Mitchell Oconnor v. Marin M. Enterprises

On a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of the evidence a ground for denial (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413; Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.) DISCUSSION Defendant operates the Marin Mazda car dealership in San Rafael. (Link Dec.,1 ¶ 2.)

Plaintiff was a salesperson for Defendant from March 2025 through July 2025. (Ibid.) When hired, Defendant presented Plaintiff with a document entitled “Binding Arbitration Agreement” (the “BAA”). (Petition, Ex. A; see also Link Dec., ¶ 7.) Plaintiff electronically signed the BAA through Defendant’s online human resources management portal on March 24, 2025. (Petition, Ex. A.) Defendant’s Regional Controller, Diane Link, signed the BAA on Defendant’s behalf. (Ibid.; see also Link Dec., ¶¶ 2, 7.)

The BAA provides that the employee signatory shall “pursue any claims [he] might have against the Company that currently exist or that may arise in the future exclusively through binding arbitration.” (Petition, Ex. A, § 1.) This requirement is mutual – Defendant is likewise bound “to pursue any claims it might have against [the employee signatory] that currently exist or that may arise in the future exclusively through binding arbitration.” (Ibid.) The BAA specifies a few claims that need not be arbitrated, but none of those exceptions apply to this case. (Petition, Ex.

A, §§ 1, 3.) It further provides that the agreement is governed by the FAA. (Id. at § 4.) Plaintiff does not dispute the reach of the BAA or the fact that he signed it. His primary argument is that the BAA is unconscionable and cannot be enforced. “Because unconscionability is a reason for refusing to enforce contracts generally, it is also a valid reason for refusing to enforce an arbitration agreement[.]” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114; see also Code Civ.

Proc., § 1281.) The prevailing view is that for a court to refuse to enforce a contract due to unconscionability, each of two types of unconscionability must be present, but not necessarily to the same degree. (Armendariz, supra, 24 Cal.4th 83, 114.) “Procedural unconscionability pertains to the making of the agreement; it focuses on the 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, 793.) “Substantive unconscionability arises when a contract imposes unduly harsh, oppressive, or one-sided terms.” (Id. at p. 795.) “[T]he more substantively oppressive the contract term, the less evidence of

1 Plaintiff’s evidentiary objections to the Link Declaration are all overruled.

procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Armendariz, supra, 24 Cal.4th 83, 114.) The BAA is an adhesion contract, or “a standardized contract which, 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.” (Neal v. State Farm Ins. Companies (1961) 188 Cal.App.2d 690, 694.) The adhesive nature of a contract is sufficient to establish “a minimal degree of procedural unconscionability.” (Gatton v.

T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 586.) Plaintiff does not point to any other circumstances evidencing procedural unconscionability. Plaintiff’s primary argument for substantive unconscionability is that the BAA is an “infinite agreement” under Cook v. University of Southern California (2024) 102 Cal.App.5th 312. In Cook, the Second District deemed the University of Southern California’s standard employee arbitration agreement unenforceable due to unconscionability. The court’s ruling was based on three factors.

First, the arbitration agreement embraced all claims that the employee and USC might have against each other, including those having nothing to do with the employment relationship. (102 Cal.App.5th 312, 322.) Second, the agreement survived indefinitely. (Id. at p. 326.) This indefinite duration, coupled with the all-encompassing scope of the agreement, meant that “ ‘for the rest of her life, if [the employee] were to suffer an injury related to USC or its related entities, [she] could be ordered to arbitrate such claims.’ ” (Id. at p. 318 [quoting the trial court’s ruling].)

For example, “if she was ‘the victim of a botched surgery in a USC hospital in 15 years, her claims could be subject to the arbitration agreement.’ ” (Ibid.) Finally, the agreement lacked mutuality because it required the employee to arbitrate her claims “against USC ‘or any of its related entities, . . . or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise[,]’ ” but did not require USC’s related entities to arbitrate their claims against the employee. (Id. at p. 326.)

It thus “provid[ed] a significant benefit to USC’s related entities without any reciprocal benefit to [the employee].” (Id. at p. 328.) In Ayala-Ventura v. Superior Court (2026) 119 Cal.App.5th 241, the Fifth District confronted an employee arbitration agreement very similar to that in Cook. The court stated that even if the agreement did endure indefinitely and embrace any claim the employee might have against the employer, even claims completely unrelated to the employment relationship, those factors did not make it unconscionable under the circumstances presented.

