Loza, Marisela vs. BH-TC Opco, LLC

The motion must set forth the provisions of the written agreement and the arbitration clause verbatim, or such provisions must be attached and incorporated by reference. (Cal. Rules of Court, rule 3.1330; see Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218.)

Absent a challenge by the nonmoving party, this burden is met by simply providing a copy of the arbitration agreement. (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal. App. 5th 1152, 1160; Cal. Rules of Court, rule 3.1330.)

"For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication." (Condee, supra, 88 Cal.App.4th at 218; Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 793.)

However, when the opposing party disputes the agreement, then the opposing party must provide evidence to challenge its authenticity. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.)

Under California law, "[t]he burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence ...." (Gamboa, supra, 72 Cal.App.5th at 164-165.)

"However, the burden of production may shift in a three-step process." (Gamboa, supra, 72 Cal.App.5th at. 165.)

"First, the moving party bears the burden of producing 'prima facie evidence of a written agreement to arbitrate the controversy.' [Citation.]" (Gamboa, supra, 72 Cal.App.5th at p. 165.)

"The moving party 'can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party's] signature.' [Citation.]" (Id.)

"For this step, 'it is not necessary to follow the normal procedures of document authentication.' [Citation.]" (Id.)

Here, Defendant has provided the Agreement it submits was executed electronically by Plaintiff in satisfaction of this initial burden.

When the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement." (Gamboa, supra, 72 Cal.App.5th at 165.)

"The opposing party can do this in several ways. For example, the opposing party may testify under oath or declare under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement." (Id.)

Here, as noted above, Plaintiff does not appear to challenge the electronic execution of the Agreement.

Facts - Scope of Agreement Here, the Agreement states that Plaintiff and Defendant agree to arbitrate "...all disputes that might arise out of or be related in any way to my application for employment and/or employment by the Company. Such disputes include, but are not limited to, claims I might bring against the Company for wrongful termination, discrimination, harassment, retaliation, breach of contract, wage and hour violations, any individual claims under the California Private Attorneys General Act ("PAGA"), and torts such as invasion of privacy, assault and battery, or defamation." (Agreement P.1.)

Authority and Analysis - Scope of Agreement Here, the Agreement expressly applies to all disputes arising out of Plaintiff employment and therefore applies to the claims asserted in this matter.

Facts - FAA Application The Agreement states "Any arbitration proceeding under this agreement shall proceed under and be governed by the Federal Arbitration Act ("FAA") because both I and the Company are engaged in interstate commerce." (Agreement P.7.)

In opposition, Plaintiff argues that Defendant's declarations in support of affecting interstate commerce are insufficient, but does not address the language in the Agreement quoted above.

Authority and Analysis - FAA Application The party asserting the FAA applies to an agreement has "the burden to demonstrate FAA coverage by declarations and other evidence." (Hoover v. American Income Life Ins.Co. (2012) 206Cal.App.4th 1193, 1207; see Shepard v. Edward Mackay Enterprises, Inc. (2007) 148Cal.App.4th 1092, 1101)

In general, the FAA "governs arbitration provisions in contracts that involve interstate commerce." (Mastick v. TD Ameritrade, Inc. (2012) 209 Cal.App.4th 1258, 1263, 147 Cal. Rptr. 3d 717.)

Title 9 of the United States Code section 2, ("the primary substantive provision of the FAA" as noted by Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 384) provides in part: "A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract . . . ." (9 U.S.C. Sec. 2,; see Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, 277 ["involving commerce" broadly construed].)

"The FAA applies to contracts that involve interstate commerce (9 U.S.C. Sec.Sec. 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement." (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.)

Therefore, the Court finds the FAA applies based on the plain language of the Agreement that states "...both I and the Company are engaged in interstate commerce."

Facts - Class Action Waiver Further, the Agreement states: "I and the Company each specifically waive our respective rights to bring such claims against the other in a court of law and to have a trial by jury. By signing below, I expressly waive the right to bring a class, collective, representative or PAGA claim (unless such waiver is prohibited by controlling law) seeking any relief on behalf of others." (Agreement P.1.)

