Alvarez v. Altamed Health Services Corporation

Filed 2/4/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
ERENDIRA CISNEROS B305155
ALVAREZ,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. 19STCV13921)
v.
ALTAMED HEALTH SERVICES
CORPORATION et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Michelle Williams Court, Judge. Reversed and
remanded with directions.
Lewis Brisbois Bisgaard & Smith, Raul L. Martinez, John
L. Barber and Rachel J. Lee for Defendants and Appellants.
Javanmardi Law|Holmquist Law, Peter A. Javanmardi
and Marc A. Holmquist for Plaintiff and Respondent.
_______________________
Respondent Erendira Cisneros Alvarez sued appellants
Altamed Health Services Corporation, Altamed Health Services
Network, Inc. and Joumana Rechdan (collectively Altamed) on
claims related to her employment with Altamed. Altamed
appeals from the trial court’s order denying its motion to compel
arbitration of the claims. Altamed contends the parties had a
valid arbitration agreement which was not revocable due to
procedural or substantive unconscionability or the failure of
Altamed’s CEO to sign it. We agree, although we do sever one
provision. We find the trial court erred in denying the motion to
compel arbitration, order Paragraph 5 authorizing review by a
second arbitrator severed, and remand the matter to enter an
order granting the motion.
BACKGROUND
On December 8, 2014, Altamed made an offer of
employment to respondent. Altamed sent respondent an offer
letter the same day. The offer letter reads in part: “It is our
sincere hope and belief that our relationship be long and
mutually rewarding. In those rare cases when a dispute arises
around your employment with Altamed, we believe it is in all of
our best interests to resolve it as quickly and fairly as we can. [¶]
Therefore, to avoid costly and time consuming litigation, we have
adopted an arbitration process that applies as a condition of
employment. Please review and then sign the enclosed
Arbitration Agreement and return with your signed offer.” The
letter stated that to accept the offer, respondent had to
acknowledge it by email or facsimile by December 9, 2014.
The parties agree respondent accepted the employment
offer. Respondent puts her acceptance on December 9, Altamed
on December 18, 2014. At some point, she signed the portion of
2
the offer letter entitled “Acknowledgement.” That section begins
by stating, “By signing and dating this letter below I, Erendira
Cisneros, accept the offer of employment described in the above
letter.” She dated it “01-05-14.[sic]”
Respondent declared that she did not remember receiving
or signing an arbitration agreement at the time she received the
offer letter. Elaine Diaz, an Altamed human resources manager,
stated in her declaration that a copy of the agreement was sent
with the letter. The record on appeal contains a copy of an
arbitration agreement on an Altamed letterhead which contains a
signature for Erendira Cisneros. It is dated “12-18-14.” The
signature on the agreement appears identical to respondent’s
signature on the acknowledgement of the letter offer.
Respondent herself attached a copy of the signed
acknowledgement of the offer letter as an exhibit to her
declaration and stated that it was a true and correct copy of the
letter. Respondent does not claim the signature was a forgery,
and the trial court did not make an express or implied finding
that respondent had not signed the arbitration agreement. We
treat the signature as genuine.
The arbitration agreement is two pages long, including the
signature block for respondent. It is entitled “EMPLOYMENT
AT-WILL AND ARBITRATION AGREEMENT CALIFORNIA.”
The title is the first line of text on the page, is larger than the
text in the body of the agreement and appears to have been
bolded. The font in the body of the agreement appears virtually
identical in size and form to the font used in the offer letter.
The first paragraph reaffirms the at-will nature of
respondent’s employment. The arbitration provisions begin in
the second paragraph. The paragraph begins by stating: “I
3
further agree and acknowledge that the Company and I will
utilize binding arbitration as the sole and exclusive means to
resolve all disputes. . . .”
The second sentence of the second paragraph states: “The
Company and I each specifically waive and relinquish our right to
bring a claim against the other in a court of law and this waiver
shall be equally binding on any person who represents or seeks to
represent me or the Company in a lawsuit against the other in a
court of law.” The seventh and final sentence in the second
paragraph states: “By this binding arbitration provision, both I
and the Company give up our right to trial by jury of any claim I
or the Company may have against each other.” The entire second
paragraph is on the first page of the agreement and is in the
same font as every other paragraph of the agreement.
Respondent began work in January 2015. Altamed
terminated her employment in April 2017. Respondent filed a
lawsuit against Altamed in April 2019, alleging various violations
of FEHA, wrongful discharge in violation of public policy,
defamation, and intentional infliction of emotional distress.
Altamed filed its answer in September 2019 and then a motion to
compel arbitration in October 2019. The trial court denied the
motion and this appeal followed.
DISCUSSION
In ruling on a motion to compel arbitration, a trial court
must make two determinations. First the trial court must
determine whether there is a valid agreement to arbitrate. If so,
the trial court must grant the order unless, as relevant here, a
ground for revocation of the agreement exists.
A party who files a motion to compel arbitration “bears the
burden of proving the existence of a valid arbitration agreement
4
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.] In these
summary proceedings, 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, to reach a final determination.” (Engalla v.
Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
Both the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and
the California Arbitration Act (Code Civ. Proc., § 1280 et seq.)
favor enforcement of valid arbitration agreements. (Moses H.
