ANGELICA RAMIREZ, Plaintiff and Respondent, v. CHARTER COMMUNICATIONS, INC., Defendant and Appellant.
B309408
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FOUR
Filed 2/18/22
CERTIFIED FOR PUBLICATION
David J. Cowan, Judge.
(Los Angeles County Super. Ct. No. 20STCV25987)
Hill, Farrer & Burrill, James A. Bowles and Casey L. Morris for Defendant and Appellant.
Plaintiff Angelica Ramirez and defendant Charter Communications, Inc. (Charter) are parties to an arbitration agreement. After Charter terminated Ramirez‘s employment, Ramirez filed suit alleging claims under the Fair Employment and Housing Act (
We affirm the trial court‘s order denying the motion to compel arbitration (though we disagree with certain pаrticulars of the trial court‘s reasoning). In affirming, we also disagree with Patterson v. Superior Court (2021) 70 Cal.App.5th 473 (Patterson), which considered the enforceability of a provision in the same arbitration agreement at issue here that awards attorney fees to the prevailing party on a motion to compel arbitration. After concluding that the provision is not enforceable as written, the court in Patterson incorporated an implied term bringing the provision into accord with the asymmetrical attorney fee standard of FEHA under
FACTUAL AND PROCEDURAL BACKGROUND
In 2017, Charter created a program for resolving and ultimately arbitrating employment-related disputes, called Solution Channel. All individuals applying for a position with Charter were required to agree to participate in Solution Channel as well as agree to Chartеr‘s mutual arbitration agreement (arbitration agreement). Individuals who applied and received an offer from Charter were then required to complete a web-based onboarding process as a condition of employment. Prospective employees were prompted to review
After agreeing to submit all employment-related disputes with Charter to arbitration, Ramirez was hired as an employee in July 2019. In May 2020, Charter terminated Ramirez. In July 2020, Ramirez filed suit, alleging multiple causes of action under FEHA and wrongful discharge in violation of public policy.
Charter filed a motion to compel arbitration and sought attorney fees in connection with its motion pursuant to the arbitration agreement. In opposition, Ramirez argued that the arbitration agreement was procedurally unconscionable because it was a contract of adhesion. She argued the agreement was substantively unconscionable for several reasons, including that it shortened the statute of limitations, broadened the employer‘s ability to recover attorney fees against an employee, unduly limited discovery, and favored the employer in defining the scope of the claims covered. She also argued that because unconscionability permeated the agreement, severance was not permissible. Lastly, Ramirez contended Charter was not entitled to attorney fees and in any event, the request for fees was itself substantially unconscionable. Charter responded that the arbitration agreement‘s terms were not unconscionable and, even if specific terms were unconscionable, the trial court should sever them and enforce the parties’ agreement to arbitrate.
Prior to the hearing on the motion, the court issued a tentаtive ruling granting Charter‘s motion to compel. The tentative ruling found that there was minimal procedural unconscionability from the adhesive nature of the contract, and two points of substantive unconscionability—the restriction on timing for arbitration of FEHA claims and the remedy provision for prevailing party fees—were severable. The tentative ruling denied Charter‘s request for attorney fees in connection with the motion to compel pursuant to the arbitration agreement.
At the November 16, 2020 hearing, counsel for Ramirez noted that in the tentative ruling the court “found minimal procedural unconscionability because there was a forced arbitration agreement as a condition of employment.” But there were in fact three, not two, points of substantive unconscionability that were part of the tentative: the restriction on timing for arbitration of FEHA claims; the remedy provision for prevailing party fees; and the attorney fee provision regarding а party bringing a successful motion to compel. Counsel further argued the arbitration agreement lacked mutuality and that the 90 days to complete discovery was also substantively unconscionable. Counsel emphasized that unconscionability must be analyzed at the time the parties entered into the agreement, instead of at the time of
On November 25, 2020, the court issued a final written ruling denying Charter‘s motion to compel. The court noted that it was undisputed the arbitration agreement was an adhesion contract as a mandatory condition of employment. However, adhesion alone establishes only a minimum degree of procedural unconscionability. But the court further found thе agreement was substantively unconscionable because it shortened the statute of limitations for FEHA claims, failed to restrict attorney fee recovery to only frivolous or bad faith FEHA claims (contrary to FEHA), and impermissibly provided for an interim fee award for a party successfully compelling arbitration. The court did not find the limited discovery or the exclusion of certain claims under the agreement substantially unconscionable. The court concluded the arbitration agreement is “permeated with unconscionability” and therefore, severance was improper.
