BURKETT vs MOSS BROS CHEVROLET, INC.

1. CASE # CASE NAME HEARING NAME BURKETT vs MOSS PETITION TO COMPEL

BROS CHEVROLET, INC. ARBITRATION Tentative Ruling: Defendant Moss Bros. Chevrolet, Inc.’s Motion to Compel Arbitration is granted; the cost provision stating that unique arbitration costs may be split by the parties in certain circumstances is severed. Action is stayed.

Arbitration is a matter of contract. (C.C.P. § 1281, 1281.2; Unimart v. Superior Court (1969) 1 Cal.App.3d 1039, 1045). A party to the arbitration agreement may seek a court order compelling the parties to arbitrate the dispute covered by the agreement. (C.C.P. § 1281.2.) The petition/motion to compel must set forth the provisions of the written agreement and the arbitration clause verbatim, or such provisions must be attached and incorporated by reference. (CRC Rule 3.1330; see also Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218–19.) This rule does not require the petitioner to authenticate the agreement or do anything more than allege its existence and attach a copy. (Condee, supra, 88 Cal.App.4th at 218-19.) The burden then shifts to the opposing party to demonstrate the falsity of the purported agreement. (Condee, supra, 88 Cal.App.4th at 218–19.)

There is a strong public policy in favor of arbitration agreements.” (Blake v. Ecker (2001) 93 Cal.App.4th 728, 741.) Upon the petition/motion of a party to an agreement to arbitrate, the court must grant a petition to compel arbitration unless it finds: no written agreement to arbitrate exists; the right to compel arbitration has been waived; grounds exist for rescission of the agreement; or litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (C.C.P. § 1281.2.)

“In ruling on a petition to compel arbitration, the trial court may consider evidence on factual issues relating to the threshold issue of arbitrability ... Parties may submit declarations when factual issues are tendered with a motion to compel arbitration.” (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.) In the summary proceedings on a motion to compel arbitration, “the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)

Both the FAA and the California Arbitration Act require the existence of a valid arbitration agreement, before arbitration can be compelled. (See 9 U.S.C. §2 and Code Civ. Proc., §1281.2) The party seeking to compel arbitration has the burden of proving the existence of such an agreement by a preponderance of the evidence. (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 842.)

In the present case, Defendant attaches a copy of two arbitration agreements in support of its motion, an Applicant Statement and Agreement (“Applicant Statement”) and a Handbook Acknowledgement At Will and Arbitration Agreement (“Handbook Acknowledgement”), and properly authenticates those agreements. (See, Decl. of Devon Pollerana [“Pollerana Decl.”] at ¶¶ 6-8, Ex. 1; Petition, Ex. A.) Thus, it met its burden of establishing an arbitration agreement exists. (See, Condee, supra, 88 Cal.App.4th at 218–19.)

The burden then shifts to Plaintiff to offer admissible evidence to challenge the authenticity of the agreements. (Ivere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.) Plaintiff does not dispute that an arbitration agreement exists or contend he did not sign it, instead only contending the agreement is unconscionable. Therefore, Defendant has established an arbitration agreement between the parties exists.

Plaintiff argues that the arbitration agreement is unconscionable and therefore unenforceable. “Under both federal and California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, 98.) “‘[G]enerally applicable contract defenses, such as ... unconscionability, may be applied to invalidate arbitration agreements without contravening’ the FAA” or California law. (Pinnacle Museum Tower Assn. v.

Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246.) The leading U.S. Supreme Court case discussing the scope of arbitration clauses held that the enforcement of an arbitration clause is a matter of ordinary state-law contract principles. (AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740, 1745 (Concepcion); see also, First Options v. Kaplan (1995) 514 U.S. 938, 944.) This was confirmed in Sanchez v. Valencia Holding Co, LLC (2015) 61 Cal.4th 899, where the California Supreme Court found that the U.S.