Cone Memorial Hospital v. Mercury Constr. Corp. (1983) 460 U.S.
1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765; Wagner Construction Co.
v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 25–26, [58
Cal.Rptr.3d 434, 157 P.3d 1029] [strong public policy in favor of
arbitration].)1
‘Through the comprehensive provisions of the California
Arbitration Act (Code Civ. Proc., § 1280 et seq.), ‘the Legislature
has expressed a “strong public policy in favor of arbitration as a
speedy and relatively inexpensive means of dispute resolution.” ’
[Citation.] As with the FAA (9 U.S.C. § 1 et seq.), California law
establishes ‛a presumption in favor of arbitrability.’ [Citation.]
1 The arbitration agreement in this matter states Altamed is
engaged in interstate commerce and so arbitration will be “under
the Federal Arbitration Act (‘FAA’) in conformity with procedures
of the California Arbitration Act.” “When it applies, the FAA
preempts any state law rule that ‘ “stand[s] as an obstacle to the
accomplishment of the FAA’s objectives.” ’ [Citations.] (Carbajal
v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 23.) The parties
have not identified any such obstacle in this case.
5
An agreement to submit disputes to arbitration ‘is valid,
enforceable and irrevocable, save upon such grounds as exist for
the revocation of any contract.’ (Code Civ. Proc., § 1281; see
9 U.S.C. § 2.)” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125
(OTO).) Put differently, an arbitration agreement will be
enforced unless grounds for its revocation exist. One such ground
is unconscionability, a “ ‛ “[g]enerally applicable contract defense
[which] may be applied to invalidate arbitration agreements
without contravening” the FAA’ or California law.” (Ibid.)
As respondent points out, Altamed did not request a
statement of decision. The trial court did provide an informal
written explanation for its ruling. In giving this explanation, the
trial court did not expressly rule on the validity of the arbitration
agreement, but did expressly consider whether the agreement
was unconscionable.
“A party's failure to request a statement of decision when
one is available has two consequences. First, the party waives
any objection to the trial court's failure to make all findings
necessary to support its decision. Second, the appellate court
applies the doctrine of implied findings and presumes the trial
court made all necessary findings supported by substantial
evidence.” (Acquire II, Ltd. v. Colton Real Estate Group (2013)
213 Cal.App.4th 959, 970.)
At the same time, “[i]nterpreting a written document to
determine whether it is an enforceable arbitration agreement is a
question of law subject to de novo review when the parties do not
offer conflicting extrinsic evidence regarding the document’s
meaning.” (Avery v. Integrated Healthcare Holdings, Inc. (2013)
218 Cal.App.4th 50, 60.) Similarly, if the facts are undisputed, a
trial court’s ruling on a motion to compel arbitration is reviewed
6
de novo. (Brown v. Wells Fargo Bank, N.A. (2008)
168 Cal.App.4th 938, 953; see Molecular Analytical Systems v.
Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 707.)
Here, although the parties do not agree on the date
respondent accepted Altamed’s offer letter, that date is relevant
only in relation to her signature on the arbitration agreement.
Altamed agrees respondent accepted the offer letter before she
signed the arbitration agreement. Thus, there are no factual
disputes.
I. The Arbitration Agreement Is Valid.
The trial court did not expressly rule on the issue of
whether the parties had reached an agreement to arbitrate, but
did state it agreed with one of the arguments made by respondent
in support of her contention that the agreement was revocable.
Respondent argued: (1) the agreement was a modification of
respondent’s employment agreement with Altamed and was not
valid because as a modification it had to be signed by Altamed’s
CEO (and it was not); (2) defendants Altamed Health Network
and Joumana Rechdan were not parties to the arbitration
agreement; and (3) she did not knowingly agree to waive her
right to a jury trial.2
2 Respondent made additional arguments in her trial brief
under the heading “No Arbitration Agreement Was Entered Into
Between The Parties” but these are fundamentally arguments
the agreement is procedurally unconscionable. She has repeated
these arguments on appeal, and we consider them in our
discussion of unconscionability.
7
The trial court rejected the first two arguments, stating
“Indication of an intent for the employer to be bound by the
agreement [is] sufficient in the absence of an employer signature.
The agreement states that both employer and employee will be
bound.”
The trial court agreed with respondent’s third argument
challenging the jury waiver, stating: “The court finds
[respondent] never knowingly waived her right to a jury trial.
Neither the offer letter nor the arbitration agreement contains
the word ‘jury’ much less stating that the parties were waiving
the constitutional right. The statements that the arbitration was
adopted to avoid costly and time-consuming litigation and that
the parties waive the right to bring a claim in a court of law are
not highlighted in any way, but in the body of the offer letter and
arbitration agreement in the same print as the rest of the terms.
There is nothing to put an employee on notice that this is a
waiver of the right to present a case to a jury.”
Altamed contends the court’s ruling is clearly erroneous on
this issue. We agree. The arbitration agreement does contain
the word “jury” and it uses the word as part of an express waiver
provision for respondent’s and Altamed’s right to trial by jury.
Because the trial court correctly rejected respondent’s other
claims that no agreement was made, the arbitration agreement is
valid.
A. Respondent Knowingly Waived Her Right to a Jury
Trial.
