ISABELLA STOJANOV vs GDH CONSULTING, INC et al

LINE # CASE # CASE TITLE RULING LINE 1 24CV441630 Hernandez v. Mac Cal Company Motion: Summary (Class Action/PAGA) Judgment/Adjudication is DENIED

Click on line 1 for tentative ruling LINE 2 24CV445405 Mendoza Jaimes v. Kumar Motion: Withdraw as Management, Corporation (Class attorney is GRANTED Action) Click on line 2 for tentative ruling LINE 3 24CV452239 Lonnie Wong vs Ro Health, LLC, a Hearing: Petition for Limited Liability Company (Class Coordination is DENIED Action) Click on line 3 for tentative ruling LINE 4 25CV469636 MARIA CASTRO vs THE VILLAGES Hearing: Demurrer is GOLF AND COUNTRY CLUB, a OVERRULED California nonprofit corporation (Class Action / PAGA) Click on line 4 for tentative ruling LINE 5 25CV477079 ISABELLA STOJANOV, individually, Motion: Compel and on behalf of other similarly Arbitration is DENIED situated emplo vs GDH CONSULTING, INC et al (Class Action) LINE 6 25CV477079 ISABELLA STOJANOV, individually, Motion: Joinder is DENIED and on behalf of other similarly situated emplo vs GDH CONSULTING, Click on lines 5-6 for INC et al (Class Action) tentative ruling LINE 7 LINE 8 LINE 9 LINE 10 LINE 11 LINE 12 LINE 13

Calendar Lines 5-6

Case Name: Isabella Stojanov v. GDH Consulting, Inc. Case No.: 25CV477079

This is a class action arising from defendants GDH Consulting, Inc. (“GDH”); Micro Focus LLC (“Micro Focus”); Micro Focus (US), Inc. (“Micro Focus US”) (collectively, “Defendants”) alleged wage and hour violations.

Before the Court is Defendant GDH’s motion to compel arbitration, dismiss class claims, and stay civil proceedings; and Micro Focus and Micro Focus US’s (collectively, “Micro Focus”) joinder to GDH’s motion, which are both opposed. As discussed below, the Court DENIES GDH’s motion to compel arbitration, its request to dismiss Plaintiff’s class claims, and request to stay are MOOT. Additionally, the Court DENIES Micro Focus’s joinder.

XIV. BACKGROUND

According to the allegations of the operative complaint (“Complaint”), Plaintiff worked for Defendants from October 2020 through October 2022 as a Consultant and Marketing Project Administrator. (Complaint, ¶ 22.) Plaintiff performed various duties such assisting the Chief Executive Officer (“CEO”) with event planning, registration, budget management, vendor coordination, and supporting remote training and marketing efforts. (Ibid.)

Defendants failed to: pay wages, including minimum and overtime wages; provide meal and/or rest periods or compensation in lieu thereof; timely pay wages during employment; provide compliant wage statements; timely pay wages due upon separation; reimburse for necessary business expenses.

October 7, 2025, Plaintiff initiated this action with the filing of the Complaint, which asserts the following causes of action: (1) Violation of Labor Code §§ 1194, 1197, and 1197.1 (Minimum Wages); (2) Violation of Labor Code §§ 510 and 1198 (Unpaid Overtime;); (3) Violation of Labor Code §§ 226.7 and 512, subdivision (a) (Meal Break Violations); (4) Violation of Labor Code § 226.7 (Rest Break Violations); (5) Violation of Labor Code §§ 204 and 210 (Wages Not Timely Paid During Employment); (6) Violation of Labor Code § 226, subdivision (a) (Wage Statement Violations); (7) Violation of Labor Code §§ 201, 202, and 203 (Untimely Final Wages); (8) Violation of Labor Code §§ 2800 and 2802 (Failure to Reimburse Necessary Business Expenses); (9) Violation of Labor Code §§ 925 and Business & Profession Code 16600, et seq; and (10) Violation of Business & Profession Code §§ 17200, et seq.

XV. EVIDENTIARY OBJECTIONS

In support of its reply, GDH submits evidentiary objections to Plaintiff’s declaration.

Objections 1-5 are OVERRULED.

XVI. GDH’S MOTION TO COMPEL ARBITRATION

GDH moves for an order compelling arbitration and staying proceedings pursuant to the arbitration agreement (the “Agreement”).

A.