Charter filed a timely notice of appeal.
DISCUSSION
Charter contends the trial court erred in denying its motion to compel because the arbitration agreement is neither procedurally nor substantively unconscionable. And even if it were, the trial court should have severed the substantively unconscionable provisions, upheld the agreement, and ordered the parties to arbitration. Ramirez responds that the arbitration agreement is procedurally and substantively unconscionable and the trial court‘s decision to find the entire agreement unconscionable, rather than severing the unconscionable provisions, should not be disturbed on appeal.
We conclude the arbitration agreement was a contract of adhesion, which establishes a minimal degree of procedural unconscionability. We further conclude the agreement contained a high degree of substantive unconscionability based on the restriction of the statute of limitations for FEHA claims, the provision granting an award of attorney fees for a prevailing party in compelling arbitration, the lack of mutuality, and the limitation on discovery. Therefore, we hold the arbitration agreement is permeated by unconscionability and cannot be enforced.
A. Standard of Review and Applicable Law
An order denying a motion to compel arbitration is appealable. (
A written agreement to submit a controversy to arbitration is valid and enforceable, absent a reason under state law, such as unconscionability, that would render any contract revocable. (
The doctrine оf unconscionability has both a procedural and a substantive element. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243-1244 (Baltazar).) “[T]he former focus[es] on ‘oppression’ or ‘surprise’ due to unequal bargaining power, the latter on ‘overly harsh’ or ‘one-sided’ results.’ [Citation.]” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.) But the two elements need not exist to the same degree. The more one is present, the less the other is required. (Armendariz, supra, 24 Cal.4th at p. 114 [unconscionability is measured on a sliding scale in which greater procedural unconscionability requires less substantive unconscionability, and vice versa].)
If a court finds a clause within a contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or instead sever the unconscionable clause and enforce the remainder of the contract. (
“A procedural unconscionability analysis ‘begins with an inquiry into whether the contract is one of adhesion.’ [Citation.] An adhesive contract is standardized . . . and offered by the party with superior bargaining power ‘on a take-it-or-leave-it basis.’ [Citations.] Arbitration contracts imposed as a condition of employment are typically adhesive.” (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 126.) Here, it is undisputed that the arbitration agreement is an adhesion contract because it was a mandatory condition of employment.
“[T]he adhesive nature of the contract is sufficient to establish some degree of procedural unconscionability.” (Sanchez v. ValenciaHolding Co., LLC (2015) 61 Cal.4th 899, 915; Alvarez v. Altamed Health Services Corp. (2021) 60 Cal.App.5th 572, 591 [adhesion “alone is a fairly low level of procedural unconscionability“].) “However, the fact that the arbitration agreement is an adhesion contract does not render it automatically unenforceable as unconscionable. Courts have consistently held that the requirement to enter into an arbitration agreement is not a bar to its enforcement. [Citations.]” (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 179.) Rather, it is “‘the beginning and not the end of the analysis insofar as enforceability of its terms is concerned.’ [Citation.]” (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 819.) When, as here, the degree of procedural unconscionability is low, the agreement must be enforced unless the degree of substantive unconscionability is high. (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704; accord, Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981-982.)
C. Substantive Unconscionability
Charter contends the trial court erroneously found the arbitration agreement substantively unconscionable based on the restriction on the statute of limitations for FEHA claims, the provision granting the prevailing party in the arbitration any remedy (including attorney fees) available under applicable law, and a separate provision granting attorney fees in connection with a successful motion to compel arbitration. We conclude the trial court‘s analysis was correct as to the restriction on the statute of limitations and the attorney fee provision on a motion to compel arbitration. We conclude the trial court was incorrect as to the remedy provision for a prevailing party in the arbitration, the limitations on discovery, and the mutuality of the agreement.