Respondent acknowledges the trial court was mistaken
about the absence of a jury waiver provision. However, she
contends the trial court was correct that she did not knowingly
agree to waive her right to a jury trial. She claims the trial court
8
read the agreement “several times and deemed the agreement to
be incredibly difficult to read. The trial court was not able to find
the language that waive[ ] her right to a jury trial because the
typeface was so small, it was single spaced, there were no
headings and the arbitration language was not highlighted in any
way.”
Respondent does not provide a record cite to support her
claim the trial court deemed the argument incredibly difficult to
read. There is no such statement in the court’s ruling.
We are surprised by the trial court’s inability to find the
word “jury” or the jury provision in the arbitration agreement.
The typeface of the agreement appears to be the same size as the
offer letter and the spacing is the same as well.3 Moreover, the
typeface is also the same height as the trial court’s ruling, at
least as that document appears in the appellate record. The
court’s ruling is also single-spaced. We have not found any of
these documents physically difficult to read.
The arbitration agreement is not lengthy. The entire
agreement is two pages long, but almost one page is taken up
with the letterhead, title, signature block, and the paragraph
reaffirming respondent’s at will status. The jury waiver sentence
is in the first paragraph discussing arbitration, which is the
second paragraph of the agreement as a whole. That second
paragraph is seven sentences long. It begins by stating
arbitration will be “the sole and exclusive means to resolve all
disputes that arise out of” respondent’s employment, and that
respondent and Altamed waive and relinquish their right to bring
3 Respondent has not complained that she was unable to
read her offer letter.
9
claims in a court of law. Several sentences describing which
claims are subject to arbitration follow. The jury waiver is the
last sentence in the paragraph. It is not sandwiched in between
other topics and is not difficult to find.
Respondent claims that “]t]ypically, valid and enforceable
arbitration agreements highlight this specific [jury] waiver by
enlarging the font size and making it bold face typeface.” She
cites no evidence to support this claim, and no legal authority
showing it is a practice or a requirement. “We may and do
“disregard conclusory arguments that are not supported by
pertinent legal authority.’ ” (Hernandez v. First Student, Inc.
(2019) 37 Cal.App.5th 270, 277.)
Respondent also contends her jury waiver was not knowing
and valid because when she “accepted” Altamed’s offer on
December 9, she did not have a copy of the arbitration agreement
and so the provisions of that agreement were not binding on her.
She compares her situation to that of the employee in Romo v.
Y-3 Holdings (2001) 87 Cal.App.4th 1153. In that case, the
employee was given a lengthy employee handbook. Section VIII
of the handbook contained a bare statement that the parties
agreed to arbitrate their claims. The last page of Section VIII
contained a line for a signature but the employee did not sign it.
He did sign the last page of the handbook where he acknowledged
receiving and reading the handbook. The Court of Appeal found
the employee had not agreed to the arbitration provision because
“the employee handbook contains two separate and severable
agreements: (1) the agreement to arbitrate which is the subject
of section VIII; and (2) an agreement to be bound by the ‛benefits,’
‛policies,’ ‛rules’ and ‛procedures’ contained within the remaining
sections of the employee handbook.” (Romo v. Y-3 Holdings, Inc.,
10
supra, 87 Cal.App.4th 1153, 1159.) The court further found that
section VIII was intended to be a stand-alone agreement and that
it “contemplates a signature from the employee separate from
that required” at the end of the handbook. (Ibid.) Thus, the
court’s finding that the employee did not agree to arbitrate was
premised on the employee’s decision not to sign the separate
arbitration agreement.
Here, there was one signature line in the offer letter and
respondent signed it. More importantly, respondent also signed
the separate arbitration document. She has nothing in common
with the employee in Romo who left the signature line on the
arbitration document blank.
Respondent also contends “any bargain to waive the right
to a judicial forum for civil rights claims . . . in exchange for
employment or continued employment must at least be express:
the choice must be presented to the employee and the employee
must explicitly agree to waive the specific right in question.
[(Nelson v. Cyprus Bagdad Copper Corp. (9th Cir. 1997) 119 F.3d
756, 762; Prudential Insurance Co. of America v. Lai (9th Cir.
1994) 42 F.3d 1299, 1305.)]”4 She contends her situation is
identical to the scenario before the court in Nelson.
4 Nelson and Lai are based on Congressional intent to
restrict an employee’s waiver of the rights provided by the
Americans with Disabilities Act and Title VII respectively. These
holdings have no application to respondent’s common law state
claims, or to her statutory claims which are not based on the
ADA or Title VII. California law does not require arbitration
agreements to contain an express waiver of the right to a jury.
11
In Nelson, after accepting employment, the employee was
presented with a handbook containing an arbitration provision.
He was not advised that “by not quitting his job he was somehow
entering into an agreement to waive a specific statutory remedy
afforded him by a civil rights statute.” (Nelson, supra, 119 F.3d
at p. 762.) Further, Nelson did not specifically agree to be bound
by the provisions of the handbook: he signed only an
acknowledgement that he had received the handbook and agreed
to read and understand it. (Id. at p. 761.)
Here, the offer letter expressly conditioned respondent’s
employment on agreeing to an arbitration process, as set forth in
the accompanying arbitration document. Respondent accepted
that conditional offer. The arbitration document described the
disputes subject to arbitration and explicitly advised respondent
that she was waiving her right to bring claims in a court of law
and her right to a jury. The document stated that by signing the
agreement, the employee agreed to its terms; respondent signed
the agreement. She had nothing in common with the employee in
Nelson.
