Sonic-Calabasas A, Inc. v. Moreno

Oct. S174475. 2013.] [No. A, INC., v. Plaintiff Appellant,

SONIC-CALABASAS MORENO, Defendant Respondent. FRANK

Counsel Fine, Perkins, and P. David J. Reese for Plaintiff & John and Boggs Boggs Appellant. Brown, Parasharami, J. M. M. Archis A. Brian Donald Tager, Wong, Evan

Mayer Center, Inc., Falk; National and Robin S. Conrad for Litigation Chamber Chamber of as Amicus Curiae behalf Commerce United States Plaintiff and Appellant. Mullin, Simmons, J. Karin Dougan Richter & Richard

Sheppard, Hampton, Curiae on and Matthew M. Sonne for as Amicus Vogel Employers Group and behalf of Plaintiff Appellant. Perrochet, for

Horvitz & Lisa Felix Shafir and James A. Sonne Levy, on behalf of California New Car Dealers Association as Amicus Curiae Plaintiff Appellant. for Defendant and Folberg

Locker Miles E. Locker Rachel Folberg, Respondent. Rice; Goishi; Shawver; Shah; Tello; Miye

Hina B. Jose Silas Cynthia Caucus, Asian Pacific Fernando Flores and Charlotte Noss Asian Law Center, Services, California Rural Legal American Bet Tzedek Legal Legal Center, Assistance, Inc., Raza, Hastings Centro de La Garment Worker Legal Center, Clinic, Law George Community Civil Justice Katharine and Alexander San La Committee for Civil Legal, Lawyers’ Rights Raza Centro Area, Legal Aid Angeles, Francisco Aid Foundation Los Bay Legal Fund, Center, Trust Law Maintenance Society-Employment Cooperation Law National Guild Labor Project, Lawyers National Employment Committee, Los Angeles Services of Neighborhood Legal Employment Center, of Golden Rights Justice Women’s Clinic Wage County, Employment of and University Gate School Law Worksafe Law Center as Amici Curiae on behalf Defendant and Respondent.

McGuinn, Ehrman; & Hillsman Palefsky, Cliff Keith Smith & Palefsky, McGinty and Valerie T. McGinty for California Lawyers Employment and Amici Association Consumer of California as Curiae on behalf Attorneys and Defendant Respondent. William A. Reich Anne for California Hipshman Labor Commissioner A. Julie Su as Curiae Amicus on behalf Defendant and Respondent.

Opinion A, LIU, J. Inc. In Sonic-Calabasas v. Moreno (2011) 51 Cal.4th 659 [121 (Sonic I), 247 P.3d we Cal.Rptr.3d held as a that it categorical rule 130] contrary an public policy unconscionable for an require employer aas condition of employee, employment, right waive to a Berman a hearing, dispute resolution forum established by Legislature assist in recovering owed. We further held our employees wages rule prohibit- waiver of Berman not ing hearing does discriminate arbitration against agreements and is therefore not Federal Arbitration Act preempted (FAA; 9 U.S.C. 1 et did We not invalidate seq.). agreement Instead, at issue. we held that if one of the is dissatisfied with the parties result of the Berman it can move to arbitrate the hearing, wage dispute consistent with the agreement, as a just dissatisfied can party in obtain trial court without such agreement. case,

The United States Court certiorari this Supreme granted vacated judgment, remanded the case to this court for consideration in light Mobility AT&T LLC v. U.S. __ Concepcion L.Ed.2d 131 S.Ct. In (Concepcion). Concepcion, clarified the high 1740] limitations that FAA on a state’s imposes to enforce its rules of capacity Concepcion, to arbitration agreements. parties light we conclude that because Berman compelling parties undergo hearing arbitration, significant delays would the commencement of impose we took in Sonic I approach is inconsistent with FAA. we Accordingly, I, to Sonic hold, now that the FAA our contrary state law rule preempts waiver of a Berman in a categorically prohibiting hearing arbitra predispute tion on an as a condition of imposed employee employment. time,

At the same we conclude that state courts continue to enforce unconscionability rules do with fundamental attributes of “interfere^ (Concepcion, supra, arbitration.” 563 U.S. at S.Ct. at p. __ [131 agreement imposed to an arbitration a not refuse enforce may court Although it the because requires as a of simply on an condition employee employment be unconscio- an agreement may to a Berman such hearing, employee bypass of the As employer. one-sided in favor unreasonably nable if it otherwise below, in Sonic I and reiterate confer the Berman statutes we explained costs of their the wage by lowering pursuing benefits on claimants important in their favor. to enforce and that able by ensuring they judgments claims benefits, and an cannot these provide There is no reason arbitral forum why the make necessarily of such benefits does not surrender employee’s as with bargain, The fundamental fairness unconscionable. agreement contracts, received under on benefits the employee all will what depend surrounding and the of circumstances terms agreement’s totality substantive of the agreement. formation arbitration scheme at in case contends that the particular The this employee unconscionable, contends that its arbitration issue is while employer to the em- and facilitate protections advantages offers agreement adequate relevant and one-sided. Because evidence unreasonably claim is not ployee’s below, we instruct to claim was not developed determine whether the present Court of to remand to the trial court to Appeal under the set forth this agreement principles is unconscionable opinion.

I. A, (Sonic), Inc. Frank Moreno a former Sonic-Calabasas employee a condition of his which owns and an automobile As operates dealership. Sonic, entitled with Moreno document employment signed “Applicant’s conditions of & The set forth number of Agreement.” agreement Statement to and contact drug testing consent employment, including permission at will. The as a making employment former well employers, provision resolution, which contained governing dispute also paragraph “binding both to submit employment disputes required parties Act, conformity under the Federal Arbitration procedures .).” et . . (Cal. Civ. Proc. sec. 1280 seq. the California Arbitration Act Code may to “all arise out The disputes arbitration provision applied which have the other against . that either context. . employment [party] or other governmental or allow would otherwise resort require tort, contract, forum[,] statutory, . on resolution . . whether based dispute law, not did apply or otherwise.” The provision specified equitable (29 U.S.C. Labor Relations Act claims under the National brought Act, or to claims before et Workers’ or the California Compensation seq.) that the further stated Employment Department. provision Development pro- from administrative prevented “filing pursuing was employee of Fair Employment before the California ceedings only Department Commission.” or the U.S. Housing Opportunity Equal addition, the agreement provided arbitration was to conducted by a “retired California Court and that “to Superior Judge” the extent applicable courts, in civil actions in California the following shall and be apply observed: all rules pleading demurrer), (including right all rules of evidence, all rights resolution of the by- means of dispute motions for summary judgment, judgment pleadings, judgment under Code of Civil Procedure the section 631.8.” At of either an request party, arbitration be will, award reviewed a second arbitrator who “as by far as practi- cable, the proceed according to law and procedures applicable appellate review the California by Court of of a Appeal civil judgment following court trial.” 2006, Sonic, December after his with leaving position Moreno filed an

administrative claim with the Labor wage Commissioner vacation unpaid (All to Labor Code pay pursuant section 98 et seq. references are to statutory the Labor Code unless otherwise indicated.) Moreno he alleged was entitled to unpaid for 63 wages days earned 7/15/02 to the “[v]acation 7/15/06 at rate $441.29 The per of such a claim is the day.” filing first toward step a obtaining Berman hearing.

In February Sonic the court to petitioned arbitration superior compel the claim and wage action, to dismiss the administrative pending arguing that Moreno waived his to a Berman right the hearing arbitration agree ment. The Labor Commissioner intervened on (§ 98.5), Moreno’s behalf Moreno the Labor adopted Commissioner’s arguments. The Labor Commis sioner the argued construed, arbitration agreement, did not properly Moreno from preclude filing administrative claim under wage section 98 et Commissioner, to the According Labor resort to a seq. Berman hearing was compatible the arbitration because the could agreement hearing followed arbitration in lieu of a by de novo in the appeal court under superior 98.2, section subdivision (a). The Labor Commissioner further argued the arbitration interpreting agreement to waive a Berman would hearing v. Foundation Psychcare Health violate public policy, relying Armendariz Services, Inc. 24 Cal.4th 83 6 P.3d Cal.Rptr.2d 669] (Armendariz). The court denied the superior petition arbitration as compel premature. Armendariz, Citing court said that as a matter of “basic . .. public policy until there has been the preliminary non-binding hearing and decision by Commissioner, Labor the arbitration provisions contract employment unenforceable, arbitration any petition compel premature must be denied.”

Sonic did Labor Commissioner in the appealed. participate appeal. During in the Court of briefing period United States Appeal, Supreme L.Ed.2d (2008) 552 U.S. 346 v. Ferrer Court decided Preston original that the Labor Commissioner’s (Preston), S.Ct. which held 978] (§ et was Act Agencies seq.) under the Talent and exclusive jurisdiction by agreement governed entered into an arbitration when preempted parties that Preston was not dispositive FAA. The Court of concluded Appeal court, chal when Preston According applies party Sonic’s appeal. challenge and seeks to have that a contract as a whole validity of lenges when it does not agency; apply party an administrative adjudicated The Court clause itself as unconscionable. challenges correctly interpreted, agreement, further concluded that Appeal terms, the its hearing. of a Berman By constituted waiver governmental “or other any judicial dispute Moreno from precluded pursuing forum,” The court stated: certain enumerated resolution subject exceptions. of Labor Standards Enforcement nor “Given that neither the Division conclude, we the stated among exceptions, Labor Commissioner was listed law, an administrative a that Moreno was barred from pursuing matter a et Court of then held that claim under section The wage seq.” Appeal 98 and not to contrary public policy. Berman waiver is enforceable below, As discussed we held granted We Moreno’s for review. petition arbitrate, to he could not be I that Moreno could be although compelled Sonic to a Berman before arbitration. Accord right hearing to waive his required the trial we and ordered reinstatement of reversed the Court ingly, Appeal arbitration. Sonic then petitioned court’s denial of Sonic’s petition compel for of certiorari. The court high the United States Court a writ Supreme the case to this vacated our and remanded granted petition, judgment, LLC v. Mobility “for further consideration in of AT&T light Concepcion, A, 742, (Sonic-Calabasas U.S. __ [179 (2011).” 131 S.Ct. 563 L.Ed.2d 1740] 343, U.S. __ [181 496].) S.Ct. We (2011) v. Moreno 565 L.Ed.2d 132 Inc. Concepcion on how affects briefing from parties requested supplemental I. our decision in Sonic

II. I. Berman statutes and our in Sonic reviewing opinion We begin by A. I, 659, hearings we how Berman In Sonic 51 Cal.4th explained claims wage against benefit with statutory employees and related protections “ amount, or in the time wages an fails to pay their ‘If employer employers: statute, has two principal contract or by by employee manner required civil ordinary an by filing seek relief may judicial employee oрtions. wages of contract for the for breach and/or action against employer 1128 218, (§§ statute. Or the

prescribed by seek employee may administra- tive relief with by filing wage claim the commissioner ato pursuant special scheme statutory codified in sections The latter 98 98.8. was added option (Stats. 1976, 1190, 4-11, enacted legislation ch. §§ 5368-5371) and is pp. known as the “Berman” commonly hearing procedure after the name of its sponsor.’ [Citation.] “Once an files employee the Labor complaint Commissioner ‘

for section nonpayment wages, (a) subdivision for three “provides alternatives: the commissioner either the matter and accept conduct [citation], administrative hearing a civil action prosecute for collection of wages other money out of an payable employees arising employment [citation], or take no further action relationship complaint. [Cita ’ Productions, v. Kenneth Cole (Murphy Inc. tion.]” Cal.4th 155 P.3d ‘If the Cal.Rptr.3d commissioner decides the matter accept and conduct an administrative or hearing, he she must hold Moreover, (Ibid.) within hearing days.’ prior Berman holding action, or a civil hearing pursuing Labor Commissioner’s staff may to settle claims either attempt a conference informally through between the Relations, parties. Industrial Div. of (Dept. Labor Stds. Enforcement (DLSE), Policies and rev.) Procedures Claim Wage (2001 Processing 2-3.) commissioner,

“A Berman is conducted hearing by a deputy [labor] (Cal. who has the to authority issue Code subpoenas. tit. Regs., §§ 13506.) ‘The Berman hearing is to a procedure designed provide speedy, informal, brief, and affordable method of claims. á resolving wage in claim; Berman the proceeding may commissioner hold a the hearing wage on answer; the are a limited to and pleadings complaint an the answer set may ; forth the evidence that the defendant intends to on . . if the rely . defendant fails to or answer no default taken appear is and the commissioner proceeds claim, to decide the but a new may grant (§ 98.) The hearing request. commissioner must decide the claim 15 days within after the hearing. (§ 98.1.)’ The are governed the technical of hearings by rules [Citation.] evidence, and relevant evidence ‘if is is admitted the sort of evidence on which are accustomed the of persons rely to conduct serious responsible (Cal. 13502.) affairs.’ Code tit. The Regs., officer is authorized to hearing § assist the and to parties cross-examining witnesses issues and explain terms (DLSE, not understood the and by parties. Policies Procedures Processing, Wage 4.) Claim The have a a right have parties (Ibid.; translator . .) see 105 . . present.

“Once entered in the the judgment is Berman enforcement of hearing, 98.2, (§ (e).) is to be a court subd. The Labor judgment Commis priority. sioner is with charged responsibility enforcing judgment ‘shall satisfied, including to ensure judgments reasonable effort every

make a deposit employer action legal requiring all taking appropriate (Id., (i).) 240.’ subd. in Section bond provided to the may any party appeal of the decision after notice days

“Within novo; if court, de no appeal be heard the claim will where appropriate immedi- final taken, a judgment, will be deemed the commissioner’s decision (§ 98.2.) If an employer a action. in civil and enforceable as a ately, judgment award, an to filing appeal condition the Labor Commissioner’s ‘[a]s appeals section, an undertaking shall first to this an employer post pursuant order, decision, The undertak- or award. in the amount of reviewing a cash surety or bond issued a licensed by shall of an consist ing appeal 98.2, order, decision, (§ or award.’ with the court in the amount deposit from discourage employers this (b).) requirement subd. purpose enforcement in order to avoid and from assets hiding frivolous filing appeals Relations, (Sen. Analysis Com. on Labor and Industrial judgment. 8, 2010, Sess.) (2009-2010 Apr. as amended Reg. Bill No. 2772 Assem. 98.2, seeking by ‘If review (c), subdivision the party “Under section the court in the court is unsuccessful appeal, filing appeal superior fees incurred other attorney’s determine the costs and reasonable shall filing amount as a cost upon party to the and assess that parties appeal, greater awards an amount An is successful if the court the appeal. employee scheme, fee-shifting establishes thereby one-way than zero.’ This provision fees while successful attorney appellants unsuccessful whereby pay appellants 218.5, to section This is in contrast not obtain such fees. may [Citation.] initiated in wages that in civil actions for nonpayment which provides court, fees. attorney obtain ‘prevailing party’ superior “Furthermore, upon represent the Labor Commissioner ‘may’ request novo to afford counsel’ in the de proceeding unable ‘financially claimant the Labor he she is attempting uphold the claimant if ‘shall’ represent final order. is not to the Commissioner’s objecting Commissioner’s award and still may the Labor Commissioner (§ 98.4.) by Such claimants represented 98.2, have such claimants to section although fees attorney pursuant collect fees, the not, construction of because attorneys incurred strictly speaking, of discouraging statute’s goals manner is consistent with the statute in this I, Cal.4th (Sonic 51 supra, wage claims. unmeritorious appeals [Citation.]” 671-674, omitted.) fn. italics & at pp. to sum, employees benefits Berman statutes important

In the provide in several ways. claim wage risks of reducing the costs and pursuing informal, accessible, and afford First, an itself hearing provides the Berman (See of such claims. to resolution for seek able mechanism laypersons 1130 855, 687, v. (1998)

Cuadra Millan 17 Cal.4th 858 Cal.Rptr.2d 952 P.2d Second, 98.2, (Cuadra).) (c) section discourages 704] subdivision unmeritori ous of Berman awards appeals hearing who by providing party an award must the unsuccessfully appeals other costs and pay party’s attorney (See fees. Lolley (2002) v. 28 Cal.4th Campbell Cal.Rptr.2d Third, 98.2, 48 P.3d (Lolley).) (c) section subdivision provides 1128] an will not be saddled employee with the employer’s fees costs attorney unless the employee from a Berman award and receives a appeals hearing judgment 218.5, of zero on This differs from appeal. rule section which for provides attorney fees for the actions initiated “prevailing party” wage Fourth, in the superior court. section 98.4 that a claimant who provides wage is “financially unable to afford counsel” bemay represented by the commis sioner in the event the and “shall” employer appeals be represented by if commissioner employee seeks a Berman uphold hearing award. Fifth, the Berman statutes ensure that an employee will collect a actually judgment or award by that the Labor mandating Commissioner use her best efforts to collect a Berman award and hearing by requiring employer post amount of the undertaking (See award if it takes an appeal. I, 674; 98.2, Sonic supra, (e), Cal.4th at p. (b), (i).) subds. Finally, Berman process ensures that have assistance in their employees resolving claims, (§ 105.) the use of a if including translator needed.

B. considering whether Berman waiver violates public policy, Sonic first reviewed law governing mandatory arbitration employment agree ments, i.e., agreements that are conditions of new or continuing Armendariz, As we employment. 24 Cal.4th explained, we “[i]n enforceable, concluded that such were agreements did not provided they contain features that were contrary (Id. unconscionable. public policy 99.) We concluded that ‘arbitration be agreements cannot made to serve as a vehicle for the waiver of statutory rights,’ such under rights [unwaivable] (FEHA California Fair .). Act . . To Employment Housing ensure occur, such waiver did not we held that arbitrations such addressing statutory would be rights subject certain minimal As we later summa requirements. ‘(1) rized these: not limit the damages (Armendariz, available under the normally statute Cal.4th at 103); (2) there discovery must be “sufficient to arbitrate their adequately 106); (3) (id. claim” there statutory must a written arbitration “ decision and review ‘sufficient ensure the judicial arbitrators comply ” (ibid.); statute’ requirements must all employer “pay of are (id. 113).’ (Little costs that to arbitration” types unique v. Auto 1064, 892, (2003) Inc. Stiegler, 29 Cal.4th 1076 63 P.3d Cal.Rptr.2d [130 979]

1131 condi only were that the above (Little).) requirements We did not hold and have since agreements, on arbitration could place tions that public policy 42 Cal.4th (2007) Court (See Gentry v. Superior other limitations. recognized of class 773, (Gentry) P.3d [prohibition 165 463 Cal.Rptr.3d 556] I, (Sonic cases].)” in some policy to contrary public omitted.) citation Cal.4th at p. hearing may a Berman that the afforded by

We then concluded protections that of “There is no question be as a condition employment; not waived an an individual but right owed is not wages merely lawful payment in . . Code section 3513 goal. provides, . ‘Civil policy important public a law intended advantage waive the “[a]nyone may that: pertinent part, be a reason cannot his But a law established for public for benefit. solely a whether The determination of a private agreement.” contravened by [][] in each case benefit is for statute is for public private particular Contracts, 645, 586). Witkin, 1987) (9th ed. (1 Summary of Cal. Law Code, toward the those directed of the Labor particularly provisions to entitled to be were established paid, wages payment employees As a was out public pointed the workers and hence have protect purpose. long has been re P.2d Trombley Cal.2d 734]: “[i]t debts, over they may preferred that are not that recognized wages ordinary claims, that, average of the other and because of the economic position and, life necessities of dependence wages worker his particular, to the welfare that he receive for himself and his it is essential family, public I, Cal.4th at (Sonic his when it is due.” pay [Citation.]” [Citation.]’ “Although statutory protections We went on explain: were added afford employees Berman and the hearing posthearing procedures common is evident: Given over a number of their years, purpose piecemeal wages, on prompt worker dependence average payment aas and hearing process has devised the Berman Legislature posthearing certain a claim wage means of with meritorious affording employee wage to reduce the costs risks of chiefly designed pursuing advantages, claim, right a theoretical prevent that such costs risks could recognizing undertak- including employer These becoming reality. procedures, from from employers unjustifiably and the fee also deter ing one-way provision, statutory an unmeritorious This by filing appeal. prolonging wage dispute important long-recognized public purpose therefore furthers regime benefit of the Berman owed. The paid wages public workers ensuring therefore, primary incidental merely legislation’s procedures, can there be doubt to that Nor but in fact central purpose. purpose as a condition of employment, employees, permitting employers require efficacy undermine the hearing seriously their to a Berman would right waive of the Berman statutes and hence the hearing thwart behind public purpose I, (Sonic supra, 679.) statutes.” 51 Cal.4th at

We rejected Sonic’s argument “even if a nonarbitration clause that required hearing Berman waiver is contrary to an public arbitration policy, be, clause containing same waiver would not because arbitration offers I, same or similar as advantages (Sonic does the Berman hearing process.” Cal.4th at We that “the choice explained is between arbitration, Berman hearing because a person to subject binding arbitra- tion eligible for a Berman will still hearing be to subject binding if employer Berman The appeals hearing award. choice is rather between arbitration that is or is not a Berman As preceded by hearing. above, discussed there are considerable for advantages undergo employees contrast, Berman hearing before process (Ibid.) arbitration.” “In arbitra- tion, its as a notwithstanding advantages reasonably means expeditious resolving still disputes, generally bears hallmark of a legal formal in which proceeding counsel is at least representation by necessary or highly here, The advantageous. for be question con- example, ducted aby ‘retired California Court and ‘to the extent Superior Judge’ courts, applicable civil actions in California shall following apply be all observed: rules of pleading (including demurrer), all right of rules evidence, all to resolution of the rights means motions for dispute by summary judgment, on the judgment pleadings, and under Code of judgment Civil Procedure section 631.8.’ arbitrator’s award at either party’s request will be reviewed aby second arbitrator who will ‘as far practicable, to the law and proceed according procedures review applicable appellate California Court of of a civil A Appeal judgment following court trial.’ wage claimant undergoing arbitration will need the same kind of legal as he I, if or she were representation going (Sonic court.” superior 680-681.) Cal.4th

We therefore concluded “an employee going directly to arbitration will lose a number of and advantages. benefits He or she will not benefit from the Labor Commissioner’s settlement efforts and He or she must expertise. pay for his or her own he attorney whether or not or she able to it—an afford who not have the attorney expertise Labor Commissioner. Moreover, what matters to the is not a favorable employee arbitration award award, se but the enforcement of that and an per going directly employee arbitration will have no advantage obtaining such Nor is special enforcement. there any that the guaranty will not employee responsible fees, 218.5, successful for under section an employer’s attorney employee who directly with a claim not proceeds against wage employer preceded aby Berman will be liable for such hearing fees if employer prevails short, the Berman appeal. hearing even when followed process, by binding arbitration, on the substantially whole lower costs and risks to the provides claims, and greater frivolous deterrence of employer

employee, greater collected, arbitration the binding be than does assurance that awards will I, omitted.) 681, fns. (Sonic supra, at alone.” process the have employees option that because argument We also Sonic’s rejected (§ 218), Berman to court or hearing going directly of a Berman pursuing the “The of a agreement. purpose be in must waivable hearings predispute them access claimants by giving is to hearing empower wage Berman statutes the an of advantages. Allowing employee a with all its to Berman hearing wage a when a claim to to Berman hearing freedom to choose whether resort a arises, whether such in of the circumstances light particular after evaluating behind is consistent with wholly public policy is hearing advantageous, that the surrender A employee the Berman statutes. hearing requirement not. As we a as is employment of Berman a condition hearing option Armendariz, waiver of our is with the impermissible in concern recognized a before dispute as a condition of employment certain rights protections Armendariz, 8.) fn. We therefore supra, 24 Cal.4th at (See has arisen. that, have an to because the intended argument Legislature employee

find the arises, Legislature claim hearing wage a Berman when a option waive to employees also intended to employers require must have permit (Sonic I, supra, a to be unpersuasive.” as condition of employment, option above, 682-683, a omitted.) we held that For the reasons 51 Cal.4th at fn. pp. violates of a Berman waiver the context predispute (Id. 684.) at public policy.

