Swain v. LaserAway Med. Grp., Inc.

• Decision Date: 13 October 2020
• Docket Number: B294975
• Citation: 270 Cal.Rptr.3d 786,57 Cal.App.5th 59
• Court: California Court of Appeals Court of Appeals
• Parties: Miranda SWAIN, Plaintiff and Respondent, v. LASERAWAY MEDICAL GROUP, INC., Defendant and Appellant.

57 Cal.App.5th 59

270 Cal.Rptr.3d 786

Miranda SWAIN, Plaintiff and Respondent,

v.LASERAWAY MEDICAL GROUP, INC., Defendant and Appellant.

B294975

Court of Appeal, Second District, Division 7, California.

Filed October 13, 2020

As Modified November 3, 2020

Prindle, Goetz, Barnes & Reinholtz, Jack R. Reinholtz, Douglas S. De Heras and Lauren S. Gafa, Long Beach, for Defendant and Appellant.

Phillips, Erlewine, Given & Carlin, Nicholas A. Carlin and Brian S. Conlon, San Francisco, for Plaintiff and Respondent.

SEGAL, J.

INTRODUCTION

Miranda Swain filed a complaint against LaserAway Medical Group, Inc., alleging she suffered skin injuries as a result of laser hair removal treatment she received from LaserAway. LaserAway filed a petition to compel arbitration, which the trial court denied, ruling the arbitration agreement between Swain and LaserAway was unenforceable because it was unconscionable. LaserAway appeals, and we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Swain Sues LaserAway

In March 2018 Swain filed this action against LaserAway, alleging she received laser hair removal treatment from LaserAway in June 2017 that caused her "several weeks of pain and irritation" and hyperpigmentation of her skin. When Swain received a second round of treatment in August 2017, the employee performing the treatment used the laser on an area of skin covered by a tattoo. The laser burned the skin, "mutilated" the tattoo, left "an open wound," and caused Swain "months of pain."

In addition to making allegations about her specific experience at LaserAway, Swain complained about several of LaserAway's business practices. Swain alleged that LaserAway falsely advertises that experienced medical professionals perform laser hair removal treatment, even though qualified physicians do not perform or supervise the procedures patients receive at LaserAway, and that LaserAway falsely advertises the treatment is safe, effective, and causes few side effects. Swain asserted causes of action for negligence, fraud, breach of contract, battery, unjust enrichment, and violations of the Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law. Swain sought, among other relief, monetary damages for her injuries and an injunction prohibiting LaserAway from continuing its allegedly unlawful practices.

B. The Trial Court Denies LaserAway's Petition To Compel Arbitration

LaserAway filed a petition to compel arbitration and attached a copy of an arbitration agreement purportedly executed by Swain stating she agreed to arbitrate any dispute "as to whether any medical services ... were unnecessary or unauthorized or were improperly, negligently or incompetently rendered."¹ Swain claimed that she did not remember executing the arbitration agreement and that, if she did sign it, the agreement was unconscionable.

Swain contended the agreement was procedurally unconscionable because it was a contract of adhesion drafted by LaserAway. She stated that on the day she first received treatment LaserAway provided her an electronic tablet that "had a few forms for [Swain] to flip through and sign," but that no one at LaserAway explained any of the forms. Swain contended that, if she signed an arbitration agreement, the agreement was one of the forms on the tablet. Swain argued the agreement was substantively unconscionable because it covered "the types of claims a patient is likely to bring while excepting the types of claims LaserAway could bring against its patients," required the parties to "split arbitration costs on a pro rata basis without limit," and prohibited a patient from seeking public injunctive relief. Swain also filed a declaration stating that her monthly income was approximately $2,000 and that she could not afford the fees typically charged by arbitrators.

LaserAway did not dispute it provided Swain an electronic tablet with several forms before she received treatment, but argued in its reply memorandum the arbitration agreement was not procedurally unconscionable because it was a "standalone agreement" with "prominently featured" terms.² LaserAway argued that, although the arbitration agreement did allow LaserAway to sue patients in court for "unpaid costs for services rendered," such a provision did not render the agreement unconscionable. LaserAway argued the cost-sharing provision was not unconscionable because it followed the language of Code of Civil Procedure section 1284.2.³ LaserAway did not dispute that the provision prohibiting Swain from seeking public injunctive relief was unconscionable, but argued that the court could sever that provision from the agreement.

