Filed 9/18/26 Ahmed v. Volkswagen Group of America, Inc. CA1/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
SALEH AHMED,
Plaintiff and Respondent,
A172716
v.
VOLKSWAGEN GROUP OF (San Mateo County Super. Ct.
AMERICA, INC., et al. No. 24-CIV-01208)
Defendants and Appellants.
Plaintiff Saleh Ahmed sued defendants Volkswagen Group of America,
Inc. (Volkswagen) and Dako Resources, LLC (Dako) (together, defendants),
and defendants moved to compel arbitration. Plaintiff did not dispute that he
signed an arbitration agreement, but he argued the agreement is
unconscionable. Defendants responded that the arbitration agreement
contains a delegation clause, so whether the arbitration agreement as a
whole is invalid due to unconscionability is a question for the arbitrator. The
trial court denied the motion to compel, finding both the delegation clause
and the arbitration agreement unconscionable.
We conclude that the delegation clause itself is not unconscionable and,
therefore, whether the arbitration agreement is unconscionable is for the
arbitrator to determine. Accordingly, we reverse.
1
FACTS AND PROCEDURAL ACKGROUND
Dako is a contract staffing agency; it employs workers who are assigned
to work at Dako’s corporate clients, including Volkswagen. In June 2022,
Dako hired plaintiff to work as a telematics test engineer at Volkswagen in
California.
As part of the onboarding process, plaintiff was required to sign
employment and arbitration agreements, which he did on June 13, 2022. The
arbitration agreement, a six-page document titled “Agreement to Arbitrate,”
includes 28 numbered paragraphs with headings “1. Introduction,” “2.
Effective Date,” and so on. Paragraph 13. “Governing Law” provides that
arbitration “shall be conducted in accordance with the Federal Arbitration
Act (‘FAA’) [(9 U.S.C. § 2)] . . . .”
Plaintiff was an employee of Dako until October 2023.
In 2024, plaintiff brought this putative class action, alleging defendants
failed to pay employees for all hours worked, failed to provide meal and rest
periods, and failed to timely pay wages at termination of employment (among
other things). Plaintiff claimed various Labor Code violations.
Dako filed a motion to compel arbitration, and Volkswagen later joined
in Dako’s motion.
Opposing defendants’ motion, plaintiff argued the arbitration
agreement “is irredeemably unconscionable.”1 (Capitalization and bolding
1 Unconscionability is “a valid defense to a petition to compel
arbitration.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109,
1142.) “A contract is unconscionable if one of the parties lacked a meaningful
choice in deciding whether to agree [procedural unconscionability] and the
contract contains terms that are unreasonably favorable to the other party
[substantive unconscionability].” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111,
125 (OTO).) A party seeking to avoid arbitration under the defense of
2
omitted.) He argued the arbitration agreement is procedurally
unconscionable because it was offered on a “ ‘take-it-or-leave-it’ ” basis, and
he asserted that “substantive unconscionability plagues the [employment and
arbitration] agreements to an egregious degree,” noting the arbitration
agreement lacks mutuality and includes “improper fee provisions.” (Bolding
omitted.)
In reply, Dako argued the arbitration agreement contains an
enforceable delegation clause and, consequently, “challenges of
unconscionability must be decided by the arbitrator.” (Capitalization and
bolding omitted.) Dako cited the last sentence of paragraph 4 of the
arbitration agreement as the delegation clause. Paragraph 4 provides: “4.
Agreement to Arbitrate. Any and all covered claims (as defined in 8 below)
that individual has or may in the future have against either employer or
Volkswagen shall be exclusively submitted to and only resolved by final and
binding arbitration administered by JAMS pursuant to its employment
arbitration rules and procedures (the ‘JAMS Rules’). All arbitration
proceedings shall be confidential except to the extent otherwise prohibited by
applicable law. The arbitrator shall have the exclusive authority to rule on the
scope of the arbitrator’s jurisdiction, including any and all issues of
procedural and/or substantive arbitrability.” (Italics added.)2
unconscionability must show “[b]oth procedural and substantive
unconscionability.” (Ibid.)