“‘While parties to an arbitration agreement may agree to shorten the applicable limitations period for bringing an action, a shortened limitations period must be reasonable. [Citation.] “A contractual period of limitation is reasonable if the plaintiff has a sufficient opportunity to investigate and file an action, the time is not so short as to work a practical abrogation of the right of action, and the action is not barred before the loss or damage can be ascertained.” [Citation.]‘” (Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th 713, 731 (Baxter).)
At the time the arbitration agreement was executed, a FEHA administrative claim had to be filed with the Department of Fair Employment and Housing (DFEH) within one year of the employer‘s discriminatory act. (Baxter, supra, 16 Cal.App.5th at p. 730; see also
Section E of the arbitration agreement provides, in pertinent part:
“The aggrieved party must give written notice of the claim, in the manner required by this Agreement, within the time limit established by the applicable statute of limitations for each legal claim being asserted. To be timely, any claim that must be filed with an administrative agency or body as a precondition or prerequisite to filing the claim in court, must be filed with Solution Channel within the time period by which the charge, complaint or other similar document would have had to be filed with the agency or other administrative body.”4
The practical effect of the arbitration agreement is therefore twofold: it cuts the period that would otherwise apply to file a FEHA action in court by as much as two years, and (given that DFEH has up to one year to investigate and issue a “right-to-sue” letter), it makes it possible that the employee will be compelled to arbitrate before DFEH has completed its investigation and issued a “right-to-sue” letter. Therefore, we agree with the trial court that reducing the period within which a FEHA claim may be brought from three years to one is substantively unconscionable, as it substantially conflicts with the statutorily sanctioned period for vindicating statutory rights under FEHA. (See Ellis v. U.S. Security Associates (2014) 224 Cal.App.4th 1213, 1223 [employment discrimination claims are already subject to shortened statutes of limitation]; Baxter, supra, 16 Cal.App.5th at pp. 730-732 [finding substantively unconscionable a shortened limitation period of one year for FEHA claims when, under then-current law, the outside limit to file a lawsuit under FEHA was as long as three years].)5
Charter notes that Ramirez sought an immediate “right-to-sue” from the DFEH and filed suit within one year of its accrual. Therefore, Charter contends that Ramirez was not forced to forfeit her right to a DFEH investigation because of the arbitration agreement. How Ramirez chose to enforce her claims does not affect the unconscionability analysis, which generally looks to an agreement “at the time it was made.” (See
2. Remedy Provision for a Prevailing Party
A prevailing defendant in a FEHA case may recover attorney fees and costs only if the plaintiff‘s action was “frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” (
Charter contends the trial court misinterpreted this provision as allowing a prevailing defendant to recover attorney fees if a plaintiff‘s FEHA claims fail but were not frivolous. We agree that the trial court misinterpreted the provision.
The provision at issue entitles a prevailing party to a remedy, such as attorney fees, only if the party would be entitled to that remedy if the dispute had been litigated in court. In court, a prevailing defendant in a FEHA case is entitled to an award of attorney fees only if the plaintiff‘s action was frivolous, unreasonable, or groundless. (
Paragraph K of the arbitration agreement provides in relevant part: “The parties agree and acknowledge . . . that the failure or refusal of either party to submit to arbitration as required by this Agreement will constitute a material breach of this Agreement. If any judicial action or proceeding is commenced in order to compel arbitration, and if arbitration is in fact compelled or the party resisting arbitration submits to arbitration following the commencement of the action or proceeding, the party that resisted arbitration will be required to pay the other party all costs, fees and expenses that they incur in compelling arbitration, including, without limitation, reasonable attorneys’ fees.”
