Title: OTO, L.L.C. v. Kho

State: california

Issuer: California Supreme Court

Document:

IN THE SUPREME COURT OF 
CALIFORNIA 
 
OTO, L.L.C., 
Plaintiff and Appellant, 
v. 
KEN KHO, 
Defendant and Respondent; 
JULIE A. SU, as Labor Commissioner, etc., 
Intervener and Appellant. 
 
S244630 
 
First Appellate District, Division One 
A147564 
 
Alameda County Superior Court 
RG15781961 
 
 
August 29, 2019 
 
Justice Corrigan authored the opinion of the Court, in which 
Chief Justice Cantil-Sakauye and Justices Liu, Cuéllar, 
Kruger, and Groban concurred. 
 
Justice Chin filed a dissenting opinion. 
 
1 
OTO, L.L.C. v. KHO 
S244630 
 
Opinion of the Court by Corrigan, J. 
 
 
Here, we again consider the enforceability of an agreement 
requiring arbitration of wage disputes.  Sonic-Calabasas A, Inc. 
v. Moreno (2011) 51 Cal.4th 659 (Sonic I) concluded that such 
arbitration 
agreements 
are 
categorically 
unconscionable 
because workers waive their statutory rights to a “Berman 
hearing” and related procedures designed to assist in the 
recovery of unpaid wages.  (See Lab. Code, § 98 et seq.)1  Rather 
than invalidating the entire agreement, however, Sonic I held 
that while Berman protections could not be waived, any party 
dissatisfied with the Berman hearing’s result could move the 
dispute to arbitration.  (Sonic I, at pp. 669, 675.)  The United 
States Supreme Court vacated that judgment and remanded for 
consideration in light of AT&T Mobility LLC v. Concepcion 
(2011) 563 U.S. 333 (Concepcion).  Thereafter, we determined 
Sonic I’s categorical rule of unconscionability was preempted by 
the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.).  (Sonic-
Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1146 (Sonic 
II).)  We held instead that an arbitration agreement is not 
categorically unconscionable solely because it entails a waiver 
of the Berman procedure.  An agreement to arbitrate wage 
disputes can be enforceable so long as it provides an accessible 
                                        
1  
All statutory references are to the Labor Code unless 
otherwise stated. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
2 
and affordable process for resolving those disputes.  (Id. at 
p. 1146.) 
 
We originally granted review in this case to decide 
whether an arbitral scheme resembling civil litigation can 
constitute a sufficiently accessible and affordable process.  
Because the facts here involve an unusually high degree of 
procedural unconscionability, however, a definitive resolution of 
that specific question is unnecessary.  Even if a litigation-like 
arbitration procedure may be an acceptable substitute for the 
Berman process in other circumstances, an employee may not 
be coerced or misled into accepting this trade.  Considering the 
oppressive circumstances present here, we conclude the 
agreement was unconscionable, rendering it unenforceable. 
I.  BACKGROUND 
 
The relevant facts are not in dispute.  Ken Kho was hired 
as a service technician for One Toyota of Oakland (One Toyota) 
in January 2010.2  Three years later, a human resources “porter” 
approached Kho in his workstation and asked him to sign 
several documents.  Kho was required to sign them immediately 
and return them to the porter, who waited in the workstation.  
It took Kho three or four minutes to sign them all.  He had no 
opportunity to read them, nor were their contents explained.  
Kho’s first language is Chinese.  He was not given copies of the 
documents in either language.   
 
One document was titled “Comprehensive Agreement—
Employment At-Will and Arbitration.”3  As the Court of Appeal 
                                        
2  
The auto dealership is licensed as OTO, L.L.C., apparently 
an acronym of One Toyota of Oakland. 
3  
According to the parties, this agreement is essentially the 
same as the one involved in the Sonic cases.  Although 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
3 
observed, “Notwithstanding its designation as a ‘comprehensive’ 
employment contract, the one and one-quarter page contract is 
merely an arbitration clause grafted onto an acknowledgment of 
at-will employment.” 
 