2 In a footnote in its opening brief, Dako requests we take judicial
notice of “JAMS Minimum Standard No. 7.” We do not consider this request
because Dako did not “file[] a separate motion in this court seeking judicial
notice” in compliance with California Rules of Court, rule 8.252(a). (United
Teachers of Los Angeles v. Los Angeles Unified School Dist. (2012) 54 Cal.4th
504, 528 [“we will not consider a judicial notice motion . . . unless a party files
3
The trial court denied the motion to compel arbitration. The court
found the one-sentence delegation clause “clear and unmistakable” but
declined to enforce it. The court found the delegation clause procedurally
unconscionable because plaintiff was required to sign the arbitration
agreement as a condition of employment, and it found the delegation clause
substantively unconscionable because the agreement to arbitrate covers
claims plaintiff has against defendants but does not cover claims defendants
might have against plaintiff. The court reasoned: “The subject delegation
clause is part of § 4 which states that the agreement to arbitrate refers to
Plaintiff’s claims against Dako/Volkswagen, but does not encompass[]
Dako/Volkswagen’s claims against Plaintiff. Therefore, it is impossible to
conclude the delegation clause is mutual, and this Court emphasizes the
substantive unconscionability with respect to not only the covered claims but
also the delegation clause itself.”
The court similarly found the arbitration agreement as a whole
“unenforceable due to lack of mutuality.”
DISCUSSION
On appeal, both defendants contend the delegation clause is
enforceable, so plaintiff’s claim that the arbitration agreement is
unconscionable must be decided by an arbitrator. Dako further argues that
even if the delegation clause is not enforced, the trial court erred in finding
the arbitration agreement unconscionable.
A. Standard of Review
“The party seeking arbitration bears the burden of proving the
existence of an arbitration agreement, and the party opposing arbitration
a separate motion in this court seeking judicial notice”].) In any event, it is
unnecessary to our decision.
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bears the burden of proving any defense, such as unconscionability.”
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC
(2012) 55 Cal.4th 223, 236.) When “the evidence is not in conflict, we review
the trial court’s denial of arbitration de novo.” (Ibid.) “We review the trial
court’s findings of disputed fact for substantial evidence; we review its finding
of unconscionability based on those facts de novo.” (Gostev v. Skillz Platform,
Inc. (2023) 88 Cal.App.5th 1035, 1047 (Gostev).)
B. Enforceability of the Delegation Clause
1. The Law on Delegating Arbitrability Issues to an Arbitrator
“The usual presumption is that a court, not an arbitrator, will decide in
the first instance whether a dispute is arbitrable.” (Gostev, supra, 88
Cal.App.5th at p. 1048.) But “parties can agree to arbitrate ‘gateway’
questions of ‘arbitrability,’ such as whether the parties have agreed to
arbitrate or whether their agreement covers a particular controversy.” (Rent-
A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68–69 (Rent-A-Center).)3
An agreement within an arbitration agreement “to delegate to the arbitrator,
instead of a court, questions regarding the enforceability of the agreement” is
often referred to as a “delegation clause.” (Tiri v. Lucky Chances, Inc. (2014)
226 Cal.App.4th 231, 241, 238 (Tiri); e.g., Aanderud v. Superior Court (2017)
13 Cal.App.5th 880, 884; Malone v. Superior Court (2014) 226 Cal.App.4th
1551, 1555 (Malone).)
“[A] delegation clause—nested within the larger arbitration
agreement—must be viewed as an independent (‘severable’) contract.”
(Nielsen Contracting, Inc. v. Applied Underwriters, Inc. (2018) 22 Cal.App.5th
3 We note that Rent-A-Center, supra, 561 U.S. at page 65, was decided
under the FAA. Ahmed does not dispute that the FAA governs the
arbitration agreement in this case.
5
1096, 1108 (Nielsen), citing Rent-A-Center, supra, 561 U.S. at pp. 70–71.)
“[A]s with any independent contract, the court must resolve specific
challenges to the delegation clause,” but “an argument that the arbitration
agreement or the underlying contract is unenforceable is not sufficient” to
render the delegation clause unenforceable. (Nielsen at p. 1108, citing Rent-
A-Center, supra, 561 U.S. at pp. 71–76.) If the court finds that the delegation
clause within the arbitration agreement is valid, then the delegation clause is
enforced, and an arbitrator—not the court—decides contract defenses
directed at elements of the agreement other than the delegation clause, such
as “whether the arbitration agreement as a whole . . . is unconscionable.”
(Tiri, supra, 226 Cal.App.4th at pp. 238–239 [“As a result of our conclusion
that the delegation clause is valid, we leave to the arbitrator the question
whether the arbitration agreement as a whole, or any of its other severable
provisions, is unconscionable”].)
Thus, our initial task in this case is to determine whether the
delegation clause—considered by itself as an independent contract—is an
enforceable agreement.
“There are two prerequisites for a delegation clause to be effective.
