Filed 10/19/26 Salazar v. CN Motor Co. CA2/8
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
LUIS ANTONIO SALAZAR, B344433
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 24STCV14541)
v.
CN MOTOR COMPANY
LLC,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Lawrence P. Riff, Judge. Reversed with
directions.
Fisher & Phillips LLP, Tyler T. Rasmussen, Kari E. Gibson
and Megan E. Walker for Defendant and Appellant.
Bibiyan Law Group, David D. Bibiyan, Henry G. Glitz and
Jason Rothman for Plaintiff and Respondent.
_________________________
Luis Antonio Salazar (Salazar) sued his employer,
appellant CN Motor Company LLC, for violations of the
California Labor Code and Business & Professions Code. CN
Motor moved to compel arbitration of Salazar’s claims. The trial
court denied the motion. CN Motor contends the parties had a
valid Arbitration Agreement (Agreement) which was not
revocable due to either procedural or substantive
unconscionability, and that even if the court found
unconscionability it could easily sever offending terms. We find
the trial court erred in denying the motion to compel arbitration
rather than severing the offending provisions. We reverse and
remand the matter to the trial court to enter an order severing
certain provisions of the agreement, grant the motion to compel
as to Salazar’s individual claims, and address the remaining
issue of the class action waiver.
BACKGROUND
I. Relevant Facts and Procedural History
CN Motor Company LLC, doing business as Santa Monica
Lincoln (CN Motor), is an automobile dealership engaged in
marketing and selling vehicles and purchasing parts and vehicle-
related supplies. On June 6, 2022 Salazar filled out an
“APPLICATION FOR EMPLOYMENT” form to work at CN
Motor with a handwritten start date of June 20, 2022. On June
8, 2022 Salazar signed the Agreement. On June 13, 2022 Salazar
completed and signed a form entitled “PERSONAL
IDENTIFICATION INFORMATION.” On June 16, 2022, he
completed, signed, and dated an IRS W-4 form.
The Agreement is two pages long and includes the
signature block on the second page for both employee and
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employer. It is entitled “APPLICANT STATEMENT AND
AGREEMENT.” The second line of the title reads,
“IMPORTANT—READ CAREFULLY CONTAINS A BINDING
ARBITRATION AGREEMENT.” The two-line title is the first
text on the page and is in all capital letters. The Agreement is
single-spaced and typed in 11-point Times New Roman font. The
font in the title and body of the Agreement appears virtually
identical in size and form. The text is separated into 15
paragraphs.
Salazar challenged the Agreement as unconscionable. The
contested terms, as set out below, are in different paragraphs in
the Agreement. We have added italics to denote the terms to
which Salazar objects and which we hold should be severed. We
also added words in block parentheses, where necessary, to make
sense after the deletions.
Paragraph 4 states: “I and the Company agree to use
individual binding arbitration to resolve all disputes of any
nature whether based on federal, state or local laws, and/or
common law and/or equity, which arise out of or are related in
any way to my seeking employment with, employment by, or any
other relationship/interaction with the Company and its
Affiliates. I must submit to binding arbitration, for example,
claims for discrimination, harassment, retaliation, wrongful
termination, defamation, invasion of privacy, wage and hour
violations, assault and battery, tort, etc. The Company and/or
Affiliates must submit to binding arbitration, for example, claims
against me for embezzlement, theft of trade secrets, breach of
confidentiality, breach of duty of loyalty, breach of contract, etc.
Affiliates include the Company’s owners, directors, officers,
managers, employees, agents, partners, attorneys, sister-
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companies, subsidiaries, parent companies, joint-venturers,
alleged joint-employers, affiliated persons/entities, independent
contractors, and parties affiliated with its employee benefit and
health plans. I and the Company/Affiliates waive our rights to
have any claims decided in an administrative hearing, or by trial
with a judge or jury in court.”
Paragraph 5 sets out the exception to binding arbitration—
“claims arising under the National Labor Relations Act which are
brought before the National Labor Relations Board, claims for
medial and disability benefits under the California Workers’
Compensation Act, Employment Development Department
claims, and claims for individual wages filed with the Labor
Commissioner. . . . Once the agency’s proceedings are finished, I
must submit my claims to binding arbitration pursuant to this
Agreement. Our agreement for binding arbitration is not
revocable.”
Paragraph 6 asserts: “The Company’s business and my
employment affect interstate commerce. This Agreement and my
employment are governed by the Federal Arbitration Act (‘FAA’)
and the rules listed herein, as supplemented by the California
Arbitration Act (‘CAA’) as set forth in the Code of Civil Procedure
§ 1280 et seq., including § 1283.05 and all of the CAA’s other
mandatory and permissive rights to discovery). The CAA shall
only control the arbitration proceedings to the extent it is
consistent with this Agreement and/or the Federal Arbitration
Act.”
Paragraph 8 states: “The arbitrator only has the authority
to adjudicate individual claims. The arbitrator does not have the
authority to make the arbitration proceeding a class or collective
action, or to award monetary relief to a group of claimants.
