Hernandez vs. Forman Automotive TO, LLC

1. Contract of Adhesion

Plaintiff contends that the agreement is a contract of adhesion because Defendant occupied a superior bargaining position; Plaintiff had no role in drafting the agreement and is less sophisticated; Plaintiff was not offered any opportunity to negotiate its terms and the agreement was a condition of employment; and Plaintiff was required to sign the agreement without the opportunity to review or ask questions. (Opp. at pp. 4-.)

Where an arbitration agreement is “imposed on employees as a condition of employment and there was no opportunity to negotiate,” there is “little dispute” that the arbitration agreement is “adhesive.” (Armendariz, supra, 24 Cal.4th at pp. 114-115; see also id. at p. 113 [defining “contract of adhesion” as “a standardized contract, which[is] imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it”].)

However, “the adhesive nature of a contract is one factor the courts may consider in determining the degree of procedural unconscionability.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84, fn. 4.) Moreover, the “adhesive aspect of an agreement is not dispositive,” as overall enforceability still depends on the “sliding scale” analysis of procedural and substantive unconscionability. (Serpa v. Cal. Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704; see also Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817 [contracts of adhesion are “an inevitable fact of life for all citizens”].)

Here, Plaintiff has shown a minimal degree of procedural unconscionability due to the adhesive nature of the agreement. Plaintiff claims that he was given the arbitration agreement by Defendant’s Service Director, Mike Carter and that he had no opportunity to ask questions or review the agreement. (ROA #34 [Flavio Decl.], ¶¶ 4-9.) However, the Court finds more credible the declaration and supplemental declaration of Defendant’s Human Resources Manager, Monica Silva (ROA #21, 44), along with the declaration of Carter (ROA #42).

Based upon these declarations, the Court finds that Carter did not provide Plaintiff with the arbitration agreement as part of the compensation meeting Carter had with Plaintiff on 9/11/2023, but that instead, Silva provided Plaintiff with the arbitration agreement as part of Plaintiff’s onboarding process on 9/13/2023. The Court also finds that Silva did not place time constraints upon Plaintiff’s review or completion of the onboarding paperwork, including the arbitration agreement, and that Silva provided him with the opportunity to ask questions, but Plaintiff did not request additional time or ask questions.

In any case, the Court also finds that the agreement was a contract of adhesion in that Defendant occupied a superior bargaining position; Plaintiff had no role in drafting the agreement and is less sophisticated; and Plaintiff was not offered any opportunity to negotiate its terms and the agreement was a condition of employment. However, this only demonstrates a minimal decree of procedural unconscionability.

2. Surprise

Unfair surprise occurs when “the allegedly unconscionable provision is hidden within a prolix printed form.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126, internal quotes omitted.)

In Plaintiff’s opposition brief, Plaintiff also contends that “the multiple corporate names increased procedural surprise.” (Opp. at p. 5.) Plaintiff’s brief contends that although the arbitration agreement identifies Plaintiff’s employer as “United Toyota,” emails from Silva came from a “United

Nissan Imperial” domain, and Plaintiff’s wage statements identify his employer as “Forman Automotive TO, LLC.” (Id.) Accordingly, Plaintiff’s opposition contends that “[t]he layering of multiple corporate names— without clarification in the Agreement itself—creates ambiguity that undermines meaningful assent.” (Id. at p. 6.)

However, the only evidence Plaintiff has offered in support of this argument is Plaintiff’s declaration, which, significantly, does not state that Plaintiff did not understand who his employer was or that the arbitration agreement governs his employment relationship with his employer. Instead, all the declaration states is:

• “I worked for Defendant from in or around December 2022 to in or around July 2025 in El Centro as a Service Advisor for the Nissan, Toyota and Kia dealerships.” (Flavio Decl., ¶ 3.) • “I received emails from Monica Silva from a ‘united Nissan imperial’ domain email address.” (Id. at ¶ 12.) • “My wage statements identified my employer as Forman Automotive TO, LLC.” (Id. at ¶ 13.)

These statements do not demonstrate Plaintiff experienced any “procedural surprise” contemporaneously with his execution of the arbitration agreement. Instead, it tends to show Plaintiff understands that Defendant operates multiple dealerships, including both United Toyota and United Nissan Imperial, and Plaintiff worked for all of them.

