Judge Kerry Bensinger, Case Number: 24STCV24104, Date: 2025-05-22 Tentative Ruling

This is a retaliation and wrongful termination action. In 2022, plaintiff Dianne Chaves (“Plaintiff” or “Chaves”) was employed by defendant Think Together, Inc. (“Defendant” or “TTI”) as the Senior Director of Program Innovations. TTI provides expanded learning programs and other educational services to school districts in California. Chaves alleges TTI retaliated against her after she complained that TTI was defrauding state and federal governments and stealing money intended for poor children. TTI retaliated against Chaves by suddenly requiring an increased amount of work and terminating her employment for pretextual “performance” reasons in 2024. As relevant here, Chaves executed an arbitration agreement when she was hired in 2022, and another arbitration agreement in 2023.

On September 18, 2024, Plaintiff commenced this action against Defendant alleging causes of action for (1) retaliation pursuant to Labor Code section 1102.5, (2) retaliation pursuant to the False Claims Act, and (3) wrongful termination in violation of public policy.

On November 5, 2024, Defendant filed this motion to compel arbitration and stay the action.

Under California¿law,¿public policy favors arbitration as an efficient and less expensive means of resolving private disputes.¿ (Moncharsh¿v.¿Heily¿&¿Blase¿(1992) 3 Cal.4th 1, 8-9 (Moncharsh);¿AT&T Mobility LLC v. Concepcion¿(2011) 563 U.S. 333, 339 (Concepcion).) ¿Similarly, the Federal Arbitration Act (FAA) reflects a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract.¿ (Concepcion,¿supra, 563 U.S. at p. 339.)¿ In line with these principles, courts must place arbitration agreements on an equal footing with other contracts and enforce them according to their terms.¿ (Ibid.)¿ “[U]nder both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’”¿ (Higgins v. Sup. Ct.¿(2006) 140 Cal.App.4th 1238, 1247 (Higgins).)¿ Accordingly, whether an agreement is governed by the California Arbitration Act (CAA) or the¿FAA, courts resolve doubts regarding the scope of arbitrable issues in favor of arbitration.¿ (Moncharsh, supra, 3 Cal.4th at p. 9; Comedy Club, Inc. v. Improv WestAssocs.¿(9th Cir. 2009) 553 F.3d 1277, 1284.)

While the arbitration agreement may be governed by the FAA, the agreement may be enforced via the summary procedures provided by California arbitration law.¿ (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 409-410 (Rosenthal).) It is a “general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts,” even though the controversy is governed by substantive federal law. (Felder v. Casey¿(1988) 487 U.S. 131, 138.) By the same token, however, a state procedural rule must give way “if it impedes the uniform application of the federal statute essential to effectuate its purpose, even though the procedure would apply to similar actions arising under state law.” (McCarroll v. L.A. County etc. Carpenters¿(1957) 49 Cal.2d 45, 61, 62.)

A party to an arbitration agreement may seek a court order compelling the parties to arbitrate a dispute covered by their agreement. (Code Civ. Proc., § 1281.2.) California statutes create a “summary proceeding” for resolving petitions or motions to compel arbitration. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 (Engalla).)

When a party has filed a petition to compel arbitration, the trial court must determine in a summary proceeding whether an “agreement to arbitrate the controversy exists.” (Code Civ. Proc., §§ 1281.2, 1290.2; Rosenthal, supra, 14 Cal.4th at pp. 412–413.) In that proceeding, because the existence of the agreement is a statutory prerequisite to granting the petition, “[t]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] 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, supra, 15 Cal.4th at p. 972; Rosenthal, supra, 14 Cal.4th at p. 413.)

The court should grant the motion unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for rescission¿of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

The trial court typically decides the threshold issues of enforceability of the arbitration agreement and the scope of issues to be arbitrated. (Aanderud v. Sup.Ct. (Vivint Solar Developer, LLC) (2017) 13 Cal.App5th 880, 891.)

The following points are not in dispute: (1) Plaintiff signed two agreements to arbitrate; and (2) the Arbitration Agreements[1] cover Plaintiff’s claims against Defendant. Nonetheless, Plaintiff argues the Arbitration Agreement should not be enforced because it is substantively and procedurally unconscionable. The court addresses each argument in turn.

The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247 (Pinnacle Museum).)¿ In general, the doctrine of unconscionability refers to “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.”¿ (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133 (Sonic) (cleaned up).)¿ In other words, the doctrine consists of procedural and substantive components, “the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” (Ibid.)¿¿¿¿

If unconscionable, the arbitration agreement is not a valid contract and therefore is unenforceable. ¿ (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).)¿ Although both components of unconscionability must be present to invalidate an arbitration agreement, they need not be present in the same degree.¿ (Id.)¿ “ ‘Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.¿ In other words, the more substantively unconscionable the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ ”¿ (Ibid.)¿¿¿¿

Procedural unconscionability focuses on the elements of oppression and surprise. (Pinnacle Museum, 55 Cal.4th at p. 247.)¿ “Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice….¿ Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.”¿ (Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 671.)¿¿

A “contract of adhesion” creates some amount of procedural unconscionability – the term signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.¿ (Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 694.)¿ In addition, a lack of effort to highlight the presence of an arbitration provision, such as through bold lettering, larger font, or capitalization, has been found to indicate procedural unconscionability.¿ (See Higgins v. Superior Court (2006) 140 Cal.App.4th 1238.)¿¿However, when there is no other indication of oppression other than the adhesive aspect of an agreement, the degree of procedural unconscionability is low.¿ (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)¿¿¿¿¿¿

“[T]he fact that the arbitration agreement is an adhesion contract does not render it automatically unenforceable as unconscionable.¿ Courts have consistently held that the requirement to enter into an arbitration agreement is not a bar to its enforcement.”¿ (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 179.)¿¿

Plaintiff contends the Arbitration Agreement is procedurally unconscionable because she was required to sign it as a condition of her employment. Plaintiff points to the declaration Kecia B. Alexander, Defendant’s Deputy Chief of Human Capital in support of the foregoing point. (Alexander Decl., ¶ 12.)