Respondent next contends that her signature on the second
untitled page of the arbitration agreement “did not constitute a
‘knowing waiver’ of a statutory remedy provided by a civil rights
law.” By this, respondent appears to mean that there is no proof
she saw or read the first page of the arbitration agreement, which
contains the express waiver provisions. Respondent did not make
this claim in the trial court; that is, she did not contend that she
only received and read the signature page of the arbitration
agreement. She has forfeited this contention.
12
B. The Signature of Altamed’s CEO Was Not Required
on the Arbitration Agreement.
Respondent contends, in effect, that the trial court’s
implied ruling that there was no valid agreement should be
affirmed because the agreement was a modification of the offer
letter. In finding that no signature was required on the
arbitration agreement, the trial court rejected this claim.
Respondent’s argument that a signature was required was based
in part on her claim that the offer letter was an integrated
agreement which required all modifications to be signed by the
CEO and the arbitration document was itself a modification of
the letter offer.5 We reject this claim as well.
Preliminarily we note we do not agree with respondent that
the doctrine of implied findings applies here. If a trial court’s
decision depends on disputed facts or extrinsic evidence, the
doctrine of implied findings applies. If “the facts bearing on the
trial court’s decision derive solely from the language of plaintiff’s
complaint and from the terms of the [arbitration agreement],
[and] neither [are] in dispute,” the “doctrine of implied factual
findings does into come into play.” (Molecular Analytical Systems
v. Ciphergen Biosystems, Inc., supra, 186 Cal.App.4th at p. 708.)
In such instances we independently review the questions of law
raised by the decision.
Here there were no facts in dispute. The trial court based
its decision on the language of the arbitration agreement and the
offer letter. We independently review the issue.
5 Respondent had clearly claimed in her opposition to the
motion to compel that the CEO’s signature was required for the
arbitration agreement to be valid.
13
“ ‛The rules governing the role of the court in interpreting a
written instrument are well established. The interpretation of a
contract is a judicial function. [Citation.] In engaging in this
function, the trial court “give[s] effect to the mutual intention of
the parties as it existed” at the time the contract was executed.
[Citation.] Ordinarily, the objective intent of the contracting
parties is a legal question determined solely by reference to the
contract’s terms. [Citations.]’ [Citation.]” (Brown v. Goldstein
(2019) 34 Cal.App.5th 418, 432.) Where, as here, no extrinsic
evidence was introduced, we independently construe the contract.
(Founding Members of the Newport Beach Country Club v.
Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th
944, 955.) Here, the offer letter does contain language which can
reasonably be understood as an integration clause: “This letter
constitutes the full terms of our employment offer and supersedes
any prior or contemporaneous offers, understandings,
communications, offers, representations, warranties or
commitments, oral or written, by or on behalf of [appellants].”
This language is slightly broader than the statutory provision
concerning the effect of integration, which states: “Terms set
forth in a writing intended by the parties as a final expression of
their agreement with respect to the terms included therein may
not be contradicted by evidence of a prior agreement or of a
contemporaneous oral agreement.” (Code Civ. Proc., § 1856,
subd. (a).)
The offer letter states that “to avoid costly and time
consuming litigation, we have adopted an arbitration process that
applies as a condition of employment. Please review and then
sign the enclosed Arbitration Agreement and return with your
signed offer.” We construe this language as manifesting an
14
intent on the part of the parties to treat the arbitration
agreement as part of (or one of the terms of) the employment
offer, not a separate and contemporaneous agreement. A
contrary interpretation would result in absurdity. If the
arbitration agreement were a separate contemporaneous
agreement, the letter would be directing respondent to sign an
agreement which would be superseded by the very letter
directing her to sign that agreement.6
Although respondent did not offer any extrinsic evidence
concerning the meaning of terms in the letter offer, she did
declare that she did not remember receiving the arbitration
agreement at the time she received the offer letter. Whether or
not she received the arbitration agreement with the offer letter,
the record contains a signed copy of the arbitration agreement
dated more than a week after respondent accepted Altamed’s
employment offer. Assuming for the sake of argument that this
late signature on the arbitration agreement transformed it into a
separate agreement, section 1856 would not bar evidence of this
later agreement, and the letter’s integration clause would not
supersede it.
6 We do not understand Code of Civil Procedure section 1856
as independently barring evidence of the arbitration agreement.
It applies only to oral contemporaneous agreements which
contradict the terms of the integrated agreement. The offer letter
states that the arbitration process is a condition of employment.
Evidence that respondent entered into a contemporaneous
written arbitration agreement does not contradict that term.
15
Building on the (mistaken) premise the arbitration
agreement is a separate agreement entered into after acceptance
of the offer letter, respondent argues the arbitration agreement
was a modification to the offer letter and so was required to be
signed by Altamed’s CEO. She bases this claim on language in
the acknowledgement section of the letter, which states: “By
accepting this offer of employment, I acknowledge that this in no
way constitutes an employment contract between Altamed
Health Services Corporation and myself. Furthermore, I
acknowledge that my employment with Altamed Health Services
Corporation is, except where prohibited by law, at will and may
be terminated at any time, with or without prior notice and with
or without cause, at the option of either myself or Altamed
Health Services Corporation, and that no promises or
representations contrary to the foregoing are binding on Altamed
Health Services Corporation unless made in writing and signed
by the Chief Executive Officer.”