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There shall be no consolidation or joinder of claims of other
claimants, or class or collective action (collectively ‘class claims’).
I and the Company expressly waive the right to bring class
claims. I still have the right, however, to bring a claim as a proxy
for the State of California pursuant to the California Private
Attorneys General Act (‘PAGA’) and this Agreement does not
waive such right.”
Paragraph 11 asserts: “To start an arbitration claim(s), I
must provide a letter outlining my claims and demand arbitration
to both the General Manager and the Controller (or Business
Manager) of the dealership where I am employed. I understand
that my letter must be dated and physically given to both the
General Manager and the Controller (or Business Manager)
personally prior to the expiration of any statute of limitations that
applies to my claims. The Company may similarly commence
claims against you by giving a letter to you. The party bringing
the claims will be required to file a formal complaint pleading the
claims and causes of action relied upon after an arbitrator is
selected. The arbitrator will set the timing for the responding
party to file and serve any responsive pleading.”
Finally, paragraph 12 reads: “If any term or provision of
this Agreement is declared void or unenforceable, it shall be
severed and the remainder of this Agreement shall be
enforceable. Notwithstanding the same, the prohibition on the
arbitrator hearing class claims and/or collective claims shall not
be severable.”
Before the signature block, the Agreement reads:
“I UNDERSTAND THAT I AM GIVING UP THE RIGHT
TO TRIAL BY JURY, BY A SITTING TRIAL COURT
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JUDGE AND/OR BY FINAL ADJUDICATION THROUGH
AN ADMINISTRATIVE PROCESS BY AGREEING TO
BINDING ARBITRATION.
“MY SIGNATURE BELOW ATTESTS TO THE FACT
THAT I HAVE BEEN GIVEN AN OPPORTUNITY TO
READ AND CONSIDER THIS AGREEMENT, AND THAT
I HAVE READ, UNDERSTAND, AND AGREE TO BE
LEGALLY BOUND BY ALL OF THE ABOVE TERMS. I
AGREE THAT THE COMPANY IS BINDING ITSELF TO
THIS AGREEMENT BY PRESENTING THIS
AGREEMENT TO ME FOR SIGNATURE.
“DO NOT SIGN UNTIL YOU HAVE READ THE ABOVE
ACKNOWLEDGMENT AND AGREEMENT.”
The signature block has a space for “EMPLOYEE” to sign
and date, and a space for “COMPANY” to sign and date.
Salazar worked as an hourly employee for CN Motor from
June 2022 to March 2024. On June 10, 2024, Salazar filed a class
action complaint in Los Angeles Superior Court against CN
Motor, asserting several wages and hour claims under the
California Labor Code on behalf of himself and the class:
(1) failure to pay overtime wages; (2) failure to pay minimum
wages; (3) failure to provide meal periods; (4) failure to provide
rest periods; (5) waiting time penalties; (6) wage statement
violations; (7) failure to timely pay wages; (8) failure to
indemnify; (9) violation of Labor Code section 227.3; and
(10) unfair competition.
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In response to the complaint, CN Motor filed a motion to
compel arbitration based on the Agreement Salazar had signed.
Salazar opposed the motion.
II. The Trial Court’s Ruling
On December 16, 2024, the trial court denied CN Motor’s
motion to compel arbitration. The court ruled CN Motor had
carried its burden to prove that the parties agreed to arbitrate,
but the Agreement was unenforceable.
“Based on the general evidence of oppression, and the
evidence of surprise in the format of the Agreement specifically,
the Court concludes the Agreement was formed in circumstances
of moderate-to-high procedural unconscionability.” The court
found Salazar “felt pressured to sign the Agreement” and that it
was a contract of adhesion because “ ‘few employees are in a
position to refuse a job because of an arbitration agreement.’ ”
The court continued: “Based on the evidence of how Defendant
generally presented papers to Plaintiff, the Court further finds
that he felt increased pressure to sign by the limited time
Defendant likely afforded him to review the Agreement. Lastly,
the Court finds the oppression of Plaintiff was increased by the
fact Defendant gave Plaintiff documents printed in English,
whereafter Spanish is his preferred language. These findings
sum to a moderate to high degree of oppression.”
The trial court also found that the “format of the
Agreement evidences a degree of surprise. Perhaps it was not
drafted with the purpose of surprising the reader with its terms.
But the text is small and dense; some paragraphs indeed appear
as an opaque mass of fine print. That said, the fine print is
bookended by warnings printed in all capital letters. The title of
the Agreement reads, ‘IMPORTANT—READ CAREFULLY
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CONTAINS A BINDNG ARBITRATION AGREEMENT.’ A
similar warning appears at the bottom of the Agreement, before
the signature block.”
