Samaniego v. Empire Today, LLC
205 Cal. App. 4th 1138
| Cal. Ct. App. | 2012Background
- Empire, a national flooring business, seeks to compel arbitration of labor-code claims by carpet installers sued in a class action.
- Plaintiffs Samaniego and Garcia signed English-only, take-it-or-leave-it subcontractor agreements; they lacked meaningful opportunity to review and lacked copies of arbitration rules.
- The arbitration clause appears late in an 11-page, densely worded contract; the overall agreement includes one-sided provisions and a six-month limitations period, plus one-way fee shifting.
- The trial court found the agreement procedurally and substantively unconscionable and refused to compel arbitration; Concepcion was issued after the denial.
- Empire appeals, arguing choice-of-law should apply Illinois law and seeking severance of unconscionable provisions.
- Court agrees California law applies, finds the agreement unconscionable, and affirms denial of arbitration; severance and late-filed declarations issues are resolved in favor of the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration clause is unconscionable. | Samaniego as plaintiff argues procedural and substantive unconscionability due to adhesion contract, English-only terms, and one-sided provisions. | Empire argues limited procedural unconscionability and that the terms are otherwise valid. | Yes, unconscionable and unenforceable under Armendariz. |
| Whether the trial court properly refused severance and enforced arbitration in light of unconscionable provisions. | Permeated unconscionability warrants denying arbitration; severance would not serve justice. | Severance should be allowed to enforce remaining arbitration provisions. | The court did not abuse its discretion; severance denied. |
| Whether California law applies or Illinois law governs the arbitration clause. | Illinois choice-of-law provision should govern. | Choice-of-law clause should apply; Illinois law controls. | California law applies; enforcement would be unjust under Nedlloyd framework. |
| Whether Concepcion affects the analysis and FAA preemption of California unconscionability standards. | Concepcion may preempt California unconscionability rationale. | Concepcion does not change the California unconscionability analysis for this case. | Concepcion does not alter the analysis; unconscionability remains valid. |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (establishes unconscionability framework for arbitration agreements)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (classwide arbitration concerns in adhesion contracts)
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (conflicts of law and enforceability of choice-of-law clauses in adhesion contracts)
- Washington Mutual Bank v. Superior Court, 24 Cal.4th 906 (Cal. 2001) (restatement approach to choice-of-law and forum concerns in adhesion contracts)
- Harper v. Ultimo, 113 Cal.App.4th 1402 (Cal. App. 2003) (arbitration rule disclosure impacts procedural unconscionability)
- Trivedi v. Curexo Technology Corp., 189 Cal.App.4th 387 (Cal. App. 2010) (procedural unconscionability and failure to attach arbitration rules)
- Lhotka v. Geographic Expeditions, Inc., 181 Cal.App.4th 816 (Cal. App. 2010) (sliding-scale approach to unconscionability; severability considerations)
- Ellsworth v. Southwest Airlines Co., not applicable () (not included)
- Wherry v. Award, Inc., 192 Cal.App.4th 1242 (Cal. App. 2011) (one-sided arbitration provisions and statutory rights)
- Armendariz Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (see above (duplicate entry kept for accuracy))