The contract’s arbitration clause is contained in a dense, 
single-spaced paragraph, written in a very small typeface that 
fills almost an entire page.4  Subject to limited exceptions, 
nearly any employment-related claim made by either party 
must be submitted to binding arbitration.  Class or collective 
proceedings are generally prohibited.  Arbitrations must be 
conducted before a retired superior court judge, pursuant to the 
California Arbitration Act (Code Civ. Proc., § 1280 et seq.), with 
full discovery permitted (see Code Civ. Proc., § 1283.05).  
Furthermore, “[t]o the extent applicable in civil actions in 
California courts,” the agreement requires adherence to “all 
rules of pleading (including the right of demurrer), all rules of 
                                        
impossible to verify without the Sonic record, the assertion may 
be at least partially true.  Both employers are automotive 
dealerships and the contract appears to be a standardized form.  
However, the agreements cannot be “identical,” as One Toyota 
claims.  The Sonic II contract allowed either party to seek review 
of an award under California appellate rules of procedure.  (See 
Sonic II, supra, 57 Cal.4th at pp. 1146-1147.)  The agreement 
here includes no such term.  Sonic II did not resolve whether the 
agreement was substantively unconscionable.  Instead, noting 
that details of the arbitration process might not be reflected on 
the face of the agreement, the case was remanded for additional 
fact-finding.  (See id. at pp. 1147-1148.)  Here, once again, we 
are faced with a bare agreement.  No additional facts about One 
Toyota’s arbitration process were developed below. 
4  
The parties dispute the precise font size.  Kho asserts it is 
7 points, while One Toyota insists it is 8.5 points.  By any 
measure, the type is quite small. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
4 
evidence, all rights to resolution of the dispute by means of 
motions for summary judgment, judgment on the pleadings, and 
judgment under Code of Civil Procedure Section 631.8.”5  The 
allocation of arbitration costs is not addressed explicitly.  
Instead, the agreement refers to Code of Civil Procedure 
section 1284.2, which generally provides that parties to an 
arbitration must bear their own expenses.  But the agreement 
also states that “controlling case law” or statutes will prevail 
over Code of Civil Procedure section 1284.2 if there is a conflict.  
 
Kho’s employment ended in April 2014.  Several months 
later, he filed a complaint with the Labor Commissioner for 
unpaid wages.  At a settlement conference before a deputy labor 
commissioner, One Toyota was represented by counsel; Kho 
appeared in propria persona.  One Toyota contends its attorney 
demanded arbitration at the conference, presenting Kho with a 
copy of the signed arbitration agreement, but Kho and the Labor 
Commissioner dispute this account.  Kho rejected One Toyota’s 
settlement offer and requested a Berman hearing.  The hearing 
was set in August 2015, some nine months later. 
 
On the Friday before the Monday Berman hearing, One 
Toyota filed a petition to compel arbitration and stay the 
administrative proceedings.  It did not serve these papers on 
Kho.  On the morning of the hearing, One Toyota’s attorney 
notified the Labor Commissioner by fax of its petition and asked 
that the hearing be taken off calendar.  The hearing officer 
refused.  One Toyota’s attorney appeared at the scheduled time 
                                        
5  
A motion for judgment under Code of Civil Procedure 
section 631.8 is the equivalent of a nonsuit motion in a court 
trial.  (See Ford v. Miller Meat Co. (1994) 28 Cal.App.4th 1196, 
1200.) 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
5 
but left after serving Kho for the first time with the petition to 
compel.  Proceeding without One Toyota, the hearing officer 
awarded Kho $102,912 in unpaid wages and $55,634 in 
liquidated damages, interest, and penalties.  One Toyota sought 
to vacate the award.  The Labor Commissioner intervened on 
Kho’s behalf and opposed the motions to compel and vacate.  One 
Toyota posted the required bond to permit de novo review of the 
award under Labor Code section 98.2.  (See post, at p. 8.) 
 
The trial court vacated the Labor Commissioner’s award, 
concluding the hearing should not have proceeded in One 
Toyota’s absence.  The court did not compel arbitration, 
however.  It found a high degree of procedural unconscionability 
attended the agreement’s execution, which “created oppression 
or surprise due to unequal bargaining power.”  The court also 
found the agreement substantively unconscionable under Sonic 
II because it “fails to provide a speedy, informal and affordable 
method of resolving wage claims and has virtually none of the 
benefits afforded by the Berman hearing procedure.”  The court 
observed, “Contrary to the assumption that arbitration is 
intended to provide an inexpensive, efficient procedure to 
vindicate rights, the agreement in this case seeks, in large part, 
to restore the procedural rules and procedures that create 
expense and delay in civil litigation.”  In light of this ruling, the 
court declined to address the Labor Commissioner’s argument 
that One Toyota waived its right to arbitrate by waiting too long 
to claim it.  
 
