Judge Michael P. Linfield, Case Number: 23STCV19796, Date: 2023-12-12 Tentative Ruling

Judge: Michael P. Linfield, Case: 23STCV19796, Date: 2023-12-12 Tentative Ruling

Case Number: 23STCV19796 Hearing Date: December 12, 2023 Dept: 34

SUBJECT: Motion to Compel Arbitration and Stay Action Pending Arbitration

Moving Party: Defendant Sensei AG Holdings, Inc.

Resp. Party: Plaintiff Jeffrey Johnston

The Motion to Compel Arbitration and Stay Action Pending Arbitration is DENIED.

BACKGROUND:

On August 18, 2023, Plaintiff Jeffrey Johnston filed his Complaint against Defendant Sensei AG Holdings, Inc. on causes of action arising from Plaintiff’s employment by Defendant.

On October 30, 2023, Defendant filed its Motion to Compel Arbitration and Stay Action Pending Arbitration. In support of its Motion, Defendant concurrently filed: (1) Declaration of Jennifer G. Redmond; (2) Declaration of Christian Boullon; (3) Proposed Order; and (4) Amended Proof of Service.

On November 29, 2023, Plaintiff filed his Opposition to the Motion. In support of his Opposition, Plaintiff concurrently filed: (1) Declaration of Jeffrey Johnston; (2) Declaration of Ruben Escalante; and (3) Amended Proof of Service.

On December 4, 2023, Plaintiff filed his Notice of Updated Information Re Opposition to Motion.

On December 5, 2023, Defendant filed its Reply regarding the Motion. Defendant concurrently filed its Proof of Service.

ANALYSIS:

I. Legal Standard

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists [unless it makes certain determinations].” (Code Civ. Proc., § 1281.2.)

“Under both federal and state law, arbitration agreements are valid and enforceable, unless they are revocable for reasons under state law that would render any contract revocable. . . . Reasons that would render any contract revocable under state law include fraud, duress, and unconscionability.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239, citations omitted.)

“The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence the existence of an arbitration agreement.¿The party opposing the petition bears the burden of establishing a defense to the agreement's enforcement by a preponderance of the evidence.¿In determining whether there is a duty to arbitrate, the trial court must, at least to some extent, examine and construe the agreement.” (Tiri, supra, at p. 239.)

II. Discussion

A. The Arbitration Agreement

Defendant submits a document titled “At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement” (“Arbitration Agreement”). (Decl. Boullon, Exh. B, p. 1.) The Arbitration Agreement is purportedly signed by Plaintiff on July 20, 2020. (Id. at p. 14.)

The following are the relevant portions of the Arbitration Agreement.

As a condition of my employment with Sensei Holdings, Inc (the “Company”), and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by the Company, I agree to the following provisions of this At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement (this “Agreement”):

. . .