C. As we Sonic I further held that Berman is unconscionable. a waiver common is that refers formulation of “One explained: ‘ together choice on the of one of meaningful parties “an absence of part ’ to the other party.” contract which are favorable unreasonably terms of uncon the doctrine recognizes, As formulation implicitly [Citation.] element, the former and a substantive scionability has both procedural latter bargaining power, or due unequal on focusing surprise oppression element of uncon results. ‘The on harsh or one-sided overly procedural adhesion, the form of contract takes generally scionable contract “ ‘which, bargaining strength, and drafted by party superior imposed to the to adhere subscribing only to the party opportunity relegates ” ’ 1071.) (Little, 29 Cal.4th supra, contract or it.’ reject “ forms, but may gen- terms take various unconscionable ‘Substantively Armendariz, form, one-sided. One such as unfairly described erally ” “a wherein bilaterality,’ lack of ‘modicum agreement’s the arbitration claims not the but against employer, employer’s claims employee’s against (Armendariz, employee, subject arbitration. Another kind of

.Cal.4th unconscionable substantively provision occurs when the party mandates imposing post-arbitration arbitral, either or proceeding, judicial wholly largely its benefit at the expense party (Little, which the arbitration is imposed.’ supra, 29 1071-1072.) Cal.4th determining our unconscionability, inquiry into whether a contract was provision ‘unconscionable the time it was (Sonic Code, (Civ. 1670.5, I, made.’ (a).)” subd. Cal.4th 684-685.) pp. these we first “the

Applying principles, observed that arbitration agreement was a contract adhesion as a indisputably imposed condition of employ- ment” and that “contract terms as a condition imposed employment I, to particularly prone (Sonic procedural unconscionability.” 51 Cal.4th supra, “ 685-686.) contracts, the case of arbitration the preemployment ‘[I]n economic exerted pressure by all but the most employers sought-after acute, be employees the may particularly for arbitration agreement stands the between and employee and few necessary employment, are in employees to refuse a an position (Armendariz, because of arbitration job a requirement.’ Moreover, 115.) supra, Cal.4th many may give not careful employees to routine scrutiny documents that personnel ask them to employers sign. (See Gentry, supra, 471.) Cal.4th

“Furthermore, above, for reasons suggested substantive uncon- significant also scionability is As Berman present. explained, hearing posthearing were to procedures designed claimants with provide wage meritorious claims claims, the unique that lower costs and protections risks such pursuing a leveling field that playing generally favors with employers greater resources power. to bargaining Requiring employees forgo these as a protections condition can benefit the employment only at the employer expense can Nor we as also employee. say, benefits the explained, employee from gains arbitration what he she loses compensates by forgoing a option of Berman hearing. sum,

“In rather than justified being by ‘legitimate (see commercial needs’ Armendariz, 117), 24 Cal.4th at main of the Berman purpose waiver to be for appears to an in the employers gain advantage dispute resolution by process eliminating statutory accorded to em- advantages to make ployees designed fairer and more efficient. process We conclude the waiver is one-sided and markedly substantively therefore unconscionable. This substantive unconscionability, together with element of significant leads to the procedural unconscionability, conclusion that Berman waiver I, in the (Sonic arbitration at issue here agreement is unconscionable.” 51 Cal.4th at

D. to contrary we Berman waiver unconscionable found the Although Instead, we agreement. did invalidate arbitration we public policy, so as arbitration is enforced may long that an arbitration be held If the at the employee’s request. a Berman hearing preceded option hearing then the hearing, post-Berman a Berman chooses have employee “A to a Berman would in arbitration: party for employees apply protections agree- prior de via arbitration hearing seeking appeal pursuant novo an file initially appeal than would through judicial ment rather proceeding 98.2, with a (a), together to section subdivision superior pursuant whether court would determine arbitration. The superior compel petition all the statutory require- and whether it timely the appeal comports so, ments, (b). If and if in subdivision undertaking such requirement meritorious, or found to petition compel unopposed, Commissioner, The Labor grant pursuant the trial court will petition. 98.4, in the then claimant eligible wage section represent 98.2, of section subdivision one-way fee-shifting provisions proceeding. arbitrator, (c) the such review as initially by judicial will be enforced with I, (Sonic 676.) be 51 Cal.4th at may appropriate.” not because we that the FAA does this “our Finally, held preempt approach and unconscio- conclusion Berman waivers are contrary public policy I, (Sonic 51 against agreements.” nable does discriminate “Rather, our that Berman waiver is contrary Cal.4th at conclusion a the waiver and unconscionable is whether public ‍​​​‌​​​​​‌​‌​​‌‌‌‌​​‌‌‌​‌​‌​‌‌​‌‌​‌‌‌​‌‌‌‌​‌‌​‌‌‍policy equally applicable (Ibid.) within an arbitration or of arbitration.” agreement independent appears detail Sonic /’ s analysis of the issue greater Below we discuss in preemption in Concepcion. the after first court’s decision examining high in. filed, I was Court Sonic Supreme Two months after the United States U.S. __ [131 1740], Concepcion, supra, 563 S.Ct. We issued its decision I, effect of that decision on Sonic with a review of beginning now the analyze at issue in Concepcion. the state law rule

A. (2005) Discover Bank Court v. 36 Cal.4th 148 Superior Cal.Rptr.3d [30 Bank), 76, (Discover the of P.3d this court confronted question 113 1100] actions are uncon in arbitration class agreements waiving whether provisions arbitration as a means of scionable. We had of class previously approved '“ claimants a method of redress for claims obtaining small “providing] 1136

which would be otherwise too small to warrant individual litigation. [Cita ’ Denial of a class action in cases it where tion.]” [Citation.] appropriate have the effect of allowing unscrupulous wrongdoer 'retain[] benefits of its conduct.’ wrongful v. (Keating Superior Court [Citation.]” 584, (1982) 31 Cal.3d 645 Cal.Rptr. P.2d (Keating), 1192] overruled on other in Southland grounds v. Corp. Keating U.S. L.Ed.2d 104 S.Ct. heldWe in Discover Bank that when class arbitration waiver “is found in a consumer contract of adhesion in setting which between disputes contracting parties involve predictably of small amounts damages, when alleged that with the party carried superior bargaining has out scheme to power cheat deliberately large numbers of out consumers of individually small sums of then ... money, waiver becomes in practice ‘from exemption party responsibility fraud, for own or willful or injury person (Civ. [its] another.’ property Code, 1668.) circumstances, these Under § such waivers unconscionable under Bank, California law and (Discover should not enforced.” 162-163.) We further held that the FAA does not this rule. preempt “ law, Reciting the we said that text applicable ‘the § [of FAA] for provides touchstone between choosing state-law and the principles of federal principles common law envisioned of that statute: passage valid, irrevocable, enforceable, An arbitrate is as a matter [citation], federal law “save such as exist at law or in upon grounds equity law, revocation of contract.” 9 U.S.C. 2 . ... Thus state whether legislative оrigin, is judicial that law arose to applicable govern issues if concerning validity, revocability, and enforceability contracts gener Aally. state-law that takes its from principle meaning the fact that a precisely contract to arbitrate is at issue does not with this of 2. comport requirement not, then, A court may assessing in to rights litigants [Citations.] enforce an agreement, arbitration construe that a agreement in manner different from in which it otherwise construes nonarbitration agreements under state law. Nor amay court on the rely an to uniqueness agreement arbitrate as a basis for a state-law that enforcement would holding be unconscionable, for this would enable to- the court effect what ... state ” (Discover Bank, 164-165, cannot.’ legislature Cal.4th pp. 483, 492-493, v. quoting Perry (1987) Thomas 482 U.S. fn. L.Ed.2d 9 [96 2520], 107 S.Ct. italics added Discover by Bank.) We reasoned that our unconscionability rule class waivers is prohibiting not because it to preempted arbitration nonarbitration applies equally are, agreements: action class waivers under certain principle “[T]he circumstances, unconscionable as is a unlawfully exculpatory principle California law that not does to arbitration but specifically apply agreements, words, to In it contracts other to class action generally. equally applies it does to as agreements in without arbitration waivers contracts litigation (See America agreements. in contracts with such arbitration waivers class Online, Court Superior [1], 17-18 v. (2001)] [Inc. Cal.App.4th Bank, (Discover 165-166.) 36 Cal.4th 699].)” Cal.Rptr.2d decided, Keating addition, was class we observed that since years or bilateral litigation a alternative to class had to be viable arbitration proven Bank, (Discover therein.) and cases cited arbitration.

B. Concepcion FAA the unconscio- court in held that the high preempts The contracts, thereby abrogating arbitration waivers in consumer nability class Discover Bank. Concepcion a filed in federal court involved class action by and false sales advertising charging that AT&T fraud alleging engaged of the class tax for as free. The value of claim advertised phones $30.22. was AT&T moved to Vincent and Liza Concepcion, representatives, that if an arbitration agreement arbitration. The arbitration provided compel offer, settlement AT&T would award was than AT&T’s last written greater $7,500 fees. The district attorney minimum twice pay plus plaintiff’s made the denied the that the class waiver holding court motion compel, under Discover Bank and that unconscionable agreement $7,500 did cure because AT&T could not penalty unconscionability of the claim. As Ninth avoid face value always penalty paying court, Circuit said in the district “the maximum customer affirming gain (Laster v. $30.22 $30.22.” for the hassle of is still arbitrating just dispute AT&T LLC Mobility 584 F.3d that Discover Bank's While acknowledging Court reversed. Supreme rule and nonarbitration con applies equally

tracts, the court that more is to avoid FAA high required preemp concluded normally thought tion: “the becomes more when doctrine complex inquiry here, or, such duress as relevant unconscionabil generally applicable, . to have in a that disfavors arbitration. . . alleged been fashion ity, applied arbitrate as a ‘rely uniqueness [A] .’ for a that enforcement would be unconscionable . . . holding basis state-law (Concepcion, supra, 1747].) U.S. S.Ct. at 563 at p. __ [131 p. [Citation.]” Concepcion said, be of “would a case “An obvious illustration this point,” unenforceable as consumer against policy unconscionable or finding public discovery. that fail to for monitored judicially arbitration agreements provide imagine neither difficult to nor holding The rationalizations for such a are Bank. A court might in kind from those articulated in Discover different to full right discovery, consumer would waive his knowingly reason no Or the court wrongdoing. might would enable to hide their as this companies say that such are simply agreements exculpatory—restricting would discovery consumer, be greater benefit to the than the since the company former Bank, See Discover supra, more to be sued than to sue. likely . . 161 . And, that class are (arguing one-sided). waivers similarly would reasoning continue, such a because rule applies general of unconscionabil principle ity public-policy it is disapproval exculpatory agreements, applicable course, contract ‘any’ and thus preserved by FAA. In practice, the rule would have a but disproportionate impact agreements; it would to contracts presumably apply restrict purporting discovery (Concepcion, supra, __ litigation as well.” 563 U.S. at S.Ct. p. [131 1747].) The p. high court added that argument same might apply “[t]he rule classifying unconscionable arbitration that fail to abide agreements by Evidence, the Federal Rules of or that disallow an ultimate disposition by .).” (Ibid.) jury termed ‘a (perhaps lay twelve arbitrators’ . . panel “ rules, Such ‘aimed at arbitration’ or ‘de destroying ” arbitration,’ manding procedures would contravene the incompatible FAA’s “overarching the enforcement of purpose” “ensur[ing] to their agreements according terms so as to facilitate streamlined proceed ings.” (Concepcion, __ 1748].) U.S. S.Ct. reasoned, Similarly, high court tire “[Requiring availability of class- wide arbitration interferes with fundamental attributes of arbitration and (Ibid.) thus creates a scheme inconsistent with the FAA.” According Concepcion, class wide arbitration interferes with fundamental attributes of arbitration in several ways.

First, classwide arbitration advantage “sacrifices of arbitra principal slower, tion—its informality—and makes the more and process costly, more (Concepcion, likely generate than procedural morass final judgment.” “ arbitration, 563 U.S. at S.Ct. at ‘In p. __ [131 bilateral forgo and parties rigor review of the courts in procedural appellate order costs, to realize the benefits of resolution: lower private dispute greater efficiency to choose speed, ability to resolve expert adjudicators (Ibid.) arbitration, contrast, specialized disputes.’ Classwide [Citation.]” a slower because “before an arbitrator process may decide the merits of a decide, claim in he classwide must first for procedures, whether the example, certified, class itself be whether named parties sufficiently and how representative typical, class should discovery (Ibid.) conducted.”

Second, “class arbitration requires formality” because of due procedural (Concepcion, supra, __ process concerns. U.S. S.Ct. at 1751]; see ibid. Arbitration rules govern [“The [American Association’s] class arbitrations mimic the Federal Civil ing Rules of Procedure for class informal, members would absent class are too “If litigation.”].) procedures to bind judgment a money For class-action bound the arbitration. by not be all times adequately must at in class litigation, representatives absentees notice, afforded members, must be and absent members class absent represent We find heard, the class. . . . to out of and right opt [f] an to be opportunity leave the meant to disposition the FAA Congress that in unlikely passing __-__ (Id. S.Ct. at to an arbitrator.” [131 these procedural requirements 1751-1752].) at pp. and “is

“Third, risks to defendants” increases class arbitration greatly the lack of because of litigation” stakes of class higher suited to the poorly __ S.Ct. 563 U.S. supra, p. review. (Concepcion, [131 judicial (with awards limited 1752].) judicial arbitration huge class-action “[I]n unattractive. It review) rendering thus will be entirely predictable, to be arbitrated consumer disputes deniable reasonably requiring is not deterrent effect on incentives have a substantial a classwide basis will 8].) fn. fn. S.Ct. at (Id. arbitrate.” p. __, to the as an obstacle “Because it ‘stands court concluded: high and objectives of the full and execution purposes accomplishment rule [citation], by Discover Bank is preempted California’s Congress,’ ___ S.Ct. at p. 563 U.S. supra, FAA.” (Cоncepcion, C. by Concepcion that the FAA as construed preempts Sonic contends an arbitration I that a waiver of Berman procedures our Sonic holding is, itself, contrary public policy. in and of unconscionable filing the usual time between our acknowledgment Sonic points a Berman the conclusion of Commissioner and with the Labor complaint I, fn. 51 Cal.4th at (Sonic is four to six months. hearing Ferrer, v. that “in Preston observation then underscores Concepcion’s Sonic administrative rule exhaustion a state-law requiring holding preempted arbitration, of an agreement ‘A objective before we said: prime remedies ’ results,” and expeditious arbitrate is to achieve “streamlined proceedings be heard dispute be ‘frustrated’by requiring which would objective least, said, rule, ‘at the U.S., would That we first. 552 at 357-358. agency Id., (Concepcion, supra, at 358.” controversy.’ hinder resolution speedy Sonic 1749], omitted.) We agree fn. U.S. at S.Ct. p. __ [131 rule categori Sonic I’s by Concepcion preempts that the FAA as construed agreements. in arbitration hearing waiver of a Berman cally prohibiting A, Inc. v. in Sonic-Calabasas contrary holding overrule the we Accordingly, Moreno, 51 Cal.4th 659. I,

In that, Sonic we Preston distinguished after grounds are Concepcion, no longer of the dispositive issue before us. preemption Preston involved a Ferrer, between dispute Preston, a television personality, over attorney, fees that Ferrer owed allegedly Preston. Ferrer claimed that the contract between him and Preston was invalid because Preston had acted as a personal addition, without manager a license. In Ferrer that argued an arbitra despite contract, tion Talent (TAA) California’s Act Agencies gave the Labor Commissioner primary jurisdiction to resolve such awith disputes, trial de novo 1700.44, available if either (§ party appeals. (a).) subd. I Sonic observed that Preston followed a line of cases that when a establishing party to an subject arbitration agreement challenges contract as a whole and not clause, merely it is the arbitrator who decides the validity I, (Sonic 689-690; contract. supra, accord, Preston, 51 Cal.4th at pp. 353; 552 U.S. at supra, see Check Buckeye Inc. Cashing, v. Cardegna (2006) 440, 546 U.S. 1204]; L.Ed.2d 126 S.Ct. Prima Paint v. Flood & Conklin 388 U.S. 403-404 L.Ed.2d 87 S.Ct. 1801].)

Sonic I that the explained case present was distinguishable from Preston “the because challenge is to a portion arbitration agreement—the Berman unconscionable, waiver—as contrary public policy rather than to the contract as a . whole. . . These cases are distinguished not merely because of the nature of the litigants’ challenges, but also because of the fundamental differences between the two at issue. The statutory regimes Preston, TAA, statute in merely lodges in the primary jurisdiction Labor Commissioner, and not does come with the same type statutory protections found in the Berman hearing posthearing discussed procedures fact, above. Ferrer’s notwithstanding that argument those in his position would be of the Labor deprived (Preston, Commissioner’s expertise 552 U.S. at 358), the Preston court that section recognized 1700.45 authorizes explicitly that allow predispute agreements parties bypass Labor arbitration, Commissioner to resolve TAA issues albeit throúgh certain conditions that could not lawfully (Preston, in that case applied 356). A predispute agreement for such provides arbitration of TAA therefore, cannot disputes, be unconscionable or contrary public policy. statutes, This is in marked contrast to the Berman hearing which have no comparable provision authorizing agreements that bypass Commissioner, Labor and which we have construed as not such permitting I, as a agreements (Sonic condition of employment.” 51 Cal.4th at 692, fn. omitted.) We now reexamine Sonic Fs conclusion in light Concepcion’s “efficient, streamlined precept is a procedures” fundamental attribute of arbitration with which state law interfere. (Concepcion, supra, noted, 563 U.S. at S.Ct. at As p. __ [131 Sonic I distinguished the administrative procedure waiver of on the ground predispute Preston “cannot be TAA and thus authorized was at issue Preston expressly I, at 51 Cal.4th (Sonic supra, contrary policy.” unconscionable or public Preston, and the unconscionability, 692.) unlike did address Concepcion, rules that unconscionability clear that courts cannot impose court made high admin waiver of forbidding rules efficiency, including interfere with arbitral U.S. at 563 that arbitration. delay (Concepcion, istrative procedures to the argument that high responded S.Ct. at p. __ [131 claims that might small-dollar “class are necessary prosecute proceedings “. . . States cannot that system” asserting otherwise the through legal by slip FAA, if it desirable with the even is that is inconsistent require procedure (Id. 1753].) The same logic at S.Ct. at p. for unrelated reasons.” p. __ [131 of a Berman hearing. waiver to Sonic Ts rule categorically prohibiting applies be substantially delayed, a Berman causes arbitration to hearing Because if desirable as a matter of contractual of such a even unwaivability hearing, arbitra a fundamental attribute of fairness or interferes with public policy, “ achieve proceedings expe its ‘to “streamlined tion—namely, objective ”’ __ 1749], S.Ct. quoting ditious results.” (Concepcion, Preston, by Sonic I’s rule is thus preempted 552 U.S. FAA. that the as amicus curiae contend

Moreno and the Labor Commissioner no obstacle to accomplishing objectives here delay contemplated presents “While the facilitation of stream- of the FAA. In his Moreno briefing, says: FAA, it lined of the is unequivocally proceedings important purpose once, without any clear that arbitration forward go requiring proceedings of generally applicable or existence delay, regardless postponement the enforceabil- a discrete challenge state contract law grounds supporting attribute’ of arbitration. of an arbitration is not a ‘fundamental ity agreement, Thus, fraud, as to some specific a defense of duress or will agreement postponement arbitration provision require ‘If a party while the of the defense is validity adjudicated. arbitration issue, to arbitrate at under 2 of the challenges agreement validity precise § ordering compliance the federal court must consider the before challenge West, Jackson, Inc. v. 561 U.S. (Rent-A-Center that under 4.’ § Thus, (2010).) the policy L.Ed.2d 130 S.Ct. 2778] of a must to the assertion yield streamlined arbitration promoting proceedings clause. This savings for revocation of a contract under ground § of a that recognizes implementation because the clause necessary savings aimed an arbitration enforcing the unfairness of state policy preventing duress, within the agreement fraud or provision agreement procured trumps purpose that is unconscionable or that violates public policy, arbitration streamlined facilitating proceedings.”