Legal Standard

In ruling on a motion to compel arbitration, the Court must inquire as to (1) whether there is a valid agreement to arbitrate, and (2) if so, whether the scope of the agreement covers the claims alleged. (See Howsan v. Dean Witter Reynolds (2002) 537 U.S. 79, 84.) “Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate. [Citations.] The threshold question requires a response because if such an agreement exists, then the court is statutorily required to order the matter to arbitration.” (Fleming v. Oliphant Financial, LLC (2023) 88 Cal.App.5th 13, 19, internal quotation marks omitted.) The agreements at issue expressly provide that they are governed by the Federal Arbitration Act.

“The FAA [Federal Arbitration Act], which includes both procedural and substantive provisions, governs [arbitration] agreements involving interstate commerce.” (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 840.) However, “[t]he procedural aspects of the FAA do not apply in state court absent an express provision in the arbitration agreement.” (Ibid.) Where the Agreement expressly provides that it “shall be interpreted and enforced in accordance with the [FAA],” federal procedural and substantive law apply. (See Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1122 [“[t]he phrase ‘pursuant to the FAA’ is broad and unconditional,” and unambiguously adopts both the procedural and substantive aspects of the FAA].)

Under the FAA, the Court must grant a motion to compel arbitration if any suit is brought upon “any issue referable to arbitration under an agreement for such arbitration” (9 U.S.C. § 3), subject to “such grounds as exist at law or in equity for the revocation of any contract...” (9 U.S.C. § 2). The moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. (See Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396 [under both federal and state law, “the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate”]; Rosenthal v.

Great Western Fin’l Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal) [moving party’s burden is a preponderance of evidence].) The burden then shifts to the resisting party to prove a ground for denial. (Rosenthal, supra, 14 Cal.4th at p. 413.)

“In determining the rights of parties to enforce an arbitration agreement within the FAA’s scope, courts apply state contract law while giving due regard to the federal policy favoring arbitration.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle).)

But the FAA’s policy favoring arbitration ... is merely an acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts. Or in another formulation: The policy is to make arbitration agreements as enforceable as other contracts, but not more so. Accordingly, a court must hold a party to its arbitration contract just as the court would to any other kind. (Morgan v. Sundance, Inc. (2022) 596 U.S. 411 (Morgan), internal citations and quotation marks omitted.)

On a motion to compel arbitration under the CAA, “[t]he party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle, supra, 55 Cal.4th at p. 236.)

B.

Discussion

GDH argues there is a valid arbitration agreement and requests for a stay pending arbitration.

1. Existence of an Agreement

As one Court of Appeal summarized, [T]he moving party bears the burden of producing “prima facie evidence of a written agreement to arbitrate the controversy.” (Rosenthal, supra, 14 Cal.4th at p. 413.) 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.” (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543–544 [279 Cal. Rptr. 3d 112] (Bannister).) Alternatively, the moving party can meet its burden by setting forth the agreement’s provisions in the motion. (Condee v.

Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 [105 Cal. Rptr. 2d 597] (Condee); see also Cal. Rules of Court, rule 3.1330 [“The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.”].) For this step, “it is not necessary to follow the normal procedures of document authentication.” (Condee, at p. 218.) If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion. (Gamboa v.

Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165–166.)

GDH provides the declaration of Iryna Ravikovska Shekhovtsov (“Shekhovtsov”), an Engagement Specialist/Branch Coordinator at GDH, who is familiar with the recruitment, onboarding, and recordkeeping procedures. (Shekhovtsov Declaration (“Decl.”), ¶¶ 2-5.) On October 19, 2020, Plaintiff was sent an email with the following documents attached: (1) the GDH application; (2) Exhibit A-Work Schedule; (3) the hourly employment agreement, containing the Agreement; and (4) the California Hire Notice. (Shekhovtsov Decl., ¶ 1, Exh. 1.)

Plaintiff was instructed to review the documents carefully, complete them, and return the signed copies before beginning her assignment. (Shekhovtsov Decl., ¶ 12.) She was provided with the opportunity to review the documents on her own time and contact GDH with any question regarding the terms to the hourly employment agreement or the Agreement and to Shekhovtsov’s knowledge, Plaintiff did not request additional time, did not express confusion about the documents, nor did she raise objections prior to signing the Agreement. (Ibid.)