The Court of Appeal reversed.  Although it noted an 
“extraordinarily high” degree of procedural unconscionability in 
the agreement’s execution, it concluded the agreement was not 
substantively unconscionable.  The agreement had no 
objectionable terms and could be considered “ ‘harsh or one-
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
6 
sided’ only in comparison to the various features of the Labor 
Code that seek to level the playing field for wage claimants.”  
The arbitration would be sufficiently affordable under Sonic II 
because laws external to the agreement require that employers 
pay both the costs of arbitration (see Armendariz v. Foundation 
Health 
Psychcare 
Service, 
Inc. 
(2000) 
24 
Cal.4th 
83 
(Armendariz)) and a successful claimant’s reasonable attorney 
fees (see Lab. Code, § 218.5).  Though the selected arbitration 
procedure is more complex than a Berman hearing, the court 
observed that those hearings are nonbinding and can progress, 
at either side’s request, to a de novo proceeding in superior 
court.  In specifying an arbitral process that resembles civil 
litigation, the agreement thus “anticipates a proceeding that is 
no more complex than will often be required to resolve a wage 
claim under the Berman procedures.”  This resolution made it 
unnecessary for the court to address the Labor Commissioner’s 
cross-appeal from the order vacating her award.  Finally, the 
court held that One Toyota did not forfeit its right to arbitrate 
because there was no showing of prejudice from the company’s 
delay in seeking arbitration. 
II.  DISCUSSION 
A. 
The Berman Process 
 
Before addressing Kho’s unconscionability defense, we 
review the statutory procedures he waived by agreeing to 
arbitration.  We also consider the significance of that waiver in 
light of Sonic I and Sonic II. 
 
1. 
Statutory Procedures Available to Wage Claimants 
 
The Labor Code provides an administrative procedure for 
recovery of unpaid wages.  When an employer does not pay 
wages as required, the employee may either:  (1) file a civil 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
7 
action in court, or (2) file a wage claim with the Labor 
Commissioner under sections 98 to 98.8.  The administrative 
option was added in 1976 (see Stats. 1976, ch. 1190, §§ 4-11, 
pp. 5368-5371) and is commonly known as a “Berman” hearing.6 
 
If an employee files an administrative complaint, the 
Labor Commissioner may either accept the matter and conduct 
a Berman hearing (§ 98, subd. (a)); prosecute a civil action on 
the employee’s behalf (§ 98.3); or take “no further action . . . on 
the complaint” (§ 98, subd. (a)).  The commissioner’s staff may 
try to settle the complaint before holding a hearing or filing suit.  
(Dept. of Industrial Relations, Div. of Labor Stds. Enforcement 
(DLSE), Policies and Procedures for Wage Claim Processing 
(2012 rev.) p. 2.)  Subject to extensions of time, Berman hearings 
must generally be held within 90 days after a matter is accepted.  
(§ 98, subd. (a).)   
 
A Berman hearing is conducted by a deputy commissioner, 
who may issue subpoenas.  (Cal. Code Regs., tit. 8, §§ 13502, 
13506.)  The procedure “is designed to provide a speedy, 
informal, and affordable method of resolving wage claims.”  
(Cuadra v. Millan (1998) 17 Cal.4th 855, 858 (Cuadra).)  
Pleadings are limited to a complaint and answer.  There is no 
discovery process.  (§ 98, subd. (d).)  Technical rules of evidence 
do not apply, and all relevant evidence is admitted “if it is the 
sort of evidence on which responsible persons are accustomed to 
rely in the conduct of serious affairs.”  (Cal. Code Regs., tit. 8, 
§ 13502.)  The hearing officer may assist the parties with cross-
examination and explain issues and terms involved.  (DLSE, 
                                        
6  
The legislation was sponsored by Assemblyman Howard 
Berman.  (Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 
942, 946.) 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
8 
Policies and Procedures for Wage Claim Processing, supra, at 
p. 3.)  If necessary, a translator will be provided.  (Ibid.; see 
§ 105, subd. (b).)  The claim must be decided within 15 days of 
the hearing.  (§ 98.1, subd. (a).) 
 
