Childres v. Arrowhead Central Credit Union

TENTATIVE RULING FOR SEPTEMBER 10, 2026 Department R12 - Judge Kory Mathewson Childres v. Arrowhead Central Credit Union – CIVRS2506390 Motion: Compel Arbitration Movant: Defendant Arrowhead Central Credit Union Respondent: Plaintiff Antonio Childres Ruling: Motion to compel arbitration of Plaintiff’s claims is GRANTED, except for the representative PAGA cause of action. To the extent that the TM Policy may prevent Plaintiff from inquiring about, obtaining in discovery, or utilizing at arbitration information from ACCU team members or ACCU documents, the court ORDERS that such language is severed and inapplicable to arbitration of the Plaintiff’s individual claims that are prosecuted in arbitration.

The class action claims are DISMISSED. The matter is STAYED pending completion of arbitration. Defendant to provide Order and give notice. _____________________________________________________________________________

[This motion was heard on August 4, 2026 and the Court provided a tentative ruling. Missing from Plaintiff’s opposition was the Team Member Confidentiality & Non-Disclosure Policy (TM Policy), so there was no evidence for the court to examine to see if the TM Policy included a confidentiality clause preventing employees from disclosing confidential or proprietary information directly or indirectly. At the hearing, the Court continued the matter to September 10, 2026, for consideration of the supplemental filing. Plaintiff submitted counsel Bokhour’s supplemental declaration attaching a true and correct copy of the TM Policy. (Bokhour Supp. Decl., ¶5, Exh. B.) The Court has now considered the TM and supplemented its previous tentative ruling].

ACCU’s motion seeks three forms of relief: 1) compelling Childres to pursue his individual claim in arbitration pursuant to a mutual arbitration agreement (AA); 2) dismissing the class claims per the AA’s class action waiver; 3) staying the PAGA claim per the Federal Arbitration Act (FAA) or California Arbitration Act (CAA). Plaintiff opposes. The motion is brought timely.

Existence of Valid Arbitration Agreement ACCU presents evidence through its Chief People Officer Ryan Weller that Plaintiff Childres entered into an arbitration agreement when he started his employment on 10/18/22. (Weller Decl., ¶¶1, 10, 11, 13, Exh. A.) The AA supplied by moving party contains Childres’s handwritten name at the top of page one and what ACCU purports to be his signature on page six. (Weller Decl., ¶¶11, 13, Exh. A.) Plaintiff does not challenge the existence of the AA.

UNCONSCIONABILITY

Plaintiff opposes the motion solely on unconscionability grounds, arguing the AA presents a low to moderate degree of procedural unconscionability as an adhesion contract and a high degree of substantive unconscionability.

Procedural Unconscionability There is no evidence that Childres participated in drafting the AA here and it appears to be a standardized, form contract with blank spaces for the employee’s number, name, and effective date, signifying it is used routinely for any new ACCU hire. (Weller Decl., Exh. A, p. 1.) Weller also states that all new hires are provided with ACCU’s arbitration agreement. (Weller Decl., ¶6.) This evidence alone supports a finding that the AA here is an adhesion contract.

ACCU argues against a finding of adhesion because Plaintiff did not elect to opt out of the agreement despite being permitted to do so. (Weller Decl., ¶12.) This argument is not persuasive; the Supreme Court has rejected the idea that a failure to opt out necessarily reflects an “authentic, informed choice.” (Gentry v. Super. Ct. (2007) 42 Cal.4th 443, 471-473 (Gentry) abrogation on other grounds recognized by OTO, L.L.C. v.Kho (2019) 8 Cal.5th 111, fn. 10.) Plaintiff presents evidence that the AA here was a necessary requirement to continue his employment.

Plaintiff contends that the AA was bundled together with lengthy company policies and procedures totaling at least 130 pages. (Childres Decl., ¶¶3-4.) Plaintiff states he was required to complete various forms before he could begin working, including the AA document, and that he was told he had to complete each document to continue with his employment. (Childres Decl., ¶¶3, 7.) Childres states that during the onboarding process, nobody from ACCU told him verbally that he could consult an attorney or refuse to agree to any particular document and still keep the position. (Childres Decl., ¶7.) Childres relates that he was required to complete the documents without assistance or supervision such that he had no opportunity to ask questions or negotiate terms and the documents were presented to him as mandatory conditions of employment. (Childres Decl., ¶¶8, 9.)

