Judge Kerry Bensinger, Case Number: 24STCV32479, Date: 2025-04-09 Tentative Ruling

MOVING PARTY: Defendants Faraday & Future, Inc., Intelligent Mobility Global Holdings, Ltd., Smart King, Ltd., and Matthias Aydt

On December 10, 2024, plaintiff Shawn Blackburn (“Plaintiff”) filed this employment action against defendants Faraday & Future, Inc. (“Faraday”); FF Intelligent Mobility Global Holdings, Ltd., Smart King Ltd., and Matthias Aydt (collectively, “Defendants”). The complaint alleges sixteen (16) causes of actions, including but not limited to violations of the FEHA, CRA, Labor Code, and wrongful termination, arising out of Plaintiff’s employment with Faraday as a Senior Battery Engineer.

Based on the moving papers, opposition, and reply, Faraday sent an offer of employment (the “Offer Letter”) to Plaintiff on March 11, 2016. The Offer Letter indicated that Plaintiff would be required to execute a document entitled “At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement” (hereafter, the “Employment Agreement”) and that Plaintiff and Faraday would be required to submit any disputes or claims arising from the employment relationship to arbitration. Plaintiff began his employment with Faraday on April 12, 2016, and executed the Employment Agreement on April 26, 2016. Plaintiff’s employment was terminated on September 21, 2023.

On March 7, 2025, Defendants filed this Motion to Compel Arbitration and Stay Proceedings.

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) the existence of the Arbitration Agreement; and (2) the Arbitration Agreement covers Plaintiff’s claims against Defendants.[1] Instead, 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, supra, 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 (1) the Agreement was presented on a take-it-or-leave it basis, (2) the terms of the Agreement were hidden resulting in surprise, (3) Plaintiff is not a sophisticated party to the Agreement, and (4) Faraday did not provide Plaintiff with a copy of the Agreement or explain its significance. These arguments boil down to whether the Arbitration Agreement is a contract of adhesion. Plaintiff offers his declaration in support of the foregoing points. (Blackburn Decl., ¶¶ 3-6.) Further, Plaintiff points out that he received a letter for an offer of employment on March 11, 2016 which required him to execute an arbitration agreement as a condition of employment. (Blackburn Decl., ¶ 3, Ex. 1.) Faraday required Plaintiff to sign a document entitled “At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement” on April 26, 2016. (See Jiang Decl., ¶ 5, Ex. 1 (“Employment Agreement”).)

Plaintiff’s declaration, however, does not support much else when it comes to procedural unconscionability. The Arbitration Agreement begins on page 7 and appears in mostly all caps. Plaintiff argues that burying the Arbitration Agreement on page 7 and mixing font sizes constitutes surprise. The court is not persuaded. Contrary to Plaintiff’s position, the all-caps font has the effect of making the Arbitration Agreement stand out. The court further notes the document has in its title “Arbitration Agreement”. Plaintiff does not show the terms of the Arbitration Agreement were a surprise to Plaintiff.[3]

In sum, the court finds there is sufficient evidence to establish that 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.)

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 contends the Arbitration Agreement is substantially unconscionable for several reasons. First, the Arbitration Agreement lacks mutuality because it provides an improper carve-out for Defendants (Opp., p. 4), the neutral nature of the agreement is illusory (Opp., p. 5:5-25), and the scope of the agreement covers employment disputes which are most likely to be brought by an employee (Opp., pp. 5:26-6:26). Second, the Arbitration Agreement is contradictory. (Opp., p. 7:1-17.) Third, the Arbitration Agreement does not provide adequate discovery. (Opp., pp. 7:18-8:14.) Fourth, the Arbitration Agreement contains a confidentiality clause which unlawfully stifles discovery. These arguments are unavailing.

First, the Arbitration Agreement does not lack mutuality. Plaintiff’s improper carve-out argument is based on Section 13(A) of the Employment Agreement which states, in full,

Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by the laws of the State of California without regard to California's conflicts of law rules that may result in the application of the laws of any jurisdiction other than California. To the extent that any lawsuit is permitted under this Agreement, I hereby expressly consent to the personal and exclusive jurisdiction and venue of the state and federal courts located in California for any lawsuit filed against me by the Company.

(Employment Agreement, ¶ 13(A).) However, Section 13(A) is separate from the Arbitration Agreement, which is set forth at Section 12 of the Employment Agreement. Further, Section 12 plainly states, “I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.” (Emphasis in original.) There is no carve-out for Faraday. Moreover, the language from Section 13(A), begins with the caveat, “To extent that any lawsuit is permitted under this Agreement….” Pursuant to the Agreement all employment related disputes are to be arbitrated by both Faraday and Plaintiff. If any other lawsuit were permitted, Plaintiff agreed to venue and jurisdiction. Plaintiff did not agree Faraday could bring any other lawsuit against him, while he could not bring a law suit against the company.