It is one thing to acknowledge must process time to state law defenses under the permit adjudicate FAA’s clause. savings But that is different from that the FAA therefore asserting state permits law categorically forbid waiver of administrative procedures significantly sure, the commencement of delay arbitration. To be ato contract parties must have an to determine whether opportunity arbitration agreement enforced; should be the FAA does not arbitration when there are valid require contract defenses to the enforcement of the arbitration But it agreement. does FAA, as interpreted by Concepcion, not follow that the additional permits delay results not from whether there is an adjudicating enforceable but from an agreement, administrative scheme to effectuate state unrelated to the policies agreement’s Moreno’s enforceability. argument the former the latter is implies unpersuasive. sum, we hold that Sonic rule 7’s waiver prohibiting of Berman hearing the FAA. preempted by

IV. we conclude that the Although FAA a state law rule preempts categorically arbitration to be requiring Berman our preceded by hearing, does holding resolve the fully claim in unconscionability this case. In his to opposition arbitration, petition Moreno stated compel as an affirmative defense the arbitration between the is construed parties “[i]f absolutely from prohibiting Respondent exercising statutory right [his] initially invoke non-binding administrative afforded remedy by Commissioner, Labor then the arbitral scheme crafted Petitioner fails to an arbitral forum in provide which can and fully employees effectively vindicate their to recover statutory rights unpaid wages, is thus contrary unenforceable.” Because Sonic I con- unconscionable public policy, cluded that arbitration must be categorically Berman preceded by hearing and that the petition arbitration was we had compel premature, no occasion whether, to address without a Berman hearing, Moreno can vindicate his right Moreover, to recover under this arbitral unpaid wages scheme. we particular did not address whether barrier to any such would make the vindicating rights arbitration agreement unconscionable or otherwise unenforceable under Cali- and, so, fornia law if whether such a rule would be the FAA. preempted by We turn now to these questions.

A. Concepcion, unconscionability We that after begin by noting re mains a valid defense to a arbitration. the FAA’s petition compel Quoting Concepcion clause, reaffirmed that saving FAA “permits as exist at law such grounds to be declared unenforceable agreements ‘upon ” 563 U.S. (Concepcion, supra, or in for the revocation of contract’ equity “ 2), 1746], ‘generally U.S.C. including S.Ct. at quoting p. __ [131 duress, defenses, fraud, . . .’ or unconscionability contract such as applicable 1746]). courts Although S.Ct. at (Concepcion, p. __ [131 [citations]” to which neither has party not rewrite terms agreements impose the common law it has been the role of courts agreed, long enforcing proper harsh, unreasonably to ensure that the terms of a are not bargain oppressive, A M Produce Co. v. FMC (1982) Corp. & (See or one-sided. Cal.App.3d Produce); v. (A & M Williams 485-493 Cal.Rptr. [186 114] Furniture Co. 1965) Walker-Thomas (D.C. Cir. 121 U.S.App.D.C. Motors, (Walker-Thomas Furniture); v. Henningsen F.2d 445] Bloomfield

Inc. A.2d the exercise of that After Concepcion, 32 N.J. 358 intact, as the function as to arbitration remains judicial agreements applied FAA expressly provides.

What is new is that the limits the FAA on state Concepcion clarifies places rules as to arbitration It is well they agreements. pertain established that such rules must not discriminate facially against and must be enforced evenhandedly. Concepcion goes further to make clear rules, that such even when must not disfavor facially nondiscriminatory, arbitration applied by imposing procedural requirements “interfere[] “ arbitration,” costs, with fundamental attributes of its ‘lower especially greater efficiency and to choose speed, ability adjudicators expert resolve at (Concepcion, supra, 563 U.S. specialized disputes.’ [Citation.]” 1748, 1751].) if S.Ct. As the pp. __, __ [131 pp. high explained, facial or evenhanded enforcement were the neutrality only principles limiting arbitration, state law defenses to then a state court scope permissible could—on grounds unconscionability or public policy—compel adop tion of an It arbitration that would be arbitration in name procedure only. trials, rules, could monitored or impose judicially discovery, evidentiary jury other that mimic court undermine the procedures thereby proceedings, FAA’s arbitration as an efficient alternative purpose encouraging __ (563 1747].) U.S. at S.Ct. at litigation. [131 state law rules that do not with fundamental Importantly, “interfere[] (Concepcion, supra, attributes of arbitration” 563 U.S. at S.Ct. p. __ [131 Concepcion’s 1748]) do not limits on state unconscionability implicate held, rules. As our cases have suсh rules address issues that arise Scissor-Tail, in the context of arbitration. In Graham v. Inc. (1981) 28 uniquely (Scissor-Tail), for 604, Cal.3d 826-827 623 P.2d Cal.Rptr. [171 165] we held unconscionable a in an arbitration agreement example, provision a an adhesive contract the to choose effectively gave imposing right party addition, arbitrators, arbitrator. In we held in that because biased Armendariz unlike an division of costs between judges, paid parties, equal 1144 has

employer employee potential practice being unreasonably one-sided an burdening exercise employee’s statutory rights. (Armendariz, 24 107-113.) Cal.4th at As these a pp. suggest, examples neutral state law rule is not facially because its evenhanded preempted simply “would have on arbitration application disproportionate agree impact (Concepcion, ments.” Concepcion, 1747].) S.Ct. at Under p. __ [131 state law rule is when its is such that it interferes with preempted impact (Id. fundamental attributes of arbitration. S.Ct. at p. ___ [131 Moreover, there are other an arbitration be uncon ways agreement may scionable that have to do with fundamental attributes of arbitration. nothing Little, $50,000 In we found unconscionable threshold for an example, favored defendants in contract appeal decidedly employment (Little, supra, 29 v. Ultimo 1071-1074.) Cal.4th at Harper disputes. pp. (2003) 418], 1407 the court found Cal.App.4th Cal.Rptr.3d [7 unconscionable an arbitration with a clause agreement damages limitation under which “the customer does not even have the theoretical possibility he CantorCO2e, v. L.P. or she can made Ajamian (2012) whole.” And in (Ajamian), Cal.App.4th 799-800 the court found Cal.Rptr.3d 773] that, unconscionable arbitration agreement among things, other “impos[ed] upon obligation fees if employee] pay employer’s] attorney [the [the in the employer] without her the prevails proceeding, granting right [the her own fees if she recoup attorney prevails.”

Consider also' the form of identified in v. Gutierrez Autowest, Inc. (Gutierrez). Cal.App.4th Cal.Rptr.3d 267] There, entered into an automobile lease with the plaintiff agreement defendant automobile dealer. He sued the dealer over subsequently alleged fraud in the transaction. The adhesive contained an inconspicuous (Id. that, 83-84.) clause. The Court of found based Appeal on the American Arbitration Association rules in effect at the time the arbitration, defendant moved to would have had to compel plaintiff pay (Id. $8,000 90-91.) in administrative fees to initiate the arbitration. It pp. (Id. that exceeded the was such fees undisputed ability pay. plaintiff’s unconscionable, 91.) In this of the arbitration holding agreement aspect “We said: conclude that where a consumer enters into an adhesive Gutierrez arbitration, contract that mandates it is unconscionable to condition that he consumer fees or she cannot It is self-evident process posting pay. one-sided, that such a is harsh defeats provision unduly expectations of the nondrafting shocks conscience. While arbitration party, may consumers, within the reasonable that builds expectations process (See fees into is not. prohibitively expensive process 1659, v. ITT Financial Patterson Consumer [(1993) 14 Corp. Cal.App.4th 563]].) 1665 To state it it is unconscio- simply: substantively Cal.Rptr.2d [18 the judicial system, nable to consumer to utilize require give up right

1145 Whatever high. arbitral forum fees are prohibitively while that imposing exist, an adhesive is not served by for arbitration might preference the redress of that blocks forum for effectively every disputes, agreement (Id. 89-90, omitted.) arbitration itself.” fns. including pp. illustrate, of the unconsciona As the cases above the core concern “ ‘ choice on the of one meaningful part doctrine is the “absence of

bility are favorable unreasonably with contract terms which parties together ’ ” I, 684-685; (Sonic Cal.4th at see supra, the other 51 party.” pp. Furniture, Walker-Thomas 350 F.2d at The unconscionability supra, contrаcts, adhesion, doctrine contracts of do ensures particularly “ ‘ ’ ” that have been described as harsh” variously “overly terms impose 1519, (Stirlen Inc. (1997) 51 1532 v. Supercuts, Cal.Rptr.2d Cal.App.4th [60 “ ” (Perdue v. National Bank Crocker 138]), (1985) 38 ‘unduly oppressive’ “ 913, 345, (Perdue)), Cal.3d P.2d ‘so one-sided 925 702 Cal.Rptr. 503] ”’ (Pinnacle Tower Assn. v. Pinnacle Museum as to “shock the conscience” 223, (US), Market LLC 55 Cal.4th Development Cal.Rptr.3d (Pinnacle)), (Little, 282 P.3d or one-sided” “unfairly 1217] 1071). that the Cal.4th All of these formulations to the central idea point “a bad doctrine is concerned not with old-fashioned simple (Schnuerle v. Insight Communications Co. 2012) 376 S.W.3d bargain” (Ky. (Schnuerle)), to the but terms that favorable “unreasonably 18:10, (8 (4th 2010) more Williston on Contracts ed. powerful party” § 91). These include “terms that integrity bargaining impair or otherwise terms contravene interest or process public public policy; nature) of an alter in an (usually adhesion or boilerplate attempt law, manner fundamental duties otherwise impermissible imposed by terms, or that seek to the reasonable fine-print negate expectations provisions terms harsh nondrafting unreasonably party, unexpectedly (Ibid.) to do with or other central of the transaction.” having price aspects Concepcion, courts may After continue to the unconscionabil apply Schnuerle, (See doctrine to arbitration 376 S.W.2d ity agreements. [Concepcion holding confidentiality 579-580 does not preempt re Account unconscionable]; Checking of arbitration provision agreement Litigation [Concepcion (11th 2012) Cir. F.3d 1280-1283 Overdraft does not under South Carolina law that holding fee-shifting provi preempt unconscionable].) As the FAA sion contemplates (9 2), in its clause U.S.C. courts examine the terms of adhesive savings arbitration to determine whether one-sided. agreements they unreasonably do, doctrine, to What courts not in may unconscionability applying mandate rules that are inconsistent with fundamental attributes of procedural arbitration, even if such rules are “desirable for unrelated reasons.” (Concepcion, supra, 563 U.S. at S.Ct. at p. __ [131

B. Sonic F rule that Concepcion, Under the FAA s waiver of a preempts Berman renders an adhesive arbitration hearing necessarily agreement uncon scionable of what terms of the regardless agreement how the provide was formed. State law agreement may arbitration to categorically require an administrative because the preceded by hearing interferes with hearing Thus, arbitral arbitration. the fact that efficiency by substantially delaying arbitration an administrative cannot be a supplants hearing finding basis an arbitration agreement unconscionable.

But the of a Berman waivability hearing favor of does not end the The Berman statutes include various unconscionability inquiry. designed features to lower the costs and risks for wage employees pursuing claims, translator, assistance of a use of an including procedural informality, who authorized expert adjudicator help parties by questioning terms, and witnesses issues and and on fee explaining shifting, provisions mandatory assistance of the Labor as undertaking, Commissioner counsel defend and enforce award on help employees any Waiver of these appeal. does not render an protections necessarily agreement unenforce able, it nor does render an arbitration agreement unconscionable se. But per waiver of these in the context of an that does not protections agreement with an accessible and affordable arbitral forum for provide employee resolving wage As with disputes may support finding unconscionability. contract, unconscionability court to examine the inquiry requires totality agreement’s substantive terms as well as the circumstances of its formation to determine whether the overall bargain unreasonably was case, one-sided. In the we remand trial court to conduct this present fact-specific inquiry. the substаntive terms of an arbitration evaluating agreement, doctrine must consider not what applying only

features of resolution the eliminates but also what features dispute agreement Here, between Sonic and agreement Moreno contemplates. says arbitration shall be conducted a “retired California Court by Judge.” Superior further for a to conduct and take right discovery provides and it the extent makes “to in civil actions depositions, applicable, applicable courts, in California ... all rules of (including right pleading evidence, demurrer), all all rules to resolution of rights dispute by means of motions for on the summary judgment, judgment pleadings, under Code of Civil Procedure section 631.8.” At either judgment party’s an arbitration award be reviewed a second arbitrator who request, by will, far “as law practicable, proceed according procedures review the California Court of of a civil' applicable appellate Appeal these of arbitra- Moreno that terms court trial.” contends judgment following tion, do not offer the formalities of many litigation, which impose (Cuadra, informal, claims” resolving wage and affordable method “speedy, him 858) from unconscionably pursuing Cal.4th and prevent his claim. hand, necessarily face does not

On the other on its agreement has that Sonic reveal many particulars process America Court Truly Nolen v. Superior (2012) 208 (See, adopted. e.g., Arbi American [examining 494-495 Cal.App.4th Cal.Rptr.3d 432] agree rules to of the arbitration tration Association determine nature be, ment].) uses It for that the actual arbitration Sonic may process example, affordable, rules an to obtain and enforce has that enable prompt, employee Sonic I that Indeed, in able claim. we wage recognized resolution of “[i]t to be so that an be for an arbitration it may possible system designed provides the Berman and advantages hearing posthearing all employee protections.” (So I, argument 51 Cal.4th at fn. At oral here nic I, in Sonic designed. counsel for Sonic said that so present agreement counsel, mandates According savings to authorizes or cost an realize the Berman through to what would comparable employee process, can to that an undertaking Sonic to an ensure requires post employee ibid. award, (See an if needed. collect arbitral and it translator provides oral in fact argued Sonic’s counsel that its arbitration argument, [“At and the arbitrator would or resembled a Berman in its hearing informality, as fee might one-way shifting.”].) Berman-like such incorporate protections us, the record but These facts about the arbitration not in before process the trial court on remand. they may by be introduced Sonic considered by 1670.5, (b) Civil Code that it is claimed provides section subdivision “[w]hen clause be to the court the contract or thereof appears to reasonable unconscionable shall be afforded a parties opportunity to its effect to aid setting, evidence as commercial present purpose, said, determination,” this construing and we have making statute, merely that “a claim of often cannot be determined (Perdue, supra, . .” the face of the contract . 38 Cal.3d by examining 926). an no formula for designing We there is emphasize single an effective and low-cost process provides approach structure many ways There are resolving wage potentially disputes. arbitration, the Berman so that it facilitates without replicating protections, accessible, resolution of We see no reason wage affordable disputes. are the only way elements of the Berman statutes believe that specific their claims achieve or that will unable pursue this goal employees to an hearing without initial resort to administrative effectively opposed itself, not, the Berman will arbitral forum. Waiver of protеctions adequate a finding of where the arbitral at issue support unconscionability scheme with provides an accessible and affordable for employees process resolving not a wage is license courts to disputes. unconscionability inquiry Rather, their renditions of an ideal arbitral scheme. in the context of a impose standard contract of adhesion forth setting conditions of the employment, focuses on unconscionability whether the arbitral scheme inquiry imposes costs and risks on a that the claimant make resolution wage wage of unaffordable, inaccessible and dispute thereby every blocks “effectively (Gutierrez, forum for the of redress including itself.” disputes, 114 Cal.App.4th 1, In Sonic we that acknowledged outside context of an adhesive contract, form other may considerations inform the unconscionability inquiry. Evidence that a Berman waiver is of a part freely nonstandard contract negotiated by parties “such exist comparable bargaining power, may between an and a employer executive highly compensated weighs employee,” I, against finding (Sonic 51 fn. unconscionability. Cal.4th at p. Moreno, 7.) Whether who not a was at Sonic and whose low-wage worker “ ‘[vjacation claim wage alleges $441.29 for 63 ... at wages days the rate ” (id. 670), had per day’ comparable bargaining freely power contract negotiated his are matters for the trial remand. court to determine on Further, issue, when negotiated or nonstandard contract is at terms of employment to arbitration confer substantial that may benefits unrelated inform the fairness of to surrender requiring employee statutory protec addition, 1670.5, tions in favor of In arbitration. Code Civil section (b) subdivision indicates that evidence the “commercial concerning setting, effect” of purpose, agreement inquiry. is pertinent sum, In unconscionability doctrine does not mandate adop mechanism, tion of form of any particular dispute resolution and courts may not decline to enforce an arbitration agreement on the that it simply ground a bad to be or that one appears bargain could have done better. The party doctrine unconscionability is instead concerned whether the is agreement favorable to one unreasonably party, context “its commercial considering Code, 1670.5, (Civ. (b).) effect.” subd. setting, purpose, applying here, doctrine to the arbitration the trial court as one may consider factor Moreno’s surrender of the Berman in their al protections entirety, though factor alone does not render the necessarily agreement unconscio nable. Because it been may not have clear before our decision today evidence concerning arbitral scheme issue in this case is specific to the will pertinent unconscionability have the inquiry, parties opportu such order nity evidence in to inform the trial court’s unconsciona present defense,” determination. “Since a contract it bility is will be Moreno’s burden on remand to “that prove provision (Chin unenforceable on that v. Fresh ground.” Advanced Franchise Concepts

1149 Further, 547].) (2011) Cal.Rptr.3d Corp. Cal.App.4th when appears in any Labor intervene proceedings Commissioner an unenforceable arbitration being his or her jurisdiction usurped Local Firefighters, Assn. (See Jose v. International City San agreement. Cal.Rptr.3d 178 Cal.App.4th C. by is not preempted The doctrine we have stated above unconscionability in Berman protections that an surrender of holding employee’s FAA. an in whether determining be as a factor their considered totality may unconscionable, dis doctrine does not facially our arbitration agreement to and nonarbitra criminate It applies arbitration. against equally the Berman agreements forgo protections tion that to employees require addition, doctrine as claims. In our resolving wage unconscionability applied as objectives an to the achievement of the FAA’s does not obstacle pose very Berman statutes Concepcion. promote construed in Because the costs,” and and “lower “greater efficiency of objectives “informality,” speed,” that the court has deemed “fundamental use of adjudicators” high “expert __-__ U.S. at (Concepcion, pp. of arbitration” attributes Cuadra, 1751]; 858), see Cal.4th S.Ct. at that agreements doctrine to case-by-case application will, tend to such if anything, promote benefits require employees forgo cost, rigor, FAA’s rather than lead increase in procedural objectives noted, many ways design As there are complexity, formality. potentially attributes, arbitration, it is its fundamental so that affordable consistent with and claimants. Sonic the arbitration wage argues accessible process issue here fits this and Sonic will have the on remand opportunity description, of its evidence contention. provide support

The fact that the FAA Sonic 7’s rule requiring preempts not mean that a court hearing to be Berman does wage by disputes preceded the value of benefits an not consider unconscionability analysis may applying statutes, well itself. hearing the Berman which go beyond provided by favors a The FAA Sonic 7’s rule because it categorically particular preempts arbitration and creates Berman hearing—over form resolution—the dispute contrast, the By an obstacle to a streamlined arbitral immovable process. is not on the superior we describe unconscionability analysis today premised contem resolution forum. Our rule of the Berman ity hearing dispute arbitration, an can be hearing, designed than administrative no less plates informal, and that resolution of claims wage to achieve affordable speedy, forth inform agreement the features of arbitration set in an properly 7’s runs afoul of because Concepcion Sonic rule unconscionability inquiry. to arbitration the Berman as an unwaivable hearing interposes prerequisite the start thereby significantly of arbitration. The rule we delays adopt waivable, which makes clear today, that the Berman hearing does not delay arbitration or otherwise interfere with fundamental attributes of arbitration. It an simply adhesive arbitration requires the surrender compels of Berman as a protections condition employment for acces- provide sible, affordable resolution wage disputes.