As to substantive unconscionability, the trial court noted
that plaintiff had raised five reasons why the terms of the
Agreement “are overly harsh and one-sided: (1) the scope,
duration, and mutuality . . . ; (2) the procedure for initiating
arbitration; and (3) the waiver of rights. Plaintiff also argues the
Agreement is unconscionable because of two omissions. He
argues it lacks (4) an exemption for sexual harassment claims
and (5) arbitrator guardrails.” The court agreed with Salazar
that two of the five terms were unconscionable. First, the court
found paragraph 4 overbroad in scope because it required
arbitration of claims “ ‘which arise out of or are related in any
way to my seeking employment with, employment by, or any
other relationship/interaction with the Company and its
affiliates.’ ” The court cited the Agreement’s examples of
arbitrable claims and noted that many did not necessarily arise
from the parties’ employment relationship, despite CN Motor’s
claims that the Agreement was limited to employment claims
only.
Next, the trial court found the Agreement suffered from a
“mutuality problem” in that it “requires Plaintiff to arbitrate
claims he might have against Defendant (‘Company’) and
Defendant’s ‘Affiliates,’ defined as the following (in part):
Defendant’s parent companies, Defendant’s sister companies , its
subsidiaries, joint venturers, independent contractors, partners,
attorneys, ‘parties affiliated with its employee benefit and health
plans,’ and broadest of all, ‘affiliated persons/entities.’ ” The
court found that “The Agreement not only reaches to claims that
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would have little or nothing to do with the employment
relationship between Defendant and Plaintiff, but also reaches to
parties whose relationship to Defendant is tenuous.” “These
terms create a mutually problem that is best illustrated . . . by
hypothetical examples. If Plaintiff were to have a claim against a
hospital for malpractice, for example, that claim might be covered
by the Agreement if the hospital is ‘affiliated with [Defendant’s]
employee benefit and health plans.’ If plaintiff were to have a
claim arising from his purchase of a car, the claim might be
covered by the Agreement if the seller is somehow an ‘affiliated
entity’ of Defendant.”
The court also found that because the Agreement was not
revocable, it was of infinite duration and therefore
unconscionable.
Lastly the trial court also found that the Agreement
“mandates an overly harsh procedure for initiating an arbitration
proceeding” because it “lacks mutuality to a degree. Whereas the
employee ‘must’ give written notice to Defendant’s General
Manager and Controller or Business Manager, the same
requirement is apparently optional for Defendant, who ‘may
similarly commence claims . . . by giving a letter’ to the
employee.” It “requires the employee to give notice to managers
of ‘the dealership where I am employed,’ a requirement that
would arguably not apply if the employee were no longer
employed by the dealership.”
The trial court grouped the issues of overbreadth, infinite
duration and lack of mutuality re parties as one ground of one-
sidedness. As a second ground, it found the lack of mutuality in
initiating arbitration unconscionable. The trial court rejected
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Salazar’s other grounds and concluded that the “degree of
substantive unconscionability is moderate.”
As to severability, the trial court concluded that the
Agreement was permeated with unconscionability and the issues
of overbreadth, infinite duration and lack of mutuality in parties
could not be cured with simple severance. “These issues go to the
core of the Agreement; the type of claims that must be arbitrated,
the parties who must arbitrate, and the duration the agreement
remains in effect. The first two issues especially are not matters
that can be severed; the Court would need to rewrite the
Agreement to narrow the scope and add symmetry to the parties
bound. The Court therefore decides not to sever the
unconscionable terms and decides instead to not enforce the
Agreement.”
CN Motor’s timely appeal followed.
DISCUSSION
I. Standard of Review and Burden of Proof
The trial court sits as the trier of fact when deciding a
motion to compel arbitration, “weighing all the affidavits,
declarations, and other documentary evidence, as well as oral
testimony received at the court’s discretion, to reach a final
determination.” (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972 (Engalla).) A party who files a motion
to compel arbitration “bears the burden of proving the existence
of a valid arbitration agreement by the preponderance of the
evidence, and a party opposing the petition bears the burden of
proving by a preponderance of the evidence any fact necessary to
its defense.” (Ibid.) “ ‘On appeal from an order denying a
petition to compel arbitration, we review the trial court’s factual
10
determinations under the substantial evidence standard, and we
review the legal issues independently.’ ” (Pacific Fertility Cases
(2022) 85 Cal.App.5th 887, 892; Doe 1 v. McGrath Kavinoky LLP
(2026) 121 Cal.App.5th 488, 496; Alvarez v. Altamed Health
Services Corp. (2021) 60 Cal.App.5th 572, 581.) Where the facts
are undisputed, a trial court’s final ruling on a motion to compel
arbitration is reviewed de novo. (Ibid.) Even under a substantial
evidence standard of review, “a trier of fact may not indulge in
inferences rebutted by clear, positive and uncontradicted
evidence.” (Fullerton Union High School Dist. v. Riles (1983)
139 Cal.App.3d 369, 383.)
If a contractual clause is found unconscionable, the court
may, under Civil Code section 1670.5, choose to do one of the
following: (1) refuse to enforce the contract; (2) sever any
unconscionable clause; or (3) limit the application of any clause to
avoid unconscionable results. (Ramirez v. Charter
Communications, Inc. (2024) 16 Cal.5th 478, 513 (Ramirez).) The
trial court’s decision to act as Civil Code section 1670.5 permits is
reviewed for abuse of discretion. (Ibid.; Samaniego v. Empire
Today, LLC (2012) 205 Cal.App.4th 1138, 1144 (Samaniego).)