Additionally, that: "Both I and the Company agree that any claims we might pursue against the other in arbitration under this agreement shall be brought in my individual capacity or that of the Company. This agreement shall not be construed to allow or permit the consolidation or joinder of claims of other claimants, or to permit such claims to proceed as a class or collective action. No arbitrator shall have the authority under this agreement to order any such class or collective action. Any dispute regarding the validity, scope, or enforceability of this agreement, or concerning the arbitrability of a particular claim, shall be resolved by a court, not by the arbitrator. I agree to waive any substantive or procedural rights that I may have to bring or participate in an action brought on a class or collective basis." (Agreement P.4.)

Authority and Analysis - Class Action Waiver As the FAA applies, the class action waiver is enforceable. (Viking River Cruises v. Moriana (2022) 596 U.S. 639, 651 ["'a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so'"]; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352 [holding class action waivers are enforceable under FAA and California rule to contrary preempted].)

Therefore, absent any defenses to arbitration as analyzed below, the Court is prepared to grant the motion to strike the class claims and compel Plaintiff's now individual claims to arbitration.

Facts - Defenses to Enforcement - Unconscionability Plaintiff, as to procedural unconscionability, states she was presented with, and signed, the Agreement along with numerous other documents that she had to quickly review and sign. (Declaration of Plaintiff P.3.)

Further, that Plaintiff was required to sign or acknowledge receipt of all onboarding documents prior to starting work and were prerequisites to starting employment with Defendant. (Declaration of Plaintiff P.3.)

Plaintiff indicates further that she was never told what the documents were, what the Agreement was or how it affected her rights, and that the office manager "pressured me to quickly sign the Arbitration Agreement in order to begin work." (Declaration of Plaintiff P.3.)

Further, that the Agreement, and other onboarding documents, were exclusively prepared by Defendant, that Plaintiff was not given an opportunity to ask questions or negotiate any terms of the Agreement and that the Agreement was presented on a take-it-or-leave-it basis. (Declaration of Plaintiff P.4.)

Further, that Plaintiff lacks legal training, was not familiar with the limitations of the Agreement, that the Agreement failed to specify which version of the rules were applicable and that Defendant did not provide a copy of the applicable rules. (Declaration of Plaintiff P.5.)

Finally, that Plaintiff did not have counsel present when the Agreement was executed and was not afforded an opportunity to consult with an attorney independently. (Declaration of Plaintiff P.6.)

As to substantive unconscionability, Plaintiff argues lack of mutuality, an overbroad class action waiver, an illegal representative PAGA waiver, an illegal waiver of PAGA standing, a "free peek" at Plaintiff's claims, deprives Plaintiff of tolling of the statute of limitations, permits delay of payment of arbitration fees and that the Agreement does not permit judicial review.

Authority and Analysis - Defenses to Enforcement - Unconscionability The inquiry into unconscionability consists of two prongs: A contract will be revoked if it is both procedurally unconscionable and substantively unconscionable. (Armendariz v. Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 82, 102.)

Procedural and substantive unconscionability need not be present to the same degree. "[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." (Id. at 114.)

Procedural Unconscionability "'Procedural unconscionability' concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. It focuses on the factors of oppression and surprise. The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party. The component of surprise arises when the challenged terms are 'hidden in a prolix printed form drafted by the party seeking to enforce them.'" (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281.)

The Court also considers whether circumstances of the contract's formation created such oppression or surprise that closer scrutiny of its overall fairness is required. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126-127.)

"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." (Id.)

As OTO recognizes, the pressure exerted on a standard employee to accept an adhesive arbitration agreement as a condition of employment is "particularly acute," which indicates oppression. (Id. at 127.)

"An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power on a take-it-or-leave-it basis. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245.)

Arbitration contracts imposed as a condition of employment are typically adhesive. (Armendariz, supra, 24 Cal.4th at 114-115; Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)

But the fact that an agreement is adhesive is not, alone, sufficient to render it unconscionable. (Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1561.)