The trial court denied the petition to compel arbitration. The court ruled that, although LaserAway met its burden to show Swain agreed to arbitrate her claims, the arbitration agreement was unconscionable. The court found that Swain "had no bargaining ability to reject or negotiate the terms of the contract" and "was given the forms to review and then immediately taken to [a] room for her procedure" and that no one at LaserAway told her she could print the forms or opt out of the arbitration agreement. The court also noted, however, there was no evidence Swain could not have printed or taken additional time to review the documents. The court concluded that the agreement had "a minimal degree of procedural unconscionability," but that for the reasons Swain argued the agreement was "permeated by substantive unconscionability" and unenforceable. LaserAway timely appealed.

DISCUSSION

A. Standard of Review

"The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense ...." ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217 ; accord, Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1157-1158, 220 Cal.Rptr.3d 887 ; Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 380, 203 Cal.Rptr.3d 522.) "An order denying a petition to compel arbitration is appealable." ( Perez v. U-Haul Co. of California (2016) 3 Cal.App.5th 408, 415, 207 Cal.Rptr.3d 605 ; see § 1294, subd. (a).)

" ‘ "[G]enerally applicable contract defenses, such as ... unconscionability, may be applied to invalidate arbitration agreements without contravening" the [Federal Arbitration Act]’ or California law."⁴ ( OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125, 251 Cal.Rptr.3d 714, 447 P.3d 680 ( OTO ); see Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5th 485, 492, 266 Cal.Rptr.3d 181 ["Generally applicable contract defenses, like unconscionability, can invalidate arbitration agreements."].) "Whether an agreement is unconscionable presents a question of law which we review de novo." ( Williams v. Atria Las Posas (2018) 24 Cal.App.5th 1048, 1055, 235 Cal.Rptr.3d 341 ; accord, Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 236, 199 Cal.Rptr.3d 332 ; see Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 702, 155 Cal.Rptr.3d 506 ["Absent conflicting extrinsic evidence, the validity of an arbitration clause, including whether it is subject to revocation as unconscionable, is a question of law subject to de novo review."].) "But ‘factual issues may bear on that determination. [Citations.] Thus, to the extent the trial court's determination that the arbitration agreement was unconscionable turned on the resolution of conflicts in the evidence or on factual inferences to be drawn from the evidence, we consider the evidence in the light most favorable to the trial court's ruling and review the trial court's factual determinations under the substantial evidence standard.’ " ( Williams, at p. 1055, 235 Cal.Rptr.3d 341 ; accord, Carbajal , at p. 236, 199 Cal.Rptr.3d 332 ; Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619, 630, 191 Cal.Rptr.3d 29.) As always, it is " ‘appellant's burden to affirmatively show error.’ " ( Multani v. Witkin & Neal (2013) 215 Cal.App.4th 1428, 1457, 155 Cal.Rptr.3d 892 ; see Jameson v. Desta (2018) 5 Cal.5th 594, 608-609, 234 Cal.Rptr.3d 831, 420 P.3d 746 ["a trial court judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate ... that the trial court committed an error that justifies reversal"].)

B. Swain Met Her Burden To Show the Arbitration Agreement Was Unconscionable

LaserAway contends that it met its initial burden to show Swain agreed to arbitrate her claims and that Swain failed to meet her burden to show the agreement was unconscionable. We assume the former contention and disagree with the latter.

"The general principles of unconscionability are well established....

[T]he unconscionability doctrine ‘ "has both a procedural and a substantive element." ’ [Citation.] ‘The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.’ [Citation.] [¶] Both procedural and substantive unconscionability must be shown for the defense to be established, but ‘they need not be present in the same degree.’ [Citation.] Instead, they are evaluated on " ‘a sliding scale.’ " [Citation.] ‘[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to’ conclude that the term is unenforceable. [Citation.] Conversely, the more deceptive or coercive the bargaining tactics employed, the less substantive unfairness is required.... ‘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.’ " ( OTO , supra , 8 Cal.5th at pp. 125-126, 251 Cal.Rptr.3d 714, 447 P.3d 680 ; see ...