This language cannot be understood as requiring, as
respondent claims, an intent by the parties that “any agreement
that in any way modified the terms of the offer letter or her
employment with Altamed Health Services Corporation needed to
be signed by the CEO.” The phrase “no promises or
representations contrary to the foregoing” is in the same sentence
as and immediately follows respondent’s acknowledgement of her
at will employment status. In this context, the phrase can only
reasonably be understood as applying to respondent’s at will
employment status only. Thus, as we see it, only promises or
16
representations that respondent is not an at will employee
require a writing signed by the CEO.7
II. Any Unconscionability in the Arbitration Agreement
Does Not Provide Grounds for Revocation or Non-
Enforcement.
The trial court found “both procedural and substantive
unconscionability here. Plaintiff’s entire employment process
appears to have been conducted in English, and her job appears
to be at least primarily in English. While plaintiff has not
established that a copy of the agreement in Spanish was
required, there is some procedural unconscionability here.”
Altamed contends the trial court erred in finding
procedural unconscionability based on the lack of a Spanish
translation. Respondent defends the court’s ruling and also
contends there was procedural unconscionability apart from the
lack of a Spanish translation. She contends Altamed failed to
provide her with a copy of the arbitration rules and created a
lengthy and complex agreement. She also contends her contracts
were ones of adhesion.
The court also found substantive unconscionability based
on a provision of the arbitration agreement providing for review
of the arbitration order by a second arbitrator. Altamed contends
the trial court erred in finding a mutually enforceable provision
7 We recognize the arbitration agreement is actually entitled
“Employment At-Will and Arbitration Agreement California” and
begins with a paragraph discussing respondent’s at will status.
The paragraph reaffirms respondent’s at will status and so is not
contrary to the provisions of the offer letter identifying her as an
at will employee. It does not require a CEO signature.
17
substantively unconscionable and in failing to consider whether
the provision was severable.
A. General Law of Unconscionability
If a court finds as a matter of law that a contract or any
clause of a contract is unconscionable, the court may refuse to
enforce the contract or clause, or it may limit the application of
any unconscionable clause so as to avoid any unconscionable
result. (Civ. Code, § 1670.5, subd. (a).) “An agreement to
arbitrate, like any other contract, is subject to revocation if the
agreement is unconscionable. (Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98.)” (Carmona v.
Lincoln Millenium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 83.)
“The general principles of unconscionability are well
established. A contract is unconscionable if one of the parties
lacked a meaningful choice in deciding whether to agree and the
contract contains terms that are unreasonably favorable to the
other party. [Citation.] Under this standard, the
unconscionability doctrine ‘ “ has both a procedural and a
substantive element. ” ’ [Citation.] ‘The procedural element
addresses the circumstances of contract negotiation and
formation, focusing on oppression or surprise due to unequal
bargaining power. [Citations.] Substantive unconscionability
pertains to the fairness of an agreement's actual terms and to
assessments of whether they are overly harsh or one-sided.’
[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 ‘ “sliding scale.” ’
[Citation.] ‘[T]he more substantively oppressive the contract
term, the less evidence of procedural unconscionability is
18
required to’ conclude that the term is unenforceable. [Citation.]
Conversely, the more deceptive or coercive the bargaining tactics
employed, the less substantive unfairness is required.
[Citations.] A contract's substantive fairness ‘must be considered
in light of any procedural unconscionability’ in its making.
[Citation.] ‘The ultimate issue in every case is whether the terms
of the contract are sufficiently unfair, in view of all relevant
circumstances, that a court should withhold enforcement.’ ”
(OTO, supra, 8 Cal.5th 111, 125–126.)
“The burden of proving unconscionability rests upon the
party asserting it. [Citations.] ‛ “Where, as here, the evidence is
not in conflict, we review the trial court's denial of arbitration de
novo.’ ” (OTO, supra, 8 Cal.5th at p. 126.)
B. There Is Limited Procedural Unconscionability.
“The procedural element addresses the circumstances of
contract negotiation and formation, focusing on oppression or
surprise due to unequal bargaining power.” (OTO, supra,
8 Cal.5th at p. 125.)
Altamed contends the trial court erred in finding that the
lack of a Spanish translation resulted in procedural inequality.
We agree.
1. There Was No Surprise.
The trial court found respondent had not established that a
Spanish translation was required, but the court nevertheless
found procedural unconscionability in Altamed’s failure to
provide such a translation. Just as a matter of logic, a party
cannot surprise another party and obtain unreasonably favorable
terms in a contract simply by failing to provide the other party
with a translation of the contract which the other party does not
19
require. (See OTO, supra, 8 Cal.5th at pp. 125–126 [procedural
unconscionability addresses the circumstances of contract
negotiation and formation and asks if there was oppression or
surprise due to unequal bargaining power].)
