the owner is always there. And if Peter is not around, have
no fear his son will be taking care that all is perfect. [¶] Skylight Gardens is owned by
one of Steve’s old friends, Peter Clinco. Peter, Michael Trope and Steven all attended
U.S.C. together back a million years ago. Peter Clinco is along with being a very
successful [restaurateur] is/was, still is, a lawyer! So the old friendship makes sense and
the best part is this, if Steven could return from the land of the departed for just 15-20
minutes, how happy he would be to see all his old friends having a ‘toast’ in his honor!
[¶] Please come in share some great stories all the while enjoying a glass of wine and
some great appetizers. There is a wonderful bar on the premises if you should like to
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have something a little stronger. Everything here at the Skylight Gardens is ‘top shelf’
and I personally know that Steven Knowles loved this place!” The invitation concluded
with an e-mail address at which to indicate an intention to attend the celebration. Judge
Chernow attended the November 10, 2012 celebration in honor of Mr. Knowles.
Mr. Durant did not attend the celebration.
The arbitration was held on November 26-28, and December 4-7, 10-11, 13-14,
17-19 and 21, 2012. The arbitration continued on January 2-3, February 4-6, March 14
and April 1, 2013. During the arbitration, on December 28, 2012, plaintiff’s counsel
served an exhibit list. Plaintiff’s exhibit list references three documents involving
Mr. Knowles.
After the corrected arbitration award was issued, plaintiff’s counsel in a July 10,
2013 letter indicated an intention to take the depositions of Judge Black and Judge
Chernow. The July 10, 2013 letter is addressed to Mr. Durant at defendant’s address. E-
mail communications concerning the proposed deposition were served on Mr. Durant at
defendant’s e-mail address. Judge Chernow was served with a deposition subpoena dated
July 15, 2013. Trope & Trope filed a motion to quash the subpoena in part upon the
ground arbitration witnesses and an arbitrator could not be deposed. On July 16, 2013,
Judge Chernow sent an e-mail to all counsel. In that e-mail, Judge Chernow explained:
“To save us all time I will advise you my only contacts between the year 2000 and the
commencement of this proceeding with Judge Black, any of [Trope & Trope’s] lawyers,
and [Steve] Kolodny and lawyers at his firm have been at legal education
events . . . excepting only the two mediations with [the Trope Firm] disclosed at the
commencement of this proceeding, and excepting a memorial event following the death
of Steven Knowles.” The July 16, 2013 e-mail was the first time Judge Chernow
revealed his attendance at the November 10, 2012 celebration. Thereafter, Judge
Chernow’s deposition never occurred because Trope & Trope’s motion to quash was
granted. The opposition to the motion to quash was served on Mr. Durant at defendant’s
offices.
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F. Arbitration Proceedings, Trope & Trope’s Petitions
To Confirm The Award And Plaintiff’s Petition To Vacate
On November 26, 2012, arbitration hearings began. The arbitration hearings
occurred over 22 days and concluded on April 1, 2013. On June 24, 2013, Judge
Chernow issued his award in favor of Trope & Trope and Mr. Durant. On July 15, 2013,
the arbitrator issued a corrected award. On July 15, 2013, Trope & Trope filed a petition
to confirm the original award. Trope & Trope later substituted the corrected award. On
July 19, 2013, Mr. Durant filed a petition to confirm the corrected award. Mr. Durant’s
address was the same as defendant’s offices.
On July 10, 2013, plaintiff sent an e-mail to the parties and Judge Chernow
indicating an intent to engage in certain discovery. Plaintiff contended Judge Chernow
failed to make required disclosures concerning his relationship with Judge Black.
Plaintiff intended to depose Judge Chernow. However, Trope & Trope moved to quash
any subpoena to depose the arbitrator. As noted, Trope & Trope’s motion to quash was
granted.
On August 29, 2013, plaintiff moved to vacate the arbitration award based on
Judge Chernow’s alleged failure to make required disclosures which were grounds for
disqualification. As noted, plaintiff argued Judge Chernow should have disclosed a prior
relationship with Judge Black and Mr. Knowles. Plaintiff did not learn Judge Chernow
had attended Mr. Knowles’s memorial service until receiving the July 16, 2013 e-mail.