"[A] compulsory pre-dispute arbitration agreement is not rendered unenforceable just because it is required as a condition of employment or offered on a 'take it or leave it' basis." (Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1127.)

Here, the Court agrees that the Agreement at issue has some degree of procedural unconscionability as a preprinted form provided to an employee, that the Agreement appears to be a condition of employment and that the Agreement was not the product of negotiation.

Substantive Unconscionability "Substantive unconscionability occurs when a contract, particularly, contracts of adhesion, impose terms "that have been variously described as overly harsh, unduly oppressive, so one-sided as to shock the conscience, or unfairly one-sided. All of these formulations point to the central idea that the unconscionability doctrine is concerned not with a simple old-fashioned bad bargain, but with terms that are unreasonably favorable to the more powerful party. Unconscionable terms impair the integrity of the bargaining process or otherwise contravene the public interest or public policy or attempt to impermissibly alter fundamental legal duties." (OTO, L.L.C. v. Kho, supra, 8 Cal. 5th at 129-30, internal quotations and citations omitted.)

Armendariz sets forth elements of essential substantive fairness as follows: (1) provide for a neutral arbitrator: (2) provide for adequate discovery; (3) require the arbitrator to issue a written decision that permits limited judicial review; (4) provide for the same remedies that would otherwise be available to the employee in court; (5) not require the employee to bear costs unique to arbitration; and (6) provide a "modicum of bilaterality" between the employer and employee. (Armendariz, supra. 24 Cal 4th at 102-113, 117-118.)

Non-Mutual Benefit Here, Plaintiff argues that the Agreement provides Plaintiff waive her jury trial right as to Defendant as well as Defendant's: "[P]arent, subsidiaries, affiliates, customers, or client entities as well as against owners, directors, officers, managers, employees, agents, contractors, attorneys, benefit plan administrators, and insurers of the Company or of its parent, subsidiaries, affiliates, customers, or client entities. I also agree to arbitrate claims pursuant to the terms of this Agreement against any person or entity I allege to be a joint employer with the Company as well as claims brought against staffing companies, employee leasing companies, professional employer organization or payroll processing vendors that the Company has utilized."

Plaintiff argues that there is no mutual requirement that these third parties waive jury trial and arbitrate claims against Plaintiff, citing to Cook v. University of Southern California (2024) 102 Cal.App.5th 312 where "The agreement requires Cook to arbitrate any and all claims she may have against USC 'or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise.' However, the agreement does not require USC's 'related entities' to arbitrate their claims against Cook." (Id. at 326.)

The Cook court concluded "This confers a benefit on USC and its broadly defined 'related entities' that is not mutually afforded to Cook." (Id. at 327.)

The Court notes Ayala-Ventura v. Superior Court (Feb. 19, 2026, No. F089695) ___Cal.App.5th___ [2026 Cal. App. LEXIS 163] distinguished Cook, stating: "The employee in Cook was obliged to arbitrate her claims against USC, its related entities, as well as its "officers, trustees, administrators, employees or agents," but only USC was bound to arbitrate its claims against the plaintiff. The agreement lacked mutuality because USC's "'related entities'" were not bound to it. (Cook, supra, 102 Cal.App.5th at p. 319.)

Here, the Agreement's definition of "Company" expressly includes CCS's related entities and binds those entities to arbitration. Cook was also bound to arbitrate any claims against USC's officers, trustees, administrators, employees or agents "'in their capacity as such or otherwise.'" (Id. at p. 317, italics added.) This language was understood as requiring Cook to arbitrate any claims against these individuals even where they were not acting in their identified capacity. In contrast, the Agreement expressly limits arbitration to claims against CCS's employees or agents in their capacity as such.

Any claims Ayala-Ventura may have against employees or agents unrelated to their role are therefore not subject to the Agreement." (Id. at *33-34.)

Here, the Agreement states that Plaintiff agrees to "...resolve all disputes that might arise out of or be related in any way to my application for employment and/or employment by the Company" and that "My agreement to arbitrate claims against the Company includes claims I might bring against the Company's..." various related entities.