Charter contends that the trial court erred in concluding that paragraph K, which awards attorney fees to the prevailing party on a motion to compel arbitration, is substantively unconscionable. We disagree, and in the process also disagree with Patterson, supra, 70 Cal.App.5th 473, which (after concluding that the paragraph K as written is not enforceable) made it enforceable by implying a term that incorporates the FEHA asymmetrical rulе of attorney fees (i.e., a prevailing defendant in a FEHA action can recover attorney fees only if the action was frivolous, unreasonable, or groundless), thereby bringing paragraph K into compliance with FEHA.
In Patterson, supra, 70 Cal.App.5th 473, our colleagues in Division Seven considered paragraph K in a procedural posture different than the present case. That is, the court in Patterson did not consider (as do we) the question of unconscionability in connection with a motion to compel arbitration. Rather, the court considered the enforceability of paragraph K in a mandate proceeding after the trial court had granted Charter‘s motion to compel arbitration of an employee‘s FEHA action and awarded Charter its attorney fees under paragraph K for the successful motion. (Id. at pp. 478-480.)
On the employee‘s petition for a writ of mandate to vacate the attorney fees award, our colleagues in Patterson reasoned that Charter was еntitled to its attorney fees under paragraph K “to the extent not otherwise prohibited or limited by FEHA.” (Patterson, supra, 70 Cal.App.5th at p. 486.) They also concluded that an employee may not be required to waive the asymmetric FEHA attorney fee standard. (Id. at p. 488.) That standard, as
Consistent with this analysis, the court in Patterson concluded that the attorney fee clause as written violated the employee‘s rights under FEHA: “Permitting Charter to recover its attorney fees for a successful motion to compel arbitration in a pending FEHA lawsuit without a showing the plaintiff‘s insistence on a judicial forum to determine his or her claims was objectively groundless . . . denies the plaintiff the rights guaranteed by
Nonetheless, the court rejected the employee‘s request to hold the clause unenforceable. Invoking “the strong public policy favoring arbitration” and the requirement that provisions in a contract be construed (where reasonable) in a manner that render them legal rather than void, the court “construe[d] the prevailing party fee provision in the arbitration agreement to impliedly incorporate the FEHA asymmetric rule for awarding attorney fees and costs.” (Patterson, 70 Cal.App.5th at p. 490.) Thus, the court vacated the attorney fee award and remanded the case to the trial court to hold a hearing to determine whether, under the FEHA standard, the employee‘s opposition to the motion to compel arbitration was frivolous, unreasonable, or groundless.
We agree with Patterson that paragraph K as written is unenforceable as being in violation of FEHA. We respectfully disagree, however, with our colleagues’ analysis incorporating the FEHA attorney fee rule, thereby making the provision enforceable.
We begin the relevant language of the clause. A party‘s “failure or refusal . . . to submit to arbitration as required by this Agreement” is a “material breach.” Further, “[i]f a judicial . . . proceeding is commenced in order to compel arbitration” (such as an employer‘s motion to compel arbitration) “and if arbitration is in fact compelled” (i.e., the motion is granted), “the party that resisted arbitration” (i.e., the employee who opposed the motion to compel arbitration) “will be required to pay” (i.e., without qualification) “the other party” (i.e., the employer) “all costs, fees and expenses that they incur in compelling arbitration, including, without limitation, reasonable attorneys’ fees.” We find this language unambiguous. There is no room to vary the terms by interpretation.
Further, the policy favoring arbitration does not permit the court to add an interpretive gloss to unambiguous provisions. Patterson cited two decision as supporting its authority to modify paragraph K by incorporating the FEHA attorney fee standard. In each, Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 682 (Pearson), and Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1473 (Roman), the appellate court interpreted ambiguous language in thе arbitration agreement and invoked the policy favoring arbitration as a reason to construe the language in a manner that rendered it legal.
In Pearson, the language at issue declared the intention of the parties to the employment arbitration agreement “to avoid the inconvenience, cost, and risk that accompany formal administrative or judicial proceedings.” The employee argued that the language declaring an intent “to avoid” the listed negative characteristics of “formal administrative . . . proceedings” precluded the employee from seeking administrative remedies for violations of FEHA. (48 Cal.4th at p. 680.)