Concerning Judge Chernow’s relationship with Judge Black, plaintiff cited to a
rough transcript from the seventh day of arbitration, December 7, 2012. While Judge
Black was testifying, the following occurred: “JUDGE CHERNOW: Just indicate on the
record, you are [sic] supervising judge of family law when I served on the bench. [¶]
THE WITNESS: That is correct. You were in Department 65. I was in Department 2.
You took my place in Department 65. [¶] JUDGE CHERNOW: Okay.” Plaintiff
contended Judge Black was like a supervising attorney to Judge Chernow. Mr. Kahn
denied hearing the exchange which is in the transcript of the arbitration.
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Plaintiff again argued the arbitration clause’s arbitrator selection provision was
unconscionable. Plaintiff also contended for the first time that the arbitration clause
contained an illusory provision regarding a party’s appeal rights. Plaintiff asserted the
arbitration clause did not clearly provide that legal errors were an excess of arbitral
authority reviewable by the courts. Plaintiff asserted the lack of that provision rendered
the entire arbitration clause unenforceable. Plaintiff relied on Cable Connection, Inc. v.
DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1365, in support of her new argument.
Defendant’s papers were served on Mr. Durant at its offices.
G. Confirmation Of Arbitration Award
On October 9, 2013, the trial court heard the petitions to confirm and vacate the
arbitration award. On November 13, 2013, the trial court entered its order granting
defendants’ confirmation petitions and denying plaintiff’s petition to vacate the
arbitration award. The trial court found no evidence of a personal relationship between
Mr. Knowles and Judge Chernow. The trial court concluded the only professional
relationship was that Judge Chernow sat in the family law department until 1993 and
Mr. Knowles was a family law attorney. Additionally, the trial court concluded Judge
Chernow had no disclosure duty because Mr. Knowles was not a party or an attorney for
a party. The trial court found an objective reasonable person would not question Judge
Chernow’s impartiality because of the attendance at Mr. Knowles’s celebration of life
memorial service. The trial court found Mr. Knowles had no interest in the resolution of
the action because he had left Trope & Trope’s employ in 2009.
The trial court found no significant professional relationship between Judges
Chernow and Black. The trial court found even if Judge Chernow was required to
disclose the relationship, plaintiff was on notice of it during the December 7, 2012
arbitration hearing. The trial court concluded plaintiff’s failure to raise this issue until
July 10, 2013, after such knowledge and the arbitration’s conclusion, constituted a waiver
of the objection.
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On November 14, 2013, judgment was entered in favor of defendants. Plaintiff
subsequently appealed both the order compelling arbitration and the order confirming the
arbitration award.
III. DISCUSSION
A. Plaintiff Fails To Prove The Arbitration Clause Was Unconscionable
1. Legal principles
Section 1281 provides, “A written agreement to submit to arbitration an existing
controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save
upon such grounds as exist for the revocation of any contract.” Both state and federal
laws favor enforcement of valid arbitration agreements. (Armendariz v. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97 (Armendariz); Wagner
Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 25 [strong public
policy in favor of arbitration].) However, courts will not enforce arbitration provisions
that are unconscionable or contrary to public policy. (Pinnacle Museum Tower Assn. v.
Pinnacle Market Development (U.S.), LLC (2012) 55 Cal.4th 223, 247 (Pinnacle
Museum); Armendariz, supra, 24 Cal.4th at p. 114.) The party opposing arbitration, in
this case plaintiff, bears the burden of proving that an arbitration agreement is
unenforceable based on unconscionability. (Pinnacle Museum, supra, 55 Cal.4th at p.
247; Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704,
708.)
Our Supreme Court has stated: “Unconscionability consists of both procedural
and substantive elements. 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 or one-
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sided. [Citations.]” (Pinnacle Museum, supra, 55 Cal.4th at p. 246; Armendariz, supra,24 Cal.4th at p. 114.) Both procedural and substantive unconscionability must be shown.
However, they need not be present to the same degree and are evaluated on a sliding
scale. (Pinnacle Museum, supra, 55 Cal.4th at p. 246; Armendariz, supra, 24 Cal.4th at
p. 114.) Our Supreme Court explained, “‘[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.’ [Citation.]” (Pinnacle
Museum, supra, 55 Cal.4th at p. 247; accord, Armendariz, supra, 24 Cal.4th at p. 114.)
The trial court’s arbitrability determination is reviewed de novo if there is no
disputed extrinsic evidence. (Pinnacle Museum, supra, 55 Cal.4th at p. 236; Suh v.