Conditioning employment on the acceptance of arbitration agreements generally satisfies the procedural unconscionability requirement, particularly among employees who are not “the most sought-after” and few employees are in a position to refuse a job because of an arbitration requirement. (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071, quoting Armendariz, supra, 24 Cal.4th at p. 115.)

Plaintiff has shown adequately that the AA here exhibits a moderate degree of procedural unconscionability given the manner in which it was presented to him and because it is fundamentally an adhesion contract.

Substantive Unconscionability Plaintiff advances three reasons why the AA is substantively unconscionable: 1) it contains an unlawful wholesale representative action waiver; 2) the confidentiality clause bars disclosure of arbitration existence and results; 3) with the Team Member Confidentiality & Non- Disclosure Policy, they chill Plaintiff’s ability to investigate and vindicate statutory rights in violation of Labor Code section 232.

1. Unlawful Wholesale Representative Action Waiver

Paragraph two of the AA specifies that the arbitrator shall not have the authority to fashion a proceeding as a class, collective, or representative action or to award relief to a group of current or former employees or applicants. (Weller Decl., Exh. A, ¶2.) “All claims covered by this Agreement may be brought and resolved on an individual basis only.” (Ibid.) The clause further provides that each side waives any right to bring claims as class, collective, or representative actions and, except as otherwise required under applicable law, each side shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person. (Ibid.)

Plaintiff contends this language unequivocally requires him and all employees to waive entirely the right to bring or participate in representative PAGA actions and such wholesale waiver is unenforceable as a matter of California public policy. The Supreme Court held that agreements requiring employees to waive representative PAGA claims are invalid because they undermine the state’s interest in enforcing the Labor Code. (Iskanian v. CLS Transportation Los Angeles LLC (2014) 59 Cal.4th 348, 383 (Iskanian), overruled on other grounds by Quach v. Calif. Commerce Club, Inc. (2024) 16 Cal.5th 562.) Thus, “an employee’s right to bring a PAGA action is unwaivable.” (Id., at p. 383.) However, individual PAGA claims may be compelled to arbitration. (Adolph v. Uber Techs., Inc. (2023) 14 Cal.5th 1104, 1118 (Adolph); Viking River Cruises v. Moriana (2022) 596 U.S. 639, 662 (Viking River).)

“Viking River requires enforcement of agreements to arbitrate a PAGA plaintiff’s individual claims if the agreement is covered by the FAA.” (Adolph, supra, 14 Cal.5th at p. 1119.) The Viking River Court held that to the extent the arbitration agreement there purported to waive representative PAGA claims, it is invalid but its severability clause salvaged Viking’s entitlement to enforce the agreement insofar as it mandated arbitration of the individual PAGA claim. (Viking River, supra, 596 U.S. at p. 662.)

Here, the AA contains a severability clause stating that if any portion is found to be unenforceable, such portion will be severed and the remaining portion shall continue to be enforceable. (Weller Decl., Exh. A, ¶7.) To the extent that the AA here intends to preclude Plaintiff from bringing representative PAGA claims outside of arbitration, such provision is invalid under Iskanian, supra, and warrants severance. Thus, just like in Viking River, the severability clause salvages ACCU’s entitlement to enforce the agreement insofar as it mandates arbitration of Plaintiff Childres’s individual PAGA claim, which is consistent with Adolph and Viking River, supra. In this regard, the AA here is not substantively unconscionable because any offending portion may be severed with respect to the representative PAGA claims.

Consequently, the Court severs any portion of the AA that restricts or waives Plaintiff’s ability to pursue representative PAGA actions outside of arbitration and finds that the AA does not preclude Plaintiff from pursuing individual PAGA claims in arbitration.

2. Confidentiality Clause Barring Disclosure of Existence, Content, or Results of Arbitration

Paragraph 5 of the AA states: “Except as may be permitted or required by law, neither a party nor the arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties.” (Weller Decl., Exh. A, ¶5.) Plaintiff contends this term is substantively unconscionable because it bars Plaintiff from disclosing the existence of an arbitration along with its content and outcome, which overwhelmingly benefits employers.

