Cook v. Adventist Health Physician Network

Ortho Diagnostic Sys., Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.) When evaluating whether a party is bound by an arbitration agreement, federal courts “ ‘apply ordinary state-law principles that govern the formation of contracts’ to decide whether an agreement to arbitrate exists.” (Norcia v. Samsung Telecomms. Am., LLC (9th Cir. 2017) 845 F.3d 1279, 1283 (quoting First Options of Chi., Inc. v. Kaplan (1995) 514 U.S. 938, 944). Accordingly, an arbitration agreement may be unenforceable if “generally applicable contract

defenses, such as fraud, duress, or unconscionability” apply. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339, citation omitted.) The California Arbitration Act (the CAA) also embodies a public policy in favor of enforcing valid agreements to arbitrate disputes. Under California Code of Civil Procedure section 1281.2, “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement. (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Cal.

Code Civ. Proc., § 1281.2, paragraph breaks omitted.) “California courts traditionally have maintained a strong preference for arbitration as a speedy and inexpensive method of dispute resolution. To this end, ‘arbitration agreements should be liberally construed’, with ‘doubts concerning the scope of arbitrable issues [being] resolved in favor of arbitration [citations].’” (Market Ins. Corp. v. Integrity Ins. Co. (1987) 188 Cal. App. 3d 1095, 1098, internal citations omitted.) “This strong policy has resulted in the general rule that arbitration should be upheld ‘unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute. [Citation.]’ [Citations.] [¶] It seems clear that the burden must fall upon the party opposing arbitration to demonstrate that an arbitration clause cannot be interpreted to require arbitration of the dispute.’” (Bono v.

David (2007) 147 Cal.App.4th 1055, 1062.) However, “[a]s our Supreme Court stressed several decades ago, the contractual terms themselves must be carefully examined before the parties to the contract can be ordered to arbitration: ‘Although “[t]he law favors contracts for arbitration of disputes between parties” [citation], “ ‘there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate....’” [Citations.] In determining the scope of an arbitration clause, “[t]he court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made [citation].” [Citation.]’ [¶] Following on from this, and as other courts of appeal have regularly observed, the terms of the specific arbitration clause under consideration must reasonably cover the dispute as to which arbitration is requested.

This is so because ‘[t]here is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.’” (Id. at p. 1063.) “[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.

If the party opposing the petition raises a defense to enforcement - either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see § 1281.2, subds. (a), (b)) - that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.” (Rosenthal v. Great Western Fin. Securities 4

Corp. (1996)14 Cal. 4th 394, 413.) Thus, in ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534.) In the present case, defendant has met its burden of presenting evidence showing that plaintiff entered into an agreement to arbitrate his claims against defendant.

Defendant presents a copy of the Professional Services Agreement (PSA) signed by plaintiff. (Tomono decl., ¶ 9, and Exhibit A thereto.)1 Plaintiff signed the PSA on July 26, 2016. (Ibid.) The agreement includes an arbitration clause, which provides that the parties will resolve “any dispute, controversy, claim or disagreement arising out of or related to this Agreement or the acts or omissions of the Parties with respect to this Agreement” through binding arbitration. (PSA, pp. 24-27, ¶ 8.9.) Thus, defendant has met its burden of showing that there was an agreement between the parties to arbitrate any disputes between them arising out of or related to their agreement.

Plaintiff has argued that the agreement only covers matters related to his provision of medical services and not other disputes, such as his claim that he was retaliated against and constructively terminated for complaining about toxic mold in the facility. However, the agreement’s language is broad, as it encompasses “any dispute, controversy, claim or disagreement arising out of or related to this Agreement or the acts or omissions of the Parties with respect to this Agreement.” The plaintiff’s claims here clearly relate to or arise out of his contractual relationship with defendant, as he alleges that defendant retaliated against him and forced him to quit working at its facility after he complained about mold in the building.

Therefore, the court intends to find that defendant has met its burden of showing that there was an agreement between the parties to arbitrate the claims that plaintiff has now brought in his complaint. As a result, the burden shifts to plaintiff to show that the agreement should not be enforced. Plaintiff argues that the agreement is procedurally and substantively unconscionable, and therefore the court should refuse to enforce it. “Unconscionability has both procedural and substantive elements.

