Mel Solorio v. SBM Management Service LP

DEFENDANT SBM HAS SHOWN THAT THE PARTIES ENTERED INTO AN ARBITRATION AGREEMENT THAT COVERS THE ASSERTED CLAIMS

Code Civ. Proc. § 1281.2, states, in part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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

August 7, 2026 Law and Motion CalendarPAGE 28 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ (b) Grounds exist for rescission of the agreement.

A party meets its burden of establishing the existence of the arbitration agreement by providing a copy thereof to the Court, or by stating the paragraph verbatim. (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160; Cal. Rules of Court, rule 3.1330.)

Here, Defendant SBM has provided a copy of the May 2019 Arbitration Agreement, meeting this burden. (Periolat Decl. ¶ 10, Ex. A [Arbitration Agreement, dated May 1, 2019].) Plaintiff does not dispute that he received, read, understood, and signed the Agreement. (Id.) Plaintiff also does not dispute that it encompasses all of Plaintiff’s asserted claims. (See id. [stating: “any and all claims arising out of or related to your employment that could be filed in a court of law, including but not limited to, claims of unlawful harassment or discrimination, wrongful demotion, defamation, wrongful discharge, breach of contract or invasion of privacy, shall be submitted to final and binding arbitration, and not to any other forum.”]) Plaintiff does not argue waiver. Plaintiff’s sole argument is that the Agreement is unconscionable.

UNCONSCIONABILITY PRINCIPLES

Unconscionability has both a procedural and a substantive element. (Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114; A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.) The former (procedural) focuses on “oppression” and “surprise” due to unequal bargaining power. (Armendariz, supra, at 114.) The latter (substantive) focuses on “overly-harsh” or “one-sided” results. Both must be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. (Id.)

But they need not be present in the same degree. (Id.) “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.” (Id.) “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.” (Id.)

PLAINTIFF HAS IDENTIFIED ONLY MINIMAL PROCEDURAL UNCONSCIONABILITY

A procedural unconscionability analysis begins with an inquiry into whether the contract is one of adhesion.” (OTO, L.L.C. v. Kho (2019) 8 Cal. 5th 111, 126.) An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power “on a take-it-or-leave-it basis.” (Id.) Arbitration contracts imposed as a condition of employment are typically adhesive. (Id.) But adhesion alone does not make an agreement procedurally unconscionable; the pertinent question is whether circumstances of the contract's formation created such oppression or surprise that closer scrutiny of its overall fairness is required. (Id.) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” (Id.)

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HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ Plaintiff does not argue that any terms were hidden/concealed.

Initially, the Court notes that Plaintiff does not argue that the Arbitration Agreement was inconspicuous, or that Plaintiff did not see it, read it, or understand it. The “ARBITRATION” section appears in bold and capital letters, and it concluded, immediately above Plaintiff’s signature line, with the following statement in capital letters: “THIS ARBITRATION AGREEMENT IS A WAIVER OF ALL RIGHTS TO A CIVIL JURY TRIAL FOR CLAIMS ARISING OUT OF YOUR EMPLOYMENT.”) (Periolat Decl. ¶ 10, Ex. A.)

Adhesion.

Plaintiff first argues that the Agreement was presented on a “take-it-or-leave-it” basis (contract of “adhesion”). This argument is not particularly compelling, for multiple reasons. First, Plaintiff offers no evidence supporting the “take-it-or-leave-it” claim. Plaintiff has not filed a supporting declaration, and offers no evidence that he attempted to discuss or negotiate the Agreement’s terms, or that he even cared about the Arbitration clause and would have tried to negotiate it, or not sign it, assuming he could have. While SBM also does not offer any evidence that the Arbitration Agreement was negotiable, that is not its burden. Thus, the “adhesion” argument is based on speculation.

Further, even assuming the Arbitration Agreement was required as a term of employment, the mere fact that a contract is an adhesion contract does not render it unconscionable. (Allan v. Snow Summit, Inc. (1996) 51 Cal.App.4th 1358, 1375; Lane v. Francis Cap. Mgmt. LLC (2014) 224 Cal.App.4th 676, 688 [“assuming the agreement was one of adhesion, courts have consistently held that that fact alone is insufficient to invalidate an arbitration agreement: Rather, an adhesion contract remains fully enforceable unless ... the provision falls outside the reasonable expectations of the weaker party or it is unconscionable.”])

The fact that Plaintiff may have no choice but to sign the Agreement (which is unclear here) is relevant, but not particularly compelling.

“Internal procedures” not identified.