The distinction between state law rules that undermine fundamental attri butes of arbitration and state law rules that do elucidated further noted, considering drawn from the facts of example As Concepcion. held that Concepcion because class proceedings undermine arbitration’s fundamental attributes of informality the FAA efficiency, preempts state unconscionability rule waiver of forbidding class But proceedings. did not rule Concepcion out other ways to enable “to consumers prosecute small-dollar claims that might otherwise through legal slip system.” __ (Concepcion, supra, 563 U.S. S.Ct. at high court noted the that arbitration agreement at issue there that AT&T “provides $7,500 will a pay claimants minimum of twice their attorney’s fees if they obtain an arbitration greater award than AT&T’s last settlement offer” and then observed that District Court found this scheme sufficient to “[t]he for the incentive individual of provide claims that prosecution meritorious are settled, not the Ninth immediately Circuit admitted that aggrieved customers who filed claims would ‘essentially guarantee[d]’ be made whole, (Ibid.) [citation].” that, in of a

Suppose light Concepcion, state legislature seeking to protect small-dollar claimants were to enact a generally unwaivable applicable, described, the statute similar to a provision just requiring defendant to a pay fees if a penalty plus attorney with a low-value plaintiff claim obtains an award or through litigation arbitration than the greater defendant’s last settlement offer. in Nothing Concepcion such a suggests statute—which designed achieve same a rule objective as class forbidding waivers but does not interfere with fundamental attributes of arbitration—would be Moreover, FAA. the fact that the preempted by statute would render (or invalid an nonarbitration) arbitration agreement odds with penalty scheme—and thus leave the to their usual and remedies parties rights under law, state including class not mean that statute proceedings—does has somehow circumvented the FAA’s of state law rules preemption forbidding class waivers.

The rule we set forth on today stands exactly same legal footing. of the Berman no Many situated differ protections counsel, than ently state laws fee of attorney assistance concerning shifting, other or to benefit one or rights designed litigation. both civil parties

1151 of waiver forbidding law rule categorically of state FAA’s preemption gener or civil litigation class procedures, discovery, jury factfinding, formal 1747]) does S.Ct. at U.S. at (see p. __ [131 563 Concepcion, ally would statutory benefits mean that a surrender specific party’s consideration certain of claims becomes prohibited otherwise kinds apply Although unconscionable. agreement whether an arbitration deciding aof not itself entail the loss arbitration for does litigation mere substitution of Armendariz, Motors 98-99; v. Mitsubishi 24 Cal.4th at (see pp. benefit L.Ed.2d (1985) 473 U.S. 626-628 Chrysler-Plymouth Soler lost Motors)), an what has (Mitsubishi party 105 S.Ct. assessment 3346] what consideration of specific an arbitration often involves through agreement Armendariz, (see, e.g., benefits otherwise or would rights, protections, apply arbitration as mandatory imposes 110-111 employer [“[W]hen arbitration arbitration agreement process condition employment, to bear any type expense cannot generally require employee if were free to bring would not be to bear he or she required employee Inc. Surety Investigations, court.”]; v. Serpa action in California (Serpa) [finding 709-710 Cal.App.4th Cal.Rptr.3d 506] a favorable because it agreement deprived employee unconscionable Act Housing under Fair fee-shifting rule California Employment Code, Ajamian, supra, (FEHA; Gov. et Cal.App.4th seq.)]; it “arguably unconscionable because [finding of her recover fees under her Califor attorney right strips employee] [the her the employ nia claims” and statutory obligation pay “imposes [the under at least fees where she would have no attorney obligation such er’s] claims”]). of her one California statutory case, this of that otherwise are ones

In the benefits would types apply undermine, to not economy, informality, designed speed, promote, not of Our does efficiency unconscionability analysis pose resolution. dispute more were to objectivés Legislature an obstacle to the FAA’s than if any mechanism, arbitra any including enact a statute resolution requiring dispute tion, to have features that miti used in lieu of Berman procedures claimants, those do not risks and costs for so as features long gate wage Although Concepcion of interfere with fundamental attributes arbitration. cannot a that undermines fundamental state law says require procedure for reasons” if it is unrelated attributes of arbitration “even desirable __ this does mean that (Concepcion, 1753]), S.Ct. at not not that do undermine FAA state" laws generally applicable preempts fundamental attributes of arbitration. sure,

To when a court invalidates an arbitration agreement be unconscionability be said that grounds, may unconscionability applying to to their “according doctrine in a refusal enforce arbitration ‍​​​‌​​​​​‌​‌​​‌‌‌‌​​‌‌‌​‌​‌​‌‌​‌‌​‌‌‌​‌‌‌‌​‌‌​‌‌‍agreements results 1748].) be may It also (Concepcion, supra, terms.” S.Ct. p. __ [131 1152 said that the doctrine results in arbitration that unconscionability rules “increase[] (Id. to

risks defendants” or lessen a defendant’s incentives to arbitrate. at p.__ & fn. 8 & fn. S.Ct. But thаt is true of generally applicable as to an principle unconscionability adhesive applied agreement. an For adhesive example, agreement gives the employer Scissor-Tail, to a right (see choose biased arbitrator is unconscionable supra, 826-827), Cal.3d at a even such rule pp. though does not enforce the agreement according to its terms and risk increases to the employer, who would The pick to arbitrator. FAA does prefer not such a plainly preempt state law rule. The enforce directive to arbitration “in accordance with the terms of the which in section 4 agreement,” appears (9 of the FAA U.S.C. 4), a court has logically applies § determined there an “enforce after

able” (9 under section agreement 2). FAA U.S.C. Were it otherwise, would we attribute to Congress an irrational to negate, intent 4, the through section clause it wrote savings into section 2. Neither a mere refusal an terms enforce arbitration agreement to its nor according itself, can, increased to a risk defendant serve by as a principle distinguishes between rule that is and one preempted that is not. sum, we time do not hold that any arbitration is substituted for a forum, or administrative there

judicial loss benefits. do we hold Nor that the will have proponent invariably justify agreement through benefits those provision comparable to afforded otherwise statute. Both California and. federal law treat the substitution of arbitration for litigation as the mere of one resolution forum for replacement dispute another, Armendariz, (See in no inherent resulting disadvantage. 98-99; Motors,

Cal.4th at 626-628.) Mitsubishi 473 U.S. at pp. where, here, But class has been afforded particular legislatively specific in order to risks and costs of certain protections mitigate pursuing types claims, extent those do not interfere protections with fundamen arbitration, tal attributes of an arbitration party requiring forgo those not protections may understood one properly only substitute another, forum dispute resolution but also to of a loss benefit. compel benefit lost is but be one factor in an dispositive unconscionabil ity analysis.

V. court, While this case was before our the United States pending Supreme case, Court decided another arbitration American Co. Italian Express v. Colors U.S. __ [186 (Italian Restaurant L.Ed.2d 133 S.Ct. 2304] Colors). the the We from supplemental briefing parties signifi requested of Italian Colors to the reviewed the present Having high cance dispute. submissions, Italian do not believe Colors the we court’s opinion parties’ above. alters our conclusions Colors, class bring a to a sought

In Italian the owner of small restaurant Sherman Act had violated the that American Express action suit alleging for in the market (15 1 et its by “us[ing] power U.S.C. seq.) monopoly at to credit cards rates approximately cards force merchants to charge accept Colors, (Italian cards.” supra, 30% than the fees for credit higher competing __ to 2308].) at S.Ct. at American moved Express 570 U.S. p. p. [133 individual, a bilateral arbitration to standardized pursuant compel action the merchants with an class waiver. express response, plaintiff of an that the cost showing expert submitted a declaration from an economist the would far exceed maxi to the antitrust claims analysis necessary prove basis, individual On that recovery plaintiffs argued mum for any plaintiff. that and that costly enforcing individual arbitration would be prohibitively their them effectively vindicating action waiver would from prevent class Act. high argument under Sherman The court rights rejected plaintiffs’ __ at (570 at S.Ct. agreement. p. U.S. upheld [133 2312].) p. to

The that the that FAA courts high requires explained principle true for claims to their terms “holds agreements according enforce arbitration statute, a mandate has been violation of unless FAA’s allege federal ‘ ’ ” Colors, (Italian contrary command.” congressional “overridden no 2309].) U.S. at court fоund high at S.Ct. p. p. __ [133 Act, Sherman observing command evident contrary congressional “the an guarantee path laws do affordable procedural antitrust 2309]; id. (570 claim.” U.S. at S.Ct. at see vindication every p. __ [133 p. __ at laws do not S.Ct. antitrust ‘evinc[e] 2309] [“The [Citation.]”].) a waiver’ of class-action procedure. intention preclude Further, court said: “Nor does high congressional approval [Federal Procedure, entitlement to class proceed Rules of Civil 23 establish an rule] __ (Id. S.Ct. rights.” vindication ings statutory “a judge-made court then addressed the contention that The high plaintiffs’ policies by to the . . . serves to harmonize federal competing FAA exception the ‘effective vindica courts to invalidate allowing agreements prevent arbitration bars federal the waiver class statutory right. Enforcing tion’ of a contend, vindication, have no economic because they effective plaintiffs] [the (Italian individually their antitrust claims arbitration.” incentive pursue Colors, to the 2310].) According U.S. S.Ct. p. __ [133 court, in the desire “finds its origin the “effective vindication” high exception rem right pursue statutory waiver of party’s ‘prospective prevent Motors, 637, 19)] edies,’ 473 fn. [(Mitsubishi (emphasis U.S. 1154

added). would That cover a in an arbitration certainly provision the assertion of certain it forbidding statutory And would rights. perhaps filing cover and administrative fees attached to arbitration that are so high to make access to the forum But the fact it is impracticable. that [Citation.] proving not worth involved in does not expense statutory remedy pursue right constitute elimination of the remedy. [Citation.] class-action waiver merely limits arbitration to the It two contracting parties. no more eliminates those parties’ right remedy their than pursue statutory 1938, did law federal before its of the adoption class action for relief in legal Or, to the individual put differently, suit was considered [citations]. to assure ‘effective vindication’ of a adequate right federal before of adoption did procedures class-action not suddenly become ‘ineffective vindication’ Colors, (Italian 2310-2311], their upon adoption.” p. __ [133 S.Ct. omitted.) fns. Italian Colors

We believe the reasoning of does not alter matter, unconscionability analysis As an applicable present case. initial Italian Colors involved the law; of harmonization the FAA with other federal it was not a case. The preemption high thus had no occasion to consider the well-established that “courts should that ‘the historic principle assume police States’ not powers ‘unless the clear and superseded was ” (Arizona United States manifest of Congress.’ (2012) v. purpose 567 U.S. 351, 2492, see Chamber Commerce __, __ [183 2501]; L.Ed.2d 132 S.Ct. of United States America v. Whiting (2011) U.S. __, __ [179 563 L.Ed.2d of of 1031, 1968, S.Ct. that a ‘establish threshold precedents high 1985] [“Our must be met if a state law is to be with pre-empted conflicting [Citation.]”].) aof federal Act.’ Laws purposes ensuring and full prompt payment wages of fall within historic of unquestionably police powers Kerr’s Service v. Catering Industrial Department (see Relations state (1962) 492, 20], 57 Cal.2d 326-327 P.2d cited Cal.Rptr. cases therein), as does the unfairly one-sided power police contracts adhesion Stevens v. Fidelity & Co. Casualty (see 58 Cal.2d 879-882 [27 (Stevens)). Italian 284], P.2d and cases cited therein Cal.Rptr. Colors did not construe FAA in basic light federalism. principles event, neither the federal antitrust laws nor Federal Civil Rules of Procedure, (28 U.S.C.) rule 23 an entitlement to class proceed “established] in Italian Colors. for the ings statutory vindication rights” issue [the] Colors, (Italian U.S. at S.Ct. at p. __ [133 According waiver in Italian court, Colors could to the high class have conflicted with other federal because congressional command policy contrary “[n]o (Ibid.) Here, us the waiver of arbitration here.” requires reject class (ibid.) contrast, has an Legislature entitlement” to a specific “establish[ed] accessible, informal, set of in order to provide persons protections lay resolving affordable mechanism for claims. Whereas the class wagе

1155 Italian Colors entitlement statutory specifically eliminated no waiver in there, the is not true of the at issue same rights vindicate the designed to help in this case. of Berman protections waiver statutorily provided the vindication” excep the discussion of “effective court’s Similarly, high tion in Italian Colors—a doctrine of the harmonization guides federal that “the In stating not our in the case. analysis present statutes—does affect involved in proving a statutory remedy not the fact that it is worth expense (Italian to right pursue remedy” of does not constitute the elimination the Colors, supra, the court was 2311]), at S.Ct. at high 570 U.S. p. p. __ [133 “tight that the to the earlier in its opinion, established proceeding premise, entitlement in that case no pursue” remedy specific the antitrust encompassed Procedure, Civil rule 23 under the antitrust laws or Federal Rules of to (28 a “an the U.S.C.) to class affordable proceeding procedural path Colors, (Italian 2309]). at of claim” S.Ct. at p. vindication every p. __ [133 Here, contrast, Berman Legislature specifically adopted protections informal, of resolving wage a and affordable method “speedy, provide Whereas in Italian Colors (Cuadra, supra, at claims.” 17 Cal.4th p. vindica “the individual suit that was considered to assure ‘effective adequate did of tion’ of a federal before class-action right adoption procedures (Italian become ‘ineffective vindication’ their suddenly adoption” upon Colors, 2311]), enacted the at S.Ct. at here Legislature p. __ [133 Berman “as a means of with a meritorious protections affording employee claim certain to reduce the costs risks wage advantages, designed chiefly claim, that such costs and risks could wage recognizing prevent pursuing I, (Sonic a theoretical Cal.4th at right becoming reality” from 679). Colors, Italian end its court added high Toward the opinion Concepcion: tell, our decision in this “Truth concerning paragraph [Concepcion] condition all but resolves this case. There we invalidated law because enforcement of arbitration on the class ing availability procedure S., U. at that law with fundamental attributes arbitration.’ 563 ‘interfere^] arbitration,’ __ [131 from bilateral to class S.Ct. switch p. 1748]. ‘[T]he said, of arbitration—its advantage informality— we ‘sacrifices principal slower, likely more and more costly, generate makes process Id., at __ [131 We morass than final S.Ct. procedural judgment.’ p. 1751]. was necessary that class arbitration rejected argument specifically Id., legal system.’ claims ‘that otherwise prosecute might slip through Colors, (Italian __ __ S.Ct. U.S. 1753].” S.Ct. at court ended this with a footnote high paragraph dismissing [Concepcion] as a involving to the dissent: “In case responding ignores and not the effective-vindication dissent pre-emption exception, enforce arbitration that case established—that FAA’s command to what low-value ensuring interest trumps any prosecution agreements interest, said, S., at __ The latter we claims. ‘unrelated’ to the FAA. U. 1752-1753], does, S.Ct. at the FAA the Accordingly, contrary to [131 [citation], dissent’s assertion the favor absence of when is litigation that ‘ ’ waiver, the of a class-action consequence since its is “principal purpose” (Id. the of enforcement arbitration agreements to their according p. terms.” __, 2312, fn. 5 5].) S.Ct. at fn. indicated, result in Italian Colors

As the court understood the high by Concepcion, Concepcion upheld entailed and one can why. see a class contrary arbitration waiver in the face aof rule because unconscionability the rule interfered with fundamental attributes of In of light arbitration. Concepcion’s that holding class interfere with attri procedures fundamental arbitration, Colors in Italian of butes the court unsurprising high face of no contrary a the class waiver in upheld command. But legislative that unites Italian Colors Concepcion logic does not to whether speak that, FAA state law preempts protections wage claimants unlike class do procedures, interfere with fundamental attributes of arbitration. The of Italian Colors that Concepcion court’s assertion in 5 high footnote . “established . . that the FAA’s command to enforce arbitration agreements (Italian interest in any of trumps ensuring prosecution low-value claims” Colors, supra, 570 U.S. at S.Ct. at p. __ [133 5]) fn. must be read Concepcion in the context of the it. paragraph precedes held that a FAA rule state-law that interferes with preempts fundamental attributes of reasons,” arbitration “even if is desirable for unrelated as such [the rule] facilitating of prosecution “small-dollar claims that might otherwise slip (Concepcion, supra, through system.” legal 563 U.S. at S.Ct. p. __ [131 Concepcion 1753].) did not hold that the FAA state law rules preempts to facilitate designed of small-dollar claims even prosecution when rules not interfere arbitration, do fundamental of attributes and we decline such a infer broad of Concepcion’s holding from a footnote in expansion Italian Colors. Italian Colors

Finally, high court ended its opinion by decrying over the prearbitration litigation costs of a expected legal pursuing particular or a claim “Such theory: preliminary hurdle would litigating undoubtedly destroy resolution that prospect speedy arbitration in general bilateral arbitration in was meant to secure. The FAA does not particular Colors, (Italian a sanction such created judicially superstructure.” 570 U.S. S.Ct. at p. __ [133 Again, high disapproved (ibid.) a hurdle” in a context where preliminary litigating statutory “[s]uch sought no mandate to ensure the specific legislative affordability pursuing the antitrust claim at issue there. The court had a high no occasion consider context statutory which does seek to ensure the specific legislation kind of claim. Nor did the court in affordability pursuing particular high Italian Colors consider (9 2 clause in section of the FAA U.S.C. savings determination 2), judicial which litigation plainly contemplates

“ duress, fraud, defenses, unconscio contract such as ‘generally applicable S.Ct. U.S. at p. __ [131 nability (Concepcion, [citations]” (See agreement. of an arbitration 1746]) to enforcement prelude West, Jackson, L.Ed.2d Inc. v. U.S. Rent-A-Center 2772, 2778].) 130 S.Ct. event, our inquiry we do not anticipate under would delay create “a hurdle” that litigating

will preliminary than the antitrust claim claim here agreement. wage simpler valid Colors, decided issue in Italian routinely have and courts here elsewhere 1163.) (See post, affordable in a case. given whether arbitration is 1290.2, Moreover, which governs petitions Code of Civil Procedure section courts, that such brought petitions arbitration in California compel provides the notice upon be heard in a in manner and summary way “shall . . .” we of motions . As making hearing law for provided by Securities Corp. v. Great Western Fin. Rosenthal in explained 1061], and determination hearing Cal.4th 394 926 P.2d CaI.Rptr.2d “ . for the . . . of motions’ by hearing ‘in the manner . . law provided (§ 1290.2)” to be affidavit or means that “the facts are generally proven taken in testimony only declaration and evidence with oral documentary fraud, (Id. to claims of 413-414.) With respect court’s discretion.” pp. credibil making where factual differences be difficult to resolve without (Id. determinations, 414.) In oral ity testimony generally appropriate. however, one, trial no reason to that the cases such as this there is suppose a summary resolve the in fashion unconscionability court cannot claim submitted in connection based on declarations or other evidence documentary Gutierrez, (See, a e.g., with motion arbitration. compel 90-91.) Cal.App.4th sum, Italian Colors unconscionability analysis does not alter the interferes with fundamental

we set forth above. Where a state law rule arbitration, law rale even if the rule FAA the state preempts attributes kinds of claims. Concepcion to facilitate of certain designed prosecution it, it Italian Colors reаffirmed and we today this apply established principle, that we hearing rule on Berman categorical waiving invalidate court, I. an claim Sonic Yet unconscionability in faced with when adopted contract waiver of from an adhesive arising employment requiring whether the overall their still determine entirety, Berman must protections not, does unconscionability one-sided. This unreasonably inquiry was bargain effect, nonarbitral as opposed for express preference purpose encourages use contrary, arbitral forums. To promotes low-cost, as efficient dispute bilateral arbitration a means conventional no enforcement doctrine obstacle to unconscionability poses Our resolution. scheme, arbitral however designed, so agreements long accessible, employees affordable provides for process resolving wage disputes does forum for the “effectively every redress of block[] [wage] (Gutierrez, disputes, including itself.” Cal.App.4th

VI. Justice Chin dissents from our treatment of Moreno’s unconscionability extent, claim on several To a grounds. significant his dissent issues relitigates this court has already decided to the contrary. And his new only the FAA argument—that preempts rule we set forth today—is we unpersuasive reasons have discussed above and further elucidate below.