11. Arbitration and Equitable Relief

A. Arbitration. IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES WITH ME, AND MY RECEIPT OF COMPENSATION AND OTHER COMPANY BENEFITS, AT PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES THAT I MAY HAVE WITH THE COMPANY (INCLUDING ANY COMPANY EMPLOYEE, OFFICER, DIRECTOR, TRUSTEE, OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT OR RELATIONSHIP WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT OR RELATIONSHIP WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT (9 U.S.C. SEC. 1 ET SEQ.) (THE “FAA”). THE FAA’S SUBSTANTIVE AND PROCEDURAL PROVISIONS SHALL EXCLUSIVELY GOVERN AND APPLY WITH FULL FORCE AND EFFECT TO THIS ARBITRATION AGREEMENT, INCLUDING ITS ENFORCEMENT, AND ANY STATE COURT OF COMPETENT JURISDICTION SHALL COMPEL ARBITRATION IN THE SAME MANNER AS A FEDERAL COURT UNDER THE FAA. I FURTHER AGREE THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, I MAY BRING ANY ARBITRATION PROCEEDING ONLY IN MY INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF, REPRESENTATIVE, OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE, OR REPRESENTATIVE LAWSUIT OR PROCEEDING. I UNDERSTAND, HOWEVER, THAT NOTHING IN THIS AGREEMENT PREVENTS ME FROM BRINGING A REPRESENTATIVE LAWSUIT OR PROCEEDING AS PERMITTED BY THE CALIFORNIA LABOR CODE’S PRIVATE ATTORNEYS GENERAL ACT OF 2004. TO THE FULLEST EXTENT PERMITTED BY LAW, I AGREE TO ARBITRATE ANY AND ALL COMMON LAW AND/OR STATUTORY CLAIMS UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE FAMILY AND MEDICAL LEAVE ACT, THE CALIFORNIA FAMILY RIGHTS ACT, THE CALIFORNIA LABOR CODE, CLAIMS RELATING TO EMPLOYMENT STATUS, CLAIMS RELATING TO COMPENSATION (CASH, EQUITY, BONUS, OR OTHERWISE), CLAIMS RELATING TO CLASSIFICATION, AND CLAIMS OF HARASSMENT, DISCRIMINATION, WRONGFUL TERMINATION, AND BREACH OF CONTRACT. TO THE FULLEST EXTENT PERMITTED BY LAW, I ALSO AGREE TO ARBITRATE ANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THE INTERPRETATION OR APPLICATION OF THIS AGREEMENT TO ARBITRATE, BUT NOT DISPUTES ABOUT THE ENFORCEABILITY, REVOCABILITY, OR VALIDITY OF THIS AGREEMENT TO ARBITRATE OR THE CLASS, COLLECTIVE, AND REPRESENTATIVE PROCEEDING WAIVER HEREIN. WITH RESPECT TO ALL SUCH CLAIMS AND DISPUTES THAT I AGREE TO ARBITRATE, I HEREBY EXPRESSLY AGREE TO WAIVE, AND DO WAIVE, ANY RIGHT TO A TRIAL BY JURY. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME. I UNDERSTAND THAT NOTHING IN THIS AGREEMENT REQUIRES ME TO ARBITRATE CLAIMS THAT CANNOT BE ARBITRATED UNDER THE SARBANES-OXLEY ACT OR OTHER LAW THAT EXPRESSLY PROHIBITS ARBITRATION OF A CLAIM NOTWITHSTANDING THE APPLICATION OF THE FAA.

B. Administration of Arbitration. I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY JAMS PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (THE “JAMS RULES”), WHICH ARE AVAILABLE AT http://www.jamsadr.com/rules-employment-arbitration/. IF THE JAMS RULES CANNOT BE ENFORCED AS TO THE ARBITRATION, THEN THE PARTIES AGREE THAT THEY WILL ARBITRATE THIS DISPUTE UTILIZING JAMS COMPREHENSIVE ARBITRATION RULES AND PROCEDURES OR SUCH RULES AS THE ARBITRATOR MAY DEEM MOST APPROPRIATE FOR THE DISPUTE. I AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR SUMMARY JUDGMENT AND/OR ADJUDICATION, AND MOTIONS TO DISMISS AND DEMURRERS, APPLYING THE STANDARDS SET FORTH FOR SUCH MOTIONS UNDER THE CALIFORNIA CODE OF CIVIL PROCEDURE. I AGREE that the arbitrator shall issue a written decision on the merits. I ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO AWARD ANY REMEDIES AVAILABLE UNDER APPLICABLE LAW, AND THAT THE ARBITRATOR MAY AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, WHERE PERMITTED BY APPLICABLE LAW. I agree that the decree or award rendered by the arbitrator may be entered as a final and binding judgment in any court having jurisdiction thereof. I UNDERSTAND THAT THE COMPANY WILL PAY FOR ANY ADMINISTRATIVE OR HEARING FEES CHARGED BY THE ARBITRATOR OR JAMS EXCEPT THAT I SHALL PAY ANY FILING FEES ASSOCIATED WITH ANY ARBITRATION THAT I INITIATE, BUT ONLY SO MUCH OF THE FILING FEES AS I WOULD HAVE INSTEAD PAID HAD I FILED A COMPLAINT IN A COURT OF LAW THAT WOULD HAVE HAD JURISDICTION OVER SUCH COMPLAINT. SUBJECT TO THE FAA’S EXCLUSIVE APPLICABILITY TO THE ENFORCEMENT OF THIS AGREEMENT TO ARBITRATE, I AGREE THAT THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION HEARING OR PROCEEDING APPLYING CALIFORNIA SUBSTANTIVE AND DECISIONAL LAW AND THE CALIFORNIA CODE OF CIVIL PROCEDURE, INCLUDING THE CALIFORNIA CIVIL DISCOVERY ACT. I agree that any arbitration under this Agreement shall be conducted in SAN FRANCISCO COUNTY, California.