Plaintiff next argues that the following language in the Agreement is confusing, in part because the Company’s “internal procedures” are not identified:

The arbitration process shall be initiated by delivering a written request for arbitration to the other party within the time limits that would apply to the filing of a civil complaint in court. A late request will be void. No claim should be submitted to arbitration without first attempting to resolve the matter informally and exhausting Company's internal procedures.

[Periolat Dec. at ¶ 9, italics added; Ex. A, Agreement at 2]. But this claimed confusion appears somewhat exaggerated. The above language unambiguously states that the same filing deadline that would apply to filing a court case applies to filing an arbitration proceeding. It further states

August 7, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ that the employee should (not “must” or “shall”) attempt to resolve any dispute informally with the company before seeking arbitration. This language does not appear overly confusing. There appears to be no ambiguity as to the filing deadline, and there is no suggestion that any attempt to resolve the matter informally changes that filing deadline.

Failure to attach the arbitration rules.

Plaintiff also argues “surprise” in that the Agreement does not attach or sufficiently identify the rules that will govern the arbitration, but instead states:

The arbitrator shall conduct the arbitration in accordance with the procedures set forth in the most recent version of the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.

(Periolat Dec., Ex. A.) But Plaintiff does not dispute that the most recent version of the AAA’s National Rules for the Resolution of Employment Disputes are expressly referenced and thus readily identifiable. (See RJN, Ex. C [AAA’s Employment/Workplace Arbitration Rules and Mediation Procedure, effective May 1, 2025].) Failure to attach the arbitration rules to the agreement does not necessarily suggest substantive unconscionability. (Baltazar v. Forever 21, Inc. (2016) 62 Cal. 4th 1237, 1246.)

Failure to identify who will administer the arbitration.

Plaintiff also notes that although the Agreement states that AAA’s procedural rules will govern the arbitration, it does not state (1) whether AAA or some other neutral dispute resolution service will administer the arbitration; (2) who selects that service; and (3) who supplies the arbitrator. The Agreement states:

If we are unable to agree upon a neutral arbitrator, we will obtain a list of arbitrators from a neutral dispute resolution service, and strike names alternatively until one arbitrator remains.

(Periolat Dec., Ex. A.) While Plaintiff is correct that the Agreement does not provide the foregoing information, the Court does not find these omissions to constitute a convincing argument of “surprise.” The Agreement provides a method for selecting an arbitrator. It states that if the parties cannot agree on an arbitrator, they will obtain a list from a neutral dispute resolution service, and alternatively strike names until one name remains. This selection procedure is facially neutral and relatively common. The Agreement also expressly references AAA rules as governing.

Plaintiff also does not persuasively argue that there is anything inherently improper about incorporating AAA rules without requiring the AAA to administer the case. In the court’s experience, this is not uncommon. Arbitration agreements often provide that AAA or JAMS rules apply, but that another provider may administer the proceeding if the parties agree, or if the AAA or JAMS declines administration. It does not appear, based on the Agreement’s language, that the

August 7, 2026 Law and Motion CalendarPAGE 31 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ employer here (SBM) has reserved unilateral authority to select the dispute resolution service or the arbitrator, or that any ambiguity would permit SBM to “stack the deck” against the employee.

Conclusion as to procedural unconscionability.

Viewing Plaintiff’s procedural unconscionability arguments collectively, while not entirely without merit, the Court finds relatively little “procedural unconscionability.”

PLAINTIFF HAS IDENTIFIED ONLY MINIMAL SUBSTANTIVE UNCONSCIONABILITY

Unidentified internal company procedures.

Plaintiff argues that the Agreement’s “most troubling substantive provision” is the same disputed language discussed above, which states:

The arbitration process shall be initiated by delivering a written request for arbitration to the other party within the time limits that would apply to the filing of a civil complaint in court. A late request will be void. No claim should be submitted to arbitration without first attempting to resolve the matter informally and exhausting Company's internal procedures.

(Periolat Dec., Ex. A at 2.) Plaintiff argues that this language creates unfair confusion/ambiguity and is substantively unfair, because it refers to internal Company procedures that are not identified, which Plaintiff argues would leave an employee guessing as to whether the internal procedures would toll the arbitration filing deadline.

As noted above, the Court does not find this language to be overly confusing, unfair, or onesided. First, on its face, the Agreement does not require participation in any internal procedure before filing for arbitration; it merely recommends attempting to resolve any dispute informally before arbitrating. And as noted above, the Agreement does not suggest that “attempting to resolve the matter informally” changes or tolls the arbitration filing deadline. The Agreement unambigously states that the arbitration filing deadline is the same deadline that would apply to filing a court case.

“Most recent version” of the AAA rules.