A. matter, As an initial Justice says Chin Moreno right forfeited his to litigate the unconscionability issue. The dissent that Moreno asserted acknowledges court, the in trial as a defense to enforcement of the arbitration agreement, “ the was agreement unconscionable because to it ‘fails provide arbitral forum in which can employees fully and vindicate their effectively ” statutory rights (Conc. to recover unpaid wages.’ post, at & dis. opn., insists, nevertheless, 1175-1176.) The dissent pp. that Moreno’s unconsciona bility claim should deemed forfeited because “he did in nothing further the (Id. trial court to either this or pursue any other defense.” at unconscionability I. 1176.) But a similar Sonic (See failed to in argument the court persuade I, 10; Sonic 685, supra, id. 51 Cal.4th at fn. at (conc. 713 & dis. of opn. Chin, J.).) chose, Moreno raised the unconscionability defense and then given time, state of law at the to focus in the trial on his argument of a waiver Berman was se hearing and per unconscionable contrary will public Moreno now have the policy. his develop opportunity defense in unconscionability light today. we articulate principles Justice Chin also characterizes our discussion of unconscionability 1178, “dicta” and an (Conc. & opn., post, “advisory opinion.” dis. pp. 1173.) But this is incorrect. “Dicta consists of and observations statements to the (Garfield Medical court’s of case.” unnecessary appellate resolution Center v. Belshé (1998) Cal.App.4th 806 Cal.Rptr.2d Statements by “responsive courts the issues appellate appeal raiséd . . . intended to guide and the trial court in parties resolving the (Ibid.; matter . . see United Steelworkers of following . remand” not dicta. America v. Board Education 834-835 Cal.App.3d 16].) Our discussion is Cal.Rptr. unconscionability to whether responsive Concepcion, Moreno has viable defense it unconscionability after remand. The discussion the trial court on guide intended parties an advisory dicta nor opinion. neither

B. that the arbitration dissent is his contention The core of Justice Chin’s several argu- He advances here is not unconscionable. issue in of this claim. ments support

1. stan unconscionability relaxed the Chin we have says improperly Justice “ ‘ ” “ “so one-sided’ instead of ‘unreasonably dard using phrase ’ ” post, & (Conc. dis. opn., one-sided as to shock conscience.” “ ” the term ‘shock the conscience.’ 1178.) Justice also favors Corrigan law does not post, But an examination of case (Conc. opn., than is a different standard practice indicate that “shock the conscience” true, authoritative standard for or that is the one other formulations others. unconscionability, substantive exclusive all Armendariz, case to examine seminal California on A & M we relied in part the context of adhesive agreements, Produce, elucidate general principles Cal.App.3d Armendariz, 113-114.) (See 24 Cal.4th unconscionability. Produce, cases, & did not involve A M our arbitration which predates made the conscience” standard. arbitration and no reference to “shock & M Produce A case law variety jurisdictions, from Upon reviewing “ ‘ to include an has been recognized stated that [u]nconscionability generally together of one of the parties absence of choice on meaningful part ” & (A M other are favorable party.’ contract terms which unreasonably Furniture, Produce, 486, F.2d at Walker-Thomas 350 supra, quoting 449.) v. Bank Grocers Assn. starting Some Courts of with Appeal, California 205, 396], have America (1994) Cal.Rptr.2d 22 214-215 Cal.App.4th [27 and instead used criticized the term “unreasonable” as have overly subjective our has in emerged But no uniformity the shock the conscience standard. shock the conscience have used the lower courts. Some Courts of Appeal School v. Harker (2013) 213 Bigler (see, in arbitration cases e.g., standard Medical Viejo Emergency Mission 727, 78]; 736 Cal.Rptr.3d Cal.App.4th [153 1146, Group Associates v. Beta Healthcare (2011) 1158-1159 Cal.App.4th 197 Cotchett, Paragon Universal Pitre & v. McCarthy 330]; Cal.Rptr.3d [128 1405, 781]), while 1419 Corp. (2010) Cal.Rptr.3d 187 Cal.App.4th [114 477, Zullo v. Court (2011) 197 Superior (see, Cal.App.4th others have not e.g., Loco, El Pollo Inc. (2009) 173 Olvera v. 461]; 484 Cal.Rptr.3d [127 1160 447, 65]; v. Master Protection Martinez 456

Cal.App.4th Cal.Rptr.3d [93 Corp. 107, (2004) 118 663]). 113 And still Cal.App.4th Cal.Rptr.3d have regarded others term “shock the conscience” as interchangeable e.g., Serpa, supra, (See, various other formulations. 215 Cal.App.4th 703.) Pinnacle, notes, As Justice Chin we said in recently an arbitration case, contract term is not substantively unconscionable when it “[a] benefit; rather, gives one side a merely greater the term must be ‘so one-sided ’ ” (Pinnacle, to “shock the 246.) conscience.” Cal.4th at But whether “shock the conscience” has different than meaning “unreasonably one-sided” or should be the exclusive formulation substantive unconscio Pinnacle, not was at issue in “it nability remotely is axiomatic that cases v. are not (People Alvarez authority considered.” propositions 1161, here, Cal.4th P.3d Likewise Cal.Rptr.2d whether these different actually formulations constitute different standards in one practice whether is more than objective the other that have issues not been briefed and are not before us. It is to observe that enough courts, ours, have used including various nonexclusive formulations to cap ture the notion substantial of unfair requires degree (Schnuerle, beyond ness “a simple bargain.” old-fashioned bad ante, 575; 376 S.W.3d at see 1148.) at pp.

2. Next, Justice Chin what neither argues Sonic nor its amici curiae contend: that the Berman do not procedures benefit He actually claims that employees. because the Labor Commissioner her exercise discretion deciding whether to conduct Berman value of the hearings, any Berman procedure post, (Conc. Moreno “entirely & dis. speculative.” opn., course, Of no one can foresee with total whether certainty particular for a employee’s hearing Berman will but that application granted, hardly means Berman have procedures speculative value ex ante. If merely were, Berman used procedures practice, rarely generally unavailable such employee, significance waiving would be dimin procedures ished. But not suggested, have nor does the parties record before us indicate, that such is the case.

To the extent Justice Chin the suggests that Berman is not well process claims, to facilitate designed enforceable resolution of we prompt wage Cuadra, have concluded otherwise. In the repeatedly court said: unanimously informal, “The Berman hearing is to procedure designеd speedy, provide (Cuadra, supra, and affordable method of resolving wage claims.” 17 Cal.4th In Lolley, the court 858.) at said the in p. unanimously fee-shifting provision unmerito- of discouraging the legislative the Berman statutes “serves purpose of claims, the costs and thereby delays reducing rious of wage appeals I, And in Sonic 376.) the (Lolley, 28 Cal.4th p. prolonged disputes.” are Berman statutes the by afforded to employees court said benefits claim.” wage to the costs and risks designed pursuing reduce “chiefly I, (Sonic 679.) 51 Cal.4th at p. protections, despite that the Berman

To extent Justice Chin suggests his intended contention actually their do not achieve their design, purpose, take several months Although the record before us. it by unsupported the record the Berman through even a to resolve a claim year wage process, none, evidence, to cites that enables us compare contains no the dissent through a similar claim the time to resolve this timeframe with required evidence, here. Such if in the agreement the sort contemplated addition, Chin notes our remand. Justice be considered on any, may no Gentry savings “. . result in cost hearings may statement in that . Berman has a that “a losing to the because of employee” possibility employer (Gentry, supra, . . . .” Cal.4th to a trial de novo in right superior 464.) concluding But the court made statement in context p. class “. . . are effective nor substitutes for hearings Berman neither practical (Id. 465.) of individual action or arbitration.” The fact that thousands savings single Berman would result in cost as hearings compared not (id. 464) hearings on whether Berman light class sheds no proceeding as arbitrations of the would result in cost to individual savings compared set forth in the litigation-like agreement same claims under the mies wage this case. for its

The rest of Justice Chin’s dissent scant provides similarly support as “speculative.” “asserted benefits of Berman procedure” disparagement (Co mandatory & dis. opn., post, Although nc. in an fees the unsuccessful attorney against assessment of costs and party as the the statute’s employer, well applies employee appeal favor. definition of works in employee’s success asymmetric plainly 98.2, (§ court awards an amount (c) subd. is successful if the employee [“An zero.”].) And even if the benefit of this was greater than provision 2002—a fact relevant signed July available when Moreno his no on remand—there question the unconscionability analysis (Stats. 790) ch. July benefit has been available since disputes” the costs and delays prolonged and helps “reduc[e] Further, 376). Cal.4th at (Lolley, supra, meritless deterring appeals for good has discretion to an award stay the Labor Commissioner although cause, this the Labor Commissioner’s is unclear how detracts from it to ensure that judgments “make reasonable effort statutory duty every 98.2, to collect a (§ (i).) seeking judgment, subd. For an employee satisfied.” side. your Finally, to have Labor Commissioner surely helps to the that an regard undertaking must before employer post taking appeal (id., (b)), subd. the dissent notes that an who a employee wage arbitrates a claim obtain may provisional remedy of requiring payment wages during (conc. post, 1182). & dis. But such a opn., remedy available a “the only upon showing award to which may applicant entitled be rendered ineffectual (Code without relief.” provisional Civ. Proc., 1281.8, (b).) subd. sum, the Berman taken together are the procedures solu Legislature’s

tion to the real-world face in problems employees recovering owed. wages The has structured a of Legislature set informal and procedures incentives that make it more will likely employees be able recover without wages substantial incurring attorney fees or the risk of for an liability employer’s fees. The attorney Legislature has also enacted to deter meritless provisions of wage claims de appeals through trial novo in court and to superior ensure will be able employees collect favorable actually judgment. dissent does us to persuade second-guess of this efficacy legislative solution or to from this court’s consistent depart the Berman understanding statutes’ we benefits. Because see no basis to conclude that the benefits of the Berman are post, procedures “entirely (conc. & dis. speculative” opn., 1181, 1182) or that “arbitration is more streamlined than the Berman pp. (id. .” . . in process every this and case we 1187), decline to reject claim Moreno’s unconscionability such and instead direct grounds trial court on remand to consider Moreno’s claim in light relevant evidence may submit. parties

3. Justice Chin’s other reasons for our challenging unconscionability analysis are likewise He contends that our unpersuasive. rule is uncertain, vague, subjective” because we “hopelessly do not define the “accessible,” “affordable,” “low-cost,” terms (Conc. or “effective.” “speedy,” & 1179-1180.) dis. post, opn., But the set principles we forth today anomalous insofar as hardly they are not formulations. As this bright-line long ago stated “reasonable water use” in a determining water rights case: “There would no seem be more difficulty ascertaining what is cause, reasonable use of water than there inis reason determining probable doubt, evidence, able reasonable diligence, a rate that is preponderance just reasonable, convenience and numerous other public necessity, prob lems which in their nature are not definition but which subject precise (Gin v. tribunals City S. Chow functions must determine.” exercising judicial Santa Barbara (1933) 217 Cal. P.2d other Many Communications, court in Cel-Tech Inc. v. Los This Angeles abound. examples Cellular Telephone Co. 20 Cal.4th Cal.Rptr.2d

1163 Chin, “unfair competition” defined 527], Justice P.2d in an opinion by 973 Code, et seq.) (Bus. & Prof. law of the unfair competition purposes law, or violates of an antitrust violation “threatens an incipient as conduct that , significantly . . or otherwise those laws . or of one of spirit policy elaboration or no definition while providing or harms threatens competition,” or “threatens,” “significantly “spirit,” “incipient,” “policy,” of the terms threatens or harms competition.” not is unconscionability that substantive been recognized

It has long (A Produce, at M 135 Cal.App.3d supra, & definition” to “precise susceptible Code nor Commercial 1670.5 Uniform 487), and neither Civil Code section “affordable,” “accessible,” fact 2-302 otherwise. The suggests section has “effective,” to definition subject are not precise similar terms case at a time these terms one law from common courts prevented applying to an adhesive nondrafting party to enforce basic principle Indeed, terms. one-sided unconscionably not be to subject contract may to unable concern that courts are simply law belies Justice Chin’s extant case an arbitration process determinations about whether make reasonable 90-91, Gutierrez, at (See, Cal.App.4th pp. e.g., affordable. 1659, (1993) 14 Cal.App.4th Patterson v. ITT Consumer Financial Corp. Internat, L.P. (3d Cir. Anthony v. 563]; Alexander 1665-1666 Cal.Rptr.2d [18 L.P. Group, 256, 269-270; v. Williams Brady Capital 2003) 341 F.3d v. 693]; Murphy N.Y.S.2d 2009) 64 A.D.3d 135-136 (N.Y.App.Div. Idaho 330 P.3d National Ins. Co. Tennessee (2003) 139 Mid-West Life unconscionability the dire that our approach assertion Despite 1184), (conc. & dis. opn., post, and unworkable” “hopelessly vague judges throughout our will cause today we doubt the standards in opinion their hands in state throw simply up despair. that, Little, we said in which

Nor is our inconsistent approach more,” the formalities “[wjithout many arbitration conducted with (Little, Cal.4th at p. is not one-sided. litigation unconscionably se is not unconscionable 1.) We that such arbitration per fn. reaffirm above, are many ‍​​​‌​​​​​‌​‌​​‌‌‌‌​​‌‌‌​‌​‌​‌‌​‌‌​‌‌‌​‌‌‌‌​‌‌​‌‌‍ways there and as contrary to public policy, explained wage affordable resolution of accessible and structure arbitration facilitate ante, 1147-1148.) Our (See approach disputes. structured, the arbitral process and whether that arbitration so оnly

insists case, in the formalities specified in this includes the litigation-like which be uncon as to disadvantage Moreno at such arbitration agreement, puts on remand. to be determined question scionable is noted, that the arbitral process counsel has represented As Sonic’s and the the arbitration agreement, not disclosed in here includes features issue ante, (See on remand. features consider such trial 1147.) Justice Chin a court cannot task because says this “arbitra perform tors have broad discretion in determining governing law procedures (Conc. the arbitration . . . .” opn., post, & dis. his concern Again, is unfounded. arbitrators have Although discretion decide features of not agreement, arbitration that are in the can and do routinely courts specified into the rules that the conduct of arbitration in order to resolve inquire guide Roman Court (See, unconscionability related claims. v. Superior e.g., 1462, (2009) 172 1475-1478 Cal.App.4th Cal.Rptr.3d [examining 153] American (AAA) Arbitration Association’s rules to determine if arbitration D.C. v. Harvard-Westlake is School agreement contrary public policy]; 836, (2009) 176 [examining 863 Judicial Cal.App.4th Cal.Rptr.3d 300] Arbitration and Mediation Services cost allocation rules to determine whether Gutierrez, they claim]; supra, adequately statutory vindication 114 protect at AAA rules Cal.App.4th pp. [examining regarding 90-91 arbitration costs to v. McDonald’s (N.D.Ill. determine unconscionability]; Popovich 2002) Corp. 189 778 arbitration F.Supp.2d [concluding agreement unconscionable after fees the examining the would have to under the AAA pay employee v. rules]); Spinetti Corp. Service Internat. (3d commercial arbitration Cir. 2003) 324 F.3d 217 district court were [affirming ruling fees cases].) exorbitant under AAA rules in We see no reason employment why the trial court cannot do the on remand. same

Justice Chin further contends that our is unconscionability inquiry unworkable “a because determination of must unconscionability be based on (Civ. circumstances existed ‘at the time was made’ [the contract] Code, 1670.5, (a)), subd. not on hindsight light events subsequent court, ... a Accordingly, trial determining accessibility [citations]. determine, will affordability, have to not what Moreno can afford but today, he he signed what could have afforded at the time the arbitration agreement.” (Conc. post, 1180.) & dis. at is This not correct. Because a opn., quite an agreement is to settle future predispute disputes by arbitration, what is resolution mechanism the proper inquiry dispute to be able Absent parties reasonably expected to afford. employee circumstances, (and unforeseeable thus there is reasonably no expected) reason to think that what can afford employee when arises wage dispute will differ from the of what the materially parties’ understanding employee the time of could afford at The dissent’s concern that entering agreement. (id. “difficult, is, 1180) if not affordability inquiry impossible” Gutierrez, (See, supra, once overblown. again, e.g., Cal.App.4th 90-91 of arbitration in the course of pp. [examining affordability determining made”].) “as time the contract is Sonic Ps statement Finally, Justice Chin that a trial court quotes “ no confronted with a ‘is in petition compel position determine’ ‘whether and to what extent a claimant will particular wage ” & (Conc. dis. opn., post, hearing from the Berman process.’

benefit 683.) this I, quotation, Cal.4th at But Sonic quoting I, it, In we context. Sonic of its essential presents stripped dissent a categorical prohibition that instead of imposing Sonic’s rejected argument ad waivers, like the hoc a case-by-case approach, we take on Berman should (See Gentry, in Gentry. we adopted to class action waivers approach we Gentry “readily distinguishable,” 462-464.) finding Cal.4th “a devised judicially procedure” a class action is observed whereas “ ‘ “ideally court is situated trial whose efficiencies practicalities ’ ” evaluate,” and to to determine” “whether a trial court “is in no position Berman hearing benefit from the claimant will рarticular wage what extent (Sonic I, made this latter in context that we It is clear process.” no to second- that are in position in courts point statement support basis, about the special hoc the Legislature’s “judgment ad guess, with that be afforded rights persons should protections procedural (Ibid.) resolved.” ensure that such claims be fairly claims in order to wage Indeed, in the statement appears, in the before one which right paragraph to empower wage “The the Berman statutes is hearing we said: of purpose with all its to a Berman hearing claimants them access giving in I are in no (Id. 682.) position at Our Sonic that courts advantages.” p. point on a basis case-by-case of the Berman to disclaim benefits procedures to consider such that courts are in no does not remotely suggest position unconscionable. If an arbitration determining benefits in whether (Id. at I other way. relevant in Sonic anything, points passage 682-683.) pp.

C. above, that our argues Justice Chin In addition to the concerns discussed Concepcion in interpreted violates the FAA as approach not withstand dissent’s contention does and Italian Colors. Again, scrutiny.

1. of Concepcion’s error is its characterization The dissent’s fundamental it, FAA, has as the construed high in the terms: “The following holding unconscionable an arbitration finding provision state courts from precludes otherwise might slip ‘small-dollar claims based on need protect be ‘desirable.’ goal may even through system,’ though the legal 1753].) It at S.Ct. at p. ‘trumps 563 U.S. p. __ [131 (Concepcion, supra, of low-value claims’ ‘favor[s] interest in ensuring prosecution its ‘com of’ following when that is consequence absence of litigation (Italian terms.’ their agreements ‘according arbitration mand’ to enforce Colors, 5], at fn. 5 S.Ct. fn. italics p. __, p. [570 U.S.] [133 post, added.)” (Conc. & dis. is a opn., misreading This Italian Colors. Concepcion and, turn, in

If the broad agreements must be enforced accord principle terms, to their ing notwithstanding the of state desirability laws protecting claims, Concepcion, small-dollar were the decisive then principle why would the high court have bothered to so much why ink class spill explaining proceedings with “fundamental attributes arbitration”? incompatible __-__ (Concepcion, supra, 563 U.S. at 1748-1753].) S.Ct. at pp. [131 That entire discussion would have been under Justice Chin’s unnecessary Concepcion. Concepcion account of holding of is that “[Requiring with attributes availability of classwide interferes fundamental arbitration and thus (Id. creates a scheme inconsistent the FAA.” with Colors, __ Italian 1748], S.Ct. at added.) italics another case Concepcion’s holding waiver, a class restated involving the same exactly [(in terms: “There we Concepcion)] invalidated law enforce conditioning procedure because that law ment of arbitration on the of class availability attributes at __ arbitration.’ ‘interfere[d] U. S. fundamental Colors, (Italian S.Ct. U.S. S.Ct. at p. __ [133 1748].” of Italian 2312], Colors added.) italics When footnote read together it, with the in the main text that paragraph high court’s statement precedes that Concepcion established that “the FAA’s command to enforce arbitration in agreements any interest trumps ensuring low-value prosecution claims” means no that such interest can save a state law from FAA preemp ” tion where “that law with fundamental attributes of arbitration.’ ‘interfere[s] Colors, (Italian ante, 5]; at fn. 5 at 2312 & p. __ & S.Ct. fn. see at p. [133 1156.) p.

Thus, Concepcion states, Italian Colors confirms, and expressly expressly Concepcion’s rationale for dispositive is that preemption holding class interfere with “fundamental proceedings attributes of arbitration.” (Concepcion, supra, __ see Italian 1748]; 563 U.S. at S.Ct. at p. p. [131 Colors, supra, __ at 570 U.S. S.Ct. at p. p. Remarkably, however, Justice Chin never mentions the court’s sustained high focus in his rendition of Concepcion’s “fundamental attributes arbitration” result, and reasoning and even disclaims affirmatively relevance such fundamental attributes in characterizing established principle by Concepcion. 1185-1187, opn., post, (Conc. & 1188-1189.) dis. at pp.