C. Remedy. FOR PURPOSES OF SEEKING PROVISIONAL REMEDIES ONLY, I AGREE THAT THE COMPANY AND I SHALL BE ENTITLED TO PURSUE ANY PROVISIONAL REMEDY PERMITTED BY THE CALIFORNIA ARBITRATION ACT (CALIFORNIA CODE CIV. PROC. § 1281.8), OR OTHERWISE PROVIDED BY THIS AGREEMENT. EXCEPT FOR SUCH PROVISIONAL RELIEF, I AGREE THAT ANY RELIEF OTHERWISE AVAILABLE TO THE COMPANY OR ME UNDER APPLICABLE LAW SHALL BE PURSUED SOLELY AND EXCLUSIVELY IN ARBITRATION PURSUANT TO THE TERMS OF THIS AGREEMENT.

D. Administrative Relief. I UNDERSTAND THAT THIS AGREEMENT DOES NOT PROHIBIT ME FROM PURSUING AN ADMINISTRATIVE CLAIM WITH A LOCAL, STATE, OR FEDERAL ADMINISTRATIVE BODY OR GOVERNMENT AGENCY THAT IS AUTHORIZED TO ENFORCE OR ADMINISTER LAWS RELATED TO EMPLOYMENT, INCLUDING, BUT NOT LIMITED TO, THE DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, THE NATIONAL LABOR RELATIONS BOARD, THE SECURITIES AND EXCHANGE COMMISSION, OR THE WORKERS’ COMPENSATION BOARD. THIS AGREEMENT DOES, HOWEVER, PRECLUDE ME FROM PURSUING A COURT ACTION REGARDING ANY SUCH CLAIM, EXCEPT AS PERMITTED BY LAW.

E. Voluntary Nature of Agreement. I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL. I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.

(Decl. Boullon, Exh. B, emphases in original.)

B. The Parties’ Arguments

Defendant moves the Court to enforce the Arbitration Agreement and stay this action pending completion of arbitration. (Motion, p. 15:17–20.)

Plaintiff opposes the Motion, arguing that the Arbitration Agreement is both procedurally and substantively unconscionable. (Opposition, pp. 4:18, 4:23, 6:17.)

In its Reply, Defendant argues that the Arbitration is neither procedurally nor substantively unconscionable, but that the Court should sever any unconscionable terms. (Reply, pp. 6:10, 8:25, 14:24.)

C. Whether an Arbitration Agreement Exists

The Arbitration Agreement appears to be signed by Plaintiff on July 20, 2020. (Decl. Boullon, Exh. B, p. 14.) Plaintiff does not dispute that he signed the Arbitration Agreement. (Decl. Johnston, ¶ 3.)

Plaintiff does not argue in his opposition that there is no arbitration agreement. The Court finds that Defendant has met its burden to show that an arbitration agreement exists.

D. Unconscionability

1. Legal Standard

“Agreements to arbitrate may be invalidated if they are found to be unconscionable.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 713, citations omitted.)

“Unconscionability consists of both procedural and substantive elements. The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. (Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC (2012) 55 Cal.4th 223, 246, citations omitted.)

“‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ But they need not be present in the same degree. ‘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 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 v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114, [cleaned up], italics in original, abrogated in part on other grounds by AT&T Mobility LLC v. Concepcion (2010) 565 U.S. 333.).)

“The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle, supra, 55 Cal.4th at p. 247, citation omitted.)

“Moreover, courts are required to determine the unconscionability of the contract ‘at the time it was made.’” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 920, quoting Civ. Code, § 1670.5.)

“Unconscionability is ultimately a question of law.” (Patterson v. ITT Consumer Fin. Corp. (1993) 14 Cal.App.4th 1659, 1663, citation omitted.)