Plaintiff next argues substantive unfairness based on the provision calling for the arbitrator to “... conduct the arbitration in accordance with the procedures set forth in the most recent version of the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.” Plaintiff argues that the phrase “most recent version” of the AAA rules could mean the date that Plaintiff signed the Agreement (May 1, 2019), the date of the arbitration demand, or the date of the arbitration hearing. Plaintiff argues that these alternatives could produce “materially different filing requirements, fees, discovery standards, virtual-hearing presumptions, administrator powers, sanctions, and consolidation procedures.” (Opp. brief at 6.)

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HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ The Court agrees with Plaintiff that the above-cited language creates some ambiguity as to which version of the AAA rules applies, but Plaintiff offers no evidence (or even argument) that such ambiguity favors the employer (SBM) in any way. Plaintiff offers no evidence, or argument, that the applicable AAA rules that would apply changed in any way from 2019 to the present that would that would favor SBM. Thus, any ambiguity on this point may require contract interpretation, but it does not show one-sidedness.

Plaintiff also suggests substantive unfairness in that the Agreement refers to both the “Company” and “Organization,” while identifying neither by name. But this merely reflects poor drafting, not substantively unconscionability—which asks whether a contract is overly harsh, unduly oppressive, or unreasonably one-sided. Using different labels for the employer does none of this. At most, it creates ambiguity that would require contract interpretation—it does not suggest onesidedness.

The sentence: “No procedures of the [AAA] shall invalidate the enforceability of this Agreement” does not appear one-sided. [Def. Ex A at p. 2].

Plaintiff argues the foregoing sentence demonstrates substantive unconscionability because it “eliminates AAA safeguards.” Plaintiff reads this sentence as meaning that the employer (SBM) may disregard any AAA rule that it dislikes, yet maintain the arbitration, thereby reserving for itself the power to strip away procedural protections while retaining the right to arbitrate. Plaintiff argues that this makes the Agreement one-sided.

Plaintiff’s reading of the foregoing sentence appears strained—it does not actually say anything close to what Plaintiff is arguing. It does not state that the employer (SBM) can disregard AAA rules, or that AAA’s rules are optional, or that the arbitrator may ignore AAA rules, or that the employer can choose substitute procedures, or that AAA due process protections are waived. The more natural/plausible reading of this sentence is that it is a saving clause—not a provision seeking to eliminate AAA safeguards.

Under a more reasonable interpretation, it means that if a particular AAA rule would prevent the AAA from administering the arbitration or would otherwise make the Agreement unenforceable, that circumstance does not invalidate the agreement. The Court finds nothing one-sided about this language. Courts generally favor interpretations that preserve contracts over interpretations that render them void.

The Court agrees with Plaintiff that the above sentence creates some small amount of ambiguity, but again, such minimal ambiguity alone does not equate with substantive unfairness. Plaintiff suggest that because the Agreement fails to specify what happens if a AAA procedure conflicts with the Agreement, the Agreement is unconscionable. But again, substantive unconscionability asks whether the challenged term is overly-harsh, one-sided, or unduly favorable to the stronger party. Here, it is not clear, and Plaintiff has not shown, that any ambiguity/uncertainty creates any unfair advantage for the employer. Uncertainty alone is a question of contract interpretation, not unconscionability.

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HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ The “injunction carve-out.”

Plaintiff takes issue with the following language:

This arbitration shall be the exclusive means of resolving any claim arising out of your employment, and no action will be filed in any court or other forum. However, nothing in this agreement will affect the .... ability of either party to seek injunctive relief in an appropriate court of law.

Plaintiff concedes that this language is bilateral (it allows both parties to seek injunctive relief in court), but argues it is one-sided because employers are more likely to seek such relief. Plaintiff invokes a principal set forth in Armendariz, that an employer cannot require employees to arbitrate claims that are most likely to be brought by employees, while reserving litigation for claims employers are most likely to bring, absent a legitimate business justification. (Armendariz, supra, 24 Cal.4th at 117.) Plaintiff also argues the “clause must be limited to provisional relief under § 1281.8. Any broader construction is substantively one-sided.”

Plaintiff’s one-sidedness argument here has some merit, but again, appears exaggerated. First, as noted, the disputed language is facially bilateral (“either party” may seek injunctive relief in court). There is no reservation of only employer claims for court. Further, employer-favored carve-outs that have been found to be overly one-sided typically have involved language excluding (from arbitration) claims that are virtually always asserted by the employer, such as trade-secret claims, intellectual property claims, and non-solicitation agreements—i.e, carve-outs that exclusively benefit employers. The challenged clause here does not identify any subject matter; it merely allows either party to seek injunctive relief. That is materially different.

Plaintiff’s critique of the “injunctive relief carve-out” has some merit, but the language here does not appear particularly one-sided, and therefore is not a strong argument for substantive unconscionability.