II. Applicable Law
In ruling on a motion to compel arbitration, a trial court
must first determine whether the parties actually agreed to
arbitrate the dispute. General principles of California contract
law guide the court in making this determination. (Ford Motor
Warranty Cases (2024) 17 Cal.5th 1122, 1128.)
As a threshold matter, the trial court found CN Motor
carried its burden as to the existence of an Arbitration
Agreement between Salazar and CN Motor. Neither party
challenges the ruling.
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A. Unconscionability in the Arbitration
Agreement
Both the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and
the California Arbitration Act (Code Civ. Proc., § 1280 et seq.)
favor enforcement of valid arbitration agreements. (Moses H.
Cone Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 24–25;
Wagner Construction Co. v. Pacific Mechanical Corp. (2007)
41 Cal.4th 19, 25–26 [strong public policy in favor of arbitration].)
An arbitration agreement will be enforced unless grounds for its
revocation exist. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125
(OTO).
California law and public policy establish “a presumption in
favor of arbitrability.” (Engalla, supra, 15 Cal.4th at p. 971; Code
Civ. Proc., § 1280 et seq.) Contract defenses like
unconscionability, “ ‘ “may be applied to invalidate arbitration
agreements without contravening” the FAA’ or California law.”
(OTO, supra, 8 Cal.5th at p. 125.) “The degree of unfairness
required for unconscionability must be as rigorous and
demanding for arbitration clauses as for any other contract
clause.” (Ibid.)
The general principles of unconscionability are well
established. A contract is unconscionable if one of the parties
lacked a “ ‘ “ ‘meaningful choice’ ” ’ ” in deciding whether to agree
to it and the contract contains “ ‘ “ ‘terms which are unreasonably
favorable to the other party.’ ” ’ ”) (Sonic-Calabasas A, Inc. v.
Moreno (2013) 57 Cal.4th 1109, 1133; 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.’ ” (OTO, supra,
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8 Cal.5th at p. 125.) Oppression turns on “ ‘(1) the amount of
time the party is given to consider the proposed contract; (2) the
amount and type of pressure exerted on the party to sign the
proposed contract; (3) the length of the proposed contract and the
length and complexity of the challenged provision; (4) the
education and experience of the party; and (5) whether the
party’s review of the proposed contract was aided by an
attorney.’ ” (Id. at pp. 126–127.) Surprise would be akin to
“hiding a clause [or provision] in a mass of fine print or phrasing
a clause in language that is incomprehensible to a layperson.”
(Penilla v. Westmont Corp. (2016) 3 Cal.App.5th 205, 216
(Penilla).)
Substantive unconscionability addresses “ ‘the fairness of
an agreement’s actual terms and to assessments of whether they
are overly harsh or one-sided.’ ” (OTO, supra, 8 Cal.5th at
p. 125.) Substantive unconscionability “ ‘typically is found in the
employment context when the arbitration agreement is “one-
sided” in favor of the employer without sufficient justification.’ ”
(Cook v. University of Southern California (2024) 102 Cal.App.5th
312, 320 (Cook); Peng v. First Republic Bank (2013)
219 Cal.App.4th 1462, 1472–1473; Gutierrez v. Autowest, Inc.
(2003) 114 Cal.App.4th 77, 88 [“Where a party with superior
bargaining power has imposed contractual terms on another,
courts must carefully assess claims that one or more of these
provisions are one-sided and unreasonable.”].) The
unconscionable terms must be “ ‘so one-sided as to “shock the
conscience” ’ ” and a “contract term is not substantively
unconscionable when it merely gives one side a greater benefit.”
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development
(US), LLC (2012) 55 Cal.4th 223, 246.)
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Both procedural and substantive unconscionability must be
present for the unconscionability defense to be established, but
“they need not be present in the same degree.” (Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
114.) Procedural and substantive unconscionability are
evaluated on a “ ‘sliding scale’ ” where “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.” (Ibid.)
B. Procedural Unconscionability
The trial court found the Agreement suffered from
“moderate-to-high” procedural unconscionability, reasoning that
Salazar felt pressured to sign the Arbitration Agreement because
he was given the Agreement in English and had a limited time
period to review and sign it. Further, the format of the
Agreement “evidences a degree” of surprise.
1. The Court’s Consideration of Salazar’s
Declaration
In his declaration, Salazar attested he is primarily a
Spanish speaker, can understand “basic conversational English,”
but cannot “read and understand documents in English unless
they are translated.” Paragraph 2 of his declaration reads: “This
Declaration was translated into Spanish for me by an interpreter
before I signed it. I recited the facts contained in this Declaration
in Spanish, which were translated into English, and then this
Declaration was read to me in both Spanish and English before
signing. I had the opportunity to review it, to make edits, and to
discuss its contents with my attorneys.” The final two
paragraphs of the declaration provide the date and place of
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execution, Salazar’s signature, and his declaration under penalty
of perjury.