Either party may appeal the decision to the superior court, 
which reviews the claim de novo.  (§ 98.2, subd. (a).)  An 
employer who appeals must post an undertaking in the amount 
of the award.  (Id., subd. (b).)  On appeal, the Labor 
Commissioner may represent claimants “financially unable to 
afford counsel” and must represent any indigent claimant 
attempting to uphold the award while objecting to no part of it.  
(§ 98.4.)  An unappealed decision is a final judgment, 
enforceable immediately.  (§ 98.2, subds. (d), (e).)  The 
commissioner is responsible for enforcement (id., subd. (i)), 
which is entitled to court priority (id., subd. (e)). 
 
If an employer’s appeal fails, the court determines costs 
and reasonable attorney fees incurred by the successful 
employee and orders payment by the losing appellant.  (§ 98.2, 
subd. (c).)  Claimants represented by the commissioner may still 
recover fees, consistent with the statute’s goal of discouraging 
unmeritorious appeals.  (Lolley v. Campbell (2002) 28 Cal.4th 
367, 376-378 (Lolley).)  “An employee is successful if the court 
awards an amount greater than zero.”  (§ 98.2, subd. (c).)  The 
statute provides a one-way fee-shifting scheme:  An 
unsuccessful employer must pay attorney fees but a successful 
one may not recover them.  (See Arias v. Kardoulias (2012) 207 
Cal.App.4th 1429, 1435.)  This fee scheme differs from wage 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
9 
claims brought in superior court, where the “prevailing party” 
may obtain attorney fees.  (§ 218.5, subd. (a).)7 
 
The Berman process is optional for both claimants and the 
Labor Commissioner.  Aggrieved employees may take their 
wage claims directly to superior court.  (See § 218.)  Likewise, 
the commissioner may decline to act on a filed complaint.  (See 
§ 98, subd. (a).)  However, Berman procedures can significantly 
reduce the costs and risks of pursuing a wage claim.  They 
provide “an accessible, informal, and affordable” avenue for 
employees to seek resolution, with assistance available if 
necessary.  (Sonic II, supra, 57 Cal.4th at p. 1129.)  They 
discourage unmeritorious appeals through a bond requirement 
and a fee-shifting scheme that favors employees.  (See id. at 
p. 1130.)  They permit the commissioner to represent claimants 
on appeal and facilitate award collection.  (See ibid.) 
 
2. 
The Sonic I and Sonic II Decisions 
 
Sonic I and Sonic II addressed the validity of predispute 
agreements requiring wage claim arbitration.  Sonic I held that 
it is against public policy for an employer to require employees 
to waive their Berman rights as a condition of employment, and 
that an arbitration agreement effectively waiving Berman 
rights is substantively unconscionable as a matter of law.  (Sonic 
                                        
7  
As amended in 2013, section 218.5, subdivision (a) 
provides that “if the prevailing party in the court action is not 
an employee, attorney’s fees and costs shall be awarded 
pursuant to this section only if the court finds that the employee 
brought the court action in bad faith.”  (Stats. 2013, ch. 142, § 1)  
Although it does not guarantee that wage claimants will be able 
to recover their attorney fees, this amendment largely 
eliminates the risk that they will be liable for their employer’s 
fees. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
10 
I, supra, 51 Cal.4th at pp. 684-687.)  However, in construing the 
agreement to attempt to harmonize the competing policies at 
issue, Sonic I also held that parties could proceed to binding 
arbitration after they had completed a Berman hearing.  (Id. at 
p. 675.)  In other words, instead of pursuing a de novo appeal in 
superior 
court, 
a 
party 
dissatisfied 
with 
the 
Labor 
Commissioner’s ruling could petition to compel arbitration.  (Id. 
at p. 676.) 
 
Sonic I’s holdings were short-lived.  Two months later, on 
a related question, Concepcion, supra, 563 U.S. 333 abrogated 
our holding from Discover Bank v. Superior Court (2005) 36 
Cal.4th 148 that class arbitration waivers in consumer contracts 
are unconscionable.  (Concepcion, at pp. 341-344.)  The high 
court explained that the “overarching purpose of the FAA . . . is 
to ensure the enforcement of arbitration agreements according 
to their terms so as to facilitate streamlined proceedings.”  (Id. 
at p. 344.)  Because Discover Bank’s classwide arbitration rule 
interfered with the “fundamental attributes of arbitration,” such 
as efficiency and informality, it was preempted as inconsistent 
with the FAA.  (Concepcion, at p. 344.)  Thereafter, the court 
vacated the Sonic I judgment and remanded for our 
consideration in light of Concepcion.  (Sonic-Calabasas A, Inc. v. 
Moreno (2011) 565 U.S. 973.) 
 