Plaintiff’s remaining contentions regarding the lack of mutuality of the Arbitration Agreement are equally unpersuasive. The Arbitration Agreement also provides, “IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES . . . I AGREE” to arbitrate “ALL CONTROVERSIES, CLAIMS OR DISPUTES . . . ARISING OUT OF, RELATING TO, OR RESULTING FRO MY EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY.” (Employment Agreement, ¶ 12(A).) (Bold emphasis added.) Moreover as Defendant points out, “Paragraph 12(A) of the Arbitration Agreement states: “I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THE COMPANY MAY HAVE WITH ME.” (Jiang Decl. Ex. 1, ¶ 12(A) (emphasis added).)

Second, the Arbitration Agreement is not contradictory. Plaintiff attempts to create a contradiction by pointing to language in the Offer Letter which states the signing of the arbitration agreement is a condition of employment and simultaneously asserts: “I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE.” (Blackburn Decl., Ex. 1, emphasis in original.) The fact the arbitration agreement is a condition of employment does not mean he signed the Agreement involuntarily, or under duress, or as a result of undue influence. Plaintiff fails to demonstrate that the Arbitration Agreement is contradictory.[4]

Third, the Arbitration Agreement provides for adequate discovery. The Arbitration Agreement incorporates the JAMS Employment Arbitration Rules & Procedures (the “JAMS Rules”). Plaintiff appears to argue that the JAMS Rules do not authorize the arbitrator to subpoena non-party witnesses prior to the arbitration proceeding or to compel their depositions. In support, Plaintiff focuses on JAMS Rules, Rule 17(b), which provides, “Each party may take at least one deposition of an opposing party or an individual under the control of the opposing party.” (Gbewonyo Decl., ¶ 2, Ex. 1 (the “JAMS Rules”), p. 10.) However, Plaintiff’s selective citation of Rule 17(b) omits the language empowering the arbitrator to allow as many depositions as needed, based upon the reasonable need for the requested information, the availability of other discovery and the burdensomeness of the request on the opposing Parties and the witness.” (JAMS Rules, p. 10.) In other words, a JAMS arbitrator is empowered to permit discovery necessary to the arbitration of the claims. This comports with case law. (See Lane v. Francis Cap. Mgmt. LLC (2014) 224 Cal.App.4th 676, 693 (citing Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 105–106 for the proposition that by agreeing to arbitrate statutory claims, the employer impliedly agreed to all discovery necessary to adequately arbitrate the claims).)

Plaintiff’s last challenge fares no better. Contrary to Plaintiff’s position, the Arbitration Agreement does not contain an improper confidentiality provision. Nor does the JAMS Rules, which requires only that JAMS and the arbitrator maintain the confidential nature of the arbitration proceeding and award. (See JAMS Rules, Rule 26.) Plaintiff also relies on a confidentiality provision in Paragraph 2 of the Employment Agreement, but a closer look at Paragraph 2 relates only to employer information Plaintiff obtains during the course of his employment.

The court finds Plaintiff has not adequately demonstrated substantive unconscionability.

Because the court finds low levels of procedural unconscionability and no substantive unconscionability, the court finds the Arbitration Agreement is not unconscionable. The Motion to Compel Arbitration is GRANTED.

Defendants move 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 proceedings pending arbitration is Granted.

[1] The signatories to the Employment Agreement, which contains the agreement to arbitrate, are Plaintiff and defendant Faraday only. The remaining defendants— FF Intelligent Mobility Global Holdings, Ltd., Smart King Ltd., and Matthias Aydt—are not signatories. Nevertheless, all defendants bring this motion to compel arbitration of Plaintiff’s claims. In the absence of any disagreement or argument contrary to the application of the Arbitration Agreement to Plaintiff’s claims against nonsignatory defendants, the court addresses the propriety of compelling arbitration as to all defendants.

[2] Although Plaintiff’s opposition begins with substantive unconscionability, the court addresses first the issue of procedural unconscionability.

[3] The timeline of events also underscores the lack of surprise. On March 11, 2016, the Offer Letter apprised Plaintiff of the future requirement to execute an Arbitration Agreement. On April 12, 2016, Plaintiff began his employment and executed the Arbitration Agreement on April 26, 2016. Accordingly, Plaintiff had six weeks to consider whether to actually execute the Arbitration Agreement.

[4] The issue of voluntariness/undue influence/duress generally involve and relate to procedural unconscionability and, as presented here, describe a contract of adhesion, which the court has already addressed. Plaintiff does not argue he was forced to sign the agreement out of undue influence or duress. It was as discussed a condition of his employment.