Cases which find procedural unconscionability based on a
lack of English skills involve a very low level of such skills. In
the two cases cited by respondent on this issue, for example, the
employees spoke little or no English and were given only minutes
to read and sign the English language employment documents
containing the arbitration provisions. (Subcontracting Concepts
(CT), LLC v. De Melo (2019) 34 Cal.App.5th 201, 206 [employee
was “not fluent enough in English to fully understand documents
written in English” and was told “he had to sign employment
documents ‘on the spot’ too get a job”]; Carmona v. Lincoln
Millennium Car Wash, Inc., supra, 226 Cal.App.4th at pp. 80–81
[one employee “could not speak or read English when he started
working” for the defendant; the other employee “can read very
little Spanish and cannot read English at all”].)
Respondent’s own declaration describes a much higher
level of English fluency. “During the interview, I confirmed that
I was comfortable speaking and reading English, but for difficult
legal terms and concepts, Spanish was preferred.” Simply
preferring to read a document in Spanish does not demonstrate
that the reader was unable to understand the document in
English. As did the trial court, we find, on this record, no
translation was required. The absence of a translation, then,
does not contribute to the agreement’s procedural
unconscionability.
Respondent also contends Altamed’s failure to provide her
with a copy of the rules for arbitration created significant
20
surprise and procedural unconscionability. The law requires
more than the simple failure to provide the employee with a copy
of the rules.
As our Supreme Court has explained, in cases which find
procedural unconscionability based on the failure of the employer
to provide a copy of arbitration rules, “plaintiff's
unconscionability claim depended in some manner on the
arbitration rules in question. [Citations.] These cases thus stand
for the proposition that courts will more closely scrutinize the
substantive unconscionability of terms that were ‘artfully hidden’
by the simple expedient of incorporating them by reference rather
than including them in or attaching them to the arbitration
agreement. [Citation.] [Plaintiff’s] argument accordingly might
have force if her unconscionability challenge concerned some
element of the AAA rules of which she had been unaware when
she signed the arbitration agreement. But her challenge to the
enforcement of the agreement has nothing to do with the AAA
rules; her challenge concerns only matters that were clearly
delineated in the agreement she signed. [Defendant’s] failure to
attach the AAA rules therefore does not affect our consideration
of [plaintiff’s] claims of substantive unconscionability.” (Baltazar
v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.)
Respondent contends that the arbitration agreement did
not tell her how to initiate arbitration. As the reasoning of
Baltazar indicates, the failure to provide a copy of the arbitration
rules generally raises procedural unconscionability concerns only
if there is a substantively unconscionable provision in the omitted
rules. The agreement in this case states the procedures of the
California Arbitration Act will apply. There are no substantively
unconscionable rules in the Act.
21
2. By Virtue of the Employer-Employee Relationship
Between the Parties, There Is Limited Procedural
Unconscionability Due to Oppression.
Respondent contends the agreement was also procedurally
unconscionable because it was a contract of adhesion and she had
no meaningful opportunity to negotiate it. This claim involves
the oppression aspect of procedural unconscionability.
“Arbitration contracts imposed as a condition of
employment are typically adhesive [citations], and the agreement
here is no exception. The pertinent question, then, is whether
circumstances of the contract's formation created such oppression
or surprise that closer scrutiny of its overall fairness is required.”
(OTO, supra, 8 Cal.5th 111, 126.)
“ ‘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, supra,
8 Cal.5th at pp. 126-127.)
When arbitration is a condition of employment, there is
inherently economic pressure on the employee to accept
arbitration. This alone is a fairly low level of procedural
unconscionability. (Serafin v. Balco Properties Ltd, LLC (2015)
235 Cal.App. 4th 165, 174–175 [procedural unconscionability
limited where arbitration provisions were in a stand-alone two
page document titled “MANDATORY ARBITRATION POLICY]”;
see Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at p. 1245
22
[procedural unconscionability limited where employee knew
about arbitration provision in her employment agreement and
was not manipulated into signing it].) Respondent does not
identify any circumstances which created additional pressure.
In OTO, for example, the employer presented the employee
with the arbitration agreement during the workday; the
employee lost pay for the time he spent reviewing the agreement.
The employee received the agreement in a workspace, and the
employer representative waited for the agreement. This
circumstance both created an expectation that the employee
would sign immediately and made it extremely difficult for the
employee to consult an attorney. The employee was not given a
copy of the agreement. (OTO, supra, 8 Cal.5th 127–128.)
Here respondent was not yet employed by Altamed, and she
declared that the letter and other documents were sent to her;
the letter is addressed to respondent at what appears to be her
residential address. The letter specified that respondent had a
day to review the letter offer and accompanying arbitration
agreement. In fact, respondent may have had longer than that,
as her signature on the arbitration agreement is dated more than
a week after the date of the letter. The agreement is not long,
prolix, or complex. Since respondent had a physical copy of the
agreement in her control for at least 24 hours, she had the ability
to make a copy of that agreement if she wished. Although
respondent offered evidence that English was not her first
language, she did not offer any other evidence of her education or
experience and did not state whether or not she consulted an
attorney about the employment offer and its arbitration
requirement. Thus, respondent has not shown any oppression
23
apart from that inherent in the adhesive nature of the
agreement.