Our Supreme Court concluded that the provision was merely a statement of purpose and did not actually preclude the plaintiff from pursuing any administrative remedy; and even if the agreement were understood to preclude “formal administrative proceedings,” it would not be unlawful in all possible applications. (Pearson, supra, 48 Cal.4th at p. 682.)
The court then reasoned: “When an arbitration provision is ambiguous, we will interpret that provision, if reasonable, in a manner that renders it lawful, both because of our public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution, and because of the general principle that we interpret a contractual provision in a manner that renders it enforceable rather than void. [Citations.]” (Pearson, supra, 48 Cal.4th at p. 682, italics added.) The court then interpreted the language in question “as
Similarly, Roman involved language in an arbitration agreement that was treated as ambiguous undеr the circumstances. In Roman, the employee signed a mandatory predispute agreement containing an arbitration clause that provided: ”I agree, in the event I am hired by the company, that all disputes and claims that might arise out of my
employment with the company will be submitted to binding arbitration.” (Roman, supra, 172 Cal.App.4th at p. 1466, italics added.) Although the rest of the agreement was bilateral, the employee argued that the “I agree” language manifested only a unilateral obligation to arbitrate. (Ibid.) Assuming the language of the arbitration provision was ambiguous, the appellate court noted the public policy favoring arbitration and the requirement that the court interpret ambiguous provisions in a manner that renders them legal rather than void. (Id. at p. 1473.) Under these rules, the court held that the “mere inclusion of the words ‘I agree’ by one party in an otherwise mutual arbitration provision [does not] destroy[] the bilateral nature of the agreement.” (Ibid.)On examination, we do not agree that these cases suрport our Patterson colleagues’ interpretation of paragraph K. These decisions apply standard rules of contract interpretation to ambiguous terms. As we have observed, the language at issue in paragraph K is not ambiguous; it leaves no reasonable basis for an interpretation in variance with the plain meaning.
Our colleagues in Patterson also found that incorporating the FEHA asymmetrical rule of attorney fees into paragraph K by implication was “precisely the course followed by the Supreme Court in” Armendariz, supra, 24 Cal.4th at page 113, where the Supreme Court incorporated into the arbitration agreement a term imposing on the employer the sole duty to pay arbitration costs in employer-compelledarbitration. (70 Cal.App.5th at p. 490.) We respectfully disagree that Armendariz supports the analysis in Patterson.
In Armendariz, the arbitration agreement compelled the employee
to arbitrate employment claims and stated that the employee “agree[d]
to submit any such matter to binding arbitration pursuant to the
provisions of title 9 of Part III of the California Code of Civil Procedure,
commencing at
The court in Armendariz agreed with the employees that applying
this default provision would impose “substantial forum fees ... contrary
to public policy, and is therefore grounds for invalidating or revoking an
arbitration agreement and denying a petition to compel arbitration
under
The court later analyzed whether the rule requiring the employer
to pay the costs of arbitration was inconsistent with the default cost-
sharing scheme of
The court then concluded: “We therefore hold that a mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims implicitly obliges the employer to pay all types of costs that are unique to arbitration. Accordingly, we interpret the arbitration agreement in the present case as providing, consistent with the above, that the employer must bear the arbitration forum costs. The absence of specific provisions on arbitration costs would therefore not be grounds for denying the enforcement of an arbitration agreement.” (Armendariz, supra, 24 Cal.4th at p. 113.)
From our discussion of Armendariz, we conclude that it does not
support the reasoning in Patterson. In Armendariz, the agreement had
no provision governing costs, and the court was not called upon to
interpret one. Thus, the Supreme Court did not make the arbitration
agreement enforceable by grafting an implied cost sharing term onto an
express provision governing costs. Rather, as a matter of public policy
and statutory interpretation, the court imposed an implied provision
(the employer must bear the costs of employer-compelled arbitration) in
place of the default cost provision of
In short, we disagree that Armendariz supports the holding in Patterson that paragraph K, which is (as Patterson acknowledges) unenforceable as written, can be saved by impliedly incorporating the FEHA asymmetrical attorney fee standard into its unambiguous language. We therefore conclude, as did the trial court, that paragraph K is unconscionable.
