60 Cal.App.5th 572
Cal. Ct. App.2021Background
- On December 8, 2014 Altamed offered Alvarez employment conditioned on signing an enclosed arbitration agreement; a signed arbitration agreement dated December 18, 2014 bearing Alvarez's signature is in the record.
- The two‑page "Employment At‑Will and Arbitration Agreement California" reaffirmed at‑will status and contained a broad arbitration clause plus an explicit jury‑trial waiver.
- Alvarez began work January 2015, was terminated April 2017, and sued in April 2019 for FEHA violations, wrongful discharge, defamation, and IIED.
- Altamed moved to compel arbitration; the trial court denied the motion, finding procedural and substantive unconscionability and concluding Alvarez did not knowingly waive a jury trial.
- On appeal the Court of Appeal reviewed the agreement de novo, found the arbitration agreement valid, held the jury waiver was express and knowing, and that the CEO's signature was not required.
- The court found only limited procedural unconscionability (adhesive nature) but severed an unconscionable second‑review (appellate arbitral review) provision and reversed the denial of the motion to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/existence of arbitration agreement | No binding arbitration agreement; signature timing and formation defects | Alvarez signed the arbitration agreement; parties agreed arbitration is condition of employment | Agreement is valid; Alvarez's signature treated as genuine; arbitration exists |
| Knowing waiver of jury trial | Alvarez did not knowingly waive jury rights; waiver not highlighted and she lacked copy when accepting | Jury waiver is explicit in the arbitration document and Alvarez signed it | Waiver is explicit and knowing; trial court erred to find otherwise |
| Whether CEO signature required / integration | Arbitration was a modification of the offer and required CEO signature per offer language | Arbitration was part of the offer terms (enclosed) and no CEO signature was necessary | CEO signature not required; arbitration treated as part of the offer |
| Procedural unconscionability (language, adhesion, rules) | Lack of Spanish translation, no copy of arbitration rules, adhesive take‑it‑or‑leave‑it process | Alvarez understood English sufficiently and had time to review; minimal procedural defects | Only limited procedural unconscionability (inherent adhesion) found; not fatal |
| Substantive unconscionability: appellate arbitral review | Second‑arbitrator review creates employer advantage, expense and delay | Provision is bilateral and severable | Second‑review provision is substantively unconscionable and severed; remainder enforced |
Key Cases Cited
- Engalla v. Permanente Medical Group, 15 Cal.4th 951 (1997) (burden and procedures for motions to compel arbitration and court's fact‑finding role)
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong federal policy favoring enforcement of arbitration agreements)
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (2000) (arbitration agreements subject to unconscionability analysis and certain procedural protections)
- OTO, L.L.C. v. Kho, 8 Cal.5th 111 (2019) (sliding scale test for procedural and substantive unconscionability; presumption in favor of arbitrability)
- Little v. Auto Stiegler, Inc., 29 Cal.4th 1064 (2003) (second‑review or trial‑de‑novo clauses can be unconscionable; severability of offending provision)
- Baltazar v. Forever 21, Inc., 62 Cal.4th 1237 (2016) (limits of procedural unconscionability claims based on failure to attach arbitration rules)
- Romo v. Y‑3 Holdings, Inc., 87 Cal.App.4th 1153 (2001) (distinguishing separate unsigned arbitration provisions in handbooks from signed agreements)
- Cummings v. Future Nissan, Inc., 128 Cal.App.4th 321 (2005) (addressing appellate review provisions and preservation of unconscionability arguments)