Carmona v. Lincoln Millennium Car Wash CA2/8
226 Cal. App. 4th 74
| Cal. Ct. App. | 2014Background
- Four employees (including two Spanish-only speakers) signed multi-page form employment agreements containing an arbitration clause and multiple confidentiality provisions; portions were translated into Spanish but key confidentiality/enforceability language was not.
- Plaintiffs claimed they were given the forms on a take-it-or-leave-it basis, had little time to review, were not told arbitration waived court access, and did not understand English portions.
- The agreement’s arbitration clause required arbitration of employment disputes under AAA rules; a separate confidentiality subagreement (not translated) broadly defined confidential information and allowed employer to seek injunctions or damages in court or arbitration.
- The enforceability clause permitted the employer to choose court or arbitration for confidentiality breaches, to recover attorneys’ fees for enforcement, and declared breaches cause "immediate, irreparable harm."
- Trial court denied the employer’s petition to compel arbitration, finding the arbitration agreement both procedurally and substantively unconscionable and refusing to sever unconscionable provisions; employer appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Procedural unconscionability of arbitration agreement | Agreement was adhesive, given under economic pressure with insufficient time, and key terms not translated — causing oppression and surprise. | Agreement was standard employment prerequisite; some Spanish translation provided; mandatory arbitration alone does not invalidate. | Court: High degree of procedural unconscionability (adhesive form, surprise from untranslated enforceability clause, no explanation of arbitration). |
| Substantive unconscionability — lack of mutuality (forum, fees, presumptions) | Employer reserved ability to sue in court while forcing employees to arbitrate; one-sided fee-shifting and presumptions of irreparable harm favor employer. | Employer contends forum choice is bilateral in operation and Civil Code §1717 cures unilateral fee-shifting. | Court: Agreement substantively unconscionable — one-sided forum choice, fee provision contributes to unconscionability despite §1717, no business justification for lack of mutuality. |
| Confidentiality provisions and "free peek" pre-arbitration requirement | Confidentiality clause required employees to discuss disputes with management before seeking outside help, giving employer an investigative advantage. | Employer characterized provisions as legitimate protection of proprietary information. | Court: Provision creates a unilateral "free peek," contributing to substantive unconscionability. |
| Severability of unconscionable clauses | Plaintiffs: multiple defects infect the agreement; severance inappropriate. | Employer: Unconscionable terms are severable (enforceability clause) and arbitration clause should stand. | Court: Multiple related defects show a systematic effort to advantage employer; refusing severance and affirming denial to compel arbitration. |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Servs., 24 Cal.4th 83 (Cal. 2000) (sets framework for procedural and substantive unconscionability in employment arbitration and mutuality requirement)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), 55 Cal.4th 223 (Cal. 2012) (defines procedural unconscionability: oppression and surprise)
- Samaniego v. Empire Today, 205 Cal.App.4th 1138 (Cal. Ct. App. 2012) (unilateral fee and confidentiality carve-outs support unconscionability finding)
- Nyulassy v. Lockheed Martin Corp., 120 Cal.App.4th 1267 (Cal. Ct. App. 2004) (pre-arbitration employer-controlled dispute process can give employer a "free peek")
- Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (Civil Code §1717 converts unilateral attorney-fee provision into reciprocal remedy but does not eliminate its contribution to unconscionability)