As such, the Court does not find the Agreement lacks mutuality as in Cook, where the claims included those against related entities in any capacity. Here, the Court finds any such claims that would be arbitrated against the related entities are limited to those related to the application for employment. Therefore, the Court does not find a lack of mutuality.

Class Waiver - Public Injunctive Relief Here, Plaintiff argues the class waiver too broadly waives claims for injunctive relief in any forum by requiring Plaintiff to "expressly waive the right to bring a class, collective, representative or PAGA claim (unless such waiver is prohibited by controlling law) seeking any relief on behalf of others..." (Agreement - P.1) and "[b]oth I and the Company agree that any claims we might pursue against the other in arbitration under this agreement shall be brought in my individual capacity or that of the Company. This agreement shall not be construed to allow or permit the consolidation or joinder of claims of other claimants, or to permit such claims to proceed as a class or collective action." (Agreement - P.4.)

As such, Plaintiff notes no carve out for injunctive relief or public injunctive relief, citing to McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 961, where the California Supreme Court held that an arbitration provision that waives the right to request in any forum public injunctive relief is unenforceable.

In McGill, however, the Supreme Court noted that a person requesting public injunctive relief does so "on his or her own behalf, not 'on behalf of the general public" because "a request for [public injunctive relief] does not constitute the 'pursu[it]' of 'representative claims or relief on behalf of others' within the meaning of Business and Professions Code sections 17203 or 17535, such that 'compli[ance] with Section 382 of the Code of Civil Procedure' is required." (Id. at 959-960.)

As such, the language of Paragraph 1 of the Agreement does not waive an action for public injunctive relief, as this term only applies to "class, collective, representative or PAGA" claims.

Further, the agreement in McGill purported to waive the plaintiff's right to seek public injunctive relief "in any forum" (Id. at 953-954.)

Here, while there is arguably a waiver as to bringing such claims in a court of law or via a jury trial under the Agreement, the Court finds no bar on awarding public injunctive relief, on an individual claim, within arbitration, as the Plaintiff is bound to pursue individual claims within arbitration. (Agreement P.4) Therefore, the Court does not an impermissible waiver of public injunctive relief.

PAGA Representative Waiver Plaintiff argues that the following term constitutes an impermissible "representative" PAGA waiver: "Both I and the Company agree that any claims under PAGA must be pursued in my individual capacity in arbitration. This agreement shall not be construed to allow or permit the consolidation or joinder of PAGA claims of other claimants. No arbitrator shall have the authority under this agreement to order any such collective action or joinder of claims. Any dispute regarding the validity, scope or enforceability of this provision, or concerning the arbitrability of a PAGA claim, shall be resolved by a court, not by the arbitrator.

To the full extent permissible under the law, I agree to waive any substantive or procedural rights that I may have to bring or participate in a PAGA action brought on a collective or non-individual basis. I acknowledge that nothing herein precludes me from pursuing my individual PAGA claim in arbitration." (Agreement P.5.)

In Viking River, the United States Supreme Court held that, under an agreement permitting such, a PAGA cause of action may be divided into individual and representative claims and that the individual claims may be ordered to arbitration: "PAGA authorizes any 'aggrieved employee' to initiate an action against a former employer 'on behalf of himself or herself and other current and former employees' to obtain civil penalties that previously could have been recovered only by the State in an [Labor Workforce and Development Agency] enforcement action." (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 645.)

The "individual PAGA claim" is the claim for the violations suffered by the aggrieved employee and the "representative PAGA claim" is the PAGA claim arising out of events involving other employees. (Id. at 648.)

The Viking River decision "left undisturbed" and "intact" both of the rules from Iskanian, supra, 59 Cal.4th 348 that (1) prohibited categorical waivers of the right to bring a PAGA action in any forum and (2) prohibited waivers of PAGA claims on behalf of other employees, i.e., non-individual or representative claims. (Adolph, supra, 14 Cal.5th at 1117-1118.)