On remand, we acknowledged the Supreme Court’s 
admonition that states “cannot require a procedure that is 
inconsistent with the FAA, even if it is desirable for unrelated 
reasons.”  (Concepcion, supra, 563 U.S. at p. 351; see Sonic II, 
supra, 57 Cal.4th at p. 1141.)  Because the court identified 
efficiency as a hallmark of arbitration under the FAA, 
Concepcion taught that “courts cannot impose unconscionability 
rules that interfere with arbitral efficiency, including rules 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
11 
forbidding waiver of administrative procedures that delay 
arbitration.”  (Sonic II, at p. 1141; see Concepcion, at pp. 344-
345.)  Accordingly, Sonic I’s categorical rule prohibiting a waiver 
of Berman procedures was preempted.  (Sonic II, at pp. 1139-
1141.) 
 
Nevertheless, we noted that unconscionability remains a 
valid defense to enforcement, even after Concepcion.  The 
overarching 
unconscionability 
question 
is 
whether 
an 
agreement is imposed in such an unfair fashion and so unfairly 
one-sided that it should not be enforced.  Arbitration 
agreements could not be deemed categorically unconscionable 
simply because they entail a waiver of the Berman proceedings.  
(Sonic II, supra, 57 Cal.4th at p. 1146.)  However, we provided 
that an employee’s Berman waiver, while not dispositive, 
remains a significant factor in considering unconscionability.  
An agreement’s failure to “provide an employee with an 
accessible and affordable arbitral forum for resolving wage 
disputes may support a finding of unconscionability.  As with 
any contract, the unconscionability inquiry requires a court to 
examine the totality of the agreement’s substantive terms as 
well as the circumstances of its formation to determine whether 
the overall bargain was unreasonably one-sided.”  (Ibid.) 
 
The Sonic II majority opinion focused repeatedly on the 
need for accessible and affordable arbitration, reasoning that 
these were key benefits of the Berman process that parties to an 
arbitration agreement had decided to forgo.  We stopped short 
of defining the requirements for an acceptable arbitration 
framework, however, and emphasized that arbitration can be 
structured in various ways “so that it facilitates accessible, 
affordable resolution of wage disputes,” without necessarily 
replicating Berman protections.  (Sonic II, supra, 57 Cal.4th at 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
12 
p. 1147.)  So long as the arbitral procedure is relatively “low-
cost” (ibid.) and provides a forum for wage claimants “to pursue 
their claims effectively” (ibid.), its adoption in lieu of the 
Berman process will not, in itself, be considered unconscionable 
(id. at pp. 1147-1148).  In short, when an adhesion contract 
requires arbitration, “the unconscionability inquiry focuses on 
whether the arbitral scheme imposes costs and risks on a wage 
claimant that make the resolution of the wage dispute 
inaccessible and unaffordable,” thus effectively blocking every 
forum for redress including arbitration itself.  (Id. at p. 1148.) 
 
We did not decide whether the Sonic II agreement was 
substantively unconscionable under this standard.  Recognizing 
that unconscionability is a fact-specific defense, we remanded 
for the trial court to examine additional evidence regarding the 
particulars of the arbitration process set out in the agreement.  
(Sonic II, supra, 57 Cal.4th at pp. 1147-1148.)  
B. 
Unconscionability of the Arbitration Agreement 
 
California law strongly favors arbitration.  Through the 
comprehensive provisions of the California Arbitration Act 
(Code Civ. Proc., § 1280 et seq.), “the Legislature has expressed 
a ‘strong public policy in favor of arbitration as a speedy and 
relatively 
inexpensive 
means 
of 
dispute 
resolution.’ ”  
(Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (Moncharsh).)  
As with the FAA (9 U.S.C. § 1 et seq.), California law establishes 
“a presumption in favor of arbitrability.”  (Engalla v. 
Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971.)  An 
agreement to submit disputes to arbitration “is valid, 
enforceable and irrevocable, save upon such grounds as exist for 
the revocation of any contract.”  (Code Civ. Proc., § 1281; see 9 
U.S.C. § 2.) 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
13 
 
 “ ‘[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 (Pinnacle); see Concepcion, 
supra, 563 U.S. at p. 339.)  Unconscionability can take different 
forms depending on the circumstances and terms at issue.  
However, the doctrine’s application to arbitration agreements 
must rely on the same principles that govern all contracts.  
(Sonic II, supra, 57 Cal.4th at p. 1133.)  The degree of unfairness 
required for unconscionability must be as rigorous and 
demanding for arbitration clauses as for any other contract 
clause.  (Ibid.) 
 