In Murrey v. Super. Ct. (2023) 87 Cal.App.5th 1223 (Murrey), plaintiff sued her employer GE for gender and sex harassment, Labor Code violations, and retaliation related to alleged sexual harassment by her supervisor. (Id., at p. 1231.) GE compelled plaintiff to arbitration then plaintiff sought writ review which the appellate court granted, finding procedural and substantive unconscionability that indicated a concerted effort to impose on an employee a forum with distinct advantages for the employer. (Id., at 1256.)

GE’s arbitration clause included a confidentiality clause forcing Murrey not to publish or disseminate the arbitration award. (Id., at pp. 1253-1254.) GE did not identify a commercial need for the proceedings to remain confidential. (Id., at p. 1254.) “GE's confidentiality provision serves no purpose other than to benefit GE. Future employees cannot take advantage of findings in past arbitrations or prove a pattern of discrimination and/or retaliation.” (Id., at p. 1255.) The court further observed that keeping past findings secret undermines an employee’s confidence in the fairness and honesty of the arbitration process and potentially discourages an employee from pursuing a valid discrimination claim. (Ibid.) The court held that GE’s confidentiality provision was substantively unconscionable. (Ibid.)

Here, ACCU’s confidentiality clause is much broader than GE’s in the Murrey case because ACCU’s clause prohibits a party from disclosing the existence and contents of the arbitration, whereas GE’s prevented dissemination of the award only. In its reply brief, ACCU argues the confidentiality term preserves disclosures that California or federal law affirmatively permit or require. This argument is not persuasive, particularly in light of the Murrey court’s analysis that confidentiality prevents future employees from proving a pattern of bad conduct (e.g., discrimination or retaliation or as applicable here, wage and hour violations).

ACCU also failed to identify any legitimate commercial need for confidentiality of the arbitration process. ACCU does not suggest that the court sever the confidentiality clause, which indicates its tacit desire to preserve the confidentiality clause and secure an unfair benefit to itself, which the Murrey court condemned. (Murrey, supra, 87 Cal.App.5th at p. 1255.)

Thus, while the Court finds that the confidentiality provision imposes a moderate degree of substantive unconscionability, it is severable and severs the confidentiality language from paragraph 5 of the AA.

3. The Team Member Confidentiality & Non-Disclosure Policy is Substantively Unconscionable but severable

Plaintiff argues that a Team Member Confidentiality & Non-Disclosure Policy (Team Member Policy), which he executed contemporaneously with the AA, includes a sweeping confidentiality clause that prevents employees as a condition of employment from disclosing confidential or proprietary information directly or indirectly. He first contends the AA and the TM Policy must be construed together for purposes of substantive unconscionability analysis because they are documents that Plaintiff executed during his onboarding process on the same day. (Childres Decl., ¶¶3, 6.) This position has merit.

Under Civil Code section 1642, the general rule is that several papers relating to the same subject matter and executed as parts of substantially one transaction are to be construed together as one contract, even if they do not expressly refer to one another. (Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 490 (Alberto); Gurganus v. IGS Solutions LLC (2025) 115 Cal.App.5th 327, 335 [reading arbitration agreement and confidentiality agreement together when assessing unconscionability]; Civ. Code, § 1642.)

The Alberto court considered an arbitration agreement and confidentiality agreement together because they were executed on the same day as separate aspects of the plaintiff’s hiring (a single primary transaction). (Alberto, supra, 91 Cal.App.5th at pp. 490-491.) Both agreements governed how to resolve disputes arising between Alberto and his employer arising from Alberto’s employment; treating the agreements separately would fail to account for the overall dispute resolution process the parties agreed upon. (Id., at pp. 490-491.) Therefore, in Alberto, unconscionability in the confidentiality agreement affected whether the separate arbitration agreement was also unconscionable. (Id., at p. 491.)

There is no doubt that Plaintiff Childres here signed the AA and TM Policy on the same day during a single transaction (e.g., Childres’ hiring and the dispute resolution procedure applicable to him). (Alberto, supra, 91 Cal.App.5th at p. 491; Childres Decl., ¶3; Weller Decl., ¶¶6, 10, 11.) Therefore, they must be read together in determining substantive unconscionability; to hold otherwise would allow ACCU to impose unconscionable arbitration terms then avoid an unconscionability finding because it put objectionable terms in a formally separate document. (Ibid.)