CN Motor argues the trial court’s ruling finding procedural
unconscionability is flawed because it was based almost entirely
on Salazar’s declaration. CN Motor contends the court should not
have considered the content of Salazar’s declaration in the first
place because Salazar dictated the facts set out in the declaration
in Spanish and the document was translated or interpreted into
English without an accompanying declaration, affirming the
document was correctly translated or interpreted, under penalty
of perjury. Salazar contends CN Motor has failed to provide
authority in support of this argument.
CN Motor primarily relies on Detrick v. Shimada (2026)
120 Cal.App.5th 170 (Detrick), as instructive authority. In
Detrick, the declaring defendant Keiko Shimada spoke Japanese
only. Shimada could not directly express herself in a declaration
because she could not speak or read English. (Id. at p. 174.) In
excluding her declaration, the court of appeal explained it lacked
“the necessary link providing a foundation for [the plaintiff’s]
declaration establishing that it is trustworthy in light of her
admitted inability to read or speak English.” (Id. at p. 178, italics
added.) “[H]ere there was an absence of the foundational facts
from which the trial court could determine whether the English-
language declaration accurately reflected Shimada’s words,
including the name and qualifications of the interpreter and the
circumstances of the declaration’s creation There is not even
‘assurance that these were [Shimada’s] words, rather than
something included at the suggestion of another person.’ ” (Id. at
p. 179.)
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We find CN Motor has forfeited this argument. In the trial
court, CN Motor did not ask the trial court to find Salazar’s
declaration inadmissible or otherwise invalid based on a failure
to identify the person(s) who translated or interpreted the
Declaration before he signed it. It argued only that Salazar was
bound by his signature whether or not he could or did read the
document. CN Motor filed written evidentiary objections to the
declaration based only on irrelevance and prejudice.
Interestingly, CN Motor pointed out that “if Plaintiff’s arguments
are taken at face value, his declaration should be inadmissible as
he cannot read English with ease and there is no admissible
evidence that the declaration was properly translated, clearly
and verbatim, so as to ensure Plaintiff knew exactly what he was
executing.” But it never put the question to the court whether
the declaration is inadmissible. Consequently the trial court did
not rule on its admissibility. CN Motor has forfeited its
objections to the admissibility of the Salazar declaration.
Our conclusion is buttressed by the fact that CN Motor
asked the trial court to consider a previous declaration Salazar
signed in an unrelated case in which he denied wage and hour
violations. That prior declaration, in CN Motor’s favor, suffers
from the same defect CN Motor now raises for the first time on
appeal. Further, in its reply brief in the trial court, CN Motor
relies on Salazar’s current declaration notwithstanding its
defects. CN Motors cannot have it both ways. The trial court did
not err in relying on Salazar’s declaration.
2. Execution of the Arbitration Agreement
A finding of oppression turns on “ ‘(1) the amount of time
the party is given to consider the proposed contract; (2) the
amount and type of pressure exerted on the party to sign the
16
proposed contract; (3) the length of the proposed contract and the
length and complexity of the challenged provision; (4) the
education and experience of the party; and (5) whether the
party’s review of the proposed contract was aided by an
attorney.’ ” (OTO, supra, 8 Cal.5th at pp. 126–127.)
The trial court found Salazar felt pressured to sign the
Arbitration Agreement, because “[f]ew if any employees share
equal bargaining power with their employer” and “ ‘few
employees are in a position to refuse a job because of an
arbitration agreement.’ ” The court found that CN Motor
generally presented papers to Salazar quickly and under time
pressure which afforded him little to no time review the
Agreement.
The only evidence in the record to support the trial court’s
finding that Salazar had to act quickly and under time pressure
is Salazar’s declaration. Here, there is no dispute that Salazar
signed a job application to work on June 6, 2022, and executed
the Agreement on June 8, 2022. There is also no dispute that
“start 6-20-22” is written on the top of the job application.
Salazar’s declaration references several documents that he
executed during his hiring process, including execution of IRS
Form W-4. CN Motor office manager Kemvette Cox attested that
the W-4 form was executed on June 16, 2022.
We conclude the Arbitration Agreement was clearly part of
the hiring process. However, no substantial evidence supports
the notion that the conditions under which it was signed amount
to oppression. Salazar declared that after he was hired he was
pressured to sign other documents at the worksite, during work
days and in the middle of his shift. These events took place after
the execution of the Arbitration Agreement. (See OTO, supra,
8 Cal.5th at pp. 126–127 [an oppression finding requires
17
oppression at the time the agreement to arbitrate is executed].)
We find this basis of oppression unsupported by the evidence.
3. Salazar’s Choice to Execute the Arbitration
Agreement in English and Not in Spanish
The trial court found that oppression was increased by the
fact CN Motor gave Salazar documents printed in English,
whereas Spanish is his preferred language. It concluded that
these findings, together with the pressure to sign documents,
“sum to a moderate to high degree of oppression.”