4. Other Terms of the Arbitration Agreement
a. Mutuality
Ramirez contends the trial court erred in rejecting her argument that the arbitration agreement lacked mutuality by еxcluding claims likely to be brought by an employer. “An agreement may be unfairly one-sided if it compels arbitration of the claims more likely to be brought by the weaker party but exempts from arbitration the types of claims that are more likely to be brought by the stronger party. [Citations.]” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 724 (Fitz).)
On the other hand, the arbitration agreement specifically excludes “claims for injunctive or other equitable relief related to unfair competition and the taking, use or unauthorized disclosure of trade secrets or confidential information.” The agreement further excludes claims: arising under separate or severance agreements or non-compete agreements; for theft or embezzlement or any other criminal conduct; and over the validity of any party‘s intellectual prоperty rights.
We agree with Ramirez and conclude that the arbitration agreement is unfairly one-sided because it compels arbitration of the claims more likely to be brought by an employee, the weaker party, but exempts from arbitration the types of claims that are more likely to be brought by an employer, the stronger party.
The decision in Mercuro v. Superior Court (2002) 96 Cal.App.4th
167 (Mercuro) is instructive. In Mercuro, the Court of Appeal held the
arbitration agreement covered “some employment-related claimsincluding employment discrimination but excluded others such as...
equitable relief for unfair competition, unauthorized disclosure of trade
secrets or violation of intellectual property rights” to be unfairly one-
sided in favor of the employer. (Id. at p. 172.) The court noted that an
employee terminated for stealing trade secrets would have to arbitrate
his or her wrongful termination claim, but the employer could avoid
arbitration by simply requesting injunctive or declaratory relief. (Id. at
p. 176.) The court concluded that the agreement compelled “arbitration
of the claims employees
Charter points out that the agreement here excludes certain claims significant to employees such as claims for workers’ compensation, unemployment benefits, and severance/noncompete agreements. “These exceptions do not turn what is essentially a unilateral arbitration agreement into a bilateral one. Workers’ compensation and unemployment benefits are governed by their own adjudicatory systems; neither is a proper subject matter for arbitration.” (Mercuro, supra, 96 Cal.App.4th at p. 176.) And claims arising out of a severance or noncompete agreement are most likely to be brought by the employer, not the employee. (See Fitz, supra, at p. 725 [“it is far more often the case that employers, not employees, will file [actions over nonсompete agreements]“].)
In support of the trial court‘s finding, Charter further contends
none of the excluded claims are at issue in Ramirez’ case. However, the
unconscionability analysis evaluates whether the agreement is bilateral“at the time it was made” rather than as applied to specific plaintiff.
(See
b. Discovery Limitation
The arbitration agreement states that the arbitration will be conducted “pursuant to the Solution Channel Program Guidelines.” The guidelines in turn provide that “[t]he parties will have 90 days to exchange information and take depositions.” Each party will be permitted to take up to four depositions, 20 total interrogatories (including subparts), and 15 total requests for documents to the other party. In addition, “[a]ny disagreements regarding the exchange of information or depositions will be resolved by the arbitrator to allow a full and equal opportunity to all parties to present evidence that the arbitrator deems material and relevant to the resolution of the dispute.”
Ramirez contends that the trial court erred in finding that the limitations on discovery were not substantively unconscionable. We agree.
“Adequate discovery is indispensable for the vindication of
statutory claims. [Citation.]” (Fitz, supra, 118 Cal.App.4th at p. 715.)
But adequate discovery does not mean unfettered discovery. (Ibid.)
The parties may agree to something less than the full panoply of
discovery available in California‘s discovery statutes. (Armendariz,
supra, 24 Cal.4th at pp. 105-106.) Nonetheless, “arbitration
agreements must ensure minimum standards of fairness’ so employees
can vindicate their public rights. [Citation.]” (Fitz, supra, at p. 716.)Generally, unconscionability is determined “at the time [the agreement]
was made” (
“In striking the appropriate balance between the desired simplicity of limited discovery and an employee‘s statutory rights, courts assess the amount of default discovery pеrmitted under the arbitration agreement, the standard for obtaining additional discovery, and whether the plaintiffs have demonstrated that the discovery limitations will prevent them from adequately arbitrating their statutory claims. [Citation.]” (Davis, supra, 53 Cal.App.5th at pp. 910- 911.)