The next step examines whether the TM Policy is substantively unconscionable. According to Plaintiff, the offensive part of the TM Policy makes certain information confidential or proprietary and trade secrets protected under federal and state law; specifically, all information regarding ACCU, its team members, members, prospective members, ACCU matters, accounts, transactions, and strategies. (Bokhour Supp. Decl., Exh. B, Arrowhead000188.) As a condition of employment, ACCU team members must not disclose confidential or proprietary information or use it in any way during employment or any time thereafter. (Ibid.)

Plaintiff argues this language is not narrowly tailored to protect legitimate trade secrets or proprietary information but instead is sweeping, broad, and undefined, extending to almost any matter related to ACCU’s business and employees. Because the TM Policy covers all team 8

members during and after employment, Plaintiff argues it would prohibit employees from discussing wages, coworkers, workplace complaints, investigations, discrimination, harassment, discipline, witnesses, and facts relevant to Labor Code litigation. This argument is not entirely persuasive.

With respect to discovery, arbitration agreements must ensure minimum standards of fairness so employees can vindicate their public rights. (De Leon v. Pinnacle Property Management Services, LLC (2021) 72 Cal.App.5th 476, 487 (De Leon), disapproved on other grounds by Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 505-506 (Ramirez).) Employees are at least entitled to discovery that is sufficient to arbitrate statutory claims, including access to essential documents and witnesses. (De Leon, supra., 72 Cal.App.5th at p. 487.) Courts assess the amount of default discovery under the arbitration agreement, the standard to obtain additional discovery, and whether plaintiffs demonstrated that the discovery limitations will prevent them from arbitrating their statutory claims adequately. (Ibid.)

Here, the AA states discovery shall be conducted per applicable JAMS arbitration rules and the parties shall be entitled to discovery sufficient to adequately arbitrate their claims and defenses. (Weller Decl., Exh. A, ¶4.5.) Plaintiff does not demonstrate that any discovery limitations will prevent him from arbitrating his claims. For example, Plaintiff did not present facts showing that he will need to call as witnesses any present or former ACCU employees, or how many, or for what purpose. The Bokhour declaration and supplemental declaration are silent on this issue.

Nevertheless, courts acknowledge that employment disputes often turn on testimony from percipient witnesses and access to employer-controlled documents. (Baxter v. Genworth N. Am. Corp. (2017) 16 Cal.App.5th 713, 727 (Baxter), disapproved on other grounds by Ramirez, supra, 16 Cal.5th 478.) But adequate discovery does not mean unfettered discovery. (Baxter, supra, 16 Cal.App.5th at p. 727.) Baxter involved Fair Employment and Housing Act (FEHA) claims for discrimination, retaliation, and wrongful termination. (Id., at p. 720.) Noting it was a factually complex case involving 12 years of employment history, the court explained the outcome would depend upon several percipient witnesses, six who were identified by name in the complaint, plus prior complaints similar to Baxter’s, internal investigations, and other documents. (Id., at pp. 727-728.)

In contrast here, Plaintiff’s class claims are subject to dismissal because he did not oppose ACCU’s motion to dismiss the class claims. The representative PAGA claim is not subject to arbitration. The FAC does not identify any percipient witnesses by name. Plaintiff began working for ACCU on 10/19/22, less than four years ago. (FAC, ¶17.) This is a wage and hour litigation; presumably much of the discovery, facts, and evidence will be documentary and payroll and accounting-based. Plaintiff’s opposition papers and supplemental declaration do not present any evidence about how many, if any, of Plaintiff’s ACCU co-workers or other personnel would be necessary percipient witnesses for his individual wage and hour claims that are subject to arbitration.

Moreover, Plaintiff does not explain adequately how the specific language of any confidentiality clauses in the TM Policy would prevent him from producing, or obtaining from

ACCU, documentary evidence or percipient witness evidence related to his individual wage and hour claims. In its moving papers, ACCU acknowledged that there “are no other terms in the Agreement that limit the manner in which discovery is conducted, nor are there imposed limits to the extent of sufficient discovery requests.” (ACCU Memo., 17:20-22.)