Salazar represented that he was “provided documents at
the worksite” and, despite requesting more time to review the
documents, he was told that he had to complete the documents in
order to work. He argues that he was not provided documents in
Spanish, nor were the terms of the Agreement explained to him.
We agree with CN Motor that the trial court erred in partly
basing its finding of oppression on the fact that Salazar was not
given documents in his preferred language of Spanish. Salazar
failed to provide any evidence that at the time he applied for the
position and executed the Agreement, he informed CN Motor that
he had difficulty with English and wanted to review the
documents in Spanish. According to Salazar’s declaration, the
first time he informed his employer of his difficulty reading
English occurred after he had already signed the Agreement.
Cases which find procedural unconscionability based on a
lack of English skills involve a very low level of such skills. For
example in Subcontracting Concepts (CT), LLC v. De Melo (2019)
34 Cal.App.5th 201, respondent answered a job ad and went to a
warehouse where he was told he could be hired “ ‘on the spot’ ” if
he signed employment documents. (Id. at p. 206) “Respondent
needed a job and felt he had to sign the documents” even though
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his native language was Portuguese and he could not understand
the documents written in English. (Ibid.) “No one asked if he
wanted the documents translated into Portuguese and no one
explained the documents to him in detail in either English or
Portuguese.” (Ibid.) Similarly in Samaniego, the court found
procedural unconscionability where employees who spoke English
as a second language were required to sign an 11-page single-
spaced agreement written in English, which was “riddled with
complex legal terminology.” (Samaniego, supra, 205 Cal.App.4th
at p. 1142.) In Penilla, the trial court found procedural
unconscionability in a contract where managers knew signatories
“were not proficient in English, [and] the managers never
explained the arbitration provision in Spanish or provided a
Spanish-language copy of it.” (Penilla, supra, 3 Cal.App.5th at
p. 216.)
Here, Salazar signed the Agreement two weeks before
beginning work. Moreover, Salazar did not present evidence that
he asked that the Agreement be translated for him, that
management knew he was not completely fluent in English when
he signed it, or that he met with management or anyone at CN
Motor before signing the Agreement. In his declaration,
Salazar’s attested that the first time he informed his employer of
his difficulty reading English occurred after he had already
signed the Arbitration Agreement. We find the trial court erred
in finding oppression based on the presentation of the Agreement
for Salazar’s signature and the fact that the Agreement was in
English. Substantial evidence does not support the trial court’s
findings.
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4. Surprise
The trial court ruled that the “format of the Agreement
evidences a degree of surprise” because it is “printed in small,
densely spaced font, and contains legal jargon,” and the full name
of the “ ‘COMPANY’ ” does not appear anywhere in the
Agreement. However, the court acknowledged that while “some
paragraphs indeed appear as an opaque mass of fine print” the
fine print is “bookended by warnings printed in all capital letters”
both on the first page of the Agreement and on the second page
just before the signature block.
CN Motor argues that there is no element of surprise in the
Agreement because, as the trial court pointed out, warnings in
large capital letters are “plastered” at the beginning and end of
the Agreement. CN Motor also contends the “font is insufficient
to demonstrate surprise, especially when [Salazar] did not testify
that he was unable to read or understand the Arbitration
Agreement” based on that fact.
Salazar offers no arguments on this point other than to
argue that the Agreement as a whole is one of adhesion.
We find the trial court erred in finding a “degree” of
surprise. As the court itself pointed out, the warnings bookended
the text of the Agreement in all capital letters on the first page
and just before the signature block. (See Penilla, supra,
3 Cal.App.5th at p. 216.) The 11-point font was readable; the
format was neither jumbled nor dense.
Although we disagree that substantial evidence supports
the trial court’s findings of oppression and surprise, we do find
that the Agreement, as a whole, presents a low level of
procedural unconscionability based on its adhesive nature. (See
OTO, supra, 8 Cal.5th at p.187 [arbitration agreements imposed
20
as a condition of employment are typically adhesive]; Walnut
Producers of California v. Diamond Foods, Inc. (2010)
187 Cal.App.4th 634, 646 [“ ‘[A]bsent unusual circumstances, use
of a contract of adhesion establishes a minimal degree of
procedural unconscionability’ ”].)
Having determined that the arbitration agreement
presents a low degree of procedural unconscionability, we next
consider whether the Arbitration Agreement is substantively
unconscionable.
C. Substantive Unconscionability
We have found a low degree of procedural unconscionability
due to the adhesive nature of the Agreement. Only a high degree
of substantive unconscionability would render the Agreement
unenforceable. (Cook, supra, 102 Cal.App.5th at p. 321.)