Respondent also addresses the physical aspects of the
agreement as being oppressive. The OTO Court’s discussion
shows length and complexity can contribute to oppression when
an employee is given only a very limited time to review the
document. However, when time is not a significant factor,
difficulty reading and/or comprehending an agreement due to its
structure or use of legal terms is more properly analyzed as
giving rise to surprise, not oppression. Because respondent had
at least a day to review the agreement, we consider her claims
concerning the physical aspects of the agreement and its
structure and terminology in terms of surprise.
The Court in OTO found surprise where “[t]he agreement is
a paragon of prolixity, only slightly more than a page long but
written in an extremely small font. The single dense paragraph
covering arbitration requires 51 lines. As the Court of Appeal
noted, the text is ‘visually impenetrable’ and ‘challenge[s] the
limits of legibility.’ ” (OTO, supra, 8 Cal.5th at p. 128.) As we
have explained, the agreement in this case was not long or
physically difficult to read. It consisted of six paragraphs, the
longest of which is 23 lines.
The Court in OTO also found surprise because the
agreement contained complex sentences, statutory references and
legal jargon. One sentence was 12 lines long. There are no such
lengthy sentences in the agreement in this case. The agreement
in this case does contain statutory references, those references
are necessary to define the claims covered by arbitration; the
references are explained in lay terms. For example, the
agreement refers to “all disputes . . . including . . . any claims of
24
discrimination, harassment and/or retaliation whether they be
based on the California Fair Employment and Housing Act, Title
VII of the Civil Rights Act or other law. Similarly, the agreement
uses a minimal amount of other legal terms and most are terms
which are commonly understood, such as “trial by jury” and
“immunity . . . from civil liability.” The agreement uses clear
language to describe the binding nature of the arbitration
agreement, and the waiver of the right to bring claims in a court
of law and to have a trial by jury.
C. The Provision Giving Rise to Substantive
Unconscionability Is Severable.
The only element of substantive unconscionability claimed
by respondent is the review by a second arbitrator (hereafter
appellate arbitral review). Altamed contends the trial erred in
finding the review was unconscionable and then failing to
consider whether it was severable. We agree in part.
The court explained its finding of substantive
unconscionability as follows: “An arbitration provision providing
for unilaterally beneficial review by a second arbitrator fails to
meet the requirement of allowing for a judicial review and
constitutes an unconscionable provision. (See Little v. Auto
Stiegler, Inc. (2003) 29 Cal.4th 1064, 1073 (Little).) Although this
provision permits either party to obtain review from a second
arbitrator, it fails to address how this second review affects the
time to appeal through the courts or to move to vacate the award
in the court, or whether it was intended to replace a court
review.”
We understand the trial court’s reference to Little, supra,
29 Cal.4th 1064 to be a statement that that even agreements
which apply equally on their face to both parties may in practice
25
benefit only one of the parties. As the Little Court stated
concerning a facially bilateral clause permitting both parties to
request trial de novo, “ ‛the benefit which the trial de novo clause
confers on patients is nothing more than a chimera.’ ” (Id. at
p. 1072, quoting Saika v. Gold (1996) 49 Cal.App.4th 1074, 1080
(Saika).) “[T]he cases where the trial de novo clause could
possibly benefit the patient are going to be rare indeed.” (Id. at
p. 1073.)
Here, respondent argued the appellate arbitral review
provision benefits the employer in employee-employer
arbitrations because the employer could unilaterally add costs
and time to the arbitration proceeding by seeking this review and
thereby maximize the employer’s status as the better resourced
party. The trial court could reasonably have adopted this
position.
Respondent contends the appellate arbitral review
provision in this case is identical to the provision considered by
the Court of Appeal in Cummings v. Future Nissan (2005)
128 Cal.App.4th 321 and held valid and enforceable. The court in
Cummings, however, held that the plaintiff had forfeited his
claim that the review provision was unconscionable on its face by
failing to raise it in opposition to the motion to compel
arbitration. (Id. at p. 329.) In dicta in a footnote, the Cummings
Court did suggest that a review provision with no dollar
threshold would be enforceable, and that Court in Little had
simply severed an offending dollar threshold and then permitted
enforcement of the review provision. (Cummings, supra,
128 Cal.App.4th at p. 329, fn. 9.) We read Little as requiring
severance of the entire review provision when it contains a dollar
threshold.
26
When the Court in Little turned to severability, it
considered the review provision as a whole and concluded: “There
is only a single provision that is unconscionable, the one-sided
arbitration appeal. And no contract reformation is required—the
offending provision can be severed and the rest of the arbitration
agreement left intact. Thus, the courts in Beynon [v. Garden
Grove Medical Group (1980) 100 Cal.App.3d 698 (Beynon)] and
Saika[, supra, 49 Cal.App.4th 1074], considering similar
provisions, severed them and enforced the rest of the arbitration
agreement. [Citations.]” (Little, supra, 29 Cal.4th at p. 1075.)
If the Court in Little had, as Altamed suggests, severed
only the dollar amount from the appellate arbitral review
provision, the Court would have done what it said was not
required: it would have reformed the contract. The drafting
party, the Little defendant, did not seek appellate arbitral review
of all awards, only those over a certain dollar amount.8 Thus,
“severing” the dollar amount alone would have created a new
provision in the arbitration agreement that neither party had
sought or agreed to: appellate arbitral review of all awards. We
understand the Court in Little as doing what it said and as the
8 The Court acknowledged that, from a defense standpoint,
“an award in which there is less than that amount [of $50,000] in
controversy would not be worth going through the extra step of
appellate arbitral review.” (Little, supra, 29 Cal.4th at p. 1073.)
