Mann v. Aptive Environmental, Inc.

transaction involved interstate commerce. (Woolls v. Sup. Ct. (Turner)(2005) 127 Cal.App.4th 197, 211-214.)

Defendant produced some evidence of interstate commerce. (Declaration of Alex J. Johnson, ¶ 1.) Plaintiff neither disputes nor confirms whether the FAA applies. But whether the FAA applies is not really at issue because Defendant does not contend that any state law is preempted by the FAA. In fact, Defendant also cites to the California Arbitration Act in support of the motion. (Motion, p. 10.)

The enforcement language of the FAA is almost identical to Code of Civil Procedure section 1281. Just like a motion to compel arbitration under the California Arbitration Act, Code of Civ. Proc. § 1280 et. seq., a motion to compel arbitration under the FAA requires a finding that an agreement exists for arbitration between the parties and the agreement covers the dispute. (AT&T Technologies, Inc. v. Communications Workers of America (1986) 475 U.S. 643, 648-49.) State law applicable to contracts generally governs whether a valid agreement to arbitrate exists. (Perry v.

Thomas (1987) 482 U.S. 483, 492, fn. 9; Stutler v. T.K. Contractors, Inc. (6th Cir. 2006) 448 F.3d 343, 347; Metters v. Ralphs Grocery Store Co. (2008) 161 Cal.App.4th 696, 701 (“federal policy in favor of arbitration does not come into play . . . until a court has found the parties entered into a valid contract under state law.”).)

Thus, whether the FAA applies or not, the question is whether there is a valid, enforceable arbitration agreement and whether grounds exist for its revocation under California law.

Defendant met its initial burden showing the existence of an arbitration agreement between the parties that covers the claims in this action (“Arbitration Agreement”). (Declaration of Alex J. Johnson (“Johnson Decl.”) ¶¶ 15-17, Exs. A, B, C.) Plaintiff does not dispute he signed the Arbitration Agreement or that the agreement covers his claims; rather, he contends the agreement is unconscionable.

Civil Code section 1670.5 provides that where the court determines, as a matter of law, that a contract or any provision in the contract is unconscionable at the time it was made, the court may refuse to enforce the contract or clause or may limit the application of the clause to avoid an unconscionable result. The unconscionability doctrine 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.” (Armendariz v.

Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 [citations and internal quotation marks omitted].) “Both procedural and substantive unconscionability must be present before a contract term will be deemed unconscionable. Both, however, need not be present at the same degree. A sliding scale is applied so that 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.” (Serafin v.

Balco Properties, Ltd., LLC

(2015) 235 Cal.App.4th 165, 178 [internal quotes and citations omitted].)

Procedural Unconscionability. “Arbitration contracts imposed as a condition of employment are typically adhesive.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.) “When arbitration is a condition of employment, there is inherently economic pressure on the employee to accept arbitration. This alone is a fairly low level of procedural unconscionability.” (Cisneros Alvarez v. Altamed Health Services Corp. (2021) 60 Cal.App.5th 572, 591.) The question is “whether the circumstances of the contract’s formation created such oppression or surprise that closer scrutiny of its overall fairness is required.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.)

Here, Plaintiff merely states in a conclusory fashion that the “Arbitration Agreement is a contract of adhesion and is therefore, procedurally unconscionable . . ..” (Opposition, p. 4: 14.) However, Plaintiff failed to produce any evidence of procedural unconscionability, including circumstances showing oppression or surprise.

Substantive Unconscionability. Given minimal procedural unconscionability – if any, Plaintiff must demonstrate significant substantive unconscionability. Substantive unconscionability focuses on the terms of the agreement and whether those terms are “overly harsh or one-sided.” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910-911.) In assessing substantive unconscionability, the “paramount consideration” is mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1287.)

Here, Defendant does not dispute the Arbitration Agreement contains unconscionable terms, including the Utah forum selection clause, Utah choice-of-law provision and the attorneys’ fee provision, but contends these terms can and should be severed. Plaintiff contends the arbitration agreement is permeated with unconscionability.

To assess whether unconscionable terms may be severed, a court considers whether the unconscionable provision is “central” or “collateral” to the purpose of the contract. “The overarching inquiry is whether the interests of justice would be furthered by severance.” (Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at 123-124.) Arbitration agreements “permeated” by unconscionability are unenforceable. (Id. at 122.) Severance is not appropriate where the agreement is completely one-sided, compelling the employee, but not the employer, to arbitrate all claims. (O’Hare v.

Municipal Resource Consultants (2003) 107 Cal.App.4th 267, 279.) In general, “courts may liberally sever any unconscionable portion of a contract and enforce the rest when: the illegality is collateral to the contract’s main purpose; it is possible to cure the illegality by means of severance; and enforcing the balance of the contract would be in the interests of justice.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 516-517.)

Here, while the Arbitration Agreement does not provide a specific Utah forum selection clause or Utah choice-of-law provision and instead references Utah and Utah law throughout the agreement, it cannot be said the Arbitration Agreement is “permeated” by unconscionability. It is clear the references to the Utah forum and Utah law, and the prevailing attorney fee provision are collateral to the central purpose of the arbitration agreement, i.e., the bilateral arbitration of employment disputes. Under its express terms, both Plaintiff and Defendant are equally bound by the arbitration agreement. (Johnson Decl., Ex.

A at p. 21 ¶ 10.1 and 10.2.) The Court does not find a systematic effort to impose overly harsh terms on the employee or Plaintiff. Absent the disputed provisions, it cannot be said the Agreement would be onesided, limited or otherwise unfair. In addition, the terms can be stricken without any need to rewrite or augment the Agreement. The interests of justice would be furthered by severance because it would enforce the mutuality of the obligation to arbitrate.

The Court therefore strikes all references to a Utah forum and Utah law, as well as paragraphs 11.1 and 11.5 of the arbitration agreement as set forth in Exhibit D of the Johnson Declaration, and GRANTS the motion to compel arbitration.

Counsel for Defendant shall provide notice of this ruling.

4. Uptown Newport Jamboree, LLC v. Newport Fab, LLC 18-973247 Before the court is a motion by Uptown Newport Jamboree, LLC (“Uptown”) for an order allowing it to file the following documents under seal: Motion for Summary Judgment (ROA 1076), Declaration of William A. Shopoff (ROA 1077) and Separate Statement of Undisputed Material Facts (ROA 1072). The motion is DENIED, as set forth herein.

A party requesting a court record be filed under seal “must file a motion or an application for an order sealing the record.” Cal. R. Ct. 2.551(b)(1). “The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing.” Id.

The California Supreme Court has held that the First Amendment provides “a right of access to ordinary civil trial and proceedings.” (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1212.) The court further noted its belief that “the public has an interest, in all civil cases, in observing and assessing the performance of its public judicial system.” (Id. at 1210.) There is a presumption of openness in civil court proceedings. (Id. at 1217.) Therefore, it is up to this Court to determine if that presumption has been overcome. Courts must find compelling reasons, prejudice absent sealing and the lack of less-restrictive means, before ordering filed documents sealed. (Hurvitz v. Hoefflin (2000) 84 Cal.App.4th 1232, 1246; KNBC-TV, 20 Cal.4th at 1208-1209 n. 25; Champion v. Superior Court (1988) 201 Cal.App.3d 777, 787.)

To grant a motion to seal, the court must expressly find that: (1) an overriding interest exists that overcomes the right of public access to the record; (2) the overriding interest supports sealing the records; (3)