The general principles of unconscionability are well 
established.  A contract is unconscionable if one of the parties 
lacked a meaningful choice in deciding whether to agree and the 
contract contains terms that are unreasonably favorable to the 
other party.  (Sonic II, supra, 57 Cal.4th at p. 1133.)  Under this 
standard, the unconscionability doctrine “ ‘has both a 
procedural and a substantive element.’ ”  (Ibid.)  “The 
procedural element addresses the circumstances of contract 
negotiation and formation, focusing on oppression or surprise 
due to unequal bargaining power.  [Citations.]  Substantive 
unconscionability pertains to the fairness of an agreement’s 
actual terms and to assessments of whether they are overly 
harsh or one-sided.”  (Pinnacle, supra, 55 Cal.4th at p. 246.) 
 
Both procedural and substantive unconscionability must 
be shown for the defense to be established, but “they need not be 
present in the same degree.”  (Armendariz, supra, 24 Cal.4th at 
p. 114.)  Instead, they are evaluated on “ ‘a sliding scale.’ ”  
(Ibid.)  “[T]he more substantively oppressive the contract term, 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
14 
the less evidence of procedural unconscionability is required to” 
conclude that the term is unenforceable.  (Ibid.)  Conversely, the 
more deceptive or coercive the bargaining tactics employed, the 
less substantive unfairness is required.  (A & M Produce Co. v. 
FMC Corp. (1982) 135 Cal.App.3d 473, 487 (A & M Produce); see 
Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 
619, 635; Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 
226 Cal.App.4th 74, 85 (Carmona).)  A contract’s substantive 
fairness “must be considered in light of any procedural 
unconscionability” in its making.  (Sanchez v. Valencia Holding 
Co., LLC (2015) 61 Cal.4th 899, 912 (Sanchez).)  “The ultimate 
issue in every case is whether the terms of the contract are 
sufficiently unfair, in view of all relevant circumstances, that a 
court should withhold enforcement.”  (Ibid.) 
 
The burden of proving unconscionability rests upon the 
party asserting it.  (Sanchez, supra, 61 Cal.4th at p. 911; Sonic 
II, supra, 57 Cal.4th at p. 1148.)  “Where, as here, the evidence 
is not in conflict, we review the trial court’s denial of arbitration 
de novo.”  (Pinnacle, supra, 55 Cal.4th at p. 236.) 
 
1. 
Procedural Unconscionability 
 
The Court of Appeal observed that the arbitration 
agreement’s execution involved an “extraordinarily high” degree 
of procedural unconscionability.  We agree. 
 
A procedural unconscionability analysis “begins with an 
inquiry into whether the contract is one of adhesion.”  
(Armendariz, supra, 24 Cal.4th at p. 113.)  An adhesive contract 
is standardized, generally on a preprinted form, and offered by 
the party with superior bargaining power “on a take-it-or-leave-
it basis.”  (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 
1245 (Baltazar); see Armendariz, at p. 113.)  Arbitration 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
15 
contracts imposed as a condition of employment are typically 
adhesive (see Armendariz, at pp. 114-115; Serpa v. California 
Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704), and 
the agreement here is no exception.  The pertinent question, 
then, is whether circumstances of the contract’s formation 
created such oppression or surprise that closer scrutiny of its 
overall fairness is required.  (See Baltazar, at pp. 1245-1246; 
Farrar v. Direct Commerce, Inc. (2017) 9 Cal.App.5th 1257, 
1267-1268.)  “ ‘ “Oppression occurs where a contract involves 
lack of negotiation and meaningful choice, surprise where the 
allegedly unconscionable provision is hidden within a prolix 
printed form.” ’ ”  (Pinnacle, supra, 55 Cal.4th at p. 247, italics 
added; see De La Torre v. CashCall, Inc. (2018) 5 Cal.5th 966, 
983.)  This record reveals both oppression and surprise. 
 