Plaintiff’s contention that “the ‘Organization’s Policies’ provision conflicts with full statutory remedies.”

Plaintiff argues that California law requires arbitration agreements covering statutory employment claims to preserve the employee’s full statutory remedies. Under Armendariz, an arbitration agreement cannot limit the remedies that would be available under statutes such as the FEHA or the Labor Code. (Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th at 103.) Thus, an arbitration agreement generally cannot prohibit an arbitrator from issuing relief that a court could order. (Id.) Plaintiff reads the Agreement here to do exactly that.

But Plaintiff’s interpretation of the language is questionable and speculative. It is not apparent that the Agreement limits the arbitrator in the manner that Plaintiff suggests. The Agreement does not state that the arbitrator may not order reinstatement, may not issue injunctions, may not require reasonable accommodation, may not prohibit retaliation, or may not require changes in employment practices. Instead, it states that the arbitrator,

August 7, 2026 Law and Motion CalendarPAGE 34 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________

“... may not amend, modify, or delete organizational policies unless they violate applicable law.”

(Periolat Dec., Ex. A at 2.) Those are not necessarily the same thing. For example, if an arbitrator were to find that Plaintiff’s Supervisor unlawfully retaliated against him (see Cmplt, Ninth & Tenth Causes of Action [retaliation claims]) because a Supervisor misapplied an otherwise lawful attendance policy, the arbitrator could reinstate the employee, prohibit further retaliation, award damages, and award backpay. None of those remedies necessarily require rewriting the employer’s attendance policy.

Plaintiff is correct that “Organization’s Policies” is vague. But again, minimal ambiguity alone does not establish substantive unconscionability, because ambiguity does not necessarily suggest one-sidedness.

The “unless violative of applicable law” language also weakens Plaintiff’s argument. If the arbitrator may modify policies that violate the law, then this language expressly preserves authority to alter unlawful policies.

California law generally favors interpretations that make contractual provisions consistent with one another, rather than interpreting one clause to nullify another. Here, reasonably construed, the Agreement provides that the arbitrator cannot rewrite lawful company policies, but may modify or invalidate policies that violate the law, and may award every statutory remedy authorized by law. Nothing about this language appears meaningfully unfair or one-sided.

Conclusion as to substantive unconscionability.

Viewing Plaintiff’s arguments collectively, Plaintiff has identified only minimal substantive unconscionability. Most of Plaintiff’s criticisms involve language that creates some lack of clarity/ambiguity, but which does not result in any meaningful one-sidedness. Even if the Agreement’s terms favor the employer (SBM) to some extent, the Court does not find sufficient “one-sidedness” to permit a finding of unconscionability. (See Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245 [“A party cannot avoid a contractual obligation merely by complaining that the deal, in retrospect, was unfair or a bad bargain. Not all one-sided contract provisions are unconscionable; hence the various intensifiers in our formulations: ‘overly harsh,’ ‘unduly oppressive,’ ‘unreasonably favorable.’”])

CONCLUSION

Viewing Plaintiff’s arguments in their totality, Plaintiff has not shown that the Arbitration Agreement is unconscionable. Accordingly, the Court need not address the severance issue. The Court notes, however, that if the Court had concluded that one or more of the challenged provisions were unconscionable (which the Court does not find), it would have severed any such provision(s) under Civ. Code § 1670.5 rather than invalidating the entire Agreement.

August 7, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________

For the foregoing reasons, Defendant SBM’s “Motion to Compel Arbitration and Stay the Civil Action” is GRANTED. (Code Civ. Proc. § 1281.2, et. seq.; FAA, 9 United States Code, § 1 et seq. The case is STAYED pending completion of the arbitration. (Code Civ. Proc. § 1281.4; 9 U.S.C. § 3.)

The Case Management Conference scheduled for December 2, 2025 is therefore continued to August 5, 2027 at 9:00 a.m. still before the Civil Commissioner, Courtroom H, and is on for Arbitration Status.

Any party who contests a tentative ruling must email Dept20@sanmateocourt.org with a copy to all other parties by 4:00 p.m. stating, without argument, the portion(s) of the tentative ruling that the party contests.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, Counsel for the prevailing party shall prepare for the Court’s signature a written order consistent with the Court’s ruling pursuant to CRC Rule 3.1312 and provide written notice of the ruling to all parties who have appeared in the action, as required by law and by the CRC. Please note that Local Rule 3.403(b)(iv) states in part “prevailing party on a tentative ruling is required to prepare a proposed order REPEATING VERBATIM the tentative ruling” (emphasis added). The order should be filed or e-filed only, do not email or mail a hard copy to the Court.