In sum, the court finds there is sufficient evidence to establish the Arbitration Agreement is a contract of adhesion which in turn supports a low level of procedural unconscionability. However, whether the Arbitration Agreement is an adhesion contract is not dispositive in establishing unconscionability. (Peng v. First Republic Bank (2013) 219 Cal.App.4th 695, 704.)¿ “When, … there is no other indication of oppression or surprise, ‘the degree of procedural unconscionability of an adhesion agreement is low, and the agreement will be enforceable unless the degree of substantive unconscionability is high.’” (Id. at p. 710, quoting Ajamian v. CantorCO2e (2012) 203 Cal.App.4th 771, 796.) Plaintiff did not submit her own declaration to show how the Arbitration Agreement is otherwise procedurally unconscionable.

The court proceeds to consider Plaintiff’s substantive unconscionability claims.¿

Assessing substantive unconscionability, courts generally focus on the terms of the agreement and look for terms that are overly harsh or one-sided such that they shock the conscience. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281 (Nyulassy); see also Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910-911 (clarifying various definitions—e.g., “shocks the conscience,” “unduly oppressive,” “unreasonable favorable” mean same thing).)¿ The “paramount consideration” is mutuality of the obligation to arbitrate.¿ (Nyulassy, 120 Cal.App.4th at pp. 1281, 1287.)¿¿¿¿¿

“Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided. One such form, as in Armendariz, is the arbitration agreement’s lack of a modicum of bilaterality, wherein the employee’s claims against the employer, but not the employer’s claims against the employee, are subject to arbitration. [Citation.] Another kind of substantively unconscionable provision occurs when the party imposing arbitration mandates a post-arbitration proceeding, either judicial or arbitral, wholly or largely to its benefit at the expense of the party on which the arbitration is imposed. [Citation.] In determining unconscionability, our inquiry is into whether a contract provision was unconscionable at the time it was made. [Citation.]”¿ (Sonic, supra, 57 Cal.4th at pp. 1133-34 [cleaned up].)¿ “To state it simply: it is substantively unconscionable to require a consumer to give up the right to utilize the judicial system, while imposing arbitral forum fees that are prohibitively high.”¿ (Id. at pp. 1144-45.)¿¿¿

Plaintiff argues the Arbitration Agreement is substantially unconscionable because the Arbitration Agreement does not include a clause “excepting (1) qui tam actions and (2) sexual harassment claims.” (Opp., p 12:3.) The argument lacks merit.

First, as Plaintiff readily concedes, she has not brought a qui tam action nor asserted any sexual harassment claims against Defendant.

Second, Section 4 of the Arbitration Agreement is broadly worded to except qui tam actions and sexual harassment claims. Section 4 of the Arbitration Agreement states:

Excluded Claims: This Arbitration Agreement does not prevent Employee from filing (A) claims against the Company for workers' compensation, State Disability Insurance, or unemployment insurance, (B) claims under the Company's group health, or other insurance or employee benefit plans, or (C) any other claim that by law cannot be required to be arbitrated.

Plaintiff fails to demonstrate the Arbitration Agreement is substantively unconscionable. Because Plaintiff shows only low levels of procedural unconscionability and no substantive unconscionability, the court finds the Arbitration Agreement is not unconscionable.

Alternatively, Plaintiff argues the court should exercise its discretion to enforce the Arbitration Agreement with the restriction that proposed certification language be attested to and adopted by Defendant. Defendant, as a government contractor, contains language requiring Defendant’s compliance with anti-discrimination provisions for the benefit of Defendant’s employees. (See Mehtani Decl., ¶ 5, Ex. F.) Plaintiff cites Armendariz, supra, 24 Cal. 4th 83 in support of her alternative request.

Plaintiff misreads Armendariz. “As noted, Civil Code section 1670.5, subdivision (a) provides that ‘[i]f the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.’ Comment 2 of the Legislative Committee comment on section 1670.5, incorporating the comments from the Uniform Commercial Code, states: ‘Under this section the court, in its discretion, may refuse to enforce the contract as a whole if it is permeated by the unconscionability, or it may strike any single clause or group of clauses which are so tainted or which are contrary to the essential purpose of the agreement, or it may simply limit unconscionable clauses so as to avoid unconscionable results.’ [Citation.]” (Armendariz, supra, 24 Cal. 4th at pp. 121–22.)

Here, Plaintiff has not established the predicate grounds for such an order. The court has found the Arbitration Agreement is not unconscionable. Given the Arbitration Agreement is valid, the court must enforce the agreement pursuant to its provisions.

Defendant also moves to stay proceedings pending arbitration. Code of Civil Procedure section 1281.4 provides that if the court has ordered the arbitration of a controversy, it “shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” Therefore, under section 1281.4, the motion to stay this action is GRANTED, because the motion to compel arbitration is Granted.

Based on the foregoing, the motion to compel arbitration and stay action pending arbitration is Granted. The action is ordered stayed pending completion of arbitration proceedings.

The court sets a Status Conference re: Arbitration Proceedings for February 18, 2026, at 9:00 a.m.

Kerry Bensinger

Judge of the Superior Court

[1] Because the Arbitration Agreements are identical, all references hereinafter are to the arbitration agreement signed on June 24, 2023. (See Farrell Decl., Ex. 1, Arbitration Agreement dated 6/24/23.)