102 Cal.App.5th 312
Cal. Ct. App.2024Background
- Plaintiff Pamela Cook sued the University of Southern California (USC) and two coworkers for discrimination and harassment related to her employment, including a claim of constructive discharge.
- USC moved to compel arbitration based on an agreement Cook signed as a condition of her employment, which required arbitration of all claims, even those unrelated to her employment, and survived indefinitely beyond her employment.
- Cook opposed, arguing the agreement was unconscionable, both procedurally (as a take-it-or-leave-it contract of adhesion) and substantively (for infinite duration, overly broad scope, and lack of mutuality).
- The trial court denied USC's motion, finding significant substantive unconscionability that could not be severed from the agreement.
- USC appealed, arguing the arbitration agreement was valid and enforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Arbitration Agreement | Agreement covers all claims, even unrelated to employment | Agreement is mutual and covers all employment disputes | Scope is overly broad; unconscionable to require arbitration |
| Duration of Agreement | Agreement lasts indefinitely, unreasonably binding Cook | Agreement should be interpreted as terminable at will | Infinite duration is unconscionable and not terminable at will |
| Mutuality | Agreement compels only Cook, not third parties, to arbitrate | Any benefit to USC's related entities is justified | Agreement lacks mutuality; unjustified benefit to employer |
| Severability | Unconscionable terms permeate agreement, can't be severed | Any problematic terms should be severed | Unconscionability is pervasive; severance would require rewriting |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (Cal. 2000) (establishes standards for unconscionability in arbitration agreements)
- Little v. Auto Stiegler, Inc., 29 Cal.4th 1064 (Cal. 2003) (discusses procedural unconscionability and contracts of adhesion)
- Stirlen v. Supercuts, Inc., 51 Cal.App.4th 1519 (Cal. Ct. App. 1997) (addresses margin of safety and mutuality in arbitration agreements)
- Samaniego v. Empire Today, LLC, 205 Cal.App.4th 1138 (Cal. Ct. App. 2012) (rejects rewriting of unconscionable contract provisions by courts)
- Martinez v. Master Protection Corp., 118 Cal.App.4th 107 (Cal. Ct. App. 2004) (cost-sharing provisions in arbitration can be unconscionable)