Superior Court (2010) 181 Cal.App.4th 1504, 1511.) The unconscionability of an
arbitration provision is ultimately a question of law. (Parada v. Superior Court (2009)
176 Cal.App.4th 1554, 1567; Suh v. Superior Court, supra, 181 Cal.App.4th at p. 1511.)
Thus, we review the contract de novo to determine unconscionability when extrinsic
evidence is undisputed. (Ibid.; Gatton v. T–Mobile USA, Inc. (2007) 152 Cal.App.4th
571, 579.)
2. Plaintiff’s contentions
Plaintiff presents three arguments as to why the arbitration clause was
unenforceable. First, plaintiff argues the retainer agreement was an adhesive contract.
Plaintiff relies on Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817-828. Plaintiff
contends: she was not an attorney and could not negotiate the retainer agreement’s terms;
she lacked representation prior to signing the retainer agreement; and Trope & Trope was
in a superior bargaining position. Second, plaintiff contends the retainer agreement’s
arbitrator selection provision was unconscionable because only a retired Los Angeles
Superior Court bench officer could be selected. Plaintiff asserts: she could not receive a
fair hearing before a retired Los Angeles Superior Court bench officer because Trope &
Trope was highly influential in the Los Angeles family law community; Trope & Trope’s
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attorneys have likely appeared before all the retired family law judges of Los Angeles
County; and arbitrators would be concerned about future losing future mediation and
arbitration opportunities if they ruled against Trope & Trope. Third, plaintiff argues the
entire arbitration agreement is unconscionable because the appeal provision is illusory
and unenforceable. Plaintiff reasons that the arbitration clause’s appeal rights term failed
to comply with the requirements in Cable Connection, Inc. v. DIRECTV, Inc., supra, 44
Cal.4th at page 1361.
3. There is no ground to set aside the arbitration agreement
The evidence of procedural unconscionability is weak. There is no evidence
plaintiff was unrepresented or would have been unable to secure other counsel. The only
evidence of adhesion was that Trope & Trope always required their clients to sign an
arbitration agreement. However, there is no evidence: on this occasion the retainer
agreement was offered on a take it or leave it basis; of surprise or misrepresentation; the
agreement was a preprinted form; or plaintiff felt she had no meaningful choice. Thus,
the evidence of procedural unconscionability is weak. (Nothdurft v. Steck (2014) 227
Cal.App.4th 524, 535-536; Trend Homes, Inc. v. Superior Court (2005) 131 Cal.App.4th
950, 958, disapproved on other grounds in Tarrant Bell Property, LLC v. Superior Court
(2011) 51 Cal.4th 538, 545, fn. 5; Crippen v. Central Valley RV Outlet (2004) 124
Cal.App.4th 1159, 1165-1166.)
Even if we accept as true the argument the retainer agreement was an adhesive
contract, plaintiff has not demonstrated with any evidence the arbitrator selection
provision was unconscionable. Defendants argue retired Los Angeles County Superior
Court judges would have knowledge of the standard of care for the community in which
the alleged malpractice occurred. The Court of Appeal has explained, “The standard [of
care] is that of members of the profession ‘in the same or a similar locality under similar
circumstances’ [citation]. . . .” (Wright v. Williams (1975) 47 Cal.App.3d 802, 809,
citing Smith v. Lewis (1975) 13 Cal.3d 349, 355, fn. 3, overruled on a different point in In
16
re Marriage of Brown (1976) 15 Cal.3d 838, 851, fn. 14; but see Avivi v. Centro Medico
Urgente Medical Center (2008) 159 Cal.App.4th 463, 470 [“Geographical location may
be a factor in making that determination [of the standard of care], but, by itself, does not
provided a practical basis for measuring similar circumstances.”].) Plaintiff fails to
demonstrate how requiring that a retired family law judicial officer from the Los Angeles
County Superior Court be an arbitrator for the parties was overly harsh or one-sided.
Plaintiff presented no evidence that Trope & Trope’s alleged influence would so bias
these proposed arbitrators they would rule for the firm or there was any danger such
would occur.