Because an arbitration agreement contract’s substantive fairness
“must be considered in light of any procedural unconscionability,”
Salazar bears the burden to prove a higher degree of substantive
unconscionability. (Sanchez v. Valencia Holding Co., LLC (2015)
61 Cal.4th 899, 912; Armendariz, supra, 24 Cal.4th at p. 114.)
1. Terms in the Arbitration Agreement
The trial court ruled that certain terms and provisions in
the Agreement related to the scope, mutuality, and duration of
the Agreement are substantively unconscionable. Although we
disagree with the trial court’s findings on duration, we agree with
the trial court on overbreadth, scope and mutuality and find a
high degree of unconscionability.
First, Paragraph 4 of the Agreement requires the employee
to agree “to use individual binding arbitration to resolve all
disputes of any nature whether based on federal, state, or local
21
laws, and/or common law and/or equity, which arise out of or are
related in any way to [the employee’s] seeking employment with,
employment by, or any other relationship/interaction with the
Company and its Affiliates.” (Italics added.)
We agree with the trial court that the term “of any nature”
requires Salazar to arbitrate any and all future claims against
CN Motor, including those that are unrelated to his employment,
thus rendering it overbroad. (Cook, supra, 102 Cal.App.5th at
pp. 321–322.) Further, the terms “any other
relationship/interaction with Company and its Affiliates” is
equally overbroad and one-sided. The subsequent examples of
claims for battery, assault, and tort compound the overbreadth
because they are not necessarily related to his employment.
CN Motor argues the language of the Agreement mirrors
the language in Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064
(Little). Not so. Cook describes Little as addressing the
enforceability of an employment arbitration agreement which
was “expressly limited to claims arising from or related to
employment.” (Cook, supra, 102 Cal.App.5th at p. 324, italics
added.) In stark contrast, while there is language rendering
arbitrable claims arising out of Salazar’s employment, there are
no provisions expressly limiting the Agreement to such claims.
Here, by the plain language of Paragraph 4 of the Agreement,
Salazar is required to arbitrate all his claims, even those
unrelated to his employment with CN Motor, resulting in an
overbroad scope.
Second, we agree with the trial court that the inclusion of
the word “Affiliates” and the subsequent definition of the term
creates a mutuality problem between parties to the Arbitration
Agreement. In the Agreement, “Affiliates include the Company’s
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owners, directors, officers, managers, employees, agents,
partners, attorneys, sister-companies, subsidiaries, parent
companies, joint-ventures, alleged joint-employers, affiliated
persons/entities, independent contractors, and parties affiliated
with its employee benefit and health plans.” The court used
hypothetical examples to demonstrate the issue of mutuality and
found the Agreement could govern claims having nothing to do
with the employment relationship between signatories.
Third, the trial court found that the duration of the
Agreement was infinite, citing the following terms from
Paragraph 5 of the Agreement: “Our agreement for binding
arbitration is not revocable.” Here, that provision appears to
modify the sentence preceding it: “Once the agency’s proceedings
are finished, I must submit my claims to binding arbitration
pursuant to this Agreement.” The term “not revocable” is
included within a paragraph outlining the only limited exceptions
to binding arbitration, which are certain claims before the
National Labor Relations Board, medical claims, and claims
before other governmental agencies. We conclude the sentence
does not render the entire Agreement as to every non-agency
related claim infinite in duration.
In any event, any contract without a stated time-limit or
duration terminates after a reasonable time. (Reigelsperger v.
Siller (2007) 40 Cal.4th 574, 580.) The Agreement includes
neither an explicit term of duration nor an implicit provision
stating that the contract shall continue until specific grounds for
termination arise.
2. Initiation of Arbitration Procedure
The trial court found that the procedure for initiating
arbitration lacked mutuality, stating “[Paragraph 11] lacks
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mutuality to a degree. Whereas the employee ‘must’ give written
notice to [CN Motor’s] General Manager and Controller or
Business Manager, the same requirement is apparently optional
for [Salazar], who ‘may similarly commence claims . . . by giving a
letter’ to the employee.” The court reasoned the provision where
the employee “must” provide a letter under certain terms and
conditions, but where the Company “may” commence claims
through a letter creates non-mutuality.
CN Motor argues the terms are “non-mutual to an
extremely limited extent.” Appellant relies on the “ ‘modicum of
bilaterality’ ” as outlined in Armendariz. (Armendariz, supra,
24 Cal.4th at p. 116.)
Salazar argues the terms lack mutuality because “the
procedure is both mandatory and specific for the employee, but
apparently optional and non-specific for the employer.”
We find the terms are one-sided in favor of CN Motors,
without any justification. The language that the Company may
similarly commence claims against signee by giving a letter to
signee is confusing at best and evince a lack of mutuality.
While we disagree with the trial court as to issue of infinite
duration, we do agree that the Agreement is overbroad in scope
and lacks mutuality. Although there is only a minimal degree of
procedural unconscionability, we find the substantive
unconscionability high because the two issues—overbreadth and
lack of mutuality—are the essence of the harsh one-sided nature
of the Agreement. Specifically, these terms which subject to
arbitration claims that have nothing to do with the employer or
the employment relationship inferentially indicate that the
employer sought to use the adhesion contract not to simplify and
make more efficient potential employment-related litigation
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through arbitration, but to protect itself and its affiliates from
any type of damages claims, whether or not they arise from
Salazar’s employment, when it had the leverage to do so by way
of an adhesion contract. Such tinkering with the basis of who can
bring what claims against whom is indicative of an effort to
impose arbitration on the non-drafting party in an inferior forum
that worked to the drafting party’s advantage. (See Nelson v.
