Eric Gonzalez et al vs Super Micro Computer, Inc.

Super Micro moves to compel arbitration of the individual component of Plaintiffs’ PAGA claims and to stay the representative component. (Memorandum, pp. 1–2.) The motion rests on a written arbitration agreement that each Plaintiff signed by DocuSign on March 14, 2023. (Id. at pp. 2–3.)

Plaintiffs oppose, contending that the agreement is an unlawful wholesale PAGA waiver, that it is unconscionable, and that the representative claims should not be stayed. (Opposition, pp. 2–12.)

II.

Legal Standard

In determining the threshold question of whether an arbitration agreement exists between the parties, a court employs a three-step burden-shifting analysis. (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755; see also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060; see also Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.)

The party seeking to compel arbitration bears the initial burden of showing an agreement to arbitrate. If that burden is met, the burden shifts to the opposing party to show a factual dispute regarding the agreement’s existence. If the opposing party does so, then the burden shifts back to the proponent of arbitration to show the existence of a valid agreement by a preponderance of the evidence. (Iyere, supra, 87 Cal.App.5th at p. 755.)

III. Existence of Agreement to Arbitrate

Defendant bears the initial burden of showing an agreement to arbitrate, and it meets that burden. Defendant submits each Plaintiff’s signed Arbitration of Disputes Program and Agreement (the “Agreement”). It authenticates the electronic signatures through DocuSign Certificates of Completion, each Plaintiff’s unique company email address, and distinct IP addresses. (Memorandum, pp. 2–3; Chan-Zien Decl., ¶¶ 7-19, Ex. A–B.)

The burden does not shift back to Defendant. Neither Plaintiff denies signing the Agreement. (Gonzalez Decl., ¶ 7; Downey Decl., ¶ 5.) They dispute the circumstances of signing, but not the fact of execution. (Opposition, pp. 1–2.)

The Court finds that a valid agreement to arbitrate exists. Each Plaintiff assented by electronic signature and by continuing employment for 30 days after receipt. The Agreement is governed by the Federal Arbitration Act, both by its express terms and because Super Micro’s operations involve interstate commerce. (Memorandum, pp. 6–8.)

V. Class and Representative Action Waiver

The Agreement requires arbitration of covered disputes on an individual basis. It waives the right to bring group, class, or collective actions. (Memorandum, pp. 4–5.) It further provides that any group, class, or collective claim that cannot lawfully be waived must be litigated in a court of competent jurisdiction, and that no such claim proceeds in arbitration unless all parties agree. (Chan-Zien Decl., ¶ 22.)

The Agreement does not mention PAGA. It is well-settled that the Federal Arbitration Act permits a court to compel arbitration of a plaintiff’s individual PAGA claim. (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662.) A pre-dispute agreement to waive representative PAGA claims remains unenforceable as against public policy. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1117.)

A PAGA action has two components: (1) the individual component that seeks penalties for Labor Code violations the plaintiff personally suffered; and (2) the non-individual component that seeks penalties for violations suffered by other employees. (Id. at pp. 1113– 1114.) Where the agreement so provides, the individual component may be compelled to arbitration while the non-individual component remains in court. (Ibid.)

Plaintiffs argue that the Agreement is a wholesale PAGA waiver with no mechanism to sever the individual component. (Opposition, pp. 2–6.) The Court is not persuaded. The Agreement does not force representative PAGA claims into arbitration, but instead preserves them for court. (Chan-Zien Decl., ¶ 22.) It separately requires arbitration of covered disputes relating to compensation on an individual basis. The individual component of Plaintiffs’ PAGA claims is such a dispute. This is the structure that Viking River endorsed.

This case is unlike those in which the agreement excluded PAGA claims altogether or supplied no route to arbitrate the individual component. (See Ford v. The Silver F, Inc. (2025) 110 Cal.App.5th 553, 564; DeMarinis v. Heritage Bank of Commerce (2023) 98 Cal.App.5th 776, 787.) The Agreement here affirmatively commands individual arbitration and does not exclude PAGA. To the extent the Agreement is ambiguous as applied to a PAGA-only action, the presumption in favor of arbitration resolves the doubt. (Reply, pp. 2-3.) The Court finds the individual component of Plaintiffs’ PAGA claims arbitrable.

V. Unconscionability

Plaintiffs argue the Agreement is unenforceable on unconscionability grounds. (Opposition, pp. 6–10.) Defendant argues that Plaintiffs failed to establish either procedural or substantive unconscionability. (Reply, pp. 3–9.)

A showing that an arbitration agreement is unconscionable can bar its enforcement. (Diaz v. Sohnen Enterprises (2019) 34 Cal.App.5th 126, 132 (Diaz).) “The doctrine has both a procedural and substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results. Both elements must be present for a court to refuse enforcement.” (Ibid., internal quotation marks and citations omitted.)