Finally, plaintiff argues the discussion of appellate rights renders the agreement to
arbitrate arbitrary, illusory and unconscionable. Plaintiff argues that the arbitration
clause’s reference to appeal rights fails to comply with the requirements identified in
Cable Connection, Inc. v. DIRECTV, Inc., supra, 44 Cal.4th at page 1361. Plaintiff did
not raise this specific argument that the reference to appellate rights was unconscionable
until after the arbitration had concluded. Thus, this contention is forfeited. (Moncharsh
v. Heily & Blase (1992) 3 Cal.4th 1, 31; Cummings v. Future Nissan (2005) 128
Cal.App.4th 321, 328-329; Reed v. Mutual Service Corp. (2003) 106 Cal.App.4th 1359,
1372-1373.)
In any event, plaintiff’s appeal argument is meritless. The challenged language is
as follows: “Any judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. The reference in this paragraph to ‘binding arbitration’
means that the determination of the arbitrator is a binding final decision of any claim or
controversy at the trial court level, but each party shall retain a right to appeal from the
judgment on the award rendered by the arbitrator to the normal California Appellate
Court process.”
There is nothing confusing of substance about the challenged language in the
arbitration agreement. It emphasizes that a trial court will be reviewing a binding
arbitration award. And, the language explains that there will be a right of appeal under
the normal appellate processes of California. More importantly, nothing in the quoted
17
Cable Connection, Inc. language constitutes a ground for any unconscionability finding.
Our Supreme Court emphasized that in order to avoid a dispute over merits-based judicial
review, the party’s rights should be clearly spelled out in the arbitration agreement. Also,
the challenged language in the arbitration clause applies equally to both sides. Here, the
parties did not “explicitly and unambiguously” state that they could seek judicial review
of the dispute’s merits. No doubt, that is a ground for not permitting judicial review of
the merits, but it is not a basis for finding a substantive unconscionability.
B. The Arbitrator’s Disclosure Requirements
1. Legal principles
Plaintiff argues Judge Chernow failed to comply with his disclosure obligations.
Section 1281.9, subdivision (a) states: “[T]he proposed neutral arbitrator shall disclose
all matters that could cause a person aware of the facts to reasonably entertain a doubt
that the proposed neutral arbitrator would be able to be impartial, including all of the
following: [¶] (1) The existence of any ground specified in Section 170.1 for
disqualification of a judge. . . . [¶] (2) Any matters required to be disclosed by the ethics
standards for neutral arbitrators adopted by the Judicial Council pursuant to this
chapter. . . . [¶] . . . [¶] (6) Any professional or significant personal relationship the
proposed neutral arbitrator or his or her spouse or minor child living in the household has
or has had with any party to the arbitration proceeding or lawyer for a party.” The Courts
of Appeal have defined person for purposes of section 1281.9, subdivision (a), “The
‘person’ referenced in this disclosure requirement concerning partiality is an objective,
reasonable person.” (Agri-Systems, Inc. v. Foster Poultry Farms (2008) 168 Cal.App.4th
1128, 1140; Guseinov v. Burns (2006) 145 Cal.App.4th 944, 960.) There are two timing
provisions for disclosure. The first timing provision is statutory and pursuant to the
Ethics Standards for Neutral Arbitrators in Contractual Arbitration (Ethics Standards).
The first deadline is within 10 days of the arbitrator’s proposed nomination or
18
appointment, “Subject only to the disclosure requirements of law, the proposed neutral
arbitrator shall disclose all matters required to be disclosed pursuant to this section to all
parties in writing within 10 calendar days of service of notice of the proposed nomination
or appointment.” (§ 1281.9, subd. (b); Ethics Stds., std. 7(c)(1); see Jakks Pacific, Inc. v.
Superior Court (2008) 160 Cal.App.4th 596, 601-602.) The second time frame for
mandatory disclosure is set forth in the Ethics Standards, standard 7(c)(2), “If an
arbitrator subsequently becomes aware of a matter that must be disclosed . . . , the
arbitrator must disclose that matter to the parties in writing within 10 calendar days after
the arbitrator becomes aware of the matter.” (Ethics Stds, std. 7(c)(2); Gray v. Chiu
(2013) 212 Cal.App.4th 1355, 1363-1364.) The disclosure duty is continuing from the
notice of the proposed nomination or appointment until the conclusion of the arbitration
proceeding. (Ethics Stds., std. 7(f); Gray v. Chiu, supra, 212 Cal.App.4th at pp. 1363-
1364.)