Supreme Court’s decision in Concepcion, supra, 563 U.S. 333, “reaffirmed that the FAA does not preempt generally applicable contract defenses such as fraud, duress, or unconscionability.” (Id. at 906.) The Court accordingly held that California’s unconscionability doctrine was applicable to determine whether an agreement to arbitrate was unconscionable, stating: “[W]e hold that Concepcion requires enforcement of the class waiver but does not limit the unconscionability rules applicable to other provisions of the arbitration agreement.” (Id. at 907 [emphasis supplied].)

Unconscionability Generally

A contract is unenforceable if it is unconscionable. (Civ. Code § 1670.5.) “The doctrine of unconscionability contains two components: procedural unconscionability and substantive unconscionability.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 713.) 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.” (Armendariz, supra, 24 Cal.4th at 114.) The procedural element focuses on oppression and surprise due to unequal bargaining power. (Ibid.)

The substantive element focuses on overly harsh or one-sided results. (Ibid.) The core concern of the unconscionability doctrine is the absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145.) The unconscionability doctrine ensures that contracts, particularly contracts of adhesion, do not impose terms that have been variously described as overly harsh. (Ibid.)

Procedural unconscionability

Procedural unconscionability involves two factors: oppression and surprise. (Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal. App. 4th 619, 631.) “Oppression occurs ‘where a contract involves lack of negotiation and meaningful choice’ and surprise involves the extent to which ‘the allegedly unconscionable provision is hidden within a prolix printed form.’” (Haydon v. Elegance at Dublin (2023) 97 Cal. App. 5th 1280, 1287.) Oppression, and therefore procedural unconscionability, is present when the weaker party to a contract is presented with a clause and told to “take it or leave it” without the opportunity for meaningful negotiation. (McManus, supra, 109 Cal.App.4th at 91; Armendariz, supra, 24 Cal.4th at 114-115 [an arbitration agreement is adhesive when imposed on employees as a condition of employment and there was no opportunity to negotiate]; OTTO, supra, 8 Cal.5th at 126 [an arbitration agreement required as a condition of employment is adhesive].)

Other circumstances indicating oppression include: “(1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party's review of the proposed contract was aided by an attorney.” (Otto, supra, 8 Cal.5th at 126- 127.) However, the fact that an arbitration clause is adhesive does not as a matter of law render it unenforceable: substantive unconscionability must still be found. (McManus, supra, 109 Cal.App.4th at 91.) “[A] sliding scale is invoked whereby the more procedurally oppressive the arbitration clause is, the less evidence of substantive unconscionability is required to warrant the conclusion that the agreements to arbitrate are unenforceable.” (Id; see also, Otto, supra, 8 Cal.5th at 130 [where there is substantial procedural unconscionability, even a relatively low degree of substantive unconscionability may suffice to render the agreement unenforceable].)

In the present case, Plaintiff argues that the arbitration agreement is procedurally unconscionable because it was presented as a mandatory part of his employment, and Defendant concedes. (Pollerana Decl. at ¶ 5.) Thus, the agreement appears to be an adhesion contract. (Otto, supra, 8 Cal.5th at 126-127.)

Plaintiff also argues that the agreement is procedurally unconscionable because it does not attach the rules governing arbitration. However, both agreements state that “The binding arbitration proceedings shall be governed by the rules listed herein or as supplemented by the Federal Arbitration Act and/or the procedures of the California Arbitration Act (California Code of Civil Procedure sec. 1280 et seq., including sec. 1283.05 and all of the California Arbitration Act's other mandatory and permissive rights to discovery).” (Pollerana Decl., Ex. 1 at ¶ 6, Petition, Ex.

A at ¶ 7.) Thus, the agreements state that the arbitration will be governed by the rules of the FAA and CAA. This is sufficient. (See, Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 399-400 [“unless the parties otherwise agree, the conduct of an arbitration proceeding is controlled by the CAA. (See, e.g., §§ 1281.6, 1282, 1282.2.) ... Because this arbitration is controlled by California statutory and case law, Cruise’s arguments that Kroger's Arbitration Policy is unconscionable, both procedurally and substantively, are meritless”].)

