Sanchez v. JFK Memorial Hospital CA4/2 (2021) · DecisionDepot
Sanchez v. JFK Memorial Hospital CA4/2
California Court of Appeal Nov 30, 2021 No. E072560Unpublished
Filed 11/30/21 Sanchez v. JFK Memorial Hospital CA4/2 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
ARACELI SANCHEZ,
Plaintiff and Respondent, E072560
v. (Super. Ct. No. PSC1805119)
JFK MEMORIAL HOSPITAL, INC. et al., OPINION
Defendants and Appellants.
APPEAL from the Superior Court of Riverside County. David M. Chapman,
Judge. Reversed.
Hill, Farrer & Burrill, Michael S. Turner, Dean E. Dennis and Jenner C. Tseng, for
Appellants and Defendants.
Law Offices of Ramin R. Younessi, Ramin R. Younessi, Gabrielle A. Pedone and
Samantha L. Ortiz, for Plaintiff and Respondent.
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I.
INTRODUCTION
Plaintiff and Respondent, Araceli Sanchez, sued her employer, Defendant and
Appellant, JFK Memorial Hospital, Inc. (JFK), and her supervisor, Jose Pecero, for
various claims related to her employment. In response, defendants petitioned to compel
arbitration of her claims. The trial court denied the petition because the parties’
arbitration agreement’s prearbitration dispute resolution process is unconscionable and
JFK hired Sanchez in 2015. As part of her onboarding, Sanchez electronically 1 signed JFK’s “Handbook and Fair Treatment Process Acknowledgement.” The
Acknowledgement provides in relevant part: “Except to the extent that any applicable
collective bargaining agreement provides otherwise, I hereby voluntarily agree to use the
Company’s Fair Treatment Process [(FTP)] and to submit to final and binding arbitration
any and all claims and disputes that are related in any way to my employment or the
termination of my employment” with JFK.
1 JFK is a part of Tenet Healthcare. All of Sanchez’s employment documents refer to “Tenet” instead of JFK, but there is no material difference between them for purposes of this appeal.
2
In 2018, Sanchez filed this case against JFK and Pecero, alleging various 2 employment-related claims. Defendants therefore petitioned to compel arbitration of
Sanchez’s claims, except for her claim under the Private Attorneys General Act (PAGA;
Lab. Code, §§ 2699 et seq.). Sanchez opposed the petition on the grounds that she did
not agree to arbitrate her claims and the FTP is unconscionable.
The trial court denied the petition. The court found that Sanchez agreed to
arbitrate her claims, but found that the FTP is unconscionable and thus unenforceable.
The court reasoned that the FTP was “presumed to be procedurally unconscionable
because of the inequality of the parties’ bargaining power and an absence of real
negotiation or a meaningful choice on the part of Sanchez whether to agree to the
[arbitration] agreement.” The trial court found that the FTP’s four-step prearbitration
procedure was substantively unconscionable because it would afford JFK a “‘free peek’”
at Sanchez’s case before she requested arbitration, which would give JFK “‘an advantage
if and when [she] were to later demand arbitration.’” The trial court also found it was
“not possible” to sever the FTP’s “prearbitration requirements” and, even if it were,
severing them was inappropriate because the FTP’s prearbitration process sought “to
inhibit Sanchez’s access to a fair resolution of the dispute by requiring her to disclose to
JFK the evidence and arguments she would present before arbitration.”
Defendants timely appealed.
2 The allegations underlying Sanchez’s claims are not relevant to the issues on appeal.
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III.
DISCUSSION
Defendants argue the trial court erred in denying its petition to compel arbitration
because (1) the FTP’s prearbitration process is not unconscionable and (2) even if it were,
the trial court should have severed the prearbitration provisions, upheld the parties’
arbitration agreement, and ordered them to arbitration. We assume without deciding that
the FTP’s prearbitration process is unconscionable because, even if it is, the trial court
should have severed it, granted defendants’ petition, and ordered the parties to arbitration.
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.”