Although both must appear for a court to invalidate a contract or one of its individual terms, they need not be present in the same degree: ‘[T]he 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.’ (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469, citations omitted.) “Procedural unconscionability focuses on the elements of oppression and surprise. ‘Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice....

Surprise involves the extent to which the terms of the bargain are hidden in a “prolix printed form” drafted by a party in a superior bargaining position.’” (Ibid, citations and some quotes marks omitted.) “Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘“overly harsh” or “one-sided” results’, that is, whether

1 Plaintiff has objected to Cecelia Tomono’s declaration. However, the court will overrule the objections. 5

contractual provisions reallocate risks in an objectively unreasonable or unexpected manner.’” (Id. at pp. 1469–1470, citations and some quote marks omitted.) With regard to procedural unconscionability, plaintiff claims that the contract was presented to him on a take-it-or-leave-it basis, and that he had no meaningful opportunity to negotiate the terms of the agreement, which were on a pre-printed form drafted by the defendant. He also claims that he felt that he had no choice but to enter into the agreement, as he had already been working for defendant for eight years and he needed to sign the agreement in order keep working at the facility.

He also points out that the JAMS rules were not attached to the agreement, which further shows that it was procedurally unconscionable. It does appear that the agreement was at least somewhat procedurally unconscionable, since it was on a pre-printed form contract prepared by the defendant. The agreement also did not provide a copy of the JAMS rules that were to govern any arbitration, which supports a finding of procedural unconscionability. (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796-797.)

However, the fact that an arbitration agreement is presented to a party on a take-it-or-leave-it basis in a preprinted form only creates a low degree of procedural unconscionability, and the agreement is still enforceable absent evidence of a high degree of substantive unconscionability. (Ibid.) Here, plaintiff has not presented any admissible evidence showing that he was presented the arbitration agreement on a take-it-or-leave-it basis, or that he was not given an opportunity to read and negotiate its terms.

His attorney has claimed in her declaration that plaintiff was not allowed to negotiate about the terms of the agreement, but her declaration lacks personal knowledge, foundation, and seems to be based on nothing more than hearsay. Defendant has objected to her declaration, and the court intends to sustain the objections. Plaintiff himself never states that he was not allowed to read or negotiate the terms of the contract, or that he was pressured into signing the agreement because it was provided on a take-it-or-leave-it basis and he felt that he had no choice but to sign the agreement in order to work at defendant’s facility.

Also, plaintiff is a sophisticated person, as he is a board-certified general surgeon with many years of experience. (Cook decl., ¶¶ 2, 3.) He could presumably have worked at other medical facilities if he was not interested in agreeing to defendant’s terms. He is also clearly highly educated and capable of reading and understanding the terms of the PSA, including the arbitration clause. He could also have retained an attorney to review the agreement if he had any questions about its terms. Therefore, his situation is different from the circumstances of many employees, who may feel more pressure to sign an employment agreement without necessarily reading and understanding all of its terms.

As a result, the court finds that plaintiff has only shown that the PSA was minimally procedurally unconscionable. Next, with regard to the issue of substantive unconscionability, plaintiff argues that the agreement is unfairly harsh and one-sided because it provides for only two depositions and one set of forty interrogatories, it provides that each party will bear its own fees and costs, including arbitrator’s fees, and it does not provide for injunctive or equitable relief except in very limited situations that do not apply to his claims.

He contends that the agreement does not meet the requirements for an enforceable

employment arbitration agreement under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. In Armendariz, the California Supreme Court held that, in order to be enforceable, an employment arbitration agreement must provide for (1) a neutral arbitrator, (2) more than minimal discovery, (3) a written award, (4) all types of relief that would otherwise be available in court, and (5) not require the employee to pay unreasonable costs or arbitration fees. (Armendariz, supra, at p. 102.)