Dual Diagnosis Treatment Center, Inc. (2022) 77 Cal.App.5th
643, 666 [multiple defects indicate a purposeful attempt to
impose arbitration not because of its benefits, but because it
favors the drafting party].)
We find the Agreement sufficiently unconscionable that it
cannot be enforced in its present form.
D. Severability of Terms
Paragraph 12 of the Agreement is a severability provision:
“If any term or provision of this Agreement is declared void or
unenforceable, it shall be severed and the remainder of this
Agreement shall be enforceable.”
The trial court decided to forego severing the
unconscionable terms of the Agreement and instead decided not
to enforce the Agreement. The court explained that if the
“unconscionability [was] limited to the provision on initiating
arbitration, then the provision would be easily severed and
unconscionability cured,” but “the issues identified in Cook . . . go
to the core of the Agreement: the type of claims that must be
arbitrated, the parties who must arbitrate, and the duration the
agreement remains in effect.” The court further reasoned it
“would need to rewrite the Agreement to narrow the scope and
add symmetry to the parties bound.”
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CN Motor contends the court abused its discretion when it
refused to sever the offending terms and refused to follow the
express severance language in the Agreement. Salazar argues in
turn that even if the terms of the contract can be severed, the
court should consider restriction of the contract in the interests of
justice.
In determining whether to enforce an unconscionable
contract, the court should consider whether its central purpose is
tainted with illegality. (Ramirez, supra, 16 Cal.5th at p. 516.) If
it is, the unconscionability cannot be cured, and the court should
refuse to enforce the contract. Nevertheless, at this stage of the
analysis, “no bright-line rule requires a court to refuse
enforcement if a contract has more than one unconscionable
term.” (Ibid.) If the contract’s central purpose is not tainted with
illegality, the court should determine whether it can cure the
contract’s unconscionability by severing or restricting the
unconscionable terms. (Ibid.) If the court cannot cure the
unconscionability without augmenting or rewriting the contract’s
terms, it must “refuse to enforce the contract.” (Ibid.) “Courts
cannot ‘rewrite agreements and impose terms to which neither
party has agreed.’ ” (Ibid.)
We conclude the trial court’s refusal to sever
unconscionable provisions was in error. The court explained that
the issues with the unconscionable terms “go to the core of the
Agreement.” We agree. However, based on the record, the few
unconscionable provisions that are left appear entirely severable
from the remainder of the agreement and removing them would
eliminate the only instances of substantive unconscionability
while still keeping the contract intact. (See Little, supra,
29 Cal.4th at p. 1075 [Severance is appropriate where offending
26
provisions can be easily severed while the rest of the arbitration
agreement is left intact, and there is no need for contract
reformation].)
In our prefatory description of the terms of the Agreement,
we have italicized the problematic language to be severed and
added terms in block parentheses to clarify the remaining terms.
First, from Paragraph 4 we sever the terms “of any nature”; “or
any other relationship/interaction with”; and “Affiliates.”
Removing these terms reduces the scope of arbitration between
employer and employee only and leaves intact the provision
which denotes as arbitrable employer-related claims. Severance
of these terms ensures that the issues appropriate for arbitration
in this employment-generated contract do not unfairly extend
beyond the bounds of the immediate employment relationship
between CN Motor and Salazar. We also remove the examples of
what claims are encapsulated within the Agreement because the
current description of encapsulated claims does not require that
they arise from the employment relationship between Salazar
and CN Motor.
Next, we sever Paragraph 11 to remove the lack of
mutuality in how to initiate an arbitration under the Agreement.
Based on the record on appeal, the terms addressed above
appear entirely severable from the remainder of the agreement.
Striking them would remove substantive unconscionability
without the necessity of rewriting the contract. We enforce the
remainder of the Agreement to the extent that it applies to claims
arising from and connected to Salazar’s employment with CN
Motor. Any other claims between these parties or between
Salazar and third parties are now excluded from arbitration
under this contract.
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On a final note, we acknowledge that the trial court did not
address Salazar’s claim that the Agreement improperly includes
a class action waiver. On remand, the trial court is directed to
address that issue. In the meantime at this juncture, our opinion
orders arbitration of only Salazar’s individual claims under the
amended Agreement.
DISPOSITION
The trial court’s order denying CN Motor’s motion to
compel arbitration is reversed with directions to grant the motion
to compel arbitration of Salazar’s individual claims under the
Agreement without the terms and conditions we have ordered
severed. The trial court is also directed on remand to address
Salazar’s challenge to the class action waiver. No costs are
awarded.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, P. J.
I concur:
VIRAMONTES, J.
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WILEY, J., Concurring.
I join in the result.
WILEY, J.
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