Substantive Unconscionability

“Substantive unconscionability” refers to terms that unreasonably favor one party, i.e., terms that are “unreasonably one-sided” or “so one-sided as to shock the conscience.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145.) In assessing substantive unconscionability, the “paramount consideration” is mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1287.) An employment arbitration agreement is not substantively unconscionable if five minimum requirements are met, it: “(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.” (Armendariz, supra, 24 Cal.4th at 102, citing Gilmer v.

Interstate/Johnson Lane Corp. (1991) 500 U.S. 20.)

Plaintiff argues that the arbitration agreement is unconscionable because it is not limited to employment disputes and it is indefinite, citing Cook v. University of Southern California (2024) 102 Cal.App.5th 312 and Phan v. Knight Sacramento SU Inc. (2026) 121 Cal.App.5th 641. In Cook, supra, the court found that the arbitration agreement at issue was unconscionable for several reasons, including a lack of mutuality because it required the employee to arbitrate all claims against employer and its agents, etc. without giving the employee the same right; it required the employee to arbitrate claims completely unrelated to his employment; it survived the term of the employee’s employment; and it could only be terminated by the employer. (Cook, supra, 102 Cal.App.5th at 321, 325- 326, 328.)

In Phan, relying on Cook, the court affirmed the trial court’s finding that the arbitration agreement was unconscionable because it required the employee to arbitration all claims that currently exist or may arise in the future having relationship with the company or its third-party beneficiaries. (Phan, supra, 121 Cal.App.5th at 655.)

However, in Ayala-Ventura v. Superior Court (2026) 119 Cal.App.5th 241, the Court of Appeal made clear that Cook must be considered in light of the highly specific facts involving USC and that overall, any evaluation of unconscionability is highly dependent on context. (Ayala-Ventura, supra, 119 Cal.App.5th at 257.) The court stated that, “Because ‘parties are free to contract for asymmetrical remedies and arbitration clauses of varying scope,’ the Agreement's purportedly broad scope does not necessarily mandate a finding of unconscionability.” (Id. citing to Armendariz v.

Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 118.) The Court in Ayala-Ventura ultimately held that because the universe of potential claims was limited in the context of janitorial services which the defendant provided, the overbroad scope and duration of the arbitration agreement were not substantively unconscionable. (Ayala-Ventura, supra, 119 Cal.App.5th at 257-258.) In distinguishing Cook, the Ayala-Ventura court explains:

The various potential claims that could arise against USC together with the agreement's infinite duration made it unconscionable. Ayala-Ventura claims if she were injured in an automobile accident caused by one of CCS's company vehicles 10 years after her employment, she would be compelled to arbitrate a claim. But without facts about the number of company vehicles generally in use by CCS, we are unable to assess the probability of this occurrence, which appears speculative at best. Nothing in the record indicates CCS's operations have anything like 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.)

Here, the arbitration agreements state the following:

I understand that this agreement requires me to pursue all claims 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 (except for those claims specifically excluded by this agreement). 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. Those claims include, but are not limited to, any claim, dispute, and/or controversy that either party brings against the other (including, but not limited to, any claims of discrimination and harassment, whether they be based on the California Fair Employment and Housing Act, the Americans With Disabilities Act, Title VII of the Civil Rights Act of 1964, as amended, claims pursuant to the California Private Attorneys General Act ("PAGA") unless prohibited by controlling law, as well as all other applicable state or federal laws or regulations) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company, as well as any third-party beneficiaries of the Company...(Ex. 1 at ¶ 4, Ex.

A at ¶ 5.)

By signing my name below and/or by accepting and/or continuing employment with the Company, agree to pursue any claims might have against the Company that currently exist or that may arise in the future exclusively through binding arbitration; similarly, the Company agrees to pursue any claims it might have against me that currently exist or that may arise in the future exclusively through binding arbitration. ....(Ex. 1 at ¶ 3, Ex. A at ¶ 4.)

