Malone v. Superior Court
173 Cal. Rptr. 3d 241
Cal. Ct. App.2014Background
- Malone, a former bank employee, signed (via employee handbook) an arbitration agreement governed by the FAA that included a delegation clause giving the arbitrator exclusive authority to decide interpretation, applicability, and enforceability of the arbitration agreement.
- Malone sued CB&T in 2013 on wage-and-hour and UCL theories and sought class relief; CB&T moved to compel individual arbitration based on the handbook clause.
- Malone opposed, arguing the arbitration agreement and specifically the delegation clause were unconscionable; she relied on Murphy, Bruni, and Ontiveros.
- The trial court concluded those appellate precedents were undermined by the U.S. Supreme Court’s decision in Concepcion and California Supreme Court guidance in Sonic‑Calabasas, enforced the delegation clause, and compelled arbitration.
- Malone petitioned for writ of mandate; the Court of Appeal reviewed whether the delegation clause itself was unconscionable and whether any such ruling would be preempted by the FAA.
- The Court of Appeal denied the petition, holding the delegation clause was clear and not unconscionable under the facts, and parts of the earlier appellate rationale (re bias and one‑sidedness) are preempted or inapplicable post‑Concepcion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the delegation clause is enforceable or unconscionable | Malone: delegation clause (and arbitration agreement) is unconscionable under Murphy/Bruni/Ontiveros and therefore courts must decide arbitrability | CB&T: clause is clear, unmistakable, bilateral, and enforceable; FAA and Concepcion preempt categorical hostility to arbitration | Court: clause is clear and not unconscionable here; trial court correctly enforced it and sent enforceability of the agreement as a whole to the arbitrator |
| Whether Murphy/Bruni/Ontiveros remain good law after Concepcion and Sonic‑Calabasas | Malone: those cases apply because facts are similar; delegation clauses can be invalid case‑by‑case | CB&T: those decisions are undermined by Concepcion/Sonic and FAA preemption of rules that disfavour arbitration | Court: parts of those cases (bias-based and per se rules) are preempted or inapplicable; remaining rationale insufficient to show unconscionability here |
| Whether concerns about arbitrator bias (repeat players/financial incentive) can render delegation clauses substantively unconscionable | Malone: repeat‑player and financial incentives make arbitrators biased, supporting unconscionability | CB&T: such generalized hostility to arbitration is preempted by the FAA and unsupported without specific evidence | Court: generalized bias concerns are preempted by the FAA; absent specific evidence of biased arbitrator, cannot render clause unconscionable |
| Whether an adhesion contract alone renders a delegation clause unenforceable | Malone: adhesive nature supports procedural unconscionability | CB&T: adhesion alone insufficient; must show significant substantive unconscionability | Held: Adhesion shows some procedural unconscionability but not enough—substantive showing here (only claim that clause was outside expectations) was insufficient to defeat enforcement |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that unduly interfere with arbitration's fundamental attributes)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (party may be allowed to delegate gateway questions to arbitrator; courts decide only specific challenges to delegation clauses)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitrability delegation must be clear and unmistakable)
- Sonic‑Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (California guidance on applying unconscionability after Concepcion; limits on state rules that disfavour arbitration)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (2005) (pre‑Concepcion rule making certain class‑action waivers unconscionable in consumer adhesion contracts)
- Murphy v. Check ’N Go of California, Inc., 156 Cal.App.4th 138 (2007) (held delegation clause unconscionable — later undermined by FAA/Concepcion analysis)
- Bruni v. Didion, 160 Cal.App.4th 1272 (2008) (held delegation clause unconscionable in adhesion context — later undermined)
- Ontiveros v. DHL Express (USA), Inc., 164 Cal.App.4th 494 (2008) (held delegation clause unconscionable citing repeat‑player/arbitrator bias concerns — later limited)