Therefore, Plaintiff’s “procedural surprise” argument also lacks merit.

3. Failure to Specify Arbitrator and, by Extension, Failure to Identify or Attach Rules Governing Arbitration

Finally, on procedural unconscionability, Plaintiff contends that he suffered oppression because the arbitration agreement “only provides that ‘the Company and I will need to select an arbitrator by mutual agreement’” and “fails to clearly identify which rules will govern” and “fails to provide the applicable arbitration rules.” (Opp. at pp. 6-7.)

This argument lacks merit. Plaintiff cites no authority to support his argument that an arbitration agreement is unconscionable because it provides for selection of an arbitrator by mutual agreement. If anything, such agreement is expressly permitted by law. (See, e.g., Code Civ. Proc. [CCP], §§ 1280, subd. (g) [defining “Neutral arbitration” to mean “an arbitrator who is (1) selected jointly by the parties . . .”], 1281.6 [“If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed.”)

Moreover, Plaintiff’s reliance on Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227 to support his position is misplaced. Carbajal did not hold that an arbitration agreement must specify in advance which arbitrator or

arbitration agency must be appointed and specify which rules of the agency apply or attach the rules to the agreement. Instead, Carbajal held that where “the arbitration provision required the parties to arbitrate their disputes under the American Arbitration Association’s (AAA) rules,” the agreement is procedurally unconscionable because “the provision did not identify which of AAA’s many different rules would apply, [the employer] failed to provide [the employee] with a copy of the rules it believed applied, and [the employer] required [the employee] to sign the agreement without telling her where she could find the governing rules or giving her an opportunity to determine which rules would apply.” (Id. at pp. 233-234, emphasis added.)

Similarly, Hasty v. American Automobile Assn. of Northern California, Nevada & Utah (2023) 98 Cal.App.5th 1041, 1048, 1060-1061 also does not help Plaintiff because it involved an arbitration agreement specifying which rules would apply (i.e., JAMS’s), but the agreement provided a hyperlink to the rules that did not appear to work. And OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126-127, cited by Plaintiff, does not address the issue of an agreement’s failure to attach rules governing the arbitration.

In any case, as the Carbajal court acknowledged, even in situations where the agreement specifies which arbitration agency will be used, “‘the failure to attach the AAA rules, standing alone, [was an] insufficient ground[] to support a finding of procedural unconscionability’ . . . .” (Carbajal, supra, 245 Cal.App.4th at pp. 245-246, quoting Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1472, italics & brackets original in Carbajal.)

In sum, the Court finds only a minimal degree of procedural unconscionability due to the adhesive nature of the agreement.

B. Substantive Unconscionability

“Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or onesided.” (Hayden v. Elegance at Dublin (2023) 97 Cal.App.5th 1280, 1287, internal quotes omitted.) “[T]he central idea [is] that unconscionability doctrine is concerned not with a simple old-fashioned bad bargain, but with terms that are unreasonably favorable to the more powerful party.” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910-911, internal quotes & citations omitted [also confirming that “overly harsh,” “unduly oppressive,” “so one-sided as to shock the conscience,” and “unfairly one sided” all point to this same “central idea”].)

Unconscionable terms include those that “contravene the public interest or public policy” or “terms . . . that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law.” (Id. at p. 911.)

“The paramount consideration in assessing conscionability is mutuality.” (Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 492, internal quotes, brackets, & ellipses omitted.) But “a contract can provide a margin of safety that provides the party with superior bargaining strength a type of extra protection for which it has a legitimate commercial need without being unconscionable.” (Sanchez, supra, 61 Cal.4th at p. 912, internal quotes omitted, quoting Armendariz, supra, 24 Cal.4th at p. 117.) “[W]here no

meaningful choice was exercised upon entering the contract, the test is whether the terms are so extreme as to appear unconscionable according to the mores and business practices of the time and place.” (Id., internal quotes omitted.)

1. Overbroad Scope

Citing Cook v. University of Southern California (2024) 102 Cal.App.5th 312, Plaintiff contends that the agreement is overbroad in scope because ¶ 3 of the agreement requires Plaintiff to arbitrate his non-employment claims against third parties. (Opp. at pp. 8-11.)