Justice Chin does claim that “arbitration is more streamlined than Berman . . .” and that our to “is process approach unconscionability to likely that are less more more efficient, formal, and more produce procedures costly, opn., post, But, (Conc. 1187.) time than arbitration.” & consuming dis. at p. above, evidentiary no support, bare have these assertions as explained a speedy, that the Berman process provides court’s understanding this settled ante, at informal, (see wage disputes method of resolving and low-cost 1149, mere 1129-1130, dissent’s 1160-1162) dislodged by cannot be pp. de factors in the trial the dissent “the never Although says majority disbelief. post, dis. at (conc. . . .” & novo under the Berman statutes opn., option (see here 1187), what have said ignores it is the dissent that we p. repeatedly ante, (see Lolley, supra, 1160, 1161, 1129, 1130, 1162) and elsewhere at pp. I, Sonic 376; 674) about 51 Cal.4th at p. 28 Cal.4th at de novo discourage built into the Berman to process considerable incentives efficiency, affordability, and thereby promote speed, superior appeals Indeed, it is hardly resolution. “self-evident” and informality dispute “is not necessarily process speedier means Berman option appeal opn., post, 1181), for (conc. & dis. more streamlined than arbitration” Moreover, noted, as how often the is used. surely actually matters option litigating does not erect a our approach “preliminary (Ante, Italian Colors. 1157.) of the sort hurdle” prohibited of unconscionability FAA’s clause initial resolution saving contemplates claims, effort inquiry Justice Chin’s determined despite portray post, do not (see 1188), conc. & dis. we exceedingly complex opn., to swiftly his in the of our trial courts ability share lack confidence such claims. examine relevant evidence resolve rationale, Concepcion’s core Chin’s Instead Justice coming to grips the FAA’s general dissent decisive to the assigns weight proposition “ ensure of arbitration ‘ac agreements enforcement principal purpose ” post, (Conc. & dis. cording their terms.’ opn., sure, FAA high this well established in the court’s To proposition Colors, __, Italian fn. 5 (See, U.S. e.g., precedents. Concepcion, supra, 5]; S.Ct. 563 U.S. S.Ct. at p. __ [131 fn. at p. FAA that at But the dissent attributes a purpose “pursue p. that at other goal legislature broadest values only expense harming all, at all no . . . its ‘broad deems After statute important. pursues purpose’ Garner, (Scalia Legal Law: Texts & Reading Interpretation costs.” v. The LTV Guaranty Corp. Corp. Pension 21, (1990) citing p. Benefit rather 110 frustrates U.S. 647 L.Ed.2d S.Ct. 496 2668] [“ ‘[I]t whatever assume that than effectuates intent legislative simplistically (italics be the law.’ the statute’s must objective [Citation.]” furthers primary at The statute’s the other values added)].) play. The FAA itself makes explicit be held unenforceable agreement may “upon clause an arbitration saving says contract” any as exist at law or in for revocation grounds equity such Concepcion, this saving in after (9 2), quoting U.S.C. and the court high § clause, to arbitrate to be the FAA “permits agreements that recognized fraud, duress, defenses, such as contract ‘generally applicable invalidated by 1168 ” (Concepcion,

or unconscionability.’ 1746], at S.Ct. at italics p. __ [131 p. added.) In the FAA’s reconciling agreements arbitration purpose enforcing defense, Concepcion with the FAA’s of an preservation unconscionability rules; did not hold that the FAA plainly all it held preempts unconscionability that the FAA that preempts unconscionability rules interfere with fundamental contrast, attributes of arbitration. By is not what if meaning, clear any, Justice Chin would assign to the FAA’s saving theory clause. His that the any FAA rule preempts unconscionability that interferes with enforcement of to their agreements according terms would authorize even blatant forms of unconscionability, such as an adhesive gives that agreement (Scissor-Tail, suprа, the sole drafting to choose the party power arbitrator 28 828) Cal.3d at or a one-sided for an arbitral imposes provision appealing (Little, ante, award at 1071-1074). Cal.4th pp. at (Compare opn., post, 1143-1144 with conc. & pp. dis. fn. 7.) Under the dissent’s view of FAA sweeping no unconscionabil preemption, rule take ity into account surrender of statutory for protections claimants, certain whether or not those protections interfere with fundamental attributes of arbitration. Waiver of fee-shifting provisions favoring particular Serpa, (see litigants fee Cal.App.4th [discussing 709-710 Ajamian, supra, FEHA]; shifting under Cal.App.4th [discuss 1194]) or ing statutory protections for small-dollar claims modeled on the very that court high discussed approvingly ante, Concepcion (see 1150) must count for apparently nothing court’s ours, assessment of unconscionability. It is this that approach, far “appears go beyond” high court’s on FAA pronouncements opn., post, (Conc. & preemption. dis. For the high court has never suggested doctrine must unconscionability disavow concerns about cost other features of arbitration that effective resolution of arbitral prevent disputes. Colors, Concepcion in Italian high rejected

challenge to an arbitration agreement where the only asserted defect was the absence of class and where the proceedings allow only remedy—to class deemed proceedings—was with fundamental attributes of incompatible arbi tration. Unlike Discover Bank’s rule consumers to class entitling proceedings, Sonic and unlike /’ entitling s rule wage claimants Berman pursue hearing, we today rule articulate no such requires Our rule incompatible fully recognizes out proceedings. parties may opt accessible, Berman process any agreement provides affordable arbitration of to the wage Contrary dissent’s characteriza disputes. tion, our rule does not unconscionability all sorts of arbitration “impose opn., post, instead, (conc. 1188); & at dis. procedures” p. targets practical to the use arbitration to of resolve while impediments wage disputes impos no ing procedural Our rule thus serves to specific requirements. facilitate its attributes. access arbitration without compromising of fundamental to any “ and to the accomplishment a rule an obstacle How such ‘stands as ” (Concepcion, of objectives execution of full [the FAA]’ purposes __ 1753]) at difficult to fathom. at S.Ct. is supra, 563 U.S. p. p. increase Indeed, the cost an might notion that very agreement foreign would have been of resolution dispute complexity (See Hearings on Sen. No. that enacted the FAA. Joint Congress Coms, 1st 68th Judiciary, Cong., and H.R. No. 646 Subcoms. of before Sess., lowering means of arbitration as a [advocating 34-35 pp. § Sess., 1st resolution]; 68th Cong., the cost No. Sen.Rep. of dispute (1924) [same].) 3p.

2. asserts, formulations, also that our Justice Chin various using approach (Conc. dis.& opn., post, discriminates arbitration. unconscionability against at in a manner different agreement ‘constructs] [an arbitration] [“ from that otherwise construes nonarbitration agreements in which [a court] ibid, ”]; under rules for arbitra unconscionability state law’ different [“crafts ” “ id. ‘de agreements”]; tion ‘disfavors arbitration’ 1191-1192 [“ that to arbitrate is from the fact meaning rivets] [its] ”].) unconscionability issue’ the dissent is that our main problem, says, any for rule is “not a that exists at law or in the revocation ground equity contract, . exists but . . that revocation merely ground to other in contracts to the Berman statutes or subject provisions ‘a class . . statutes that afford to . ‘legislatively’ particular specific protections ” of claims.’ in order to the risks and costs of certain mitigate pursuing types (Id. 1190.) at into Concepcion is instructive. In reasoning calling

Again, that have a impact rules “would question unconscionability disproportionate S.Ct. agreements” (Concepcion, on arbitration 563 U.S. at p. __ [131 careful not the FAA 1747]), suggest сourt was high preempts Instead, such rule. court marshaled series high examples to both arbitration show that rules nominally applicable “ ‘aimed at destroy and nonarbitration agreements may, practice, ” ” “ with arbitration’ incompatible arbitration’ or ing procedures ‘demand[] ibid, 1747]; see unconscio (Concepcion, S.Ct. p. __ [131 [positing to the monitored adherence nability discovery, rules judicially require Evidence, those ultimate jury]). Federal Rules disposition by circumstances, recog FAA. we have by long But preempted rule general unconscionability applied nized that the mere fact principles does mean that the rule is context of arbitration preempted specific Armendariz, issue (See 24 Cal.4th at The crucial FAA. some the rule undermines the essence of arbitration in is whether procedural 1170 is, whether

way—that the rule “interferes with fundamental attributes of Where, here, (Concepcion, arbitration.” at S.Ct. p. __ [131 an rule unconscionability that is to equally nonarbi applicable tration agreements does not interfere with fundamental attributes of arbitra tion, the rule cannot be said to discriminate against simply because more often to applies arbitration agreements. Perry (1987) 426,

Neither v. U.S. Thomas L.Ed.2d 107 S.Ct. (Perry) nor v. Southland Corp. Keating U.S. 1 2520] 1, (Southland) L.Ed.2d 104 S.Ct. held suggests Perry otherwise. that 852] the FAA a state statute that “actions preempted providing for the collection of wages be maintained may ‘without to the regard existence of any private agreement to arbitrate.’ 484.) (Perry, Similarly, Southland [Citation.]” held that the FAA decision of this court that had read preempted into Code, California’s Franchise Investment Law 31000 et (Corp. seq.) “defense to arbitration” that of “require[d] judicial consideration claims brought (Southland, under state 11.) statute.” pp. fn. Perry, [that] the high court in a footnote that explained doctrine could unconscionability law, not be used avoid the to rule: of whether preemptive legislative “[S]tate or judicial origin, applicable law arose govern issues concerning if validity, revocability, A enforceability generally. contracts state-law that takes its principle meaning from fact that a contract precisely arbitrate is at issue does not with this comport requirement of FAA’s [the not, then, A court saving in may assessing rights clause]. [Citations.] litigants to enforce an arbitration construe agreement, in a manner different from that in which it otherwise construes nonarbitration agreements under state law. Nor a court on the rely of an uniqueness agreement to arbitrate as a basis for a state-law that enforcement holding unconscionable, would be for this would enable the court to effect what we hold 492-493, the state cannot.” today legislature 9.) fn. (Perry, Southland,

Under the FAA Perry clearly state unconsciona- preempts rule that bility establishes an unwaivable right litigate claims particular by deeming to arbitrate such categorically agreements claims unenforceable. That is what the court meant its high reference state-law principle “[a] that takes its from the fact that a meaning precisely contract to arbitrate is at issue.” 482 U.S. (Perry, supra, fn. rule unconscionability we set forth similar today not at all to the state laws preempted Perry and Southland or their functional doctrine. equivalents unconscionability Whereas the law those state rules in cases discriminated overtly against claims, arbitration in favor certain litigation thereby contracts rendering enforceable, to arbitrate such claims our rule entirely fully contemplates agreements wage enforceability disputes resolve arbitration in lieu Berman through Our rule process. only requires have wage claimants and affordable accessible mechanism dispute or assume resolution, any procedure adopt particular that the mechanism not Moreover, our rule informing plainly the principles form. any particular enforceabil- revocability, concerning validity, issues “arose to govern that courts (Perry, the doctrine 9), fn. contracts generally” ity one-sided unreasonably terms that are contracts or not enforce adhesive will insulate that effectively as terms such drafting in favor of the party, law that long predates of state body from liability, drafting party Stevens, (see to arbitration recent extension subsumes its more cases]). [collecting Cal.2d at 879-882 with the ominous implication concludes Justice Chin’s dissent ” “ hostility’ demonstrates ‘judicial rule we today the unconscionability adopt post, 1192.) we But (Conc. & dis. opn., toward arbitration agreements. reason regarded sensibilities judicial when day prevailing are well past as an expression relationship regulation employment able state treat rule does not unconscionability contractual freedom. Our to hostility not does agreements, nonarbitration from differently arbitration agreements dis arbitrate wage agreements the enforceability foreclose remotely devices any agreements adopt and does not such putes, require “It should be attributes. fundamental inimical to arbitration’s procedures observes, does stressed,” today “that our decision Corrigan as Justice an when or analytical approach a new procedure trial courts adopt require in an employment an arbitration provision defense concerns unconscionability short, discrimi opn., post, 1173.) our rule does not (Conc. contract.” arbitration agree courts to place arbitration. The FAA requires nate against time, the FAA the same other contracts. At ments on with footing equal arbitration and nonarbitration on which footing makes clear that the legal at law or in as exist any “grounds agreements may placed encompasses “ 2), including ‘gener (9 contract” U.S.C. for the revocation of equity fraud, duress, defenses, or unconscionabil such as contract ally applicable ” __ 1746]). Our (Concepcion, supra, S.Ct. at p. 563 U.S. at ity’ law. with this governing consistent today fully opinion

CONCLUSION as prema arbitration denied the compel The trial court petition Berman of a ture, ordered until completion not be ruling I, (Sonic affirmed that we Although 51 Cal.4th hearing. I, light Concepcion, FAA hold, Sonic that the preempts we now order arbitration agreement an adhesive categorically prohibits law rule that state A court a Berman hearing. access to an to waive from employee requiring must circumstances under these with a to compel faced petition a valid asserts the petition opposing unless party grant petition defense, whose Moreno has asserted contract defense. merits should now be determined the trial court in the first instance in of our light decision today. we Accordingly, reverse the judgment of Court of Appeal granting petition arbitration and remand compel directions to remand the case to the trial court for consistent with proceedings this opinion. J., Kennard, J., C.

Cantil-Sakauye, J., J., Werdegar, Corrigan, concurred. CORRIGAN, J., Concurring. I concur in the result and much of the in the analysis majority but I opinion, disagree with its failure to articulate clear standard for assessing of arbitration in unconscionability terms employment agreements.

The majority refers to several formulations but does not settle on a test for It describes unconscionability. an in analysis which the trial court weighs Berman waived advantages against benefits of if the arbitration to decide ante, 1146, “unreasonably one-sided.” (Maj. 1157.) opn., Justice Chin characterizes this as interest approach and criticizes it weighing deferential insufficiently arbitration. Whereas the re- would majority mand for the trial court to determine Justice Chin would unconscionability, have us decide here that the agreement is not unconscionable. I agree Justice Chin that the test for proper unconsciona- determining “ here is

bility whether the terms are ‘so one-sided as to “shock the ’ ” (Pinnacle conscience.” Museum Tower Assn. v. Pinnacle Market (US), LLC Development (2012) 55 Cal.4th Cal.Rptr.3d P.3d 1217].) are Courts nоt free to alter terms to which the contracting parties agreed because find the simply they terms unreasonable or ill advised. (American Software, Inc. Ali v. (1996) 46 Cal.App.4th 1391 [54 477].) The Cal.Rptr.2d unconscionability defense a much requires stronger showing unfairness. The majority opinion mentions the “shock the con- standard, science” but as one only of several (See formulations. maj. opn., ante, view, 1144.) In we should my here. Courts of provide clarity have Appeal successfully “shock the applied conscience” standard to decide whether contractual employment terms substantively (See, unconscionable. Peng First Bank e.g., v. Republic (2013) 219 1462; v. Serpa Surety Inc. Cal.App.4th Investigations, California 695, 703, 710 Cal.App.4th 506].) We should settle on Cal.Rptr.3d this clear standard, test. Under the “shock the conscience” arbitration provisions are not unconscionable because their enforcement simply will require employee Berman forego procedures.

However, is a unconscionability defense. fact-specific courts are Appellate at a when the disadvantage Thus, is not fleshed out in question the trial court. for the trial court case should be remanded

I with the this agree majority The majority opinion decide the merits of the defense. unconscionability Justice the lower court’s analysis. discusses considerations to many guide “a these and faults the majority requiring Chin criticizes several of and the Berman costs and benefits of arbitration minitrial on the comparative & (Conc. post, case. dis. every opn., procedure” trial courts to that our decision does not today require

It should be stressed an unconscionability when analytical new adopt procedure approach contract. Consid- an arbitration in an defense concerns provision employment an analysis, erations outlined in the be relevant to such majority opinion may these considerations as but lower courts retain discretion to weigh appropriate Today’s only in each case. decision holds particular remains a defense to enforcement of an arbitration clause in employment that, of Berman is one contract while relinquishment procedures is not factor to be this factor alone weighed considering unconscionability, an unconscionability finding. support sufficient decision.

With this I understanding, join majority’s and Dissenting. A, CHIN, J., Inc. v. Moreno In Sonic-Calabasas Concurring 58, (Sonic I), a (2011) 51 Cal.4th 247 P.3d Cal.Rptr.3d 130] bare four-to-three of this court held that the arbitration majority provision unconscio here at issue is both to our state’s and contrary policy public the extent it Frank Moreno nable—and therefore unenforceable—to precludes from an as a “Berman hearing”— administrative pursuing hearing—-known before his claim for vacation to arbitration. I with submitting agree pay (FAA) (9 that the Federal Act U.S.C. conclusion Arbitration majority’s However, I with disagree et Sonic /’ s rationale. policy seq.) preempts" public unconscionability. decision to remand this case on the issue of majority’s below, claim for As I we should Moreno’s explain reject (2) and and two reasons: he forfeited it to raise below by failing pursue met, meet, I showing unconscionability. he has not and cannot his burden of the unconsciona regarding also with disagree majority’s advisory opinion view, those on remand. In my trial court should bility principles apply under—and thus are both to state law and invalid contrary pre principles I from of the majority’s opinion FAA. dissent this empted by—the aspect from the judgment.

I. Factual Background. A, (Sonic). Inc. In of Sonic-Calabasas Frank Moreno was employee he filed a wage after his voluntarily ending December employment, with the Labor Commissioner to Labor Code section 98 claim pursuant et “vacation at the rate seeking allegedly wages” seq.1 unpaid days $441.29 He also day. “additional accrued per requested wages pursuant Labor Code Section 203 as a penаlty.” Sonic filed in the February court a superior compel petition

arbitration of Moreno’s claim and to dismiss administrative his pending action. It relied on the broad and in an comprehensive provision 14, 2002, agreement Moreno on which signed July in relevant provides part: “I . . . acknowledge utilizes a of alternative system dispute [Sonic] resolution that involves arbitration to binding may resolve all disputes (such arise out of the employment context. Because of the mutual benefits reduced and increased which expense efficiency) binding private can claim, both provide myself, both and I agree any [Sonic] [Sonic] to, and/or dispute, controversy but not claims of (including, any limited .) discrimination and . harassment . that either I or . . . have [Sonic] against other which would otherwise or allow resort to require from, to, or other governmental resolution forum related or dispute arising having any or connection whatsoever relationship with my seeking employ- With, ment [Sonic], or other employment by, association with whether based tort, contract, law, otherwise, or statutory, (with the sole equitable , of claims under the National Labor Act . . . exception arising Relations claims for medical and disability benefits under the California Workers Act, and claims) Compensatipn Employment shall Development Department be submitted determined exclusively by arbitration under the binding Act, Federal Arbitration conformity of the California procedures (Cal. Arbitration Act Code Civ. Proc. sec. 1280 et section seq., including 1283.05 and of the Act’s other all and mandatory permissive rights However, herein discovery). nothing shall me from prevent filing pursu- administrative ing- before the California proceedings only of Fair Department or the U.S. Employment Housing, Commission.” Equal Opportunity Commissioner, behalf, Moreno and the Labor who intervened on Moreno’s that, Sonic’s motion to insofar as the arbitra- opposed compel. They argued tion Moreno of the benefits of the Berman it is deprives procedure, unenforceable as against public policy. arbitration, court denied the superior petition compel agreeing

the arbitration violates insofar it waives provision public Moreno’s policy reversed, a Berman The Court right hearing. “no pursue Appeal finding evidence” in record “that Moreno or other claimant wage lacks skills, abilities, or knowledge, resources to vindicate his or her statutory in an rights arbitral forum.”

1 statutory All further unlabeled references Labor Code. I, Sonic held that the above, of this court majority

As noted a narrow and uncon policy both to our state’s contrary public arbitration provision Moreno the extent unenforceable—to precludes scionable—and therefore for vacation his claim submitting pay from a Berman before hearing pursuing I, (Sonic States The United to arbitration. 51 Cal.4th certiorari, and remanded judgment, Court vacated granted Supreme LLC v. Mobility Concepcion of AT&T case to us for consideration in light 742, ‍​​​‌​​​​​‌​‌​​‌‌‌‌​​‌‌‌​‌​‌​‌‌​‌‌​‌‌‌​‌‌‌‌​‌‌​‌‌‍U.S. __ [179 (2011) (Concepcion). L.Ed.2d 131 S.Ct. 1740] I’j Rationale. Policy II. The FAA Public Preempts Sonic I, FAA, dissent in Sonic under the United States In I that the my explained I Sonic statute, of that preempts Court’s Supreme binding interpretation I, (Sonic 51 Cal.4th at 706-712 rationale. majority’s pp. public policy I, After we decided Sonic Chin, (dis. court held in J.).) high opn. rule, Concepcion another that the the California announced by FAA preempts Bank v. Court Superior Discover four-to-three court in of this majority Bank), (Discover 36 Cal.4th 113 P.3d Cal.Rptr.3d 1100] [30 certain arbitration are unconscionable waivers of classwide procedures __-__ (Concepcion, supra, S.Ct. at unenforceable. 563 U.S. at pp. I. I therefore discussion in Sonic Concepcion 1747-1748].) confirms my pp. Sonic Fs with the the FAA agree public policy majority preempts rationale. Claim. Unconscionability Moreno Has His