If an arbitrator “failed to disclose within the time required for disclosure a ground
for disqualification of which the arbitrator was then aware,” the trial court must vacate
the arbitration award. (§ 1286.2, subd. (a)(6)(A); Nemecek & Cole v. Horn (2012) 208
Cal.App.4th 641, 646.) Where the material facts are undisputed and the applicable
standard is subject to objective analysis, we review this issue de novo. (Haworth v.
Superior Court (2010) 50 Cal.4th 372, 385-386 (Haworth); Mt. Holyoke Homes, L.P. v.
Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1312.) Where the
facts are disputed, the Courts of Appeal have held: “‘We must accept the trial court’s
resolution of disputed facts when supported by substantial evidence; we must presume
the court found every fact and drew every permissible inference necessary to supports its
judgment, and defer to its determination of credibility of the witnesses and the weight of
the evidence.’ [Citation.]” (Fininen v. Barlow (2006) 142 Cal.App.4th 185, 189-190;
accord, SWAB Financial v. E*Trade Securities (2007) 150 Cal.App.4th 1181, 1205.)
19
2. Judge Chernow’s relationship with Judge Black
Plaintiff contends Judge Chernow should have disclosed a prior relationship with
Judge Black from the time they both served in the family law departments of the Los
Angeles County Superior Court. Plaintiff asserts Judge Black had a relationship akin to a
supervising attorney with Judge Chernow. Plaintiff relies on Standard 7(d)(14)(A),
which states: “A proposed arbitrator or arbitrator must disclose all matters that could
cause a person aware of the facts to reasonably entertain a doubt that the proposed
arbitrator would be able to be impartial, including . . . all of the following: [¶] . . . (15)
Any other matter that: [¶] (A) Might cause a person aware of the facts to reasonably
entertain a doubt that the arbitrator would be able to be impartial . . . .” (See § 170.1,
subd. (a)(6)(A)(iii) [grounds for judicial disqualification when “[a] person aware of the
facts might reasonably entertain a doubt that the judge would be able to be impartial”].)
There was no evidence Judge Chernow and Judge Black had a personal or close
relationship. The prior work relationship occurred when Judge Chernow and Judge
Black served on the bench together. Judge Chernow served on the Los Angeles County
Superior Court from 1977 to 1993. Plaintiff, without citation to any evidence, argues
Judge Black was like a supervising attorney to Judge Chernow. (See Nemecek & Cole v.
Horn, supra, 208 Cal.App.4th at pp. 648-649 [arbitrator not required to disclose a witness
served on the same executive committee and board]; Luce, Forward, Hamilton &
Scripps, LLP v. Koch (2008) 162 Cal.App.4th 720, 734 [arbitrator not required to disclose
membership on same board of directors as a party’s witness and lawyer].) Judge
Chernow and Judge Black’s prior relationship on the Los Angeles County Superior Court
was too “‘slight or attenuated’” to require disclosure. (Nemecek & Cole v. Horn, supra,
208 Cal.App.4th at p. 649; Luce, Forward, Hamilton & Scripps, LLP v. Koch, supra, 162
Cal.App.4th at p. 734.) As a matter of law, the preexisting relationship issue would not
cause a person aware of the facts to reasonably entertain a doubt Judge Chernow would
not be impartial.
20
3. Judge Chernow’s attendance at the celebration of Mr. Knowles’s life
Plaintiff contends the attendance at Mr. Knowles’s service would cause a person
aware of it to reasonably entertain a doubt Judge Chernow could be impartial. Though it
is a close case, this scenario could cause an objective person to reasonably entertain a
doubt as to Judge Chernow’s impartiality.
The evidence shows Mr. Knowles was a senior lawyer with Trope & Trope.
Mr. Knowles was directly implicated in the legal malpractice claim which includes
allegations of negligence at the inception of the marital dissolution action. The
November 22 and 23, 2011 agreement provided Trope & Trope was responsible for the
omissions of any of its members, which included Mr. Knowles and Mr. Durant. Judge
Chernow was aware that Mr. Knowles was involved in the case since at least June 13,
2012. That is when the parties engaged in a heated dispute about Mr. Knowles’s
deposition. The deposition centered upon Mr. Knowles’s written settlement agreement
with Trope & Trope which included alleged non-disparagement and confidentiality
agreements. Judge Chernow attended the celebration of Mr. Knowles’s life on November
10, 2012. Sixteen days after the celebration of Mr. Knowles’s life, the taking of
testimony commenced, concluding on April 1, 2013. The invitation to attend the
celebration was made in part by Mr. Trope who, at times, was one of the attorneys
representing Trope & Trope. Judge Chernow did not notify any of the parties regarding
attendance at Mr. Knowles’s memorial service until July 16, 2013, after arbitration was
concluded. On July 16, 2013, in response to the deposition subpoena, Judge Chernow
first gave notice of his attendance at the celebration of Mr. Knowles’s life. This
notification occurred after Judge Chernow had issued his corrected order. As the
celebration was held on November 10, 2012, the July 16, 2013 notification was untimely.