The instant agreement provides in ¶ 1 that Plaintiff and Defendant “agree to utilize binding individual arbitration to resolve all disputes that might arise out of or be related in any way to [Plaintiff’s] application for employment and/or employment by [Defendant].” Then, ¶ 3 of the agreement states:

My agreement to arbitrate claims against the Company includes claims I might bring against the Company’s parent, subsidiaries affiliates, customers, or client entities as well as against owners, directors, officers, managers, employees, agents, contractors, attorneys, benefit plan administrators, and insurers of the Company or of its parent, subsidiaries, affiliates, customers, or client entities. I also agree to arbitrate claims pursuant to the terms of this Agreement against any person or entity I allege to be a joint employer with the Company as well as claims brought against staffing companies, employee leasing companies, professional employer organization or payroll processing vendors that the Company has utilized.

In Cook, the court explicitly noted that “[t]he concern here is not that the arbitration agreement provides ancillary benefits to third parties. The concern is that the agreement provides benefits to broad swaths of third party beneficiaries only in favor of USC without any showing of justification for this one-sided treatment.” (Cook, supra, 102 Cal.App.5th at p. 327.) Specifically, the Cook court noted that that “[n]o explanation is offered as to why Cook should be required to give up the ability to ever bring claims in court against a USC employee that are unrelated to USC or her employment there.” (Id. at p. 327.)

Accordingly, Cook is inapplicable to arbitration agreements that are limited in scope to only employmentrelated disputes. (See Cocom v. ABM Aviation, Inc. (9th Cir. 2026) --- F.4th ----, 2026 WL 1793637, at *4 [“The [agreement[here is limited to employment-related disputes, making this case distinguishable from Cook . . . .”].)

Plaintiff tacitly acknowledges that ¶ 1’s limitation of the arbitration agreement to only employment-related claims differentiates the instant agreement from the one considered in Cook. (See Opp. at pp. 9-10.) Nevertheless, Plaintiff contends that ¶ 3 is not similarly limited to employment-related claims but instead provides that Plaintiff must arbitrate all claims—including non-employment-related claims—against the third parties. (Id. at pp. 9-11, distinguishing Ayala-Ventura v. Super. Ct. (2026) 119 Cal.App.5th 241.)

In reply, Defendant contends that “[a]t the outset,” ¶ 1 of the agreement states that it applies only to employment-related claims, and “Paragraph 3 does not erase that threshold limitation. Its reference to owners, affiliates, employees, customers, agents, insurers, and alleged joint employers identifies additional persons or entities against whom covered employmentrelated claims must be arbitrated. It does not transform the Agreement into a lifetime obligation to arbitrate disputes having no connection to Plaintiff’s application or employment.” (ROA #40 [Reply], p. 8.)

Defendant has the better argument in interpreting the limited reach of ¶ 3. In the first sentence, ¶ 3 begins with “[m]y agreement to arbitrate claims against the Company,” and those “claims” refer only to employment-related claims, as explained in ¶ 1. Then, the sentence continues by referencing “claims I might bring against [third parties].” Although neither mention of the generic word “claims” in this sentence explicitly states that the relevant claims are only employment-related claims, given that ¶ 3 begins by implicitly referencing the context provided by ¶ 1, the remainder of ¶ 3 should also be interpreted to apply only to claims related to Plaintiff’s employment with Defendant. (See Cocom, supra, 2026 WL 1793637, at *6 [using “context of other [agreement] provisions” to interpret agreement as applying only to employment-related claims, as “[u]nder California law, other provisions from a contract may be used to shed light on ambiguous language”]; E.M.M.I.

Inc. v. Zurich American Insurance Co. (2004) 32 Cal.4th 465, 475 [noting “the rule of contract interpretation that the same word used in an instrument is generally given the same meaning unless the policy indicates otherwise”].)