However, the United States Supreme Court held that the third rule, which prohibited the "'division of PAGA actions into individual and non-individual claims through an agreement to arbitrate'" was preempted by the FAA. (Id. at 1118.)

Specifically, the Viking River Court stated: "The agreement between Viking and Moriana purported to waive 'representative PAGA claims. Under Iskanian, this provision was invalid if construed as a wholesale waiver of PAGA claims. And under our holding, that aspect of Iskanian is not preempted by the FAA, so the agreement remains invalid insofar as it is interpreted in that manner. But the severability clause in the agreement provides that if the waiver provision is invalid in some respect, any portion that remains valid must still be 'enforced in arbitration.' Based on this clause, Viking was entitled to enforce the agreement insofar as it mandated arbitration of Moriana's individual PAGA claim." (Id. at 1924-1925.)

As summarized by Adolph: "The high court explained that an anti-splitting rule 'unduly circumscribes the freedom of parties to determine "the issues subject to arbitration" and "the rules by which they will arbitrate," [citation], and does so in a way that violates the fundamental principle that "arbitration is a matter of consent."' (Viking River, at p. 659.) Requiring parties to adjudicate a PAGA action entirely in one proceeding, the high court said, 'compels parties to either go along with an arbitration in which the range of issues under consideration is determined by coercion rather than consent, or else forgo arbitration altogether.

Either way, the parties are coerced into giving up a right they enjoy under the FAA.' (Viking River, at p. 661.) Thus, Viking River requires enforcement of agreements to arbitrate a PAGA plaintiff's individual claims if the agreement is covered by the FAA." (Adolph, supra, 14 Cal.5th at 1118-1119.)

"There is no individual component to a PAGA action because '"every PAGA action . . . is a representative action on behalf of the state."' [Citation.]" (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 87.)

The term "individual" refers to those claims brought by a plaintiff as a representative of the State and which seek to recover civil penalties under PAGA for Labor Code violations experienced by the plaintiff. (See Galarsa v. Dolgen California, LLC (2023) 88 Cal.App.5th 639, 648 [referring to these claims as "Type A" claims].)

The term "non-individual" refers to those claims brought by a plaintiff as a representative of the State and which seek to recover civil penalties under PAGA for Labor Code violations experienced by employees other than the plaintiff. (Galarsa, at 649 [referring to these claims as "Type O" claims].)

As summarized by the California Supreme Court in Adolph, an agreement that is covered by the FAA may require arbitration of "alleged Labor Code violations personally sustained by a PAGA plaintiff -- so-called 'individual' claims." (Adolph, supra, 14 Cal.5th at 1114, 1119.)

"'[W]hen an appropriate arbitration agreement exists'" and "a plaintiff has filed a PAGA action comprised of individual and non-individual claims," the trial court must "'bifurcate and order [the] individual PAGA claim[] to arbitration.'" (Id. at 1126, 1123.)

In this circumstance, the "order compelling arbitration of [the] individual claim[] does not strip the plaintiff of standing to litigate non-individual claims [i.e., claims on behalf of other employees] in court." (Id. at 1123) Instead, "'the individual PAGA claim[] in arbitration remain[s] part of the same lawsuit as the representative claims remaining in court.'" (Id. at 1126.)

The plaintiff would thus be "'pursuing a single PAGA action "on behalf of [himself or herself] and other current or former employees," albeit across two fora.' [Citation.]" (Id.)

Here, the Agreement first states a waiver of "collective, representative or PAGA claim (unless such waiver is prohibited by controlling law) seeking any relief on behalf of others." This initial statement appears to be a wholesale waiver of PAGA claims in violation of Iskanian above.

However, the Agreement then states "Both I and the Company agree that any claims under PAGA must be pursued in my individual capacity in arbitration" which, to the Court, evidences an intent to split the claim under Viking River.