Here, the agreement provides for the selection of a neutral arbitrator from a JAMS panel of arbitrators. (Tomono decl., Exhibit A, p. 25, ¶ 8.9(b)(iii).) It also provides for discovery, although each party is limited to two depositions and forty written interrogatories. (Id. at p. 26, ¶ 8.9(b)(iv).) The agreement provides for a written arbitrator’s award. (Id. at p. 26, ¶ 8.9(b)(v).) The agreement also states that the parties will pay the costs and expenses of arbitration equally. (Id. at p. 26, ¶ 8.9(b)(vii).)

Each party must also pay their own attorney’s fees and costs, unless the arbitrator finds that the claims or positions of the non-prevailing party are frivolous and without reasonable foundation, in which case the arbitrator shall order that party to pay the prevailing party’s fees and costs. (Id. at p. 26, ¶ 8.9(b)(viii).) The agreement also provides that the parties waive the right to seek injunctive or similar equitable relief, with certain exceptions not applicable to plaintiff’s claims. (Id. at p. 26, ¶ 8.9(c).)

Thus, the agreement only provides for some of the protections under Armendariz. It substantially limits the parties’ rights to discovery, as it only allows each party two depositions and forty interrogatories. There is no provision allowing plaintiff to serve requests for production of documents or expert discovery. Given plaintiff’s claims are based on the alleged presence of mold at the defendant’s facility and the potential for physical harm from the mold, plaintiff will likely need to serve document requests and engage an expert to determine if mold was present, whether it was adequately remediated, and whether it caused any harm to him or others at the facility.

Limiting plaintiff to only two depositions and forty written interrogatories is likely to prejudice his ability to prosecute his case. By contrast, defendant already presumably has most of the documents and witnesses it needs to defend itself, so the limit on discovery is not likely to harm its defense. The agreement also substantially limits plaintiff’s remedies by eliminating any possibility that he could obtain any injunctive relief, reinstatement in his former position, or attorney’s fees if he prevails on his claims.

For example, plaintiff would have the right to recover attorney’s fees and costs for prevailing on his Labor Code section 1102.5 claim if he is allowed to bring his case in court, but under the agreement he would only be able to obtain his fees and costs in arbitration if the arbitrator found that defendant’s position was frivolous or without reasonable basis. Thus, the agreement imposes significant limits on plaintiff’s right to recover if he prevails on his claims. The agreement also imposes substantial costs on plaintiff that he would not have to incur if he were allowed to bring the case in court, as it requires him to pay half of any arbitration fees and costs.

Such costs are typically much higher than the filing fees and costs for bringing an action in court. Where an arbitration agreement forces an employee to pay arbitration costs in excess of the costs to bring a court case, the agreement may be unconscionable. (Armendariz, supra, at pp. 110-111.)

Thus, since the agreement fails to provide for several of the protections required under Armendariz, the court intends to find that it is substantively unconscionable. Furthermore, the court will not sever the offending provisions, as the agreement fails to provide for at least three separate protections under Armendariz. In effect, the agreement is so permeated with unconscionability that the court would have to re-write the agreement in order to eliminate the unconscionable provisions.2 As a result, the court intends to find that the entire agreement is unconscionable and unenforceable, and it will deny defendant’s motion to compel plaintiff to attend arbitration. The court will also deny defendant’s motion to stay the pending court action.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling

Issued By: JS on 6/25/2026. (Judge’s initials) (Date)

2 Defendant has argued that Armendariz does not apply to plaintiff because he is a sophisticated

independent contractor rather than an employee, and thus he does not require the type of protections provided for in Armendariz. However, at least one Court of Appeal has held that the fact that plaintiffs were independent contractors rather than employees does not make a difference, and that Armendariz’s protections still applied to their claims. (Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242, 1249.) This court agrees that the fact that Dr. Cook is an educated and sophisticated party does not necessarily mean that he is not entitled to the protections under Armendariz.

Defendant is a large and sophisticated corporation that had superior bargaining power. It drafted the arbitration agreement with several terms that are likely give it an unfair advantage in arbitration, including limited discovery, limited remedies, lack of ability to recover attorney’s fees, and imposition of arbitration costs on both parties rather than on defendant alone. Thus, the court intends to find that Armendariz applies to plaintiff, regardless of his status as an independent contractor rather than an employee. 8