Interpreting ¶ 3 to apply to only employment-related claims also complies the California Supreme Court’s application of Civil Code section 1643 in construing arbitration agreements such that “[w]here a contract is susceptible to two interpretations, one which renders it valid and the other which renders it void, a court should select the interpretation that makes the contract valid.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 507, also cited by Ayala-Ventura, supra, 119 Cal.App.5th at p. 256.)

Although Civil Code section 1654 provides that “the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist,” which in this case would be Defendant as the drafter of the agreement, Civil Code section 1654 expressly states that its rule applies only “[i]n cases of uncertainty not removed by the preceding rules,” and section 1643 is a preceding rule. (Ayala-Ventura, supra, 119 Cal.App.5th at pp. 255-256.)

Accordingly, the Court finds that the agreement is not overbroad in scope because it does not provide for arbitration of Plaintiff’s non-employment claims against Defendant or the third parties listed in ¶ 3.

2. Lack of Mutuality

Plaintiff also contends that the agreement “[l]acks [m]utuality” because “[i]n the face of the extensive list of all disputes and a vast list of ‘covered entities[’] Defendant purports to bind Plaintiff, Defendant must only

arbitrate claims against the Plaintiff without binding any additional beneficiaries.” (Opp. at p. 11, emphasis original.)

Plaintiff devotes all of 10 lines of his opposition to this argument and fails to adequately develop this argument by citing the exact language of the agreement that Plaintiff contends makes the agreement lack mutuality. (Id.; see also Niko v. Foreman (2006) 144 Cal.App.4th 344, 368 [rejecting party’s arguments made “without supporting legal or factual analysis,” and noting that it is not the court’s function to “act as counsel for [a party] and furnish a legal argument” for that party]; Craddock v. Kmart Corp. (2001) 89 Cal.App.4th 1300, 1307 [refusing to consider argument “so poorly articulated” where party does not develop stated proposition].)

In any case, even if the agreement does contain some lack of mutuality as to arbitration of the third parties’ claims against Plaintiff relating to Plaintiff’s employment with Defendant, “Cook explicitly acknowledged that an arbitration agreement ‘cannot be unconscionable simply because it provides benefits to third parties.’” (Cocom, supra, 2026 WL 1793637, at *7, quoting Cook, supra, 102 Cal.App.5th at p. 348.) Moreover, as the Cocom court explained:

the lack of mutuality Cook found substantively unconscionable was predicated on the court’s conclusion that the agreement applied to all claims, regardless of whether they were related to Cook’s employment. Unlike the claims Cook found to be covered by the agreement, employment-related claims have an inherent asymmetry: an employee is far more likely to sue the employer and third parties– –often many at a time, as Cocom has done here—rather than the other way around.

Ayala-Ventura is once again instructive. The court there distinguished Cook’s mutuality analysis, finding the inclusion of third parties not substantively unconscionable because the agreement at issue limited third parties’ ability to invoke the arbitration agreement “to claims against [the employer’s] employees or agents in their capacity as such,” meaning that “[a]ny claims Ayala-Ventura may have [had] against employees or agents unrelated to their role” were not covered by the agreement. The [agreement here] does not explicitly include the same express limitation, but the fact that the [agreement] is limited to employment-related claims achieves a similar result.

Just as in Ayala-Ventura, claims Cocom may have against third parties “unrelated to their role” in ABM would not be covered by the MAA. Id. Because of the [agreement’s] more limited scope, the lack-of-mutuality analysis here is much more similar to Ayala-Ventura than to Cook, and any lack of mutuality does not rise to the level of substantive unconscionability.

(Cocom, supra, 2026 WL 1793637, at *7.)

3. Class and PAGA Waivers

Plaintiff also contends that the agreement’s class and PAGA waivers are substantively unconscionable because, even though “[w]hen viewed in isolation, [the waivers] may track post-Adolph practice[,] . . . when considered in combination with the Agreement’s sweeping scope, indefinite duration, and expansive coverage of affiliated entities, the class and representative waivers operate to significantly restrict the practical vindication of Labor Code rights.” (Opp. at p. 12.) In short, Plaintiff does not contend that the agreement’s class and PAGA waivers are illegal or unconscionable in and of itself, but rather, “the cumulative effect of compelling individual arbitration while foreclosing collective enforcement mechanisms contributes to the Agreement’s one-sided and employerfavoring design.” (Id.)