Plaintiff physically signed the hourly employment agreement, which contained the Agreement and returned the documents to Shekhovtsov via email on October 20, 2020. (Shekhovtsov Decl., ¶ 13.)

The Agreement provides, “Consultant and GDH agree that, to the maximum extent permitted by law, any dispute or claim arising from or relating in any way to Consultant’s employment with GDH, including pre-employment, employment, and post-employment claims, or any provision of this Agreement...shall be submitted to arbitration pursuant to the Employment Arbitration Rules and Mediation Procedures... Claims subject to arbitration shall include contract claims, tort claims, claims relating to compensation, and claims based on any federal, state, or local law, including but not limited to claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay Act, and the Fair Labor Standards Act.”

Based on the foregoing, GDH provides admissible evidence to establish that a valid agreement exists between the parties. (See Gamboa, supra, 72 Cal.App.5th at pp. 165–166.)

Once the party seeking arbitration meets it burden of proving the existence of an arbitration agreement, “the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle, supra, 55 Cal.4th at p. 236.) Here, Plaintiff does not dispute the existence of the Agreement, but rather she argues the Agreement is procedurally and substantively unconscionable.

2. Unconscionability

Plaintiff argues the Agreement is substantively and procedurally unconscionable.

“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.” (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 125, [internal citation omitted] (OTO).) Unconscionability has both procedural and substantive elements. (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz); Jones v.

Wells Fargo Bank (2003) 112 Cal.App.4th 1527, 1539 (Jones).) Both must appear for a court to invalidate a contract or one of its individual terms (Armendariz, supra, 24 Cal.4th at p. 114; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174), but they need not be present in the same degree: “the 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.” (Armendariz, supra, 24 Cal.4th at p. 114.) “A contract’s substantive fairness must be considered in light of any procedural unconscionability in its making.” (Ibid., [internal quotations and citation omitted].) “The burden of proving unconscionability rests upon the party asserting it.” (OTO, supra, 8 Cal.5th at 126.)

i. Procedural Unconscionability

Procedural unconscionability focuses on the elements of oppression and surprise. (Armendariz, supra, 24 Cal.4th at p. 114.) “Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice,” while “[s]urprise involves the extent to which the terms of the bargain are hidden in a prolix printed form drafted by a party is a superior bargaining position.” (Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 671, [internal citation and quotation marks omitted].)

Analyzing procedural unconscionability “begins with an inquiry into whether the contract is one of adhesion” (Armendariz, 24 Cal.4th at 113) i.e., one that is “standardized, generally on a preprinted form, and offered by the party with superior bargaining power ‘on a take-it-or-leave-it basis.’” (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 126.) Arbitration agreements imposed as a condition of employment are typically deemed to be adhesive and the determinative inquiry in such a circumstance is “whether circumstances of the contract’s formation created such oppression or surprise that closer scrutiny of its overall fairness is required.” (Id.) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” (Pinnacle, supra, 55 Cal.4th at p. 247.)

Circumstances relevant to establishing oppression include: the amount of time the party is given to consider the agreement; the amount and type of pressure exerted on them to sign; the length of the proposed contract and the length and complexity of the challenged provision; the education and experience of the party; and whether the party’s review of the agreement was aided by an attorney. (Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1348.) In pre-hiring settings, such as the one at bar, courts must be “particularly attuned” to the danger of oppression and overreaching. (Armendariz, supra, at 115.)

Here, Plaintiff argues the Agreement is procedurally unconscionable because it is a contract of adhesion; it was offered as a mandatory condition of employment in circumstances suggesting significant oppression; and the Agreement bears considerable surprise. (Plaintiff’s Opposition (“Opp.”), p. 3:23-26.) In support, Plaintiff provides her declaration in which she states she does not remember signing any documents prior to beginning work at GDH; however, she felt pressured to accept the offer of employment. (Plaintiff Decl., ¶ 3.)

At the time of the job offer, she had taken a leave of absence from her university and was living with her grandpa because she could not afford rent or a car. (Ibid.) She spoke with Bianca Zavala, a GDH recruiter, prior to accepting the offer of employment regarding the rate of pay and she was immediately shut down. (Ibid.) As a result, Plaintiff did not believe or know that she could negotiate any aspect of her employment. (Ibid.) Plaintiff further states that she felt pressure to begin working for GDH so that she could start supporting herself without burdening her family. (Ibid.)