Ramirez argues that the limitation of discovery in and of itself denies her a reasonable opportunity to prove her statutory claims. However, as observed by the trial court, “[l]imited discovery rights are the hallmark of arbitration” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 790) and there must be some showing of inadequacy under the circumstances of the case (Sanchez, supra, 224 Cal.App.4th at p. 405).
Although limitations on discovery are generally permitted, we conclude that Ramirez met her burden in the trial court of showing inadequacy in the discovery limitations of Charter‘s agreement. In the trial court, Ramirez estimated (with no dispute from Charter) that she would need to take at least seven depositions: her former supervisor,the Human Resources (HR) person, the four people hired by her former supervisor during her pregnancy lеave, and the person(s) most knowledgeable at Charter regarding its HR and pregnancy leave policies and procedures. Therefore, Ramirez demonstrated (with no rebuttal from Charter) that the guidelines‘s limitation on depositions (four) is inadequate to permit Ramirez fair pursuit of her claims (which requires at least seven depositions). (Davis, supra, 53 Cal.App.5th at pp. 913-914.)
Charter contends that the guidelines‘s provision allowing the
arbitrator to resolve “[a]ny disagreements regarding the exchange of
information or depositions,” is tantamount to providing the arbitrator
authority to order additional depositions.10 But resolving
“disagreements” between the parties
appears to refer only to the “disagreements” between the parties regarding the four depositions permitted by the guidelines, things like the identity of persons sought to be deposed, objections made during depositions, and the dates, location, and duration of depositions.
It is true that Ramirez does not explain with any particularity why the limitations on written discovery (20 total interrogatories, including subparts, and 15 total requests for documents) are inadequate. Nor does she demonstrate any need for a longer period of discovery than the 90-day limit in the guidelines. However, we conclude the limitation on depositions is sufficient to show substantive unconscionability. Under the deposition limit, Ramirez would be deprived of the opportunity to prepare her case because of her inability to depose three of the minimum seven necessary witnesses. That, we conclude, would not provide her a fair opportunity to present her case.
D. Severance
Charter contends severance is appropriate, and the court abused its discretion by failing to sever the unconscionable provisions. We affirm the denial of severance.
“An unconscionable contractual term may be severed and the resulting agreement enforced, unless the agreement is permeated by an unlawful purpose, or severance would require a court to augment the agreement with additional terms. [Citation.]” (Penilla v. Westmont Corp. (2016) 3 Cal.App.5th 205, 223.) Severance may be properly denied when the agreement contains more than one unconscionable provision, and “there is no single provision a court can strike or restrictin order to remove the unconscionable taint from the agreement.’ [Citation.]” (Baxter, supra, 16 Cal.App.5th at p. 738.)
Here, we conclude that the limitations period for bringing a FEHA
claim under the agreement, the provision granting an award of attorney
fees for a prevailing party in moving to compel arbitration (paragraph
K), the lack of mutuality, and the limitation on discovery (specifically,
depositions) are
Although we find that the trial court erred on these two points, we do not find the errors prejudicial with respect to whether the unconscionable provisions should be severed. Given the multiple defects we have found that work to Ramirez‘s distinct disadvantage, it is not reasonably probable that the trial court would have reached a different decision regarding severability had the errors not been committed. (People v. Watson (1956) 46 Cal.2d 818, 836.) And given that we have found the agreement permeated by significant unconscionable terms, a denial of severance is entirely reasonable.11
DISPOSITION
The trial court‘s order denying Charter‘s motion to compel arbitration is affirmed. Ramirez is entitled to her costs on appeal.
CERTIFIED FOR PUBLICATION
WILLHITE, J.
We concur:
MANELLA, P. J.
COLLINS, J.