Cardenas-Cuevas v. Arbonne Int'l, LLC

• Court: California Court of Appeals
• Writing for the Court: THOMPSON, J.
• Decision Date: 14 March 2019
• Docket Number: G055921
• Citation: Cardenas-Cuevas v. Arbonne Int'l, LLC, G055921 (Cal. App. Mar 14, 2019)
• Parties: JUAN CARLOS CARDENAS-CUEVAS, Plaintiff and Respondent, v. ARBONNE INTERNATIONAL, LLC, Defendant and Appellant.

JUAN CARLOS CARDENAS-CUEVAS, Plaintiff and Respondent, v. ARBONNE INTERNATIONAL, LLC, Defendant and Appellant.

G055921

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

March 14, 2019

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 30-2017-00935794)

OPINION

Appeal from an order of the Superior Court of Orange County, Derek W. Hunt, Judge. Reversed and remanded with directions.

Snell & Wilmer, Christy D. Joseph, Todd E. Lundell and Amina Mousa for Defendant and Appellant.

C&B Law Group and Jack Bazerkanian for Plaintiff and Respondent.

After being fired from his job at Arbonne International, Inc. (Arbonne), respondent Juan Carlos Cardenas-Cuevas (respondent) filed the instant wrongful termination and discrimination suit against Arbonne. Arbonne responded with a motion to compel arbitration, which the trial court denied based on a finding the arbitration agreement at issue was procedurally unconscionable and unenforceable in its entirety.

Arbonne appeals from the order denying the motion to compel arbitration. It argues: (1) the trial court erred in determining the arbitration agreement was unenforceable without finding any substantive unconscionability; (2) the arbitration agreement is not procedurally or substantively unconscionable; and (3) if we find any provision of the arbitration agreement substantively unconscionability, we should either sever that provision ourselves or remand for the trial court to decide whether to sever it.

We conclude: (1) the arbitration agreement is procedurally unconscionable; (2) one of the challenged provisions in the arbitration agreement is substantively unconscionable, but the other is not; and (3) the trial court did not consider whether the substantively unconscionable provision, by itself, warranted nonenforcement of the entire arbitration agreement. Thus, we remand with directions for the trial court to exercise its discretion and decide whether to sever the substantively unconscionable provision.

FACTS

The events giving rise to this lawsuit occurred towards the end of respondent's roughly 11-year tenure as an employee of Arbonne. According to the complaint, one of Arbonne's employees backed a forklift into respondent, injuring his heel. Respondent reported the injury to his supervisors. Within days, he was fired.

Believing Arbonne wrongfully terminated him because of his heel injury-related disability, respondent filed suit seeking compensatory and punitive damages, lost earnings, statutory civil penalties and injunctive relief. The complaint alleged causes of action grounded upon the Fair Employment and Housing Act (Gov. Code, § 12960 et seq.) (FEHA), the Labor Code, the California Family Rights Act, and public policy.

Arbonne answered and moved to compel arbitration pursuant to a three-page "Employee's Acknowledgement and Acceptance" (Arbitration Agreement) signed by respondent almost four years before his termination. The Arbitration Agreement required binding arbitration under the Federal Arbitration Act (FAA), in accordance with the procedures set forth in the California Arbitration Act (California Code of Civil Procedure Section 1280 et seq., including Section 1283.05, and all other mandatory and optional discovery rights established by this act)." (Italics omitted.)

Respondent opposed the motion to compel arbitration. He did not deny he had signed the Arbitration Agreement, nor did he challenge the accuracy of the English translation of the original Spanish document. Instead, he argued that the Arbitration Agreement was procedurally and substantively unconscionable and unenforceable.

As to procedural unconscionability, respondent explained in a declaration that one day, his supervisor "called multiple employees for a meeting and asked them to sign some documents." She told him he would not be allowed to return to work the next day if he did not sign them. He signed them without having the opportunity to read them or discuss them with anyone because his supervisor rushed him to sign and return to work. According to respondent, he never received a copy of the Arbitration Agreement.

With respect to substantive unconscionability, respondent focused on a clause in the Arbitration Agreement which provided that by signing he "agree[d] to waive any substantive or procedural rights . . . to bring any class, collective, private attorney general, representative or any other action on a similar basis." As for procedural unconscionability, respondent argued: an employee's waiver of a private attorney general action is unenforceable as a matter of law under Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian); the same was true of a bar on class-wide arbitration under Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165 (Ingle); and those two "unlawful" provisions rendered the Arbitration Agreement unenforceable.

The trial court denied the motion to compel arbitration.

DISCUSSION

"'"[T]he doctrine of unconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results."' [Citation.]" (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243 (Baltazar).) Generally, both elements "'"must . . . be present in order for a court to exercise its discretion to refuse to enforce a contract or clause . . . ." But they need not be present in the same degree. "Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves." [Citations.] In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.' [Citation.]" (Id. at pp. 1243-1244.)

"'[T]here are degrees of procedural unconscionability. At one end of the spectrum are contracts that have been freely negotiated by roughly equal parties, in which there is no procedural unconscionability. . . . Contracts of adhesion that involve surprise or other sharp practices lie on the other end of the spectrum. [Citation.] Ordinary contracts of adhesion, although they are indispensable facts of modern life that are generally enforced [citation], contain a degree of procedural unconscionability even without any notable surprises, and "bear within them the clear danger of oppression and overreaching." [Citation.]' [Citation.] . . . [C]ourts must be 'particularly attuned' to this danger in the employment setting, where 'economic pressure exerted by employers on all but the most sought-after employees may be particularly acute.' [Citation.]" (Baltazar, supra, 62 Cal.4th at p. 1244.) "'[A] finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided. [Citation.]'" (Ibid.)

The substantive aspect of "'[t]he unconscionability doctrine ensures that contracts, particularly contracts of adhesion, do not impose terms that have been variously described as "'"overly harsh"'" [citation], "'unduly oppressive'" [citation], "'so one-sided as to "shock the conscience"'" [citation], or "unfairly one-sided" [citation].'" (Baltazar, supra, 62 Cal.4th at p. 1244.) There is no conceptual difference among these formulations. They all "'point to the central idea that the unconscionability doctrine is concerned not with "a simple old-fashioned bad bargain" [citation], but with terms that are "unreasonably favorable to the more powerful party" [citation].'" (Ibid.) "'The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.' [Citation.]" (Id. at p. 1245.) Absence conflicting extrinsic facts, a trial court's unconscionability determination presents a question of law subject to de novo review. (Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 247.)

1. Procedural Unconscionability

Arbonne contends the Arbitration Agreement is not procedurally unconscionable, while respondent contends it is. We agree with respondent.

The procedural unconscionability evidence was undisputed. Respondent was called into his supervisor's office one day while working. She handed him a document and said he would not be allowed back to work the following day if he did not sign it. He signed it without the opportunity to read it because she rushed him to do so and to resume his work duties.

These facts evidence a type of procedural unconscionability commonly found in the employment context. (See, e.g., Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz); OTO, L.L.C. v. Kho (2017) 14 Cal.App.5th 691, 708; Jones v. Humanscale Corp. (2005) 130 Cal.App.4th 401, 415; Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1284 (Nyulassy); Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 722.)

The Arbitration Agreement was a contract of adhesion, offered on a take-it-or-leave-it basis with no possibility of negotiation. It was presented to respondent in a manner that gave him no meaningful opportunity to consider its terms and reflect on the rights he would be giving up by signing it. This aspect of Arbonne's procedure is even more egregious than that which was found by the Supreme Court to be procedurally unconscionable in Armendariz. (Armendariz, supra, 24 Cal.4th...