A contract of adhesion in the employment context adds a modest amount of procedural unconscionability and, the amount of procedural unconscionability is increased when an adhesion contract is combined with other issues. (See Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248.) The Court finds procedural unconscionability is present based on the requirement that Plaintiff sign the Agreement to begin employment with Defendant. However, in order to be unconscionable, there must be procedural and substantive unconscionability. (See Armendariz, supra, 24 Cal.4th at p. 114.)

ii. Substantive Unconscionability

Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create “overly harsh” or “one-sided results”, (Armendariz, supra, 24 Cal.4th at p. 114, internal citation and quotations omitted), that is, whether they reallocate risks in an objectively unreasonable or unexpected manner. (Jones, supra, 112 Cal.App.4th at p. 1539). “In assessing substantive unconscionability, the paramount consideration is mutuality.” (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 241 [internal citation and quotation marks omitted].) Arbitration agreements are substantively unconscionable where they lack a “modicum of bilaterality,” “without at least some reasonable justification for such one-sidedness based on ‘business realities.’” (Armendariz, supra, 24 Cal.4th at p. 117.)

“Substantive unconscionability examines the fairness of a contract’s terms. This analysis ensures that contracts, particularly contracts of adhesion, do not 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.” (OTO, supra, 8 Cal.5th at pp. 129-130, internal citation and quotations omitted.)

Plaintiff argues the Agreement is substantively unconscionable because the confidentiality agreement, when read together with the Agreement, is one sided; the administrative carve-out waives the right to labor commissioner wage proceedings; the Agreement improperly limits the costs covered by GDH; the Agreement improperly waives PAGA claims; and the delegation clause delegates PAGA arbitrability and formation arguments.

a. Whether the Agreement Should be Read with the Confidentiality Agreement

Plaintiff argues that the Agreement should be read with the Confidentiality Agreement.2 (Opp., pp. 8:28-9:6.) She asserts that they must be read together in terms of evaluating substantive unconscionability because they were executed as part of the same onboarding process.

Plaintiff relies heavily on Gurganus v. IGS Solutions, LLC (2025) 115 Cal.App.5th 327 (Gurganus), which involved an appeal from the trial court’s denial of defendant’s motion to compel arbitration. (Id. at p. 330.) The plaintiff was employed by the defendant and five months into her employment she electronically signed additional employment documents including the arbitration agreement and a confidentiality and non-disclosure agreement (“CND”). (Ibid.) Unlike the former, the latter did not contain an opt out or inform employees that they could decide not to sign. (Id. at p. 332.)

Both contained severability provisions. (Ibid.) The appellate court affirmed the trial court’s decision. (Id. at p. 334.) In doing so, the appellate court read the arbitration agreement and CND together. (Id. at p. 335.) The Court found the arbitration agreement procedurally and substantively unconscionable and that severance was not warranted. (Id. at pp. 339-340.)

2 The Confidentiality Agreement and Agreement are both contained within the Hourly Employment Agreement.

Here, Plaintiff notes that she executed the Agreement and the Confidentiality Agreement as part of the same onboarding process as a new hire. Plaintiff was provided with the conditional offer of employment and the other employment documents at the same time. Given these facts, the Court sees no reason why the Agreement and the Confidentiality Agreement should not be read together.

Here, the Confidentiality Agreement provides a remedy for breaches of confidentiality; however, it does not change the procedures for the arbitration process. Nevertheless, the Confidentiality Agreement provides,

Consultant acknowledges and agrees that the disclosure of any Confidential Information or any other violation of the terms of Section 4 of this Agreement would cause immediate and irreparable injury, loss and damage to GDH, Client and/or its customers and that an adequate remedy at law for such injury, loss and damage may not exist, and that in the event of such disclosure or threatened disclosure, GDH, Client and/or its customers shall be entitled to institute and prosecute proceedings in a court of competent jurisdiction to obtain temporary and/or permanent injunctive relief to enforce a provision of this Agreement, without the necessity of proof of actual damage or loss. (Confidentiality Agreement, § 4, subd. (e).)

This permits GDH to seek judicial remedies for specific claims while compelling Plaintiff’s employment-related claims to arbitration. Furthermore, the provision allows for GDH to seek permanent injunctive relief. Such relief is not available for Plaintiff. Thus, the Court finds there is substantive unconscionability on this basis.

b. Administrative Carve-Out

Next, Plaintiff argues that the administrative carve-out is selective and prevents Plaintiff from bringing wage claims to the Labor Commissioner. (Opp., p. 11:17-18.)