2. Procedural Unconscionability

a. Legal Standard

“[P]rocedural unconscionability requires oppression or surprise. 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 [cleaned up].)

“The procedural element of an unconscionable contract generally takes the form of a contract of adhesion . . . .” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.)

b. Discussion

Plaintiff argues that the Arbitration Agreement is procedurally unconscionable. Defendant disagrees.

Plaintiff is correct.

“Absent unusual circumstances, a contract offered on a take-it-or-leave-it is deemed adhesive, and a commercial transaction conditioned on a party’s acceptance of such a contract is deemed procedurally unconscionable.” (Vasquez v. Greene Motors, Inc. (2013) 214 Cal.App.4th 1172, 1184.)

“[F]ew employees are in a position to refuse a job because of an arbitration agreement.” (Armendariz, supra, 24 Cal.4th at p. 115.)

The Arbitration Agreement is a classic take-it-or-leave-it contract of adhesion. Defendant did not give Plaintiff a meaningful choice or opportunity to negotiate the document. (Decl. Johnston, ¶ 3.)

The Court finds that the Arbitration Agreement is procedurally unconscionable.

3. Substantive Unconscionability

a. Legal Standard

“Substantive unconscionability focuses on overly harsh or one-sided results. In assessing substantive unconscionability, the paramount consideration is mutuality.” (Fitz, supra, 118 Cal.App.4th at p. 723 [cleaned up].)

b. Discussion

Plaintiff argues that the Arbitration Agreement is substantively unconscionable, pointing to: (1) multiple instances of non-mutuality; (2) the requirement for arbitrating in San Francisco County; (3) the lack of sufficient discovery; and (4) a provision against “taking away employees,” which Plaintiff claims is illegal. (Opposition, pp. 6:20, 6:24, 7:14, 9:1–2, 9:18, 11:19, 12:8–9, 14:3, 14:19.) Plaintiff further argues that the unconscionable provisions are not severable. (Id. at p. 15:1.)

Defendant disagrees, arguing: (1) that the Parties have an equal obligation to arbitrate; (2) that the Invention Assignment Agreement remedies provision do not evidence unconscionability; (3) that the forum selection clause is not unconscionable and is easily severable; (4) that the Arbitration Agreement provides for adequate discovery; and (5) that the other terms identified by Plaintiff are not unconscionable or unlawful. (Reply, pp. 9:5, 10:21, 12:18, 13:4, 13:24.) Defendant argues that the Court should severe any unconscionable terms. (Id. at p. 14:24.)

The Court agrees with Plaintiff.

The provisions of the Arbitration Agreement lack mutuality. The Agreement which was signed by Plaintiff binds him but not the company. For instance, the agreement states:

· “As a condition of my employment . . ., I agree to the following provisions . . . .”

· “IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY . . . I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES THAT I MAY HAVE WITH THE COMPANY . . . SHALL BE SUBJECT TO BINDING ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT (9 U.S.C. SEC. 1 ET SEQ.)”

· “I FURTHER AGREE THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, I MAY BRING ANY ARBITRATION PROCEEDING . . . .”

· “TO THE FULLEST EXTENT PERMITTED BY LAW, I AGREE TO ARBITRATE ANY AND ALL COMMON LAW AND/OR STATUTORY CLAIMS . . . . TO THE FULLEST EXTENT PERMITTED BY LAW, I ALSO AGREE TO ARBITRATE ANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THE INTERPRETATION OR APPLICATION OF THIS AGREEMENT TO ARBITRATE . . . .”

· “I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.”

· “I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY JAMS . . . .”

· “I agree that any arbitration under this Agreement shall be conducted in SAN FRANCISCO COUNTY, California.”

· “I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL. I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.”

Although not raised by Plaintiff, the Court notes that the arbitration agreement is not signed by the company.