According to the Fifth District, “[t]he agreement in Cook was unconscionable in part because of the multifarious ways in which a claim against USC ‘completely unrelated to [Cook’s] employment’ could arise.” (Id. at p. 257.) Given “the well-known, broad capacity of USC’s reach[,] Cook could be subject to the arbitration agreement forever in any manner of ways including not just a botched surgery but an injury while attending a USC football game in 15 years.” (Id. at p. 258.) By contrast, the defendant employer in Ayala-Ventura was a provider of commercial janitorial services and so, by its nature, did not generate litigation opportunities in a number or variety approaching an entity like USC. (Id. at pp. 258-258.)

Regarding the third factor identified in Cook, mutuality, the Ayala-Ventura court was simply untroubled by the fact that the agreement required the employee to arbitrate her claims against the employer’s other employees and agents, but not vice versa. It did not consider this to count toward a finding of unconscionability. (Id. at p. 259.)

Applying Cook and Ayala-Ventura to the facts presented, the Court concludes that the BAA is not an unenforceable infinite agreement. By its express terms, the BAA obligates its parties to arbitrate all claims they have may have against each other and is expressly not limited to those arising out of the employment relationship. (See Petition, Ex. A, § 2 [“Our agreement to arbitrate includes any and all claims which arise out of the employment context or any other interaction/relationship we had, have or may have in the future.”] [emphasis added].)

But the Court is required to follow Ayala-Ventura, which dictates that this breadth only be treated as unconscionable when combined with an agreement of indefinite duration and when there is some enhanced likelihood that the employee may one day have a claim against the former employer that does not arise out of the employment relationship. (Ayala-Ventura, supra, 119 Cal.App.5th 241, 257 [“[W]e reiterate the importance of context in determining unconscionability. The various potential claims that could arise against USC together with the agreement’s infinite duration made it unconscionable.”].)

Defendant is a car dealership. It is not an entity that, like USC, interacts with the public in a great number of diverse ways, any of which could be a catalyst for litigation. The Court follows Ayala- Ventura and holds that the duration and scope of the BAA do not render it unconscionable under the circumstances presented here. As to mutuality, the third Cook factor, Plaintiff argues that the BAA is unconscionable because it obligates Plaintiff to arbitrate claims not just against Defendant, but against various individuals and entities affiliated with Defendant as well, without a corresponding obligation upon those affiliated individuals and entities to arbitrate any claims they may have against Plaintiff.2 This gives the BAA some degree of substantive unconscionability.

Plaintiff argues that the BAA contains unconscionable terms outside the Cook “infinite agreement” framework. First, the BAA provides that while “in most circumstances the Company will pay all costs and arbitrator fees unique to the arbitration as required by controlling case law, . . . the Company shall not be responsible for paying the arbitrator’s fees and costs for the arbitration hearing sooner than 60 days before the commencement of the arbitration hearing.” (Petition, Ex. A, § 6.) Plaintiff invokes Code of Civil Procedure, section 1281.98, subdivision (a), which provides that a drafting party to an arbitration agreement is in material breach of that agreement where “the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date[.]” Plaintiff contends that Section 6 of the BAA is unconscionable because it “indicate[s] Defendant’s clear intent to violate” Section 1281.98(a).

Upon comparing Section 6 of the BAA to the text of Section 1281.98(a), the Court cannot follow Plaintiff’s logic here and cannot understand how the fee provision is unfair to Plaintiff. Second, the BAA purports to prohibit Plaintiff from bringing claims under PAGA in any forum. (Petition, Ex. A, § 7 [“By signing below, you expressly waive the right to bring a class, collective, representative or PAGA claim (unless prohibited by controlling law) seeking any relief on behalf of others.”].) This provision is unenforceable, as described below.

This provision can be severed from the arbitration agreement consistently with the BAA’s Section 10, 2 See Petition, Ex. A, §§ 1 (“Our agreement to submit all claims to binding arbitration includes any claims that either of us may have against any third-party beneficiaries as mentioned below.”); 2 (“I understand that this agreement requires me to pursue all claims I bring against the Company (and any third-party beneficiaries) through binding arbitration and requires that the Company submit any claims it has against me to binding arbitration[.]”)

which provides that “the prohibition on the arbitrator hearing class claims and/or collective claims shall not be severable.” The severance provision provides: “If any term or provision, or portion of this agreement, is declared void or unenforceable, it shall be severed, and the remainder of this agreement shall be enforceable.” (Petition, Ex. A, § 10.) The legal effect of his language is merely to “express[] . . . the parties’ intent that an agreement curable by removing defective terms should otherwise be enforced.” (Ramirez v.