First, the language of the clause must be clear and unmistakable. (Rent-A-
Center, supra, 561 U.S. at p. 69, 70, fn. 1.) Second, the delegation must not
be revocable under state contract defenses such as fraud, duress, or
unconscionability.” (Tiri, supra, 226 Cal.App.4th at p. 242.)
2. The Delegation Clause by Itself is Not Unconscionable
The delegation clause in this case is the last sentence of paragraph 4 of
the arbitration agreement: “The arbitrator shall have the exclusive authority
to rule on the scope of the arbitrator’s jurisdiction, including any and all
issues of procedural and/or substantive arbitrability.”
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Plaintiff does not dispute that this delegation clause meets the first
requirement of showing “clear and unmistakable evidence that the parties
intended to delegate arbitrability issues to an arbitrator.” (Tiri, supra, 226
Cal.App.4th at p. 244.) “We see no reason to disagree with the parties’ tacit
understanding that the delegation clause here was clear.” (Id. at p. 242.)
The only contested issue is whether the delegation clause is
unconscionable and, therefore, unenforceable.
As we have mentioned, “the unconscionability doctrine ‘ “has both a
procedural and a substantive element.” ’ ” (OTO, supra, 8 Cal.5th at p. 125.)
“ ‘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.’ ” (Ibid.)
a. Procedural Unconscionability
“A procedural unconscionability analysis ‘begins with an inquiry into
whether the contract is one of adhesion.’ [Citation.] An adhesive contract is
standardized, generally on a preprinted form, and offered by the party with
superior bargaining power ‘on a take-it-or-leave-it basis.’ [Citations.]
Arbitration contracts imposed as a condition of employment are typically
adhesive.” (OTO, supra, 8 Cal.5th at p. 126.) “ ‘Ordinary contracts of
adhesion, although . . . indispensable facts of modern life . . ., contain a
degree of procedural unconscionability even without any notable surprises.’ ”
(Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1244.)
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Substantial evidence supports the trial court’s finding that the
delegation clause within the arbitration agreement is a contract of adhesion.
The six-page arbitration agreement appears to be a pre-printed form, and
paragraph 27 expressly provides that the employee understands that the
arbitration agreement, which includes the delegation clause, “is a condition of
employment with Employer or assignment to Volkswagen.” Dako’s human
resources witness declared that the arbitration agreement and employment
agreement are among the “necessary onboarding documents” that all
“employee candidates” sign. On this record, the trial court reasonably could
find that the delegation clause is procedurally unconscionable because it is
part of a contract of adhesion.
We are not persuaded by Dako’s argument that there is no procedural
unconscionability because plaintiff signed the arbitration agreement as “the
result of a negotiation of terms between the parties that were acceptable to
[plaintiff].” In Tiri, the Court of Appeal found an arbitration agreement
adhesive despite “statements by [the employer defendant]’s human-resources
manager that [plaintiff] Tiri was never told that the agreement was
nonnegotiable and that Tiri never proposed changes.” (Tiri, supra, 226
Cal.App.4th at p. 245.) The court found this evidence “fell far short of
demonstrating an arm’s-length bargaining transaction,” and noted,
“Tellingly, the manager did not say that the agreement was actually
negotiable, that [the employer] offered to negotiate, or that [the employer]
would have considered proposed changes. Under these circumstances, we
have no difficulty concluding that the arbitration agreement was a contract of
adhesion.” (Ibid.) Similarly, in this case, nothing suggests the terms of the
arbitration agreement were up for negotiation. To the contrary, a Dako
employee explained that a Volkswagen recruiter “insisted that Dako use its
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own [that is, Volkswagen’s] arbitration agreement, which has clearer
provisions making Volkswagen a third-party to the Arbitration Agreement
between Dako and Plaintiff,” strongly suggesting that its terms, including the
delegation clause, were non-negotiable.
b. Substantive Unconscionability
“Substantive unconscionability examines the fairness of a contract’s
terms. This analysis ‘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.” ’ ” (OTO,
supra, 8 Cal.5th at pp. 129–130.)
“[L]ack of mutuality in an arbitration agreement is a hallmark of
substantive unconscionability.” (Santana v. Studebaker Health Care Center,
LLC (2026) 120 Cal.App.5th 1, 22.) In the context of an arbitration
agreement, “if an agreement singles out certain claims for arbitration, there
must be ‘mutuality,’ ” meaning “[t]he agreement cannot require ‘one
contracting party, but not the other, to arbitrate all claims arising out of the
same transaction or occurrence or series of transactions or occurrences.’
[Citations.] Instead, a ‘ “modicum of bilaterality” ’ is required.” (Ramirez v.
Charter Communications, Inc. (2024) 16 Cal.5th 478, 495.)