(Ethics Stds., std. 7(c) & (f); Gray v. Chiu, supra, 212 Cal.App.4th at pp. 1363-1364.)
This case is distinguishable from our Supreme Court’s decision in Haworth,
supra, 50 Cal.4th at pages 378-379. That case involved an arbitrator who did not disclose
he had been publicly censured in 1996 by the Commission on Judicial Performance for:
21
making sexually suggestive remarks to female staff members; using crude, demeaning
remarks and an ethnic slur; and creating “‘an overall courtroom environment where
discussion of sex and improper ethnic and racial comments were customary.’” (Haworth,
supra, 50 Cal.4th at pp. 378-379.) The arbitrator presided over a claim involving a
woman who alleged her male physician was negligent in performing plastic surgery. (Id.
at p. 378.) The Supreme Court majority held: “[N]othing in the public censure would
suggest to a reasonable person that [the arbitrator] could not be fair to female litigants,
either generally or in the context of an action such as the one now before us. . . . The
conduct that was the subject of the public censure occurred . . . more than 15 years prior
to the arbitration proceeding. None of the conduct or comments for which [the arbitrator]
was censured involved litigants or occurred in the courtroom while court was in session.”
(Id. at p. 390.)
Unlike the circumstances in Haworth, the fact requiring disclosure here, Judge
Chernow’s attendance at the celebration of Mr. Knowles’s life, occurred during the
arbitration. The celebration occurred immediately before the commencement of the
taking of testimony. Mr. Knowles was deposed as an interested person. The malpractice
allegations include the time period of 2006 through 2008. Mr. Knowles, a member of the
firm, was assigned to plaintiff’s case during that time period. As to Mr. Durant, the first
amended complaint alleges the legal representation provided at the time of the settlement
was below the standard of care. According to Judge Chernow’s corrected award,
Mr. Durant was “substantially involved” in representing plaintiff in connection with the
settlement with her former spouse. Mr. Durant did so as an employee of defendant.
Judge Chernow set forth Mr. Durant’s role in the settlement and drafting of the ensuing
judgment: “Mr. Leone served as lead counsel at the mediation, although Mr. Durant was
present. Settlement was reached at the mediation on July 7, 2008, and a written
settlement agreement was signed. Although Mr. Durant worked on various matters
before the mediation, his major role in the case was to negotiate and prepare a stipulation
for judgment and judgment based on the signed settlement agreement.” And as noted,
defendant agreed to pay any damages resulting from these allegations of professional
22
negligence involving Mr. Durant and Mr. Knowles. And Mr. Durant was still employed
by defendant during the arbitration and the enforcement proceedings.
Further, Judge Chernow believed the celebration of Mr. Knowles’s life was a
matter of material significance. Judge Chernow gave notice of his attendance at the
November 10, 2012 celebration in his July 16, 2013 e-mail after being served with the
deposition subpoena. Attendance at the celebration at the invitation of one of Trope &
Tropes’ attorneys, could indicate favorable opinions of Mr. Knowles’s friends, family
and former colleagues.
We are not finding actual bias existed. However, the question is whether a
reasonable person aware of the facts could reasonably entertain a doubt that Judge
Chernow could be impartial in this case. (See § 1281.9, subd. (a); Haworth v. Superior
Court, supra, 50 Cal.4th at pp. 385-386.) Under these circumstances, attendance at the
celebration would cause a person aware of the facts to reasonably entertain a doubt that
the Judge Chernow would be able to be impartial. (§ 1281.9, subd. (a).) Because Judge
Chernow failed to make a timely required disclosure under section 1281.9, subdivision
(a), the arbitration award must be vacated. (§ 1286.2, subd. (a)(6)(A); Nemecek & Cole
v. Horn, supra, 208 Cal.App.4th at p. 646.)