Charter Communications, Inc. (2024) 16 Cal.5th 478, 517.) This term is not legally capable of requiring a court to sever an unenforceable provision instead of invalidating the contract if the court believes severance cannot cure the problematic aspects of the agreement. (Ibid.) This severance provision is not one-sided. It operates to the benefit of anyone trying to enforce the BAA, whether that is Plaintiff or Defendant. Plaintiff has demonstrated light procedural unconscionability inherent in any adhesive contract.

As a result, the showing of substantive unconscionability must be heavy to have the BAA deemed unenforceable on unconscionability grounds. (See Armendariz, supra, 24 Cal.4th 83, 114 [discussing this sliding-scale approach].) The petition to compel arbitration is GRANTED as to Plaintiff’s First through Ninth Causes of Action to the extent he brings them in his individual capacity. The Court addresses these claims as brought in Plaintiff’s representative capacity, and his PAGA claim, below. A. Class Action Where the FAA applies, it preempts state law rules limiting the enforceability of class and representative action waivers in arbitration agreements. (See Iskanian v.

CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 366 [overruled in part by Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662].) Such waivers are enforced according to their terms. The BAA states that Plaintiff “expressly waive[s] the right to bring a class . . . claim . . . seeking any relief on behalf of others.” (Petition, Ex. A, § 7.) As a result, his class action claims are properly dismissed. B. Representative Claim “[A]n employee’s right to bring a PAGA action is unwaivable” and any “agreement by employees to waive their right to bring a PAGA action[,]” including one contained in an arbitration agreement, “is against public policy and may not be enforced.” (Iskanian, supra, 59 Cal.4th 348, 383.)

This aspect of Iskanian survived Viking River, supra, 596 U.S. 639, which abrogated Iskanian in part. (596 U.S. 639, 662; see also Ford v. The Silver F, Inc. (2025) 110 Cal.App.5th 553, 564 [“Viking River did not disturb Iskanian’s rule that a contractual waiver of the right to prosecute PAGA claims is unenforceable under California law.”].) Thus, Plaintiff is permitted to maintain his PAGA claim. Iskanian also deemed unenforceable any agreement that a PAGA claim shall be split into representative and individual components for arbitrability purposes. (Viking River, supra, 596 U.S. 639, 648-649 [also discussing the difference between a “representative” and an “individual” PAGA claim].)

In Viking River, the United States Supreme Court reversed this portion of Iskanian, holding that the FAA requires state courts to enforce agreements to split PAGA claims in this manner. (596 U.S. 639, 662; Ford, supra, 110 Cal.App.5th 553, 564.)

Thus, Viking River requires enforcement of an agreement to arbitrate the individual portion of a plaintiff’s PAGA claim if that agreement is covered by the FAA. (Adolph, supra, 14 Cal.5th 1104, 1119.) Contrary to Defendant’s argument (Memorandum, p. 5) the BAA does not provide that any PAGA claims shall be split into representative and individual portions for arbitrability purposes. It states that “claims brought pursuant to PAGA” are not arbitrable. (Petition, Ex. A, § 7.) As a result, no portion of Plaintiff’s PAGA claim shall be arbitrated. He is entitled to litigate the entire claim in court. The motion is denied as to the Tenth Cause of Action. Defendant to prepare the motion.

Parties must comply with Marin County Superior Court Local Rules, Rule 2.10(A), (B), which provides that if a party wants to present oral argument, the party must contact the Court at (415) 444-7046 and all opposing parties by 4:00 p.m. the court day preceding the scheduled hearing. Notice may be by telephone or in person to all other parties that argument is being requested (i.e., it is not necessary to speak with counsel or parties directly.) Unless the Court and all parties have been notified of a request to present oral argument, no oral argument will be permitted except by order of the Court. In the event no party requests oral argument in accordance with Rule 2.10(B), the tentative ruling shall become the order of the court.

IT IS ORDERED that evidentiary hearings shall be in-person in Department L. For routine appearances, the parties may access Department L for video conference via a link on the court website. Kindly turn your camera on when your case is called and make sure the party or lawyer making the appearance is properly identified on the screen.

FURTHER ORDERED that the parties are responsible for ensuring that they have a good connection and that they are available for the hearing while using the virtual remote courtroom. If the connection is inadequate, the Court may proceed with the hearing in the party’s absence. If it is determined that you are driving your car during the hearing, you will be removed from the virtual courtroom. (Yes, this happens).