41 Cal.App.5th 753
Cal. Ct. App.2019Background:
- Bakersfield College (member of the California Community College Athletic Association) agreed to the Association’s constitution/bylaws as a condition of participating in intercollegiate football, including a four-step appeals process culminating in binding arbitration.
- The College was sanctioned in 2013; after exhausting the first three appeal levels it did not pursue arbitration and instead sued, alleging the arbitration provision was unconscionable.
- Key arbitration terms: a pre‑selected 12‑person master panel (appointments controlled by the Association/League executives and kept secret), three arbitrators chosen from that list, a five working‑day deadline to demand arbitration with simultaneous statement of issues, waiver of testimonial hearings/evidence at arbitration, and one‑sided attorney‑fee provisions favoring the Association.
- The trial court severed the one‑sided fee subsections, found only minimal procedural unconscionability, compelled arbitration, and dismissed the litigation for failure to exhaust administrative remedies.
- The Court of Appeal reviewed arbitrability de novo, concluded the contract was procedurally and substantively unconscionable (notably for lack of mutuality, secret unilateral panel selection, and the short filing deadline), found the defects permeated the arbitration agreement, and reversed the judgment compelling arbitration.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Procedural unconscionability — was the arbitration clause adhesive/take‑it‑or‑leave‑it? | Clause was drafted by Association; College had no meaningful ability to negotiate or opt out when joining. | College is sophisticated and could propose later amendments; thus no adhesion. | Procedural unconscionability found: take‑it‑or‑leave‑it presentation at formation; post‑formation amendment rights irrelevant. |
| Substantive unconscionability — lack of mutuality (who must arbitrate)? | Provision forces member colleges to arbitrate appeals but does not bind the Association to arbitrate its claims; thus one‑sided. | The clause is bilateral as written; scope shows it can apply to those who use arbitration. | Provision lacks mutuality: the Association would not be subject to the same limitation and gave no reasonable business justification. |
| Other substantive defects — neutral arbitrator, short filing period, fee shifting | Secret master list and Association control over appointments, five‑day demand deadline, and one‑sided fee rules make arbitration one‑sided and unfair. | Selection/custom may be practical and extensions could be requested; Civil Code §1717 cures fee asymmetry. | These features are substantively unconscionable: unilateral selection creates presumptive bias, five‑day limit is unreasonably short, and §1717 does not cure the written one‑sided fee provisions for unconscionability analysis. |
| Severability — may court sever offending terms or must it refuse enforcement? | Even if some parts are severed, multiple defects permeate the agreement so it must be voided. | Trial court severed fee subsections and enforced remainder. | Arbitration agreement is permeated by unconscionability and cannot be salvaged by severance or narrow reform; entire provision unenforceable. |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (adhesive arbitration agreements require basic fairness, mutuality, and neutral arbitrator)
- Magno v. The College Network, Inc., 1 Cal.App.5th 277 (Cal. Ct. App. 2016) (sliding‑scale unconscionability, permeation and severance framework)
- Nyulassy v. Lockheed Martin Corp., 120 Cal.App.4th 1267 (Cal. Ct. App. 2004) (procedural unconscionability and mutuality analysis)
- Sonic‑Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (Cal. 2013) (unconscionability judged as of the time the contract was made)
- A & M Produce Co. v. FMC Corp., 135 Cal.App.3d 473 (Cal. Ct. App. 1982) (even large businesses may lack bargaining power against a stronger party)
- American Home Assurance Co. v. Benowitz, 234 Cal.App.3d 192 (Cal. Ct. App. 1991) (one‑sided arbitrator selection creates presumptive bias)