III. Forfeited ante, 1149-1150), because As the majority acknowledges (maj. opn., defense, a contract enforcement of unconsсionability resisting party (Pinnacle unconscionability. has the burden of provision proving (US), Museum TowerAssn. v. Pinnacle Market LLC Development (2012) 55 (Pinnacle).) light Cal.4th 282 P.3d Cal.Rptr.3d 1217] and our have held that party this both this court Courts principle, Appeal the defense of resisting by failing forfeits (Pearson Dental Inc. v. Court Superior Supplies, it in court. the trial pursue P.3d Mastick v. TD 171, 83]; (2010) 48 Cal.4th 681 229 Cal.Rptr.3d Ameritrade, Inc. 1266-1267 Cal.App.4th Cal.Rptr.3d rule to Moreno’s The record here of this forfeiture supports application the trial court did Moreno claim claim. At no in unconscionability point the the here is one-sided in favor of “unreasonably arbitration provision ante, 1125.) allege He did his (Maj. response employer.” opn., that the is unconscionable Sonic’s arbitration petition compel provision can fully because it “fails to an arbitral forum in which employees provide vindicate their to recover effectively statutory rights wages.” unpaid However, he did further in the trial court to either nothing this or pursue any briefs, not, other defense. In his he did unconscionability as majority asserts, that the argue Berman waiver “was se unconscionable.” per (Maj. ante, Rather, 1158.) he that the opn., argued only provision violates Nor did he assert public in the Court of policy. unconscionability court, in the for review he filed in this or in the Appeal, petition opening fact, briefs he filed with us. In reply Moreno never mentioned unconsciona- court, bility until well after closed in this again briefing when we resurrected the issue to discuss it in On this by asking parties briefs. supplemental record, Moreno has forfeited the claim that the arbitration provision unconscionable. The fails to majority does explain why apply forfeiture rule and it is Moreno a why giving second chance “to develop” that, defense as the he as a majority acknowledges, “chose” to abandon below ante, matter of 1158-1159.) litigation strategy. (Maj. opn., Law, IV. Under Existing Arbitration Provision Is Not California Unconscionable. Were it either to reach the claim necessary appropriate law, Moreno is now under California I would it. asserting, existing reject 1670.5, court, (a), Civil Code section finding subdivision authorizes a upon “as a matter of law” that a “contract or clause of the contract” was any made,” contract,” “unconscionable at the time it was to “refuse to enforce clause,” to “enforce the remainder of the contract without the unconscionable or to “so limit the unconscionable clause as to avoid application any unconscionable result.” The official comment this Assembly accompanying whether, section “The basic test in the explains: unconscionability] light [of case, and the needs of the general background clauses particular involved are so to be one-sided as unconscionable under the circumstances at the time existing of the contract. . . . The is one of making principle and unfair and not of disturbance prevention oppression surprise [citation] of allocation of risks because of on Assem. superior bargaining power.” (Rep. (1979-1980 Sess.) Sess.) (1979-1980 Bill No. 510 5 Assem. J. Reg. Reg. com., (2011 ed.) Com. West’s Ann. Civ. Code reprinted Legis. 1670.5, comment, (Official Comment).) foil. Consistent with this we reaffirmed in the context of of an arbitration recently determining validity term when it contract is not unconscionable provision substantively “[a] benefit; rather, one the term must be ‘so one-sided merely gives greater side ’ (Pinnacle, as to 55 Cal.4th at “shock conscience.” [Citation.]” Under at issue here is not these principles, provision notes, that a contract is unconscionable. As the claim majority evaluating unconscionable, not to a single we look to the “overall” parties’ agreement, ante, 1157.) at The in isolation. agreement (Maj. opn., p. aspect waiver, at here not a Berman and does not agreement target issue simply Rather, broad, bilateral arbitration provision the Berman it is a procedure. with certain to “all between the parties applies, exceptions, disputes” out . that either have “aris[ing] context . . employment [party] observes, the other.” As Sonic this “does not against provision inequitably brought from arbitration of claims more to be exempt employer likely by On the to the extent the lacks contrary, mutuality, employee.” provision Moreno, favors claims that are by excluding generally brought by employees. That Moreno’s claim is not one of those excluded claims does not wage favor, render the arbitration as a whole one-sided in Sonic’s provision “ ’ (Pinnacle, let alone ‘so one-sided as to “shock conscience.” [Citation.]” 246.) Cal.4th at p. conclusion is this court’s decision in Little v. Auto Steigler, Supporting my There, Inc. 29 Cal.4th 1064 63 P.3d Cal.Rptr.2d 979]. terminated sued his former for tortious demotion and employee employer termination in violation of breach of an contract of public policy, implied continued and breach of the covenant of faith and employment, implied good (Id. fair dealing. 1069.) The moved to employer compel that, issue, under a like one now at that the arbitrator provision specified must be a retired California and made superior judge applicable evidence, civil rules of ordinary rules of and resolution of pleading, disputes (Id. 1069-1070.) motions. The majority rejected argument “incorporation formalities into” the arbitration legal procedure [these] “unconscionable,” rendered the arbitration “Without explaining: more, ... we cannot that these which make arbitration more say provisions, follow closely judicial one-sided. It is not at procedures, unconscionably all obvious that such would benefit provisions inordinately employer] [the (Little, rather than Cal.4th at employee].” fn. A [the similar conclusion is here. appropriate Unworkable, The Test Is Majority’s Unconscionability Vague,

V. with Existing Law. Inconsistent California Moreno, believes that who made no in the trial court majority attempt to show should nevertheless have a second chance. After unconscionability, that, FAA, under remains a valid defense concluding “unconscionability ante, 1142), arbitration” petition (maj. majority compel opn., that, did reasons because Moreno his claim “develop[]” ante, 1125), below (maj. remand is so the trial court opn., appropriate ante, 1172). can consider that claim “in the first instance” (maj. opn., Theatres, (Stockton Inc. v. Because this conclusion “is decisive of the appeal” 1178 469, 7]),

Palermo (1956) Cal.2d 474 P.2d the majority’s lengthy 47 [304 of various and factors it believes should “properly discussion principles ante, inform” the trial court’s at “unconscionability inquiry” (maj. opn., the and the trial court on 1149), which the offers “to majority guide parties p. (id. 1159), is dictum” and is not “the law of the case” remand” “obiter Theatres, Palermo, (Stockton Inc. v. 474).

Moreover, dicta, there are numerous with the majority’s starting problems its articulation of the standard. general unconscionability According the the trial court declare unconscio- majority, may provision nable it one-sided in favor of the finding “unreasonably upon “ ante, If, this, 1125.) means ‘so employer.” (Maj. opn., majority ’ ” (Pinnacle, 55 Cal.4th at one-sided as to “shock conscience” then, above, And, above, 246), I as agree. as discussed explained is not so one-sided as to shock the conscience agreement simply because it fails to exclude claims from otherwise broad wage all either have the other. against to arbitrate claims party However, if, one-sided,” the something means by “unreasonably majority less, then I our Courts of have disagree. consistently recognized, As Appeal not, “shock the conscience” is majority suggests (maj. opn., phrase ante, 1145, 1159-1160), with ‘unreasonable.’ an Basing “synonymous on the of a contract determination reasonableness provision would level of into the subjectivity analysis. inject inappropriate judicial as nebulous аs it is that courts “unconscionability” ‘With concept important not be thrust role of contractual paternalistic intervening change the court believes the terms that the have because agreed merely parties terms are The terms must shock the conscience.’ unreasonable. [Citations.]” 1305, (Morris v. Redwood (2005) Empire Bancorp 128 Cal.App.4th American Inc. v. Ali 797], Software, 1322-1323 Cal.Rptr.3d quoting [27 1386, see Walnut Producers 477]; (1996) 46 Cal.Rptr.2d 1391 Cal.App.4th [54 Foods, 634, Inc. v. Diamond (2010) 187 647-648 Cal.App.4th of California LLC Holdings, Belton v. Comcast Cable 449]; (2007) 151 Cal.Rptr.3d [114 1224, 631]; Aron v. U-Haul Co. 1247 Cal.App.4th Cal.Rptr.3d [60 796, 555]; Wayne v. (2006) 143 Cal.Rptr.3d 809 Cal.App.4th [49 California Koehl v. 544]; Inc. 483 Staples, (2006) 135 Cal.App.4th Cal.Rptr.3d [37 Verio, 749]; Inc. (2006) Cal.App.4th Cal.Rptr.3d America Grocers Assn. v. Bank Cal.App.4th California 214-215 Cal.Rptr.2d fact, does, mean less. something

Unfortunately, majority appears indicates that whether the arbitration in its Early opinion, majority fundamental fairness of the turns on unconscionable provision “[t]he under the benefits the received which on what bargain,” employee “depend[s] substantive and the agreement’s terms of circumstances totality surrounding ante, Later, the formation of the agreement.” (Maj. opn., “ indicates that the ‘unrea majority key is whether is question ” ante, 1148.) favorable to one at sonably These party.’ (Maj. opn., p. formulations seem tantamount to the arbitration asking whether was provision a bad and are bargain, thus inconsistent with our statement in Pinnacle that a contract term is not substantively unconscionable because it merely “gives (Pinnacle, one side a greater 246.) benefit.” 55 Cal.4th at supra, They p. also inconsistent with the intent in the unconscionabil Legislature’s enacting statute, 1670.5, Civil Code ity (a), section subdivision which towas prevent and unfair “not disturb oppression allocation of risks surprise, [to] [] [the] Com., Code, because of (Off. superior bargaining 9 West’s Ann. Civ. power.” 1670.5, And, 74.) foll. p. they endorse “unreasonable subjective § that, above, ness” standard California explained courts have consistently rejected. end,

In the the majority, though the trial guidance to purporting provide court, refuses to what say standard the court should precisely apply Instead, remand in determining unconscionability. after that our case asserting law “does not indicate” whether the shock the conscience standard is forth, “different” from the many other standards the or “is the majority puts true, one authoritative standard for substantive exclusive of unconscionability, ante, all others” 1159), at (maj. opn., p. majority declines decide these and leaves it to the trial questions court to determine which of the majority’s ante, “nonexclusive formulations” to 1160). at apply (maj. opn., p. my view, Pinnacle settles the the arbitration question; issue is provision unconscionable if it is so only (Pinnacle, one-sided as to shock the conscience. 246.) Cal.4th at p.

The dicta majority’s how the regarding general standard should be in this applied case also The specific problematic. majority offers formulations, a number of different that the arbitration indicating agreement’s turns, validity variously, (1) on whether the arbitration will enable procedure ante, Moreno to “vindicate his right recover unpaid wages” (maj. opn., 1142) affordable, or “obtain and enforceable resolution of prompt, [his] ante, claim” wage 1147); (2) will (maj. opn., costs and “impose[] . risks . . that make the resolution of the wage inaccessible and dispute ” unaffordable, and thereby blocks forum for . . . ‘effectively every redress’ (id. at 1148); and will “an effective and low-cost provide approach informal, (id. at resolving wage 1147), a disputes” affordable “speedy, ante, resolution” of Moreno’s claim wage (maj. 1149), or an opn., “accessible” and “affordable” forum for resolving his wage dispute (maj. ante, 1147-1148, 1149). These terms are opn., hopelessly vague, uncertain, subjective. offers no clue as to what it means to majority “effective,” “low-cost,” con- “accessible,” “affordable,” or “speedy,” ante, definition.” (Maj. opn., subject that these tеrms “are not precise cedes whether the arbitration procedure Nor does the majority specify at p. abstract, litigation, in the relative to on these measures to be judged to the Berman relative procedure. definition, necessary the inquiry

Even were these terms capable precise law, difficult, Under our them would be if not impossible. to apply circumstances must be based on the determination of unconscionability 1670.5, Code, (a)), subd. (Civ. made” existed “at the time was contract] [the (Setzer Robinson v. (1962) 57 events not on hindsight light subsequent Colton v. 524, 213, 124]; (1890) 82 P.2d Cal.2d 217 368 Cal.Rptr. [18 Stanford a trial 351, 16]). under the Accordingly, majority’s approach, Cal. 403 P. [23 determine, court, will have to affordability, determining accessibility in at the he have afforded afford but what could today, not what Moreno can (Parada Court v. Superior (2009) agreement. time he the arbitration signed (Parada).)2 It 1554, will also 1583 Cal.Rptr.3d 176 Cal.App.4th 743] [98 determine, but how would be conducted today, have to not how an arbitration arbitration at the time the signed it would have been conducted parties (O’Hare v. Resource Consultants Municipal (2003) 107 agreement. Moreover, 267, 116].) whether 281-282 Cal.Rptr.2d Cal.App.4th [132 future, a court cannot perform looks to the or to simply inquiry present it: “the of Sonic’s determining the task the majority assigns particulars” ante, at does not “reveal.” (Maj. opn., arbitration that the agreement process in the 1147.) an arbitration that are not process specified The particulars p. arbitrator, rules are or the arbitration applicable (Howsam Reynolds, Dean Witter Inc. court, (2002) 537 not the to decide v. 79, 491, are for L.Ed.2d 123 S.Ct. [procedural questions U.S. 84 588] [154 arbitrator]), determining and arbitrators have broad discretion arbitration, contractual their including and law governing procedures Devices, Inc. v. Intel (Advanced Corp. Micro remedies to fashion authority v. 581, 994]; 362, Sanchez 885 P.2d (1994) Cal.4th 376 Cal.Rptr.2d 9 [36 154, 177 Inc. Enterprises, Western Pizza (2009) 172 Cal.App.4th Thus, the matter to until the here submit 818]). actually parties Cal.Rptr.3d a trial the arbitrator determines the arbitration procedures, arbitration and court cannot know now all “the of the specific process particulars” ante, and, therefore, those 1147) cannot consider at p. at issue (maj. opn., in determining unconscionability. features that, more, determin- view majority’s is if

Equally, problematic of’ the benefits consider “the value may a trial unconscionability, ing ante, (Maj. that Moreno has surrendered. opn., the Berman under procedure 2 can afford when a enough employee determine “what an majority’s view that it is ante, (Parada, supra, 176 1164), contrary to statute.” (maj. opn., “is wage dispute arises” 1583.) Cal.App.4th with, 1149.) To as the discussion begin majority’s introductory explains, entitlement a Berman hearing; receiving wage has no employee upon claim, for a but hearing, the Labor Commissioner has discretion to provide ” “ (Maj. also choose to ‘take no further action on the complaint.’ opn.,

ante, Thus, 1128; 98, (a).) it was at the time the agreement see subd. whether the Berman today, was remains signed, entirely speculative is of value to Moreno. procedure that the Berman is

Also assertion speculative majority’s procedure informal, and we have affordable. speedy, Regarding speed, previously that, observed because of “the time consumed the various procedural in Berman there is four-to six-month steps” proceedings, “typically” (Cuadra v. Millan between the date and the Berman “delay” filing hearing. case, 17 Cal.4th P.2d In this Cal.Rptr.2d Sonic has documented cases in which commencement of a Berman hearing I, (Sonic fn. After took or more.3 51 Cal.4th year the Labor to file a concluding days Commissioner has hearing, decision, decision, and that there no not become does assuming appeal, 98.1, 98.2, Either side (§§ (a), (d).) (a), final for another 10 subd. subds. days. from the Labor Commissioner’s decision and obtain a trial de may appeal 98.2, novo in court. (§ (a).) subd. the Labor Commissioner has Finally, discretion to execution of for cаuse” and to “stay any judgment” “good [final] 98.2, (§ the terms and conditions of the of execution.” “impose stay “unclear”—i.e., subd. it is it is (g).) Notably, majority concedes the Labor Commissioner’s discretion to speculative—how statutory stay execution of a final the Labor judgment duty Commissioner’s impacts ante, make efforts to ensure that are satisfied. at judgments (Maj. opn., 1161.) More its claims about the Berman p. broadly, despite process’s “ ‘ ’ ” ante, 1149), and “greater efficiency (maj. speed” opn., also concedes that there is “no evidence” a claim will be majority wage resolved faster the Berman than through through Sonic’s process ante, 1161.) This is not self- it is procedure. (Maj. opn., surprising; evident that the dual an fora under the Berman procedure statutes—involving hearing potentially by administrative a formal trial de novo in followed court—is not or more streamlined than arbitration. speedier superior a Berman not as informal as the Regarding formality, hearing nearly 2002, when signed Moreno majority suggests. agreement, (and the Labor Commissioner’s and stressed published policies procedures 3 statutes, days deciding after Under Berman Labor Commissioner has least 90 it, hearing may grant proceed actually “postpone with a to hold and or additional time before setting hearing findpng] just an of the [upon] equitable a that it would lead to resolution 98, (§ (a).) “understanding” provision The Labor Commissioner’s of this is that dispute.” subd. (Cuadra v. ground delay. simple request by parties appropriate of the constitutes an for one Millan, 860.) 17 Cal.4th at still stress that Berman “are formal at which each today) hearings procedures” counsel, evidence, has the to be right testify party represented present oath, and have other under under oath witnesses to cross-examine testify witnesses, witnesses, and to documents and opposing party subpoena Relations, records. of Industrial Div. of Labor Stds. Enforcement (Dept. (DLSE), (2001 rev.) Policies and Procedures for Claim Wage Processing 2-4; DLSE, see Policies and Procedures Claim Wage Processing pp. course, (2012 rev.) 2-4.) Of the trial de novo in court to which superior either all side is entitled after Berman would involve the formalities hearing It would also increase the cost of the Berman any litigation. greatly observed, as this court has because a has a procedure; losing right employer court, to a trial de in “. . . Berman in hearings novo result no superior may (Gentry v. Court cost Superior savings Cal.4th employee.” Thus, (Gentry).)4 P.3d whether Cal.Rptr.3d 556] informal, cost, in the Berman low either abstract or procedure speedy, in to Sonic’s arbitration does not for a comparison procedure—which provide formal trial de novo in court—is entirely speculative.

Other asserted benefits Berman are likewise procedure speculative. that, 1281.8.) The Berman next the majority emphasizes procedure’s fee-shifting § which that unsuccessful are liable for only provision, specifies appellants ante, notes, 1129.) the fees. at As this attorney (Maj. opn., p. majority may an who is in the administra- unsuccessful provision discourage employer ante, 1130.) tive from an at But it filing (Maj. proceeding appeal. opn., p. 4 not, states, Gentry majority discussing the whether “thousands of individual was as hearings savings single proceeding.” . to a compared Berman would . . result in cost as class ante, 1161.) losing right de (Maj. opn., p. explaining employer’s at It was that a to trial novo employee,” the negate any savings procedure the procedure under the Berman can cost “to 464, i.e., (Gentry, supra, added.) employee. p. to an individual 42 Cal.4th at italics 5 If, asserts, undertaking requirement the of the is to majority purpose as the Berman ante, (maj. judgment” opn., counteract an efforts “to avoid enforcement of the at employer’s 1129), significant obtaining why majority provisional then it unclear finds it that relief p. is “ may which the be entitled be rendered requires showing applicant that ‘the award to ” ante, 1162.) (Maj. opn., p. rеlief.’ at provisional ineffectual without

1183 in the administra- who is unsuccessful likewise an may discourage employee at all or less either nothing he or she recovered tive proceeding—because course, we have no evidence Of filing than was sought—from appeal. actual effect on either or employees, regarding employers provision’s Moreover, effect would be to any pure speculation. attempt quantify 98.2, notes, the current version of section subdivision as the although, majority awards if the court (c) successful employee appeal] provides [on “[a]n ante, 98.2, (§ (c); see maj. opn., an amount than zero” subd. greater 1129), signed did not exist until the Moreno year this p. provision after whether the arbitration so it is irrelevant to agreement, determining (Civ. at the time it was made.”6 in this case was “unconscionable Code, 1670.5, (a).) subd. also the Labor Commis- majority emphasizes in de sioner’s claimants novo statutory authority represent proceedings. ante, 1129.) But that to “a claimant only (Maj. opn., authority applies and, claimant, even to such a unable to afford counsel” as financially the claimant the amount discretionary unless “is attempting uphold awarded Labor Commissioner and is objecting part uncertainties, (§ 98.4.) Labor Commissioner’s final order.” Given all of these what, the trial court on remand can if “value” the only any, speculate of a Berman had to Moreno at the time he hearing signed possibility arbitration agreement. that, conclusion at the the value of the

My petition stage, compel Berman ato in a case is procedure particular given speculative employee not, asserts, does as the majority “disparage^” procedure. (Maj. opn., ante, is, all, 1161.) It after that is the trial court to majority requiring determine the “value” of the Berman to Moreno. potential procedure (Maj. ante, 1149.) that the Berman Insofar as opn., majority presumes would be beneficial to Moreno and to Sonic’s arbitration procedure superior evidence the burden on Sonic to introduce procedure, majority places ante, (see 1147), the showing otherwise reverses our maj. opn., majority noted, Moreno, earlier established As approach unconscionability. defense, has the burden to asserting unconscionability. party prove Thus, (Pinnacle, 55 Cal.4th at he have the burden of should features, the value of the Berman in this case and the proving procedure costs, (See and risks of Sonic’s arbitration v. Los Dryer Angeles procedure. Rams Cal.3d P.2d Cal.Rptr. 826] [“the July signed agreement, when Moreno the law was unclear as to whether an appealing employee greater was if the award than the administra appeal successful on was award, granted authority split published tive and we had review to resolve a on the issue. 29, 2001, 2002, (Smith S098760.) Group, granted Aug. rev. In December we v. Rae-Venter Law meaning an appealing employee held that is “unsuccessful” within the of the fee statute if he (Smith judgment appeal. Group or she does not obtain a favorable" on v. Law “more Rae-Venter 345, 351, 516, (2002) year, the Cal.Rptr.2d Cal.4th 58 P.3d The next 93, 2, 790.) (Stats. Legislature majority quotes. added the sentence the ch. arbitration” resisting must show “that the rules under which party is to will it aof fair proceed deprive procedure”].)