Any appearance of mutuality evaporates under closer inspection. For instance, the agreement states that Plaintiff “understand[s] that this agreement to arbitrate also applies to any disputes that the company may have with me.” (Boullon Decl., Exh. B.) This is simply a statement of Plaintiff’s understanding; it is not a commitment by the company to arbitrate. Even the first sentence of the agreement is illusory in its mutuality. The agreement states that the company “promise[s] to arbitrate all employment-related disputes” with Plaintiff. But the agreement is not signed by the company. (Boullon Decl., Exh. B.) Further, even if it were found that the company had agreed to arbitrate all employment-related disputes, the company has nowhere agreed to the details of such arbitration: e.g., that the arbitration be administered by JAMS or that it take place in San Francisco.

The Court is aware that some courts have held that the company need not sign the arbitration agreement for it to be enforceable. “A party who has signed a contract may be compelled specifically to perform it, though the other party has not signed it, if the latter has performed, or offers to perform it on his part, and the case is otherwise proper for enforcing specific performance.” (Civ. Code, § 3388; see Serafin v. Balco Props. Ltd., LLC (2015) 235 Cal.App.4th 165, 177 [holding that Civil Code section 3388 applies in the context of arbitration agreements].) But taking that route would add another layer of unconscionability. It would allow Defendant to enforce the arbitration agreement if it wished, but at the same time would allow Defendant to sue Plaintiff in Court if it so desired. That is simply not fair.

There is no mutuality, where only Plaintiff but not Defendant is bound by the arbitration agreement.

On the sole basis of this complete lack of mutuality, the Court can find that this Arbitration Agreement is substantively unconscionable.

However, other provisions of the agreement are also substantively unconscionable. The agreement incorporates JAMS rules, which limit each side to one deposition, unless the arbitrator decides, in their own discretion, to allow more. This is unconscionable.

“While superficially neutral, the discovery restrictions favor defendants. Employment disputes are factually complex, and their outcomes are often determined by the testimony of multiple percipient witnesses, as well as written information about the disputed employment practice. Seemingly neutral limitations on discovery in employment disputes may be nonmutual in effect. This is because the employer already has in its possession many of the documents relevant to an employment case as well as having in its employ many of the relevant witnesses.” (De Leon v. Pinnacle Prop. Mgmt. Servs., LLC (2021) 72 Cal.App.5th 476, 487–488 [cleaned up].)

This Court recognizes that some decisions have upheld arbitration provisions that limit the right of discovery to one deposition, with further depositions allowable by a showing of need. (See, for example, Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 982–985.) This is because the Court must “assume that the arbitrator will operate in a reasonable manner in conformity with the law.” (Ibid.) However, other Courts of Appeal have noted that such a provision can add to the substantive unconscionability of an arbitration agreement. (See, for example, Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 118–119 [“Nevertheless, considered against the backdrop of the other indisputably unconscionable provisions, the limitations on discovery do, in our view, compound the one-sidedness of the arbitration agreement.”].)

Further, the requirement that arbitration occur in San Francisco County – although Plaintiff worked for Defendant in Los Angeles County – further adds to the substantive unconscionability of the Arbitration Agreement.

“Where an ‘arbitration agreement contains more than one unlawful provision,’ that factor weighs against severance.” (Penilla v. Westmont Corp. (2016) 3 Cal.App.5th 205, 222, quoting Armendariz, supra, 24 Cal.4th at pp. 124–125.) “[U]pholding this type of agreement with multiple unconscionable terms would create an incentive for an employer to draft a one-sided arbitration agreement in the hope employees would not challenge the unlawful provisions, but if they do, the court would simply modify the agreement to include the bilateral terms the employer should have included in the first place.” (Mills v. Facility Sols. Grp., Inc. (2022) 84 Cal.App.5th 1035, 1045.)

The Court finds that substantive unconscionability permeates the document. Choosing to sever multiple clauses would encourage the drafters of arbitration agreements to include as many unconscionable clauses as many unconscionable clauses as possible, knowing courts might catch some but not all of them.

The Arbitration Agreement is both procedurally unconscionable and substantively unconscionable. The arbitration agreement is procedurally unconscionable because it was a take-it-or-leave-it contract of adhesions. The arbitration agreement is substantively unconscionable containing multiple substantively unconscionable provisions.

III. Conclusion

The Motion to Compel Arbitration and Stay Action Pending Arbitration is DENIED.