On the other hand, the Agreement then states: "To the full extent permissible under the law, I agree to waive any substantive or procedural rights that I may have to bring or participate in a PAGA action brought on a collective or non-individual basis. I acknowledge that nothing herein precludes me from pursuing my individual PAGA claim in arbitration. I further acknowledge that upon my execution of this Agreement, I lack standing to pursue, litigate, or act as a representative for any non-individual PAGA claims in a court of law. If any term, provision, or portion of this paragraph is deemed invalid or unenforceable, it shall be severed and the remainder shall remain enforceable in arbitration." (Agreement P.5.)

This portion of the Agreement does violate the rule above precluding waiver of representative, Type O PAGA claims in Court. While not a wholesale waiver of all PAGA claims, it expressly seeks to waive Type O PAGA claims.

The Court notes here that Hasty v. American Automobile Association (2023) 98 Cal.App.5th 1041 provides that savings clauses limiting otherwise unconscionable terms to "the extent permitted by law" are ineffective to prevent substantive unconscionability because a lay person "...would have no way of knowing what would be covered or not covered by this provision." (Id. at 1062.)

Further, that although no PAGA claims are made here, this is irrelevant under Najarro v. Sup. Ct. (2021) 70 Cal.App.5 th 871, 882. As such, the Court finds the attempt to waive Type O PAGA claims substantively unconscionable.

Waiver of PAGA Standing Here, Plaintiff argues that the Agreement's term "I lack standing to pursue, litigate, or act as a representative for any non-individual PAGA claims in a court of law" is an impermissible attempt to waive PAGA standing.

The Court agrees that Viking River's statement keeping intact one of Iskanian's rules that precludes a waiver of representative standing in either arbitration or this Court requires a finding that this term is substantively unconscionable. (Viking River, supra, 596 U.S. at 694.)

Free Peek at Plaintiff's Claims Here, Plaintiff notes that Defendant's Handbook's terms related to dispute resolution requires Plaintiff to first speak with a supervisor, then a director and then the CEO before bringing claims via arbitration or otherwise.

The Court first notes that it will consider the terms of the Handbook under Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, which states: "'Under Civil Code section 1642, it is the general rule that several papers relating to the same subject matter and executed as parts of substantially one transaction, are to be construed together as one contract [citation].'" (IMO Development Corp. v. Dow Corning Corp. (1982) 135 Cal.App.3d 451, 463.)

According to that rule, documents executed as part of a single transaction are construed together, even if they do not expressly refer to one another. (Boyd v. Oscar Fisher Co. (1989) 210 Cal.App.3d 368, 378; Cadigan v. American Trust Co. (1955) 131 Cal.App.2d 780, 786-787 ["it [is] unnecessary for either instrument to refer to the other"].) (Id. at 490.)

Plaintiff cites to Nyulassy v. Lockheed Martin Corp., (2004) 120 Cal. App. 4th 1267, 1282 where employees were required "...to submit to discussions with [their] supervisors in advance of, and as a condition precedent to, having [a] dispute resolved through binding arbitration."

The court in Nyulassy found this term substantively unconscionable "[g]iven the unilateral nature of the arbitration agreement, requiring plaintiff to submit to an employer-controlled dispute resolution mechanism (i.e., one without a neutral mediator) suggests that defendant would receive a 'free peek' at plaintiff's case, thereby obtaining an advantage if and when plaintiff were to later demand arbitration." (Id. at 1282-1283)

Here, the Court does not view the Handbook provision as mandatory or a precondition of submitting a claim to arbitration where the Handbook states "...the following steps should be utilized for solution:..."

The provision above in the paragraph stating "Before any problem can be solved, it must be expressed, and remedies must be explored" is too general, in the Court's view, to mandate the steps below in a manner similar to Nyulassy. Therefore, the Court does not find this term substantively unconscionable.

Statute of Limitation Tolling Here, Plaintiff argues that the term "I further understand that I must present notice of any claim in arbitration before the statute of limitations expires for that type of claim" precludes a statutory right under Code of Civil Procedure section 1281.12, providing: "If an arbitration agreement requires that arbitration of a controversy be demanded or initiated by a party to the arbitration agreement within a period of time, the commencement of a civil action by that party based upon that controversy, within that period of time, shall toll the applicable time limitations..."