The Agreement provides, “[t]his Arbitration agreement does not apply to any dispute involving breaches of obligations contained in paragraph 6, hereof, claims for workers’ compensation, claims for unemployment compensation, claims under the National Relations Act and charges filed with federal e.g. National Labor Relations Board, or state administrative agencies, including private attorney general actions (however, all state law claims must be addressed prior to private attorney general actions), alleging violation of federal and state equal opportunity in employment laws.” (Agreement, § 6.)

In support of her argument, Plaintiff relies on Hasty v. American Automobile Ass’n of N. California, Nevada, & Utah (2023) 98 Cal.App.5th 1041, 1060 (Hasty). In Hasty, the provision at issue required the parties to waive their right to any remedy or relief as a result of charges or complaints brought by governmental administrative remedies. (Hasty, supra, 98 Cal.App.5th at p. 1060.) The court there noted that this provision “certainly seems onesided.” (Ibid.) The court found that “[a] waiver of administrative remedies and relief, hidden in an arbitration agreement, is overly harsh and shocks the conscience.” (Ibid.)

The court also found the provision confusing in that it permitted the parties to file a complaint with government agencies but also waived the right to resolve any claim by administrative proceeding. (Ibid.) Here, unlike in Hasty, the Agreement does not expressly waive the Berman procedure. Moreover, waiver of the Berman procedure does not constitute unconscionability unless the arbitration forum is not accessible or is otherwise one-sided and Plaintiff has not made such a showing here. (See Sonic-Calabasas A, Inc. v.

Moreno (2013) 57 Cal.4th 1109, 1146.) Thus, the Court does not find this provision to be unconscionable.

c. Arbitration Costs

Plaintiff argues the Agreement improperly limits the costs GDH must cover thus, forcing employees to bear costs for services otherwise provided by courts. (Opp., p. 12:14-15.)

“When an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.” (Armendariz, supra, 24 Cal.4th at pp. 110-111.)

Here, the Agreement provides that “[t]he costs and fees of the arbitrator shall be borne by GDH.” (Agreement, § 6.) While the Agreement does not explicitly address expenses such as the cost of an interpreter, this is not a basis to render the claim unenforceable. (See Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1084 [“silence about accosts in an arbitration agreement is not grounds for denying a motion to compel arbitration.”].)3 Therefore, the Court is not persuaded that this provision is unconscionable.

d. PAGA Waiver

Plaintiff argues that the Agreement improperly waives claims under PAGA. (Opp., p. 13:14.)

The Agreement provides, “HOWEVER, CONSULTANT SHALL HAVE NO RIGHT OR AUTHORITY TO HAVE ANY DISPUTE BROUGHT, HEARD OR ARBITRATED AS A... PRIVATE ATTORNEY GENERAL ACTION OR IN A REPRESENTATIVE CAPACITY ON BEHALF OF ANY PERSON...” (The Agreement, § 6 [emphasis original].) On its face, it appears this language waives Plaintiff’s ability to bring any PAGA claims. Thus, the Court finds the PAGA waiver is substantively unconscionable. (See Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 495 [“blanket waivers of PAGA claims are unconscionable.”]; DeMarinis v. Heritage Bank of Commerce (2023) 98 Cal.App.5th 776, 787.)

e. Delegation Clause

3 The Court is not persuaded by Plaintiff’s reliance on Family Violence Appellate Project v. Superior Court (Aug. 10, 2026, No. S288176) 2026 Cal.LEXIS 4133 because it is factually distinguishable from the instant matter specifically because it involved indigent litigants and pertained to whether a civil litigant could obtain an official verbatim record of the proceedings.

Lastly, Plaintiff argues that the delegation clause is substantively unconscionable because it would delegate PAGA arbitrability and formation arguments to the arbitrator. (Opp., p. 15:3-6.)

“Challenges to the validity of an arbitration clause itself are generally resolved by the court in the first instance. An exception to this rule applies when the parties have clearly and unmistakably agreed to delegate questions regarding the validity of the arbitration clause to the arbitrator.” (Nielsen Contracting, Inc. v. Applied Underwriters, Inc. (2018) 22 Cal.App.5th 1096, 1108 [citing Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 890 (Aanderud)].) “There are two prerequisites for a delegation clause to be effective.