While the agreements state that they apply to current and future claims arising out of employment or any other interaction between the parties, no evidence has been provided to indicate that Defendant is anything like USC (in Cook), or that the universe of potential claims is overly broad in scope. Furthermore, as has been stated by the California Supreme Court, “like other contracts, arbitration agreements that do not specify a term of duration are terminable at will after a reasonable time has elapsed.” (Reigelsperger v.

Siller (2007) 40 Cal.4th 574, 580.) Thus, the term of the agreement is not indefinite, but terminable after a reasonable time. (Ibid.) Finally, the breadth and duration apply equally to Plaintiff and Defendant. (See, Ex. 1 at ¶¶ 3-4, Ex. A at ¶¶ 4-5.) As the court in Phan noted, “[s]ubstantive unconscionability is concerned not with a simple old-fashioned bad bargain..., but with terms that are unreasonably favorable to the more powerful party. ... The substantive component of unconscionability looks to whether the contract allocates the risks of the bargain in an objectively unreasonable or unexpected manner. (Phan, supra, 121 Cal.App.5th at 653 [internal quotations and citations omitted].)

Accordingly, the agreement is not substantively unconscionable based on its breadth or duration.

Lack of Mutuality

Plaintiff also argues the agreements are substantively unconscionable because they lack mutuality, in that they require him to arbitrate claims against third parties while not requiring the same of those third parties.

The arbitration agreements state the following:

I understand that this agreement requires me to pursue all claims 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 (except for those claims specifically excluded by this agreement). ... Third-party beneficiaries include the Company's owners, directors, officers, managers, employees, agents, partners, attorneys, sister-companies, subsidiaries, parent companies, joint- venturers, affiliated persons/entities, independent contractors, and parties affiliated with its employee benefit and health plans.

These claims also include any claims arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company or third-party beneficiaries, whether based on tort, contract, statute, equity or otherwise.(Ex. 1 at ¶ 4, Ex. A at ¶ 5.)

Although Plaintiff is correct that the agreement lacks some mutuality in the sense that it requires Plaintiff to arbitrate claims against certain third parties affiliated with Defendant, while not requiring all of those people/entities to arbitrate their claims against Plaintiff, contract law allows non-signatory third-party beneficiaries to enforce and be bound by arbitration agreements. (See, Epitech, Inc. v. Kann (2012) 204 Cal.App.4th 1365, 1371, Macaulay v. Norlander (1992) 12 Cal.App.4th 1, 7-8.)

Thus, this is insufficient alone to establish unconscionability. Additionally, if necessary, the provision requiring Plaintiff to arbitrate claims against third parties can be severed or limited. (See, Jenkins v. Dermatology Management, LLC (2024) 107 Cal.App.5th 633, 647.) Here, that is unnecessary, as no third parties are attempting to enforce the arbitration agreement against Plaintiff.

Modification

Plaintiff argues the agreements are unconscionable because they can be unilaterally modified by Defendant. Plaintiff is correct that the Handbook Acknowledgement states that the “Arbitration Agreement [] may not be changed, altered, revised, or modified without a writing signed by the General Manager of the Company.” (Ex. A at ¶ 2.) However, this does not mean Defendant can make unilateral changes to the agreement, only that the General Manager must sign any such modification. Furthermore, both agreements state the following: “This is the entire agreement between the Company and me regarding dispute resolution and this agreement supersedes any and all prior agreements regarding this issue to the extent that they differ from the foregoing.

It is further agreed and understood that any agreement contrary to the foregoing must be entered into, in writing, by both the Owner(s) and/or President of the Company and me. Oral promises shall not serve to modify and/or cancel this agreement.” (Ex. 1 at ¶ 13, Ex. A at ¶ 14 [emphasis added].) Therefore, the agreements are not unconscionable on this basis.

Rules

Plaintiff argues the agreements are unconscionable because they do not identify the rules governing arbitration. However, as discussed above, both agreements state that the arbitration will be governed by the rules provided in the FAA and CAA, which is sufficient. (See, Cruise, supra, 233 Cal.App.4th at 399-400.

Costs

Plaintiff argues the agreements are unconscionable because they do not guarantee that he will not be required to bear any costs unique to arbitration as required. Plaintiff is correct in this regard. The agreements state:

I understand that in most all circumstances the Company will pay all costs and arbitrator fees unique to the arbitration as required by controlling case law, such as for statutory claims for unpaid wages, discrimination, harassment, retaliation, etc. However, there are some instances where the costs of arbitration will be split between the parties as set forth in the California Arbitration Act, such as where the Company brings a claim against me for violation of trade secret rules, conflicts of interest, or other similar claims.

The costs of arbitration may also be split unless the claims you bring involve unwaivable statutory rights where the controlling case law requires that the Company pay such costs (e.g., if you bring a breach of contract claim against the Company such fees may be split). You will not be required to share in any costs unique to arbitration until the arbitrator makes a specific ruling at the outset of the arbitration process that the claims at issue require you to share any portion of the cost of arbitration.

It is further agreed that 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.(Ex. 1 at ¶ 8, Ex. A at ¶ 9.)

However, the California Supreme Court in Armendariz, supra, 24 Cal.4th 83 held “that a mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obliges the employer to pay all types of costs that are unique to arbitration.” (Id. at 113.) As the scope of these arbitration agreements includes FEHA claim, Defendant must pay all costs unique to arbitration. (Ibid.) However, the Court can and severs the portion of this provision stating that such costs may be split by the parties. (See, Jenkins, supra, 107 Cal.App.5th at 647.)

Certified-Mail Requirement

Plaintiff also argues that the provision requiring an employee to initiate arbitration via certified mail creates a “forfeiture trap,” citing Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, as support for this proposition.

I understand that all I have to do to begin the arbitration process is to send a letter by United States Postal Service Certified Mail with Return Receipt requested to the Owner(s) of the Company, the President of the Company if the Company is a corporation, or the General Manager of the dealership stating that I have legal claims against the Company and/or any third-party beneficiaries, the nature of the legal claims and that I demand to pursue them via binding arbitration. I understand that my letter must be post- marked prior to the expiration of any statute of limitations that applies to my claims. The Company may similarly commence claims against you by making a similar demand and sending it to you in the same manner. ...(Ex. 1 at ¶ 10, Ex. A at ¶ 11.)

Nyulassy did not involve a similar provision, but a provision that required employees to submit to discussions with his supervisors about his/her claims as a condition precedent to arbitration, thereby giving the employer a “free peek” at the employee’s case ahead of arbitration. (See, Nyulassy, supra, 120 Cal.App.4th at 1282-1283.) The provision here simply requires Plaintiff (or Defendant if it is initiating the claim) to send a letter setting forth the nature of his claims to start the process, much like the filing of a Complaint in a civil action. As the letter is the start of the arbitration process, there is no “free peak” to Defendant. Accordingly, the provision is not unconscionable.

Injunctive Relief

Finally, Plaintiff claims that ¶ 10 of the Handbook Acknowledgement prohibits injunctive relief, making the agreement unconscionable. What that provision actually states is:

I agree that the arbitrator only has the authority to hear and adjudicate my individual claims and that the arbitrator does not have the authority to make the arbitration proceeding a class, representative or collective action, or to award relief to a group of employees in one proceeding, including claims brought pursuant to PAGA. This arbitration agreement shall not be construed to permit the consolidation or joinder of claims of other claimants, or to permit such claims to proceed as a class, representative or collective action (collectively "class claims"). ... 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...(Ex. 1 at ¶ 9, Ex. A at ¶ 10.)

There is no prohibition against seeking injunctive relief, and thus, no unconscionability in this provision.

Pursuant to C.C.P. § 1284, “[i]f a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Ibid.)