Accordingly, “[u]nder this section the court, in its discretion, may refuse to enforce the
contract as a whole if it is permeated by the unconscionability, or it may strike any single
clause or group of clauses which are so tainted or which are contrary to the essential
purpose of the agreement, or it may simply limit unconscionable clauses so as to avoid
unconscionable results.” (Cal. Civ. Code, § 1670.5, Legis. Comm. Comments, n. 2; see
also Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 826 [“The trial
court has discretion under [Civil Code section 1670.5, subdivision (a)] to refuse to
enforce an entire agreement if the agreement is ‘permeated’ by unconscionability.”].)
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Two policies support severing a contract’s illegal provision rather than voiding the
entire contract: “The first is to prevent parties from gaining undeserved benefit or
suffering undeserved detriment as a result of voiding the entire agreement—particularly
when there has been full or partial performance of the contract. [Citations.] Second,
more generally, the doctrine of severance attempts to conserve a contractual relationship
if to do so would not be condoning an illegal scheme.” (Armendariz v. Foundation
Health Psychcare Servs. (2000) 24 Cal.4th 83, 123-124.)
To determine whether to sever unconscionable provisions in an arbitration
agreement, “[c]ourts are to look to the various purposes of the contract. If the central
purpose of the contract is tainted with illegality, then the contract as a whole cannot be
enforced. If the illegality is collateral to the main purpose of the contract, and the illegal
provision can be extirpated from the contract by means of severance or restriction, then
such severance and restriction are appropriate.” (Armendariz v. Foundation Health
Psychcare Servs., supra, 24 Cal.4th at p. 124.)
Thus, “[i]n determining whether to sever or restrict illegal terms rather than
voiding the entire contract, ‘[t]he overarching inquiry is whether “‘the interests of justice
. . . would be furthered’” by severance.’ [Citation.] Significantly, the strong legislative
and judicial preference is to sever the offending term and enforce the balance of the
agreement: Although ‘the statute appears to give a trial court some discretion as to
whether to sever or restrict the unconscionable provision or whether to refuse to enforce
the entire agreement[,] . . . it also appears to contemplate the latter course only when an
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agreement is “permeated” by unconscionability.’ [Citation.]” (Roman v. Superior Court
(2009) 172 Cal.App.4th 1462, 1477-1478.) To determine whether an arbitration
agreement is “permeated” with unconscionability, courts look to (1) whether there are
multiple unconscionable provisions; (2) whether “the central purpose” of the contract is
illegal; and (3) whether the contract can be “saved” by severing the unconscionable
terms, or whether the contract would have to be “reformed.” (Poublon v. C.H. Robinson
Co. (9th Cir. 2017) 846 F.3d 1251, 1273.)
Sanchez did not comply with the FTP prearbitration process and defendants have
not sought to enforce it. The arbitration agreement can be “saved” by severing the
prearbitration provisions of the FTP and ordering the parties to arbitration. After doing
so, Sanchez’s claims can be arbitrated free of any allegedly unconscionable terms. The
trial court thus could have easily severed the FTP’s prearbitration provisions, upheld the
remainder of the parties’ arbitration agreement (none of which Sanchez challenges), and
ordered the parties to arbitration. As a result, we conclude the trial court abused its
discretion in declining to sever the FTP’s prearbitration provisions and denying
defendants’ petition to compel arbitration.
IV.
DISPOSITION
The trial court’s order denying defendants’ petition to compel arbitration is
reversed. The trial court is directed to sever the FTP’s prearbitration provisions, grant
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defendants’ petition to compel arbitration, and order the parties to arbitrate Sanchez’s
claims. Defendants may recover their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
CODRINGTON Acting P. J.
We concur:
FIELDS J.
MENETREZ J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the trial court abused its discretion by refusing to sever allegedly unconscionable prearbitration provisions from an employment arbitration agreement, as the agreement could be saved by severing those terms.
Issues
Whether the trial court erred in finding the arbitration agreement's prearbitration dispute resolution process unconscionable and not severable.
Whether the trial court should have severed the unconscionable provisions and compelled arbitration.
Disposition. reversed
Quotations verified verbatim against the opinion
“We assume without deciding that the FTP’s prearbitration process is unconscionable because, even if it is, the trial court should have severed it, granted defendants’ petition, and ordered the parties to arbitration.”
“The arbitration agreement can be “saved” by severing the prearbitration provisions of the FTP and ordering the parties to arbitration.”