The Court’s phrasing in discussing the procedural history of the
case is also helpful here: “The Court of Appeal did not consider
whether the arbitration ‘appeal’ triggered by an award of greater
than $50,000 was unconscionable.” (Id. at p. 1071, italics added.)
27
Courts of Appeal in Beynon and Saika did: severing the entire
provision, not reforming the provision to make it bilateral.9
While the Court in Little focused on the unfair advantage
provided to the defendant employer by the $50,000 threshold for
appellate arbitral review, it was also concerned with the extra
expense and delay associated with procedures which potentially
stood between a plaintiff employee and the confirmation of his or
her award. We share those concerns and cannot agree with the
Cummings court’s suggestion that an appellate arbitral review
provision is always enforceable as long as it does not contain a
dollar threshold.
The Little Court quoted the Beynon court’s finding that a
second arbitration “can render arbitration an expensive and
protracted proceeding.” (Little, supra, 29 Cal.4th at p. 1072.)
Although not quoted by Little, the Beynon court continued: “a
[patient] who has already incurred substantial expenses in the
first arbitration proceeding, as has plaintiff, and who faces the
prospect of having to pay one-half the cost of a second and
9 In Beynon, the court did not strike the portion of the
arbitration agreement which limited the right to a second
arbitration to the medical providers, thereby making the right to
a second arbitration equally available to the patient and the
medical provider, and then allow the case to proceed to a second
arbitration. In Saika, the court did not sever the $25,000 dollar
amount which gave rise to the right to request a trial de novo,
thereby making the option of a trial de novo bilateral in practice,
and then allowing a trial de novo. In both cases, the Courts of
Appeal severed the entire provision and remanded the matter for
the trial court to enter an order confirming the arbitration award.
(Beynon, supra, 100 Cal.App.3d at pp. 713−714; Saika, supra,
49 Cal.App.4th at p. 1082.)
28
perhaps more costly proceeding before a panel of doctors might
well be discouraged from further pursuit of the claim in the only
forum available for the resolution of the dispute.” (Beynon,
supra, 100 Cal.App.3d at p. 706.)
The Little court also included the following quote from
Saika: “ ‛Unless we are to assume that arbitrators in medical
malpractice cases regularly and capriciously make awards
substantially below what justice requires―and that is an
assumption which we will not indulge―the cases where the trial
de novo clause could possibly benefit the patient are going to be
rare indeed.’ ” (Little, supra, 29 Cal.4th at pp. 1072-1073.)
Although not quoted by the Little court, the court in Saika
expressed concern with the additional expense and delay of a
trial de novo for a plaintiff who had prevailed in the arbitration.
(Saika, supra, 49 Cal.App.4th at p. 1079.)
Finally, the Little court itself stated: “[Defendant
employer] also argues that an arbitration appeal is less
objectionable than a second arbitration, as in Beynon, or a trial
de novo, as in Saika, because it is not permitting a wholly new
proceeding, making the first arbitration illusory, but only
permitting limited appellate review of the arbitral award. We
fail to perceive a significant difference. Each of these provisions
is geared toward giving the arbitral defendant a substantial
opportunity to overturn a sizable arbitration award. Indeed, in
some respects appellate review is more favorable to the employer
attempting to protect its interests. It is unlikely that an
arbitrator who merely acts in an appellate capacity will increase
an award against the employer, whereas a trial or arbitration de
novo at least runs the risk that the employer would become liable
for an even larger sum than that awarded in the initial
29
arbitration. (Little, supra, 29 Cal.4th at pp. 1073−1074, italics
added.)
The appellate arbitral review provision in this case brings
together all the concerns alluded to and addressed in Little. If an
employee such as respondent receives an award that she believes
is too low, “[i]t is unlikely that an arbitrator who merely acts in
an appellate capacity will increase an award against the
employer.” (Little, supra, 29 Cal.4th at p. 1074.) If the employee
receives a substantial award, the employer can seek appellate
arbitral review and thereby increase the expense and possibly the
length of time required for the employee to obtain confirmation of
her award, and do so with very little risk to itself.
Our use of the word “possibly” here highlights an additional
problem with the appellate arbitral review provision, which the
trial court recognized: the provision provides no indication of
how it is intended to be implemented or if it is an attempt to
replace a court review. If there are standard rules for appellate
arbitral review, Altamed has not identified them. Litigating
these issues in the trial court as part of an attempt to confirm an
award would certainly contribute to increased expense and delay
in the confirmation. Thus, the ambiguities created by the
drafter, Altamed, have the potential to give it an even greater
advantage than the mere provision for appellate arbitral review
does.
Based on the record on appeal, this second review provision
appears entirely severable from the remainder of the agreement
and removing it would remove the only instance of substantive
unconscionability. The arbitration agreement contains a
severability provision. Accordingly, we order the provision
severed.
30
DISPOSITION
The trial court’s order denying the motion to compel
arbitration is reversed. The second review provision of the
arbitration agreement is ordered stricken. The parties are
ordered to arbitrate their dispute. No costs are awarded.
STRATTON, J.
We concur:
BIGELOW, P. J.
GRIMES, J.
31