Here, the trial court found the delegation clause substantively
unconscionable on the ground that it “is part of” paragraph 4 of the
arbitration agreement, “which states that the agreement to arbitrate refers to
Plaintiff’s claims against Dako/Volkswagen, but does not encompass[]
Dako/Volkswagen’s claims against Plaintiff.” Based on the lack of mutuality
in the obligation to arbitrate claims, the court found, “it is impossible to
conclude the delegation clause is mutual.”
9
Defendants contend the trial court erred in relying on terms of the
arbitration agreement other than the delegation clause itself in its
unconscionability analysis.4 This contention has merit.
A delegation clause within an arbitration agreement is treated “as a
separate agreement to arbitrate solely the issues of enforceability.” (Malone,
supra, 226 Cal.App.4th at p. 1559, italics added; accord Nielsen, supra, 22
Cal.App.5th at p. 1108 [“a delegation clause . . . must be viewed as an
independent (‘severable’) contract”].) “For this reason, when a party is
claiming that an arbitration agreement is unenforceable, it is important to
determine whether the party is making a specific challenge to the
enforceability of the delegation clause or is simply arguing that the
agreement as a whole is unenforceable. If the party’s challenge is directed to
the agreement as a whole—even if it applies equally to the delegation
clause—the delegation clause is severed out and enforced; thus, the
arbitrator, not the court, will determine whether the agreement is
enforceable. In contrast, if the party is making a specific challenge to the
delegation clause, the court must determine whether the delegation clause
itself may be enforced (and can only delegate the general issue of
enforceability to the arbitrator if it first determines the delegation clause is
enforceable).” (Malone, at pp. 1559–1560.)
4 Dako argues, “[T]he delegation clause must be analyzed apart from
the alleged unconscionability of the Arbitration Agreement.” Volkswagen
argues, “[A]n opposing party presented with an agreement to arbitrate
containing a delegation clause must specifically challenge the latter,” and it
is insufficient to raise “a challenge only to the broader agreement since the
delegation clause and broader agreement to arbitrate are distinct
agreements.”
10
In this case, plaintiff’s claim of lack of mutuality is directed to the
arbitration agreement as a whole. Viewing the one-sentence delegation
clause as its own separate contract, however, we see no lack of mutuality. Its
specification that the arbitrator has “the exclusive authority to rule on the
scope of the arbitrator’s jurisdiction, including any and all issues of
procedural and/or substantive arbitrability” does not single out one party.
Instead, any party is required to submit to the arbitrator issues of
arbitrability, and any party can enforce the delegation clause. (See, e.g.,
Malone, supra, 226 Cal.App.4th at p. 1564 [where the delegation clause
applies to both parties, “it is clear that the delegation clause is not one sided,
and it is therefore not substantively unconscionable due to a lack of
bilaterality”]; Tiri, supra, 226 Cal.App.4th at pp. 246–247 [“The delegation
clause here does not lack mutuality because [plaintiff] Tiri and [defendant]
Lucky Chances are bound by it equally”].)
We reject plaintiff’s argument that the delegation clause cannot be read
“independently from the preceding language in the very same
section/paragraph.” In fact, a court “must” view a delegation clause “as an
independent (‘severable’) contract.” (Nielsen, supra, 22 Cal.App.5th at p.
1108; see Rent-A-Center, supra, 561 U.S. at pp. 71–72 [a delegation clause is
severable from the remaining arbitration agreement; therefore, unless the
plaintiff “challenged the delegation provision specifically,” the delegation
clause must be treated as valid and enforced “leaving any challenge to the
validity of the [arbitration a]greement as a whole for the arbitrator”].)
Plaintiff also asserts, “[T]he same lack of mutuality plagues both the
entire agreement as well as the delegation clause specifically.” But, as we
have explained, the delegation clause, by itself, binds the parties equally.
11
3. Conclusion
Plaintiff has failed to show that the delegation clause, as opposed to the
arbitration agreement as a whole, is substantively unconscionable. We
conclude the delegation clause is valid, and therefore the trial court should
have granted the motion to compel arbitration. “[I]t will be for the arbitrator
to consider the conscionability of the agreement as a whole.” (Tiri, supra, 226
Cal.App.4th at p. 250.) We express no view on that issue.
DISPOSITION
The order denying defendants’ motion to compel arbitration is reversed.
The parties shall bear their own costs on appeal.
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_________________________
Miller, J.
WE CONCUR:
_________________________
Stewart, P. J.
_________________________
Desautels, J.
A172716, Ahmed v. Volkswagen Group of America, Inc. et al.
13