The Court, however, interprets the term in the Agreement as a statute of limitations term and that Plaintiff's choice to first file a lawsuit would equitably toll the limitations period for filing an arbitration claim under section 1281.12.

In other words, the phrase "before the statute of limitations expires for that type of claim" accounts for any statutory tolling, as the statute of limitations would not expire due to that tolling. Therefore, the Court does not find this provision unconscionable.

Delay of Payment of Arbitration Fees Here, the Agreement states "...the Company shall not be responsible for paying the arbitrator's fees and costs for the arbitration hearing sooner than 60 days before the commencement of the arbitration hearing." (Agreement - P.8.)

Plaintiff argues that this violates Code of Civil Procedure sections 1281.97's 30 day deadline to pay the initial arbitration fees.

The Court agrees that, under Hohenshelt v. Superior Court (2025) 18 Cal. 5th 310, 323, this requirement is not preempted by the FAA's application to this Agreement.

Further, the term does provide double the statutory period to pay the initial filing fees. As such, the Court finds this term to be substantively unconscionable.

Judicial Review Here, Plaintiff argues the "Agreement is silent on the Court's ability to review an arbitrator's decision in this purportedly mandatory arbitration; thus, the Agreement does not guarantee a Court an opportunity to examine the award as required under Armendariz, or to vacate/modify the award. (See CCP Sec. 1286.2)."

However, the Agreement states: "Any arbitration proceeding under this agreement shall proceed under and be governed by the Federal Arbitration Act ("FAA") because both I and the Company are engaged in interstate commerce. To the extent they are not contrary to the FAA, the procedures of the California Arbitration Act ("Act") shall also apply. The Act is found at California Code of Civil Procedure section 1280 and the following sections."

As such, the Agreement appears to incorporate, amongst other provisions, Code of Civil Procedure section 1286.2, as well as section 1285 "Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award..."

Therefore, the Court does not find any substantive unconscionability on this issue.

Severance The Court notes Paragraph 9 of the Agreement states: "If any term or provision or any portion of this agreement is deemed invalid or unenforceable, it shall be severed and the remainder of this agreement shall be enforceable. Under no circumstances shall this agreement be construed to allow the joinder of claims in arbitration or arbitration on a class, collective, representative, or other similar basis. I acknowledge that this Agreement is not intended to interfere with my rights to collectively bargain, to engage in protected, concerted activity, or to exercise other rights protected under the National Labor Relations Act."

Courts have discretion to sever unconscionable clauses and enforce the remainder of the contract. (Civ. Code, Sec. 1670.5, subd. (a); Armendariz, supra, 24 Cal.4th at p. 1244.)

There is a strong preference for courts to sever unconscionable provisions unless unconscionability permeates the entire agreement. (De Leon v. Pinnacle Property Management Services, LLC (2021) 72 Cal.App.5th 476, 492.)

However, if "the central purpose of the contract is tainted with illegality, then the contract as a whole cannot be enforced." (Armendariz, supra, 24 Cal.4th at p. 124.)

But if "the illegality is collateral to the main purpose of the contract, and the illegal provision can be extirpated from the contract by means of severance or restriction, then such severance and restriction are appropriate." (Id.)

Therefore, the Court will strike the following two sections, which cure the Agreement of the unconscionability noted above: Paragraph 5: "...To the full extent permissible under the law, I agree to waive any substantive or procedural rights that I may have to bring or participate in a PAGA action brought on a collective or non-individual basis...I further acknowledge that upon my execution of this Agreement, I lack standing to pursue, litigate, or act as a representative for any non-individual PAGA claims in a court of law." Paragraph 8: "...It is agreed that the Company shall not be responsible for paying the arbitrator's fees and costs for the arbitration hearing sooner than 60 days before the commencement of the arbitration hearing."

As such, the Agreement, as modified, lacks substantive unconscionability. Therefore, the Court grants the motion, having found a valid waiver of class claims above and compels arbitration of Plaintiff's remaining claims.

If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order.

Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings. Re: Loza, Marisela vs. BH-TC Opco, LLC