The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO), internal citation omitted.)

A. Procedural Unconscionability

The issue of procedural unconscionability concerns the making of the agreement and any “oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Courts have considered employment contracts provided on a “take-it-or-leave-it” basis to be procedurally unconscionable to some extent. (See Farrar v. Direct Commerce, Inc. (2017) 9 Cal.App.5th 1257, 1266.)

Plaintiffs argue there is procedural unconscionability because the Agreement was presented as a condition of employment, on a take-it-or-leave-it basis, weeks or months after they began work, with no opportunity to negotiate, to take the document home, or to ask questions. (Opposition, p. 7; Gonzalez Decl., ¶¶ 7–9; Downey Decl., ¶¶ 5–7.)

The Court finds a low degree of procedural unconscionability. The Agreement is a contract of adhesion imposed as a condition of employment, and it is therefore procedurally unconscionable to some extent. (Farrar, supra, 9 Cal.App.5th at p. 1266.) Adhesion alone, however, does not render an agreement unenforceable. (Reply, pp. 3–4; Lane v. Francis Capital Mgmt., LLC (2014) 224 Cal.App.4th 676, 689 [“assuming the agreement was one of adhesion, courts have consistently held that that fact alone is insufficient to invalidate an arbitration agreement”].)

The element of surprise is weak. The Agreement is a stand-alone, seven-page document with a clear heading and a bold, enlarged disclosure of the arbitration commitment. Each Plaintiff acknowledged the opportunity to read the Agreement and to ask questions of Human Resources. (Chan-Zien Decl., ¶¶ 8, 21.) The degree of procedural unconscionability is low.

B. Substantive Unconscionability

“Substantive unconscionability looks beyond the circumstances of contract formation and considers the fairness of an agreement’s actual terms focusing on whether the contract will create unfair or one-sided results. Substantively unconscionable contractual clauses reallocate risks in an objectively unreasonable or unexpected manner.” (Ramirez, supra, 16 Cal.5th at p. 493, internal punctuation and citations omitted; see also Vo v. Technology Credit Union (2025) 108 Cal.App.5th 632, 641.)

The test is whether the terms impair the integrity of the bargaining process or otherwise contravene public policy, or the terms “attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law” or “negate the reasonable expectations of the nondrafting party.” (Sonic-Calabasas A., Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145.)

Plaintiffs contend the Agreement is substantively unconscionable because it waives non-waivable PAGA claims, because its definition of covered disputes is overbroad and nonmutual, and because its “Excluded Claims” provision bars any monetary recovery through administrative proceedings. (Opposition, pp. 7–10.)

Here, because the procedural showing is low, Plaintiffs must make a strong showing of substantive unconscionability. (OTO, supra, 8 Cal.5th at p. 126.) They do not. The waiver is not one-sided. As explained above, the Agreement preserves representative PAGA claims for court and does not waive PAGA penalties. (Reply, pp. 2–3.)

The definition of covered disputes is not unlawfully overbroad. It reaches only disputes arising out of employment. It does not bind Plaintiffs for life and does not cover non-employment claims. It is therefore distinguishable from Cook v. University of Southern California (2024) 102 Cal.App.5th 312. (Reply, pp. 5–6.) In addition, the obligation to arbitrate is mutual.

Plaintiffs raise legitimate concerns regarding the “Excluded Claims” provision. That provision preserves access to administrative agencies but states that an employee may not seek or receive monetary compensation from such proceedings. (Opposition, pp. 8–9.)

Even assuming this provision is substantively unconscionable, it does not defeat the motion, because it is severable. California law strongly prefers severing a single offending term and enforcing the balance of the agreement. (Ramirez, supra, 16 Cal.5th at p. 513.) The central purpose of the Agreement is to arbitrate employment disputes on an individual basis, and that purpose is not tainted by the “Excluded Claims” provision, which is collateral and may be excised without reformation. (Id. at pp. 515–516.)

The Agreement contains a severability clause, and the interests of justice favor severance. (Reply, pp. 9–10.) The Court severs the “Excluded Claims” provision to the extent it limits any statutory monetary remedy and enforces the balance of the Agreement. The Court finds that the Agreement, as enforced, is not unconscionable.

VI.

Conclusion

For the reasons stated, the Court GRANTS IN PART and DENIES IN PART the motion to compel arbitration. The Court compels each Plaintiff’s individual claims to arbitration. The Court STAYS the non-individual, representative claims pending the completion of the arbitrations.

Case Management Conference July 15, 2026 at 2:30 p.m. is VACATED. Further Case Management Conference for review pending arbitration is set on February 24, 2027 at 2:30 p.m. Defendant shall prepare the order in accordance with California Rules of Court, rule 3.1312.

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