23
IV. DISPOSITION
The January 24, 2012 order compelling arbitration is affirmed. The November 13,
2013 order confirming the arbitration award is reversed. All parties are to bear their own
costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER, P. J.
I concur:
MINK, J.*
*
Retired judge of the Los Angeles Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
24
MOSK, J., Concurring
I concur.
I believe the arbitration clause in this case could have been found unconscionable,
depending on the facts. Under the clause, the arbitrator had to be a retired Los Angeles
County Superior Court judge who sat in the family law department and “who is currently
active as a reference judicial officer handling family law matters.” In other words, the
arbitrator was to be someone in Los Angeles who is likely to be hired by a family law
firm like Trope & Trope for compensation in a private dispute resolution mechanism.
A retired judge from other large counties in California or who may have been
family law judges or lawyers but who are not active as “a reference judicial officer
handling family law matters” are ineligible. There could be no reason for such a
restrictive clause, other than to insure that the arbitrator might well have some likelihood
of being retained by or selected by Trope & Trope in the future. Having as an arbitrator
one who has a financial incentive with regards to Trope & Trope gives the appearance of
bias.
The arbitration clause is analogous to the one in Engella v. Permanente Medical
Group, Inc. (1997) 15 Cal.4th 951, in which it was argued that a party to an arbitration
clause had an unfair advantage because the panel from which the arbitrator was to be
selected would result in that party being a “repeat player” in arbitration before that
arbitration and would have information on the arbitrators unavailable to the other party.
The court held that the arbitration agreement was not “per se unconscionable.” (Id. at p.
986.)
The “repeat player” situation is similar to the consequences of the arbitration
clause here. In both instances, the arbitrator is likely to be utilized by one of the parties
in the future. In Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, employees were
compelled to arbitrate their employment claims against their employer, Countrywide
Securities Corporation. The employees argued, inter alia, that the process was flawed
because it did not guarantee a neutral arbitrator. The claims were to be arbitrated by the
National Arbitration Forum (NAF) in California where there were only a few NAF
arbitrators. Thus, the employer necessarily would repeatedly appear before the same
group of arbitrators. The court said, “While our Supreme Court has taken notice of the
‘repeat player effect,’ the court has never declared this factor renders the arbitration
agreement unconscionable per se. The court apparently believes the provisions of Code
of Civil Procedure section 1281.6 will keep the proceedings ‘honest’ and neutral.
The first sentence in section 1281.6, however, states: ‘If the arbitration agreement
provides a method of appointing an arbitrator, that method shall be followed.’ The
Countrywide agreement provides the arbitrator will be selected by NAF. Therefore, the
weaker party’s participation in the selection of the arbitrator, which is sometimes
available under the statute, does not arise under the Countrywide agreement. [¶] We too
are not prepared to say without more evidence the ‘repeat player effect’ is enough to
render an arbitration agreement unconscionable. However, given the low threshold of
substantive unconscionability in this case we find the lack of mutuality as to arbitrable
claims together with the disadvantages to the employee in using NAF as the arbitration
provider renders the Countrywide arbitration agreement substantively unconscionable.”
(Id. at pp.178-179.).
California law requires that both procedural and substantive unconscionability be
present in order for a court to refuse to enforce a contract or clause under the doctrine of
unconscionability. But the two types of unconscionability need not be present in the
same degree. Rather, there is sliding scale whereby the more substantively oppressive a
contract term is, the less evidence of procedural unconscionability is required to come to
the conclusion that the term is unenforceable and vice versa. (Armendariz v. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) Here, the evidence of
procedural unconscionability is scarce. The only evidence of it is that the law firm gave a
form agreement to its prospective client. And while there is some conceivable
substantive unconscionability by virtue of the clause as to the requirements for the
2
arbitrator, there is no evidence as to the effect of such a clause. For example, there is no
evidence of how many retired judges fulfill the requirements and whether in fact such
arbitrators are used by firms like Trope & Trope. Interestingly, Trope & Trope accepted
Evan’s proposed arbitrator even though the arbitrator did not strictly fit within the
requirements. The arbitrator had retired from the court more than 15 years before being
selected.
Under the circumstances and based on the record, the unconscionability of the
arbitration provision has not been established.
MOSK, J.
3