This argument lacks merit. As discussed above, the Agreement’s scope is not overbroad in that it covers only employment-related claims. Plaintiff also made no arguments about indefinite duration, and in any case, given that agreement applies only to claims related to Plaintiff’s employment, the default rule—that “arbitration agreements that do not specify a term of duration are terminable at will after a reasonable time has elapsed”—applies here, so the agreement is not of indefinite duration. (Reigelsperger v. Siller (2007) 40 Cal. 4th 574, 580.) Also as discussed above, Plaintiff also failed to adequately explain or develop his argument on lack of mutuality, and in any case, any purported lack of mutuality does not rise to the level of substantive unconscionability given the agreement’s limited coverage of only employment-related claims.

In short, the Court finds that the agreement has only a minimal degree of procedural unconscionability and no substantive unconscionability. Therefore, the agreement is enforceable.

Accordingly, Plaintiff is ORDERED to arbitrate his individual claims against Defendant, including Plaintiff’s individual PAGA claim against Defendant.

C. Plaintiff’s Class Claims and Stay of Instant Action Pending Arbitration

Although Defendant’s motion notes that the first 9 of Plaintiff’s 10 causes of action against Defendant are brought on a class action basis, Defendant’s motion requests that the Court “order arbitration of Plaintiff’s individual claims, including his individual PAGA claim) and stay all proceedings in connection with the remaining PAGA claims pursuant to C.C.P. § 1281.4 and the language of the agreement itself.” (Mot. at p. 4; see also id. at p. 2.) Defendant’ request for relief does not address Plaintiff’s class claims.

Here, the agreement includes a class waiver in ¶ 1, providing that Plaintiff “expressly waive[s] the right to bring a class, collective, or non-individual claim seeking any relief on behalf of others, unless such waiver is prohibited by controlling law.” (See also Agreement, ¶ 4 [“I agree to waive any

substantive or procedural rights that I may have to bring or participate in an action brought on a class or collective basis”].)

Courts routinely dismiss class claims while ruling on a motion to compel arbitration when the arbitration agreement contains an enforceable class waiver. (See, e.g., Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 361, 366; see also Kinecta Alternative Financial Solutions, Inc. v. Super. Ct. (2012) 205 Cal.App.4th 506, 510-511, 518-519 [dismissing class claims when an arbitration agreement governed by the FAA does not authorize class arbitration of disputes and the court orders arbitration of a plaintiff’s individual claims].)

Therefore, Plaintiff’s class claims against Defendant are hereby DISMISSED.

This action is STAYED until the arbitration is had pursuant to Code of Civil Procedure section 1281.4.

An ADR review hearing is scheduled for March 4, 2027 at 9:30AM in Department CX102. The parties shall submit a joint status report 10 days in advance of the hearing.

Defendant shall give notice of this ruling. 112 Medicredit Wage and 1. Motion to Certify Class Certification (ROA 464) Hour Cases 2. Motion to Deny Class Certification (ROA 457) 3. Trial Setting Conference JCCP 5269 The Court has reviewed Plaintiff’s amended revised proposed class notice (ROA #633 at Exh. A) submitted in response to the Court’s 5/21/2026 minute order. The Court notes that the amended revised notice incorporates Defendants’ edits. (Id. at p. 3.)

The Court CONTINUES the parties’ cross-motions on class certification to July, 23 2026 at 2:00 p.m. in Department CX102 and ORDERS Plaintiff to submit a further revised proposed class notice that addresses the deficiencies below.

To recap, at the last hearing on 5/21/2026, the Court ordered Plaintiff to submit a revised proposed class notice that “clearly and adequately explains to class members (1) the substance of the “inclusive dates” wage statement claim as to which class certification is being granted; (2) all the remedies available under Labor Code section 226(e)(1); (3) the limited recovery sought in this case; and (4) the resulting forfeiture of the right to seek greater actual damages if the class member does not opt out.” (ROA #603.)

Plaintiff’s amended revised class notice (ROA #633, Exh. A) does not adequately address these points.

1. As to “the substance of the ‘inclusive dates’ wage statement claim as to which class certification [has been] granted”: