KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC

25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

Tentative Ruling

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25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

will forward the form to the Court Reporter’s Office and an official reporter will be provided.

TENTATIVE RULING: Defendant Capital Nephrology Medical Group’s motion to compel arbitration and stay action is ruled upon as follows.

In this employment action, Plaintiff Crystal Katsma alleges various causes of action under FEHA and the Labor Code related to her employment with Defendant.

Defendant moves to compel the action to arbitration pursuant to an arbitration agreement (“Agreement”) signed by Plaintiff. (Tani Decl. Exh. A.) The Agreement provides in relevant part that “[t]he Company and I mutually consent to the resolution by arbitration of all claims or causes of action, (collectively, “claims”), arising out of the termination of my employment or any claim of discrimination or unlawful harassment of any kind, that the Company may have against me or that I may have against the Company....

The claims covered by this Agreement include... claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); tort claims; claims for discrimination (including but not limited to, race, sex, sexual harassment, or any type of unlawful harassment, religion, national origin, age, marital status, medical condition, disability, or sexual orientation); and claims for violation of any federal, state, or other, governmental law, statute, regulation, or ordinance, including, but not limited to, all claims arising under Title VII of the Civil Rights Act of 1969, the Age Discrimination Act of 1967, [and] the California Fair Employment & Housing Act....” (Id. ¶ 1.)

A written agreement to submit a controversy to arbitration is valid, enforceable, and irrevocable consistent with standard contract principles. There is a strong public policy favoring the enforcement of arbitration agreements. (Code Civ. Proc. §1281; Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 706.) On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy, the court shall order the petitioner and the respondent to arbitrate the matter if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) the right to compel arbitration was waived by the petitioner; (b) grounds exist for the revocation of the agreement; or, (c) a party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. (Code Civ.

Proc. §1281.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

“A party seeking to compel arbitration of a dispute ‘bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

burden of proving any defense, such as unconscionability. [Citation.]” (Jenks v. DLA Piper Rudnick Gray Cary US LLP (2015) 243 Cal.App.4th 1, 8.)

Plaintiff opposes the motion on the sole basis that the Agreement is unconscionable. Plaintiff does not dispute that she signed the Agreement or that the Agreement covers the claims alleged in this action.

The Court must observe that Defendant’s reply contains numerous references to the Federal Arbitration Act (“FAA”). However, nowhere in the moving papers did Defendant refer to the FAA much less argue that the Agreement was somehow subject to the FAA. In fact, the Agreement itself contains no reference to the FAA. Thus, any citation to the FAA or any cases decided under the FAA referenced in Defendant’s reply are not controlling of any issues addressed herein.

Unconscionability

Both procedural and substantive unconscionability must be present in order for a contract provision to be unenforceable under the unconscionability doctrine. (Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1570.) “But they need not be present in the same degree. ‘Essentially a sliding scale is invoked which disregards the regularity of the procedural process of contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.’ In other words, 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.” (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th at 114.)

Plaintiff has the burden to prove unconscionability. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 911.)

Procedural Unconscionability

According to Plaintiff, the Agreement is procedurally unconscionable because the Agreement was presented on a take-it-or-leave-it basis with no opportunity to negotiate. She also contends that while the Agreement states that it is governed by the JAMS or AAA arbitration rules, she was not provided with those rules.

Defendant contends that Plaintiff was given a meaningful choice in signing the Agreement because she was free to ask questions after reviewing the Agreement. However, there is no dispute that this Agreement was presented in the context of an employer-employment relationship and at the same time that Plaintiff was onboarded as a newly hired employee. (Tani Decl. ¶ 4.) Further, Plaintiff declares that she was told by

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

“Jenny” that she had to sign the agreement in order to continue working. (Katsma Decl. ¶ 3.) Plaintiff declares that she was afraid not to sign the Agreement because she was afraid she would lose her job. (Id. ¶ 4.) Defendant’s attempt to submit evidence in reply that “Jenny” would not have been involved with onboarding Plaintiff does not change the result. While Defendant’s accounts manager may declare that Jenny would not have been involved because she never had access to onboarding documents, Plaintiff has not declared that Jenny had access to onboarding documents. Rather, Plaintiff declared that Jenny, an employee of Defendant, told Plaintiff that she had to sign the Agreement.

An adhesion contract establishes “some degree of procedural unconscionability.” (Sanchez, supra, 61 Cal.4th at 914.) “[T]he initial question regarding procedural unconscionability is whether the contract was one of adhesion, namely, 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.’”’” (Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 103.) “A finding of a contract of adhesion is essentially a finding of procedural unconscionability.” (Flores v.

Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 853.) In the employment context, the inequality of bargaining power that exists between an employee and an employer is sufficient on its own to demonstrate the oppression required for a finding of procedural unconscionability in an employment contract presented on a take-it-or-leave-it basis. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1534.) Nonetheless, the conclusion that the Agreement is an adhesion contract “heralds the beginning, not the end, of our inquiry into its enforceability.” (Mayers v.

Volt Management Corp. (2012) 203 Cal.App.4th 1194, 1207.)

With respect to Plaintiff’s argument that she was not provided a copy of the JAMS or AAA rules, any failure to provide a copy of the rules, standing alone such does not show unconscionability. (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1472.) Indeed, “[t]he absence of the AAA arbitration rules adds a bit to the procedural unconscionability.” (Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 485.) “We agree that the absence of the AAA rules is of minor significance to our analysis.” (Bigler v.

Harker School (2013) 213 Cal.App.4th 727, 737.) In the cases which discuss a failure to attach the rules, a finding of unconscionability was supported by the fact that the rules which were not attached were actually unfair to the weaker party. (Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 422-423.) The California Supreme Court has made clear that in cases finding that the failure to provide a copy of the arbitration rules, the failure was relevant because the unconscionability challenge depended in some manner on the arbitration rules in question and where there is no challenge to the applicable rules, the failure to attach such rules does not affect the unconscionability analysis. (Baltazar v.

Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.) Where the party is not claiming, for example, that anything was hidden in the arbitration rules, the failure to attach the applicable rules does not increase the procedural unconscionability.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

(Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 249.) Plaintiff does not make any claim that there was anything hidden in the rules which were not provided.

The Court finds that Plaintiff has demonstrated the Agreement is procedurally unconscionable on the basis that it is an adhesion contract presented in the context of an employment agreement on a take-it-or-leave-it basis.

Substantive Unconscionability

“A provision is substantively unconscionable if it ‘involves contract terms that are so one-sided as to ‘shock the conscience,’ or that impose harsh or oppressive terms.’” (Parada, supra, 176 Cal.App.4th at 1573.”)

Plaintiff asserts that the Agreement is substantively unconscionable because it shortens the statute of limitations applicable to her claims, limits discovery, precludes the right to administrative investigation, and lacks mutuality.

Plaintiff also argues that although the Agreement contains a delegation clause which purports to require the arbitrator to resolve any claim regarding “the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to, any claim that all or any part of this Agreement is void or voidable”, the Court should determine arbitrability. The Court need not address this argument because Defendant made no reference to any delegation clause in the Agreement in its motion and specifically presented an argument as to why the Agreement is not unconscionable.

Defendant itself has submitted the dispute with respect to unconscionability to the Court without any reference to a delegation clause. Defendant is not therefore permitted to rely upon any delegation clause. Indeed, in reply, Defendant while making various arguments as to the enforceability of the delegation clause concedes that the unconscionability issue shall be decided by the Court. (Rep. 6:26-7:3.)

As noted above, Plaintiff’s claims include FEHA related claims. When dealing with nonwaivable statutory rights, arbitration agreements encompassing those rights “must be subject to particular scrutiny.” (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 100.) To that end, an arbitration agreement encompassing such rights “must, at a minimum, provide for neutral arbitrators, adequate discovery, a written award subject to limited judicial review, the same types of relief which would be available from a court, and the employees must not be required to bear any type of expense they would not be required to bear if their claims were brought in a court.” (Armendariz, supra, 24 Cal.4th at 103-113.) [I]t is evident that an arbitration agreement cannot be made to serve as a vehicle for the waiver of statutory rights created by” the relevant statutory scheme. (Armendariz, supra, 24 Cal.4th at 101.)

Such claims may be

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25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

subject to arbitration only if the arbitration permits the plaintiff to fully vindicate their statutory rights in the arbitral forum. (Id. at 100-102.)

Notice and Statute of Limitations

Paragraph 3 of the Agreement is titled “Required Notice of All Claims and Statute of Limitations” and provides: “The Company and I agree that the aggrieved party must give written notice of any claim to the other party within one (1) year of the date the aggrieved party first has knowledge of the event giving rise to the claim. Written notice to the Company, or its officers, employees or agents, shall be sent to the Director of the Company or my most immediate supervisor in Sacramento, California.

I will be given notice at the last address recorded in my personnel file. The written notice shall identify and describe the nature of all claims asserted and detail the facts upon which such claims are based. The notice shall be sent to the other party by certified or registered mail, return receipt requested.” Paragraph 9 of the Agreement provides in part, “The Arbitrator shall apply the applicable statute of limitations to any claim, taking into account the compliance with paragraph 3 of this Agreement.”

Again, FEHA claims are purportedly covered by the Agreement. “The timely filing of an administrative complaint is a prerequisite to the bringing of a civil action for damages under the FEHA.” (Medix Ambulance Serv. v. Superior Court (2002) 97 Cal.App.4th 109, 116 [citations omitted].) With respect to FEHA claims, the Legislature amended Government Code § 12960 in 2021 to provide that an administrative complaint must be filed within three years of the unlawful employment practice. (Gov. Code § 12960(e)(5).)

The Agreement was executed by Plaintiff on October 14, 2021, and Plaintiff’s claims are premised on conduct that allegedly occurred, at least in part, in 2023 and 2024. (Comp. ¶¶ 14, 24.) The plain language of the Agreement places a oneyear time limit as to when an employee must file a claim subject to arbitration, which is two years shorter than an employee has to file an administrative claim under FEHA.

“It is settled that parties may agree, in an arbitration agreement or otherwise, to shorten the limitations period applicable to a claim. [citations omitted] However, the shortened limitations period must be reasonable.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal. 5th 478, 501.) Importantly for analysis of this motion, however, numerous cases have found that a provision in an arbitration agreement which requires an employee to submit a FEHA claim within one year is substantively unconscionable. (Id. at 502; Baxter v.

Genworth North America Corp. (2017) 16 Cal. App. 5th 713, 732; Ellis v. U.S. Security Associates (2014) 224 Cal.App.4th 1213, 1226.) The California Supreme Court determined that an arbitration provision requiring claims to be filed within one-year “truncates the period the Legislature has determined employees need to effectively vindicate their rights. As a result, it potentially deprives Charter employees of meaningful DFEH participation. It is ‘problematic to require [an] employee to arbitrate

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25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

statutory FEHA claims before an administrative investigation can be conducted.’ The ‘involvement of the DFEH serves an important function [and] ‘may be helpful because it requires a prompt, detailed response from the employer, giving the employee a free, quick look at the defenses the employer is likely to raise.’ The filing limitation substantially shortens the time for fully pursuing a FEHA claim and may preclude a DFEH investigation, rendering it substantively unconscionable.” (Ramirez, supra, 16 Cal. 5th at 502.)

The limitation in the Agreement is no different than the offending provisions in the above cases. In reality, the provision in paragraph 3 is more limiting than the offending provision in Ramirez. Ramirez involved the previous version of Government Code § 12960 which required an employee to file an administrative charge with the DFEH within one year. But now the employee has three years to file such a charge. Thus, paragraph 3 shortens the applicable statutory timeframe by two years. Just as in Ramirez, the filing limitation in the Agreement “substantially shortens the time for fully pursuing a FEHA claim and may preclude a DFEH investigation, rendering it substantively unconscionable.” (Ramirez, supra, 16 Cal. 5th at 502.)

Further, the applicable time to file a civil action after filing an administrative claim with the DFEH is one year after the DFEH issues written notice that it has closed its investigation without electing to file its own civil action. (Gov. Code § 12960(f)(1)(B).) The DFEH has up to one year to investigate. (Id. § 12965(c)(1)(A).) Thus, because an employee now has three years to file an administrative charge with the DFEH, the DFEH has one year to investigate, and the employee then has one year to file a civil action upon notice from the DFEH, the outside limit for a FEHA action could be five years from when the offending conduct occurred.

Yet here, an employee must file notice with Defendant within one year, potentially four years before the employee would be required to file a FEHA action in Court. Indeed, while paragraph 9 of the Agreement states that the arbitrator will “apply the applicable statute of limitations to any claim” that language is limited and conditioned by the following phrase: “taking into account the compliance with paragraph 3 of this Agreement.” The plain reading of this provision means that for any claims for which the applicable statute of limitations is more than one year (including FEHA claims), because the Agreement only allows application of the statute “taking into account the compliance with paragraph 3”, any such claim effectively must be submitted to Defendant within the one year timeframe of paragraph 3 regardless of the applicable statute of limitations.

Again, while effectively shortening the statute of limitations for certain claims may be permissible through an arbitration agreement, shortening the time for submitting a FEHA claim to one year is not.

Defendant’s reply essentially ignores the entirety of the above case authority and instead cites to case law that does not involve FEHA claims. Defendant argues in reply that paragraph 3 “does nothing to shorten the statute of limitations period for Plaintiff to

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

pursue her claims.” (Reply at 4:6-7.) Defendant asserts that the agreement “requires the Arbitrator to ‘apply the applicable statute of limitations to any claim’” but ignores the immediately subsequent modifying clause, “taking into account the compliance with paragraph 3 of this Agreement.” (Reply at 4:8-9.) The existence of this latter clause, by its plain language, requires that the arbitrator not simply apply the statute of limitations, but instead, the arbitrator can do so only by “taking into account” whether the party asserting the claim has complied with the one-year notice requirement.

Indeed to read this latter condition, as Defendant appears to suggest, as adding no restriction to the arbitrator’s analysis of the applicable statute of limitations where a claim (including a FEHA claim) has a statute of more than one year, would be to remove its existence from the paragraph entirely. Paragraph 3 makes no distinction for FEHA claims as those alleged in this action.

The Court concludes that based upon the language set forth in paragraph 3, the limitations period as set forth thereby is substantively unconscionable.

Discovery

Plaintiff contends that the Agreement does not provide for non-expert depositions and also does not provide for any mechanism to request additional discovery from the arbitrator. As discussed above, in order to allow vindication of statutory rights, Armendariz requires that an arbitration agreement allow for adequate discovery. The parties may “agree to something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05.” (Armendariz, supra, 24 Cal.4th at 105-106.) Armendariz recognized that “a limitation on discovery is one important component of the ‘simplicity, informality, and expedition of arbitration.’” (Id. at 106, fn. 11.) But, “adequate discovery is indispensable for the vindication of FEHA claims.” (Id. at 104.)

Paragraph 5 of the Agreement tiled “Discovery” provides that “[e]ach party shall have the right to take the deposition of any expert witness designated by another party. Each party shall have the right to make requests for production of documents to any party. Each party shall have the right to propound written interrogatories to any party of the arbitration. The subpoena right specified below shall be applicable to discovery pursuant to this paragraph.” Paragraph 7 of the Agreement also states that “[e]ach party shall have the right to subpoena witnesses for arbitration.”

Plaintiff is correct that the Agreement does not provide for non-expert depositions or any way to request additional discovery from the arbitrator. “The assessment of whether a discovery clause is unconscionable should focus on general factors that can be examined without relying on subsequent developments. Those factors include the types of claims covered by the agreement, the amount of discovery allowed, the degree to which that amount may differ from the amount available in conventional litigation, any

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25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

asymmetries between the parties with regard to discovery, and the arbitrator's authority to order additional discovery.” (Ramirez, supra, 16 Cal. 5th at 506.) The discovery provision in Ramirez which was not found substantively unconscionable provides that an “arbitrator will decide all discovery disputes related to the arbitration”, allowed the parties to take up to four depositions, and to propound up to 20 interrogatories and 15 requests for documents. (Id. at 503-504.) The provision also stated that “disagreements regarding the exchange of information or depositions will be resolved by the arbitrator to allow a full and equal opportunity to all parties to present evidence that the arbitrator deems material and relevant to the resolution of the dispute.” (Id. at 504.)

Ramirez concluded that the language gave the arbitrator the authority to resolve discovery disputes with including the authority to order additional depositions. (Id. at 506.) “[I]t seems clear the Agreement and the Guidelines give the arbitrator the authority to resolve ‘all discovery disputes’ in a manner that allows ‘a full and equal opportunity’ to discover and present relevant and material evidence. Understood in this way, if the arbitrator determined additional depositions were necessary to satisfy the Armendariz requirement, the Guidelines would permit the arbitrator to order expanded discovery.” (Id.)

By contrast, here the Agreement not only does not permit percipient witness depositions, but also does not set forth any mechanism by which the parties could request additional discovery. Unlike Ramirez, there is no language providing that the arbitrator will resolve all discovery disputes much less any language that the arbitrator will resolve any disagreements “to allow a full and equal opportunity to all parties to present evidence that the arbitrator deems material and relevant to the resolution of the dispute.” (Id. at 504.)

There is no manner by which the Court can construe paragraph 5 as permitting the arbitrator to order additional discovery deemed necessary to fully vindicate an employee’s FEHA claims as required by Armendariz. Notably in Armendariz, there was no provision in the arbitration agreement which discussed discovery. The California Supreme Court found in Armendariz that the absence of a provision for discovery did not automatically mean the arbitration agreement was unconscionable. Rather, the California Supreme Court “infer[red] that when parties agree to arbitrate statutory claims, they also implicitly agree, absent express language to the contrary, to such procedures as are necessary to vindicate that claim.” ((Armendariz, supra, 24 Cal.4th at 106.) [emphasis added].)

Here, with respect to the Agreement, there is “express language to the contrary” as to the discovery allowed for FEHA claims, specifically, only deposition of experts designated by the other party, and limited interrogatories and requests for production. Indeed, if an employer did not designate any experts, an employee would not be entitled to any depositions. Further there is no mechanism through which an employee can ask for additional discovery. Ramirez noted that interpreting the agreement before it “to prevent the arbitrator from ordering additional discovery deemed appropriate could render the provisions invalid under Armendariz.” (Ramirez, supra, 16 Cal. 5th at 506.)

Ramirez was able to avoid that interpretation given

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25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

the agreement’s language giving the arbitrator the authority to resolve discovery disputes “to allow a full and equal opportunity to all parties to present evidence that the arbitrator deems material and relevant to the resolution of the dispute.” (Id. at 504.) However, no such language exists here.

Other cases are illustrative. A provision which entitled an employee to receive documents from their medical and personnel files in addition to propounding 10 interrogatories, 5 requests for production, and taking two depositions was found to be substantively unconscionable. (Baxter v. Genworth North America Corp. (2017) 16 Cal. App. 5th 713, 727.) The arbitrator had the authority to increase depositions, interrogatories, and requests for production “for good and sufficient cause shown to ensure that a party has a fair opportunity to present a case.” (Id.) Baxter concluded that the default discovery was low and the burden placed on the employee to justify additional discovery was “somewhat greater than a simple showing of need or good cause ” (Id. at 730.) Again, here there is no provision for percipient witness depositions, nor any mechanism to request additional discovery.

Defendant’s reply fails to directly confront the above authority and rather argues that paragraph 5 does not limit discovery and simply “lists examples of discovery devices available to the parties ” (Rep. 4:14-16.) This argument ignores the plain language of paragraph 5 which provides that the parties have a right to engage in three specific methods of discovery. It does not in any manner purport to set forth mere examples much less allow a party to request more discovery.

Under the framework articulated by the California Supreme Court in Ramirez which is set forth above, the Court concludes that paragraph 5 is substantively unconscionable. The failure to allow for percipient witness depositions in a FEHA case, and to restrict discovery to expert depositions (if an expert is designated), interrogatories and requests for production. FEHA cases can be complex and highly factual is unreasonable. “Given the complexity of employment disputes, the outcomes of which are often determined by the testimony of multiple percipient witnesses, as well as written information about the disputed employment practice, it will be the unusual instance where the deposition of two witnesses will be sufficient to present a case.” (Fitz v.

NCR Corp. (2004) 118 Cal. App. 4th 702, 717.) Fitz involved an unconscionable discovery limitation which allowed two witness depositions and a mechanism to request more. Again, the Agreement does not permit any witness depositions or a way to request them. By contrast in a civil action, an employee would be able to take a multitude of witness depositions. Further there necessarily is an asymmetry between Defendant and any employee with respect to discovery. “This is because the employer already has in its possession many of the documents relevant to an employment discrimination case as well as having in its employ many of the relevant witnesses [citations omitted] Given that [the employer] is presumably in possession of the vast majority of evidence that would be relevant to

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employment-related claims against it, the limitations on discovery, although equally applicable to both parties, work to curtail the employee's ability to substantiate any claim against [the employer].” (Id. at 716.) The Court concludes that paragraph 5 is inadequate to permit an employee to vindicate their statutory rights.

Administrative Waiver

Plaintiff also contends that Paragraph 9 impermissibly requires an employee to waive any right to have the DFEH investigate any administrative charge. The relevant language provides: “[e]xcept as otherwise provided in this Agreement, both the Company and I agree that neither of us shall initiate or prosecute any lawsuit or administrative action (other than an administrative charge of discrimination) in any way related to any claim covered by this Agreement. I further understand that by this Agreement, I am waiving my right to have a claim adjudicated by a court, jury or administrative agency.” [Emphasis added]

A fair reading of the above language is that an employee is waiving the right to have any administrative charge filed with the DFEH actually investigated by the DFEH. As discussed above, filing an administrative complaint with the DFEH is a prerequisite to a FEHA action. Here, however, Paragraph 9 permits an administrative charge to be filed with the DFEH, and does not purport to waive any right to have that charge investigated by the DFEH. Instead it prohibits an employee from having any claim adjudicated, not investigated. This language alone is not substantively unconscionable.

Mutuality

Plaintiff also contends that the Agreement lacks mutuality because it does not provide that Defendant is required to arbitrate any equitable claims or trade secret claims it may have against an employee.

“Arbitration agreements must have “a modicum of bilaterality.” (Armendariz, supra, 24 Cal.4th at 119.) An arbitration agreement may not require “one contracting party, but not the other, to arbitrate all claims arising out of the same transaction or occurrence or series of transactions or occurrences.” (Id. at 120.) “Given the disadvantages that may exist for plaintiffs arbitrating disputes, it is unfairly one-sided for an employer with superior bargaining power to impose arbitration on the employee as plaintiff but not to accept such limitations when it seeks to prosecute a claim against the employee, without at least some reasonable justification for such one-sidedness based on ‘business realities’ If the arbitration system established by the employer is indeed fair, then the employer as well as the employee should be willing to submit claims to arbitration.

Without reasonable justification for this lack of mutuality, arbitration appears less as a forum for neutral dispute resolution and more as a means of maximizing

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employer advantage. Arbitration was not intended for this purpose.” (Id. at 117–118.)

Here, the Court does not find that the Agreement lacks mutuality with respect to the claims that are subject to arbitration. While Plaintiff is correct that the Agreement does not specifically mention trade secret claims, paragraph 1 of the Agreement does provide for arbitration of all tort claims, violation of any federal or state law. This would necessarily include trade secret claims. Indeed, the only claims that are excluded from arbitration are an employee’s claims for workers compensation or unemployment compensation. (Agreement ¶ 2.)

Severance

As set forth above, the Court has concluded that paragraphs 3 and 5 are substantively unconscionable and that Plaintiff demonstrated procedural unconscionability. The question remains as to whether the Court may nevertheless sever those provisions from the Agreement and enforce the Agreement. The Court concludes that it cannot.

Pursuant to Civil Code § 1670.5, a court has discretion to refuse to enforce the contract, sever the unconscionable clause, or limit application of the unconscionable clause. (Ramirez, supra, 16 Cal. 5th at 513.) “Here, we clarify that no bright-line rule requires a court to refuse enforcement if a contract has more than one unconscionable term. Likewise, a court is not required to sever or restrict an unconscionable term if an agreement has only a single such term. Instead, the appropriate inquiry is qualitative and accounts for each factor Armendariz identified.

At the outset, a court should ask whether ‘the central purpose of the contract is tainted with illegality.’ If so, the contract cannot be cured, and the court should refuse to enforce it. If that is not the case, the court should go on to ask first, whether the contract’s unconscionability can be cured purely through severance or restriction of its terms, or whether reformation by augmentation is necessary. If no ‘reformation is required,’ the offending provision can be severed or limited, and ‘the rest of the arbitration agreement left intact,’ then severance or restriction is the preferred course for provisions that are collateral to the agreement's main purpose.

If the unconscionability cannot be cured by extirpating or limiting the offending provisions, but instead requires augmentation to cure the unconscionability, then the court should refuse to enforce the contract. Courts cannot ‘rewrite agreements and impose terms to which neither party has agreed.’” (Id. at 516 [citations omitted].) Even if the contract can be cured through severance, a court may refuse to do so if it would “condone an illegal scheme” or if “the defects in the agreement indicate that the stronger party engaged in a systematic effort to impose arbitration on the weaker party not simply as an alternative to litigation, but to secure a forum that works to the stronger party's advantage.” (Id.)

The Court finds that severance is not proper here. Although there is no bright line rule

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV000475: KATSMA vs CAPITAL NEPHROLOGY ACCESS CENTER, LLC 03/27/2025 Hearing on Motion to Compel Arbitration in Department 53

with respect to the number of unconscionable terms required to refuse severance, the Court concluded that two provisions are substantively unconscionable. These provisions go to the very heart of claims that an employee is likely to bring against and employer and substantially limit the employee’s rights with respect to those claims. As discussed extensively above, the Agreement substantially limits the employee’s time to pursue FEHA claims. In addition, the Agreement substantially limits the employee’s ability to pursue discovery in order to vindicate the employee’s statutory rights.

These two provisions indicate that the stronger party, Defendant, engaged in a systematic effort to impose arbitration on the weaker party, the employee, in order to secure a forum that works to Defendant’s advantage. This is especially true given the asymmetry between an employer and employee with respect to discovery set forth above. “Such multiple defects indicate a systematic effort to impose arbitration on a [plaintiff] not simply as an alternative to litigation, but as an inferior forum that works to the [defendant’s] advantage.” (Arrmendariz, supra, 24 Cal.4th at 124.)

Thus, the Court finds that the Agreement is permeated by unconscionability, and thus the entire agreement is unenforceable.

The Court recognizes that paragraph 13 of the Agreement states that if any provision is found void or unenforceable the remained of the Agreement is not affected. It is true that if an arbitration agreement “contains a severance clause, the court should take it into account as an expression of the parties’ intent that an agreement curable by removing defective terms should otherwise be enforced.” (Ramirez, supra, 16 Cal. 5th at 517.) “That said, we note that the parties to an agreement cannot divest a trial court of its discretion under Civil Code section 1670.5 by including such a severance clause.” (Id.) Here, paragraph 13 does not state that any provision may be severed, and in any event, the Court declines to do so for the reasons already stated above.

The motion is denied.

Given the above, the Court need not address Plaintiff’s argument that Defendant failed to comply with California Rules of Court 3.1330 by not attaching the Agreement to the motion. In addition, the Court need not rule on Plaintiff’s objections to evidence.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or other notice is required.