Indeed, my conclusion the regarding benefit of Berman speculative proceeding my rejection consequent majority’s case-by-case ap proach fully consistent with our the existing Sonic I precedent, including in this majority’s opinion very case. In v. Foundation Health Armendariz Services, Inc. Psychcare 24 Cal.4th 6 P.3d Cal.Rptr.2d 669], the court observed that a motion to “[t]uming arbitration into a compel mini-trial the costs and benefits comparative of arbitration and litigation for a would not particular employee only burdensome on the trial court case, and the but would parties, likely yield answers.” In this the speculative Sonic I extended majority this to the analysis costs and benefits comparative of arbitration and Berman in procedures; adopting categorical prohibition all Berman against waivers as a matter of it public policy, rejected expressly very case-by-case now approach majority because proposes precisely court, a trial at the “is in no petition compel “stage,” to determine” position “whether and to what extent a claimant will benefit from the particular wage I, (Sonic Berman hearing 51 Cal.4th at process.” The majority fails to in the context of explain why, determining unconscionability—rather than a trial court public policy—during petition better compel, to determine “whether and to what extent a position claimant particular wage will benefit (Ibid.) from the Berman hearing process.” majority’s superficial to distance from unpersuasive attempt itself Sonic I' s ante, statement unqualified 1164-1165), and (maj. opn., its embrace of pp. case, it case-by-case approach previously rejected this very suggest been rebuffed majority, having by court in its first attack on high this now predispute agreement, for a simply searching new plan attack. reasons,

For all of the preceding approach unworkable, dicta outlines is majority’s vague and and is hopelessly inconsis- tent with California law. existing with,

VI. The Majority’s Approach Is Inconsistent and Preempted by, the FAA. I, FAA, clear me Sonic was that the construed authoritatively Court,

the United States I Supreme Sonic preempts majority’s public I, (Sonic Chin, (dis. rule. 51 Cal.4th at policy J.).) 706-712 opn. more, that, decisions, It is if not clear under the court’s the FAA equally, high dicta preempts unconscionability analysis majority’s now describes. Not this conclusion most clearly from surprisingly, appears Concepcion, decision the court directed us to consider it vacated the very high when above, There, as noted to us. I and remanded the case in Sonic judgment rule,” which Bank “the Discover the FAA court held that preempts high contracts in consumer waivers most collective-arbitration “classified] __ at S.Ct. at supra, 563 U.S. (Concepcion, p. [131 unconscionable.” are rule, waivers that such this court found 1746].) In this adopting to small” cases “often in consumer damages [too] because “exculpatory” Thus, Bank, at p. (Discover 36 Cal.4th action. warrant individual to the reasoned, linked “inextricably often are class arbitrations the court “ ‘ to effective way “the only rights” provide of substantive vindication ’ ” (Ibid.) In Concepcion, . of consumers. and redress . . exploitation” halt a state court the FAA that holding precludes that rejected analysis, court high the need to based on unconscionable an arbitration finding provision from the legal through otherwise might slip “small-dollar claims protect “States,” 1753].) at at S.Ct. (Concepcion, supra, p. __ [131 system.” FAA, declared, inconsistent with a that is court “cannot require procedure (Ibid.) it desirable for unrelated reasons.” even if Restaurant Co. v. Italian Colors Express in American More recently, (Italian Colors), U.S. __, __ [186 L.Ed.2d 133 S.Ct. 2310] the “effective vindication” approach court further high explored ante, (See maj. opn., discussion. underlies majority’s such I “did not address whether any vindicating barrier to [Sonic There, unconscionable”].) in would make the arbitration agreement rights arbitration, that a class argued to resisting compel plaintiffs motion from them in the relevant arbitration prevented action waiver provision “because antitrust laws their under federal vindicating rights effectively individually their antitrust claims no economic incentive to pursue they [had] Colors, 2310].) (Italian S.Ct. in arbitration.” p. __ individual that their maximum a declaration they showing submitted support, $38,000, analysis and the cost of expert would be recovery approximately several hundred thousand their claims would be at least necessary prove __ [133 (Id. S.Ct. $1 exceed million. at p. dollars and could vindication The effeсtive the argument, explaining: high rejected be enforced that arbitration agreements the FAA’s requirement “exception” ‘prospective “finds its in the desire origin prevent to their terms according remedies,’ That would right pursue statutory waiver of a [citation]. party’s the asser forbidding in an arbitration cover certainly provision filing cover And would statutory rights. perhaps tion of certain access as to make high arbitration that are so fees attached to administrative not worth the But the fact that it is to the forum impracticable. [Citation.] constitute the does not proving statutory remedy involved expense (570 U.S. pursue right remedy. [Citation.]” elimination __-__ “established,” 2310-2311].) As Concepcion at pp. S.Ct. interest arbitration agreements trumps command to enforce “the FAA’s 1186 Colors, (Italian supra, ensuring of low-value prosecution claims.” at “ ' __, 2312, fn. 5

p. 5].) S.Ct. at fn. Because p. [133 its “principal ’ is the enforcement purpose” of arbitration agreements to their according terms,” the FAA the absence of litigation when that is the “favor[s] conse (570 __, of a class-action quence waiver.” U.S. at fn. 5 p. S.Ct. at [133 2312, 5].) fn. p.

Under these binding FAA precedents, to uncon preempts approach scionability majority describes. To the extent an arbitration agreement the assertion of certain statutory “forbid[s] and rights,” to the “perhaps” extent it and “filing administrative imposes fees . . . that are so as to high ’ make access to the forum the FAA impracticable,” not enforce require Colors, (Italian ment of the agreement according its term. 570 U.S. __-__ at that, S.Ct. at pp. 2310-2311].) FAA, pp. Short of under the [133 an arbitration not be provision may invalidated as unconscionable because of a court’s subjective determination that a given arbitration is not procedure ante, 1148, “affordable” and “accessible” 1149), (maj. opn., or that its “ ” costs and risks render ‘effectively’ claim not wage worth pursuing (maj. ante, 1142) and opn., thus erect a “barrier p. to vindicating [wage] rights” ante, FAA, (maj. 1143). it, The opn., p. as the court high has construed state precludes courts from finding arbitration unconscionable provision based on the need to protect “small-dollar claims that otherwise might slip through even legal system,” that though goal may “desirable.” (Concepcion, supra, 563 U.S. at __ S.Ct. at p. It p. “trumps [131 interest ensuring prosecution claims” and low-value “favor[s] the absence of litigation when that is the of’ its consequence following “command” to enforce arbitration agreements to their “according terms.” Colors, (Italian __, 2312, fn. 5 5], S.Ct. at fn. italics [133 added.) The majority’s which approach, far appears go what the beyond court high has declared the FAA is therefore permits, preempted.

The to reconcile majority’s its dicta with attempts these binding precedents are that, “[bjecause first unpersuasivé. majority asserts the Berman costs,’ statutes promote very objectives ‘lower ‘informality,’ ‘greater ” efficiency use of speed,’ its ‘expert adjudicators,’ “does approach an obstacle to the achievement pose FAA’s as construed objectives ante, Concepcion.” (Maj. However, opn., is obvious that using doctrine to invalidate agreements mandate either Berman Berman-like procedures what procedures frustrates Concepcion, it, like court decisions before many high identified as “[t]he of the FAA”: ‘principal purpose’ “to private agree ‘ensur[e] ments are enforced (Concepcion, supra, their according to terms.’ [Citations.]” __ Stolt-Nielsen S. A. v. 563 1748]; U.S. at S.Ct. at see [131 AnimalFeeds Int’l Corp. 605, (2010) 559 U.S. 682 L.Ed.2d S.Ct. have said on numerous occasions the central or 1758] [“we to arbitrate agreements the FAA is to ensure that ‘private

‘primary’ purpose ”].) high and other Concepcion terms’ enforced their according (Dean this principle decisions establish unequivocally “preeminent” Witter Inc. v. L.Ed.2d Reynolds Byrd 470 U.S. contracts, the state seeks to 1238]) S.Ct. even when even adhesive applies forum, if arbitration in another and evеn vest initial jurisdiction dispute (Concepcion, supra, is most means a resolving dispute. not the streamlined __-__ Ferrer (2008) 552 Preston v. 1748-1749]; at at S.Ct. pp. pp. [131 978]; Dean Witter Reynolds U.S. L.Ed.2d 128 S.Ct. 349-350 [169 Inc. 217-221.) Byrd, supra, at v. pp. here, than because arbitration more streamlined the Berman process,

But the high FAA court objectives the also frustrates other majority’s approach in 563 U.S. at S.Ct. Concepcion. (Concepcion, supra, emphasized p. __ [131 (ante, 1179-1180), the because 1749].) at As above p. pp. proce explained an cause before adminis delay dural Berman steps process appreciable to is entitled trative is even held and because that hearing any process party a the to a trial Berman hearing, de novo in court superior after formal efficient, less that are majority’s likely approach produce procedures formal, more more more than arbitration. costly, consuming and time otherwise, the de novo the never factors in trial asserting option majority statutes; it no how a explain procedure under the Berman makes attempt full, de by an a formal trial novo in administrative involving hearing followed the it identifies: court does not interfere with attributes arbitration superior ante, costs, at informality. lower and and greater efficiency (Maj. opn., speed, not, Moreover, Concepcion identify does as the majority suggests, p. ” ante, the a arbitration (maj. opn., “use of as benefit of ‘expert adjudicators’ ” “ ability ‘the to choose 1149); at adjudicators’ identifies p. expert __ 1751], added). at S.Ct. at italics The (Concepcion, p. p. and, agreement, Berman choice to the contrary eliminates this process parties’ Thus, the imposes a assertion adjudicator. contrary majority’s particular ante, does contravene 1149), the (maj. majority’s at opn., p. approach “ the an obstacle to Concepcion's by ‘standing] principles preemption objectives execution of the and Con purposes and accomplishment full ” 563 U.S. at S.Ct. (Concepcion, supra, gress’ in the FAA passing p. __ [131 1753], added). at italics

Moreover, Italian Colors establishes that the process very majority the of the arbitration accessibility for the determining affordability prescribes There, high the in a case such an obstacle. poses procedure given “ case case to that would courts proceed rejected approach ‘require ” in of their means’ costs burdens tally plaintiffs light the particular “ ” Colors, (Italian at 570 U.S. ‘the size of their claims.’ __-__ a 2311-2312].) at “Such litigating S.Ct. pp. preliminary hurdle,” undoubtedly destroy prospect the court “would explained, resolution that and bilateral speedy general arbitration arbitration was meant to FAA such secure. The does sanction particular judicially (Id. 2312].) created superstructure.” S.Ct. p. __ [133 majority’s is the the FAA case-by-case inquiry very type “superstructure” prohibits. (570 U.S. S.Ct. at p. __ [133

Nothing supports majority’s case-by- its unsupported speculation i.e., different, case will be that a minitrial on costs inquiry the comparative and benefits of arbitration and the Berman em- procedure particular ante, will not ployee hurdle. impose preliminary litigating (Maj. opn., 1158.) Under submitting will be majority’s approach, parties issues, evidence number of what following: including can procedure “materially afford and whether employee currently from what he should or could have afforded signed when parties differ[s]” ante, (and what opn., 1164); were (maj. are) arbitration; rules perhaps govern what will unspecified be; arbitration are Berman “in used procedures procedures rarely practice, ante, and unavailable to the at generally employee” (maj. 1160); how opn., p. itwill take to resolve the long employee’s wage claim the Berman through court, a trial de in procedure, including possible novo and how superior long will it to the take resolve claim the wage through (maj. arbitration procedure ante, 1161); at how will much it cost to resolve the opn., p. wage employee’s novo, claim the Berman through including a trial de procedure, possible how much will it cost to resolve claim the arbitration wage through ante, 1161); at procedure (maj. how often do a trial de opn., p. parties request ante, 1167)? novo at all (maj opn., Given the need to of p. parties’ litigate court, these matters in the trial and the of availability review appellate Parada, Proc., 1294, (Code trial court’s (a); decision Civ. subd. 1560), at that its will

Cal.App.4th p. majority’s “anticipation]” approach not of create kind preliminary, hurdle arbitration-delaying litigating ante, Italian Colors discussed 1157) at wishful (maj. thinking. opn., p. just This a conclusion reflects “lack of confidence” in the only majority’s not, asserts, unwarranted as the “in the of our trial optimism, majority ability ante, courts.” at (Maj. opn., p. event, that, I with disagree so as states and their any majority long arbitration, Concepcion

courts not do interfere fundamental attributes of allows them to on agreements invalidate arbitration unconscionable based that the judgment arbitration is not affordable policy procedure adequately ante, at 1144-1158.) accessible. Under the (Maj. opn., majority’s Concepcion, states, narrow the FAA’s clause for reading savings permits reasons, all not to sorts arbitration that are policy impose procedures agreement, within the terms of arbitration so as those parties’ long do not interfere with fundamental arbitration. This procedures attributes of Concepcion view to the court’s statement that the FAA contrary high “ agreements, notwith favoring a ‘liberal federal policy embodies contrary,’ policies or procedural state substantive standing 1749], at S.Ct. 563 U.S. p. __ (Concepcion, supra, [131 [citations].” that, statement added.) Concepcion’s also inconsistent with It is italics the concerns may rules “address[] state’s although adhesion,” the FAA not “conflict with they may attend contracts of agreements to ensure private its purpose frustrate (Id. at fn. 6 S.Ct. to their terms.” according p. __, enforced fn. not, FAA, Thus, based 6], added.) under the state italics an arbitration refuse enforce unconscionability, principles lacks features its the arbitration procedure terms because according simply “a class”— as a matter of established Legislature, policy, particular claims wage (maj. risks and costs of employees—to “mitigate pursuing” “accessible, ante, owed more 1155) recovery wages or to make opn., FAA, ante, informal, 1157). In enacting and affordable” (maj. opn., to undercut the Congress legislative attempts “intended foreclose [such] (Southland v. Corp. Keating of arbitration enforceability agreements.” (Southland).) 465 U.S. L.Ed.2d 104 S.Ct. 852] Indeed, to unconsciona that its weighing approach assertion majority’s been “a class has bility but where generally, only particular applies, risks legislatively mitigate afforded order specific protections ante, 1152) . . .” (maj. opn., costs of certain claims pursuing types with, and is inconsistent further demonstrates the majority’s approach on the therefore the FAA. The its by, majority approach preempted premises clause, be “shall agreements FAA’s which that arbitration savings provides enforceable, valid, irrevocable, as exist at law save such grounds upon 2; (9 contract.” U.S.C. see any maj. opn., the revocation of § equity ante, Southland, clause to 1143.) Justice Stevens invoked this justify at Franchise the arbitration had read into California’s prohibition we against at 465 U.S. (Southland, supra, Investment Law Code et seq.). 31000 (Corp. Stevens, that, a (conc. J.).) reasoned because 18-22 & dis. of He pp. opn. at the as is revocable law or contrary policy equity, contract void to public to a law special FAA does not state that “provid[es] protection” preempt arbitrate claims under Franchise franchisees by declaring аgreements (465 21-22 as U.S. policy. pp. Investment Law void a matter of public Stevens, this J.).) in Southland (conc. rejected & dis. of The majority opn. view, had read into Franchise that the “defense arbitration” we finding ‘for the a at law or in equity Investment Law was “not exists ground for the revocation a that exists ground revocation of contract’ but any merely Franchise to the California subject of arbitration in contracts provisions “ ‘a view that 11.) It also (465 rejected Law.” U.S. at fn. Investment . . . can for franchisees state special protection policy providing the basic without recognized impairing purposes [Citation.].” [FAA]’ (Id. 11.) fn. “If this analysis,” we the court accepted explained, could intent “states eviscerate arbitration wholly congressional place contracts,’ [citation], the same other ‘upon footing as agreements simply statutes such as the Franchise . . Investment Law. We . this passing reject[] analysis because it is in conflict with the and would states to permit [FAA] override the declared enforcement policy of arbitration requiring agreements.” (Ib id.) Southland. Like the defense to is inconsistent with majority’s approach Law, we read into

arbitration the Franchise Investment the defense to arbitration the now reads majority into Berman statutes is not ground contract, is, that exists at law or in for the revocation of but equity assertion, own according majority’s ground exists for the merely revocation of arbitration in contracts to the Berman provisions subject statutes or to other statutes that afford to “a “legislatively” class . .. particular specific in order to protections mitigate risks costs certain pursuing types ante, Moreover, 1152.) of claims.” it (Maj. with” the opn., “conflicts] FAA our by enabling Legislature, statutes such as” the “simply by passing statutes, Berman “to override the declared enforce policy requiring [federal] ment arbitration and to agreements” “wholly congressional eviscerate intent place agreements same other ‘upon footing ” (Southland, 16-17, 11.) contracts.’ U.S. fn. Under Southland, is, therefore, preempted.

Given I analysis, this broad assertion that the disagree majority’s FAA does not rules in the preempt apply “uniquely ante, context of arbitration.” court (Maj. opn., As has high held, not, in cases where the FAA state “in applies, assessing to enforce an rights litigants agreement, construe that in a manner different from that in which it otherwise construes nonarbitration 483, 492, (Perry Thomas under state law.” v. U.S. agreements fn. words, as Concepcion explains, L.Ed.2d 107 S.Ct. In other “a court not on the of an to arbitrate may ‘rely uniqueness agreement [state] aas basis for a enforcement be holding state-law would unconscio U.S. (Concepcion, supra, 1747].) nable ....’” at S.Ct. at p. __ [131 p. The violates this insofar as it from our majority’s approach principle departs law of different existing unconscionability unconscionability crafts rules decisions, for Under the court’s the agreements.7 high arbitration majority cannot invent a rule a legislative decision to unique implementing policy 7 Whether, high any precedent, preempts under current court the FAA unique other ante, 1143-1145) unconscionability majority’s (maj. opn., pp. rules the dicta discusses at is not us in case. before this ante, at (maj. opn., “a class” particular

confer “specific protections” rule a rule of calling that 1152) by and avoid preemption simply p. unconscionability. reasons, that the view with the majority’s for two I also

Finally, disagree benefits the value of allow to “consider court’s FAA decisions us high unconscionability. (Maj. in determining the Berman statutes” by provided ante, First, 1149.) require complex insofar this will at as p. approach opn., to a of the Berman statutes the value into speculative inquiry purported is, it as earlier signed, was at the time the contract employee particular __-__ Colors, 570 U.S. at supra, inconsistent with Italian pages explained, Second, 2311-2312], it for a trial court at even were possible S.Ct. pp. [133 benefits, cоnsidering value these assign any meaningful speculative and Italian Concepcion be with value would inconsistent fundamentally former, base a may not Colors. In court held that state courts high arbitration to litigants on the value of class finding at S.Ct. at 563 U.S. “small-dollar claims.” (Concepcion, supra, p. __ [131 court, latter, that an Concepcion, held 1753].) expressly applying p. on individualized proof arbitration not invalidated based arbitration—is so waived—the to class that what have plaintiffs right that, it, valuable costs of their claims prohibitive. without pursuing Colors, (Italian 570 U.S. at S.Ct. at supra, pp. ___-___ [133 us 2311-2312].) of the FAA from preclude These binding interpretations on the unconscionable based supposed arbitration as invalidating provision As Concepcion value to a of the Berman employee procedure. particular “established,” agreements “the FAA’s command to enforce arbitration trumps Colors, (Italian of low-value claims.” interest ensuring prosecution court, Thus, 5].) is the high at at fn. it fn. 5 S.Ct. p. __, I, adherence its primary that has construed the FAA to require ‘at to their terms—“ agreements according purpose—enforcing ” deems legislature important.’ other values that expense harming ante, been clearer in hardly could have (Maj. opn., Colors', that is the Italian absence of when litigation the FAA “favor[s] arbitration agreements of’ its “command” enforce following consequence Colors, fn. 5 S.Ct. at (Italian p. __, to their terms.” “according fn. reasons, is inconsistent with For of the above the majority’s approach all “the FAA’s to be faithfully the FAA. Although majority purports applying ante, 1142), which permits clause” saving (maj. opn., defenses, contract “to be invalidated agreements ‘generally applicable ” U.S. )(Concepcion, supra, . p. __ [131 such . . unconscionability’ is, contrary 1746]; 2), U.S.C. in reality see 9 S.Ct. fashion that disfa defense “in a Concepcion, applying unconscionability __ 1747]) and that S.Ct. at p. arbitration” (Concepcion, vors from the fact meaning to arbitrate is at [its] “derive[s] __ (id. Therefore, 1746]). issue” S.Ct. at majority’s the FAA. unconscionability approach preempted by VII. Conclusion. court, Concepcion, another of this high invalidating court’s refusing rules for to enforce arbitration first provisions,

noted that “judicial hostility” towards arbitration has “manifested itself in ‘a ” great variety’ ‘devices formulas.’ U.S. (Concepcion, supra, Then, sentence, S.Ct. at in the it p. __ [131 very next commented: definitive, “And these statistics although is worth noting California’s courts have been more to hold contracts to arbitrate likely (Ibid.) unconscionable than other contracts. Ignoring high [Citations.]” reversal, court’s “ message clear and undeterred by today, another majority ‍​​​‌​​​​​‌​‌​​‌‌‌‌​​‌‌‌​‌​‌​‌‌​‌‌​‌‌‌​‌‌‌‌​‌‌​‌‌‍“ ” ” (ibid.) another yet invalidating ‘formulates]’ ‘device[]’ agreements: a case-by-case, and indeterminable hopelessly vague, subjective, (1) assessment value of the of the benefits Berman to a procedure the accessibility and to that em particular employee affordability of the he she ployee specific agreed. which has procedure The majority’s is inconsistent with California law and is approach preempted I FAA. therefore dissent from that part majority’s opinion from the judgment.

Baxter, J., concurred. The notes before the of a Berman majority holding hearing, Labor “ ‘may Commissioner’s staff to settle claims either attempt informally ” ante, a conference between the through (Maj. parties.’ opn., However, added.) italics these efforts are entirely discretionary; any given case, the Labor to make Commissioner choose informal settlement also that an majority attempts. emphasizes requirement to file an an with the must employer wishing appeal post undertaking ante, However, the amount of the award. (Maj. opn., employee who to arbitrate a obtain agreed controversy may has remedies— provisional such as an attachment or a injunction wages preliminary requiring payment Proc., (Code the arbitration—in connection with the Civ. during controversy.5

Case Details

Case Name: Sonic-Calabasas A, Inc. v. Moreno

Court Name: California Supreme Court

Date Published: Oct 17, 2013

Citation: 163 Cal. Rptr. 3d 269

Docket Number: S174475

Court Abbreviation: Cal.