In its reply memorandum regarding the TM Policy, ACCU argues that Plaintiff’s interpretation “is an artificially narrow reading of isolated language.” (ACCU Reply, 15:26.) Regarding the TM Policy phrase “all information regarding the Credit Union’s team members,” ACCU explains that when “[r]ead as a whole, the [TM] Policy does not prohibit employees from discussing wages, workplace complaints, government investigations, or other legally protected disclosures – it protects only information legally entitled to protection. The savings clause ensures employees remain free to make any disclosures authorized or required by law without enumerating every statutory exception.” (ACCU Reply, 16:7-11.) ACCU concludes: “Plaintiff’s interpretation depends on selectively reading isolated language while disregarding the Policy’s limiting provisions and express carve-outs.” (ACCU Reply, 16:18-19.)

Therefore, ACCU has acknowledged that the TM Policy will not and does not interfere nor impede Plaintiff’s ability to obtain necessary and appropriate discovery from ACCU and other team members if needed to prosecute the individual wage and hour claims. Instead, with its stated Reply position, ACCU consented to rather broad-based discovery for the individual wage and hour claims in arbitration.

Substantive unconscionability focuses on overly harsh or one-sided results. (Armendariz v. Found. Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).) Based on the foregoing analysis, Plaintiff has not demonstrated that the TM Policy will produce overly harsh or one-sided results in connection with any arbitration here of Plaintiff’s individual wage and hour claims. But even if the court concluded that the confidentiality clauses in the TM Policy would produce such results, the court has remedial options.

Civil Code section 1670.5, subdivision (a), provides: “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.” (Armendariz, sura, 24 Cal.4th at p. 114.)

Thus, even if the court found that the confidentiality clauses in the TM Policy exhibited a mild to moderate degree of substantive unconscionability, the court could limit their application, and make an order that the Plaintiff is permitted to obtain discovery from ACCU of relevant documentary evidence and percipient witness evidence necessary to arbitrate the individual wage and hour claims.

Severance of Offending Terms in the AA Plaintiff urges the court to find that the AA here is permeated with unconscionability and refuse to sever any offending terms, relying on Armendariz which states that courts may not reform contracts to save them from illegality. (Armendariz, supra, 24 Cal.4th at p. 125.) But as the Murrey court explained, under Armendariz, if the central purpose of the contract is tainted

with illegality, then the contract as a whole cannot be enforced but if the illegality is collateral to the main purpose of the contract and can be severed, then such severance is appropriate. (Murrey, supra, 87 Cal.App.5th at p. 1255, quoting Armendariz, supra, 24 Cal.4th at p. 124.)

Here, the Court can sever the confidentiality clause found at the last sentence of paragraph 5 in the AA because it is collateral to the main purpose of the contract, which is to resolve any disputes or claims in arbitration. (Weller Decl., Exh. A, ¶5.) As explained above, the court also may sever the language that restricts or waives Plaintiff’s ability to pursue representative PAGA actions outside of arbitration, because again, the AA’s main purpose is to resolve claims in arbitration.

Thus, even though the AA here exhibits a moderate degree of procedural unconscionability, and the confidentiality clause demonstrates some substantive unconscionability, it may be severed. As a result, there is no substantive unconscionability that tarnishes the AA. An unconscionability defense requires a mixture of procedural and substantive unconscionability, which does not exist here once the two offending provisions are severed.

Consequently, the Court declines to find that the AA is permeated with unconscionability and grants ACCU’s motion to compel arbitration of Plaintiff’s claims except for the representative PAGA cause of action.

Dismissing the Class Claims ACCU argues the class action claims should be dismissed because of the AA’s class action waiver which is enforceable. (Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612, 1632 (Epic).) The Epic high court stated: “Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” (Id., at p. 1619.)

Here, the AA expressly states that Employee and Company agree that each will not assert class action claims against the other in arbitration or otherwise. (Weller Decl., Exh. A, ¶2.) In opposition, Plaintiff does not address the request to dismiss the class claims. Therefore, the Court grants ACCU’s motion to dismiss the class action claims.

Stay the PAGA Representative Claim Plaintiff does not oppose the motion to stay. ACCU’s motion to stay the action pending completing of arbitration is granted.

Dated: September 10, 2026

____________________________ Judge Kory Mathewson

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