First, the language of the clause must be clear and unmistakable. Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability. The ‘clear and unmistakable’ test reflects a heightened standard of proof that reverses the typical presumption in favor of the arbitration of disputes.” (Aanderud, supra, 13 Cal.App.5th at p. 892 [internal citations omitted].) An unconscionability challenge must be specifically directed at the delegation provision, not the entire arbitration agreement. (Id. at p. 895; see also Tiri v.

Lucky Changes, Inc. (2014) 226 Cal.App.4th 231, 248 (Tiri).)

The Agreement provides, “The arbitrator, not a court, shall be the exclusive authority to resolve any dispute relating to the interpretation, arbitrability, enforceability or formation of the agreement to arbitrate set forth in this Paragraph but not limited to any claim that all or any part to arbitrate is void or voidable.” (The Agreement, § 6.) Thus, it appears to the Court that there is a clear and unmistakable delegation clause. However, GDH explicitly states that it “asks this Court to determine whether an enforceable arbitration agreement exists.” (Reply, p. 9:1-2.)

Thus, it appears Defendant waives the right to invoke the delegation clause. (See Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 771.) Moreover, Plaintiff does not assert a PAGA claim in this action, thus, even if GDH invoked the delegation clause here, the issue of PAGA arbitrability would not go to an arbitrator. Therefore, the delegation clause itself does not constitute substantive unconscionability.

f. Severability

The Agreement provides, “[t]he provisions of this Arbitration agreement are severable.” (Agreement, § 6.)

Here, the Court finds substantive unconscionability with regard to the PAGA waiver and the access to injunctive relief. GDH argues those portions can be severed without rewriting the parties’ bargain or disturbing the Agreement’s core terms. (Reply, p. 9:22-25.)

“[W]hether to sever is within the trial court’s discretion.” (Navas v. Fresh Venture Foods, LLC (2002) 85 Cal.App.5th 626, 636-637.) The California Supreme Court recently explained, “[i]f the unconscionability cannot be cured by extirpating or limiting the offending provisions, but instead requires augmentation to cure the unconscionability, then the court should refuse to enforce the contract.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 516 (Ramirez).)

“ ‘In deciding whether to sever terms rather than to preclude enforcement of the provision altogether, the overarching inquiry is whether the interests of justice would be furthered by severance; the strong preference is to sever unless the agreement is “permeated” by unconscionability.’ An agreement to arbitrate is considered ‘permeated’ by unconscionability where it contains more than one unconscionable provision. ‘Such multiple defects indicate a systemic effort to impose arbitration on [the nondrafting party] not simply as an alternative to litigation, but as an inferior forum that works to the [drafting party’s] advantage.’ An arbitration agreement is also deemed ‘permeated’ by unconscionability if ‘there is no single provision a court can strike or restrict in order to remove the unconscionable taint from the agreement.’ If ‘the court would have to in effect, reform the contract, not through severance or restriction, but by augmenting it with additional terms,’ the court must void the entire agreement.” (Mango v.

The College Network, Inc. (2016) 1 Cal.App.5th 277, 292.) (De Leon v. Pinnacle Property Management Services, LLC (2021) 72 Cal.App.5th 476, 492- 493 [internal citations omitted].)

Here, the Court finds that the unconscionable provisions particularly the Confidentiality Agreement, which is read together with the Agreement, permeate through the entire Agreement as it provides an advantage to GDH while limits the judicial remedies available to Plaintiff. Moreover, it appears augmentation is necessary in order to cure it. (See Ramirez, supra, 16 Cal.5th at p. 516.) Consequently, the Court declines to sever the unconscionable provisions.

Accordingly, GDH’s motion to compel arbitration is DENIED, its motion to dismiss class claims and request to stay are MOOT.

XVII. DFENDANT MICRO FOCUS’S JOINDER

Micro Focus joins GDH’s motion and argues Plaintiff should be compelled to arbitrate her claims against them based on equitable estoppel and agency theories. Micro Focus relies on the arguments put forth by GDH in support of its motion. For reasons explained above, the Court declines to enforce the Agreement. Consequently, Micro Focus’s joinder is DENIED.

XVIII. CONCLUSION

GDH’s motion to compel arbitration is DENIED, GDH’s request to dismiss Plaintiff’s class claims and stay this action are MOOT, and Micro Focus’s joinder is DENIED.

The Court will prepare the order.

- oo0oo -

- oo0oo -

10