“The circumstances relevant to establishing oppression 
include, but are not limited to (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.”  (Grand 
Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 
Cal.App.4th 1332, 1348, fn. omitted.)  With respect to 
preemployment arbitration contracts, we have observed that 
“the economic pressure exerted by employers on all but the most 
sought-after employees may be particularly acute, for the 
arbitration agreement stands between the employee and 
necessary employment, and few employees are in a position to 
refuse a job because of an arbitration requirement.”  
(Armendariz, supra, 24 Cal.4th at p. 115.)  This economic 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
16 
pressure can also be substantial when employees are required 
to accept an arbitration agreement in order to keep their job.  
Employees who have worked in a job for a substantial length of 
time have likely come to rely on the benefits of employment.  For 
many, the sudden loss of a job may create major disruptions, 
including abrupt income reduction and an unplanned reentry 
into the job market. In both the prehiring and posthiring 
settings, courts must be “particularly attuned” to the danger of 
oppression and overreaching.  (Armendariz, at p. 115; see 
Baltazar, supra, 62 Cal.4th at p. 1244.) 
 
The 
circumstances 
here 
demonstrate 
significant 
oppression.  The agreement was presented to Kho in his 
workspace, along with other employment-related documents.  
Neither its contents nor its significance was explained.  One 
Toyota admits that Kho was required to sign the agreement to 
keep the job he had held for three years.  Because the company 
used a piece-rate compensation system, any time Kho spent 
reviewing the agreement would have reduced his pay.  
Moreover, as the Court of Appeal explained, “Not only did One 
Toyota provide no explanation for its demand for his signature, 
it selected a low-level employee, a ‘porter,’ to present the 
Agreement, creating the impression that no request for an 
explanation was expected and any such request would be 
unavailing.”  By having the porter wait for the documents, One 
Toyota conveyed an expectation that Kho sign them 
immediately, without examination or consultation with counsel.  
One Toyota protests that Kho did not ask questions about the 
agreement, but there is no indication that the porter had the 
knowledge or authority to explain its terms.  (See Carmona, 
supra, 226 Cal.App.4th at pp. 84-85.)  Similarly, although One 
Toyota is correct that Kho did not attempt to negotiate, a 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
17 
complaining party need not show it tried to negotiate 
standardized 
contract 
terms 
to 
establish 
procedural 
unconscionability.  (Carbajal v. CWPSC, Inc. (2016) 245 
Cal.App.4th 227, 244; see Sanchez, supra, 61 Cal.4th at p. 914.)  
By its conduct, One Toyota conveyed the impression that 
negotiation efforts would be futile.  Finally, Kho was not given 
a copy of the agreement he had signed.8 
 
The facts also support the trial court’s finding of surprise.  
The agreement is a paragon of prolixity,  only slightly more than 
a page long but written in an extremely small font.  The single 
dense paragraph covering arbitration requires 51 lines.  As the 
Court of Appeal noted, the text is “visually impenetrable” and 
“challenge[s] the limits of legibility.”   
 
The substance of the agreement is similarly opaque.  The 
sentences are complex, filled with statutory references and legal 
jargon.  The second sentence alone is 12 lines long.  The 
arbitration paragraph refers to:  the California Fair 
Employment and Housing Act; title VII of the Civil Rights Act 
of 1964; other unspecified “local, state or federal laws or 
regulations”; the National Labor Relations Act; the California 
Workers’ Compensation Act; “California Small Claims” actions; 
the Department of Fair Employment and Housing; the 
Employment 
Development 
Department; 
the 
“Equal 
Opportunity 
Commission”; 
the 
federal 
and 
California 
                                        
8  
Nor was Kho offered a version to read in his native 
language.  (See Subcontracting Concepts (CT), LLC v. De Melo 
(2019) 34 Cal.App.5th 201, 211; Carmona, supra, 226 
Cal.App.4th at p. 85.)  However, because the record does not 
reveal the level of Kho’s English proficiency, we cannot 
determine the significance of this omission, and we do not rely 
on it. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
18 
arbitration acts; and six different sections of California’s Civil 
Code and Code of Civil Procedure.  A layperson trying to 
navigate this block text, printed in tiny font, would not have an 
easy journey. 
 
With respect to arbitration costs, the agreement states:  “If 
CCP § 1284.2 conflicts with other substantive statutory 
provisions or controlling case law, the allocation of costs and 
arbitrator fees shall be governed by said statutory provisions or 
controlling case law instead of CCP § 1284.2.”  Code of Civil 
Procedure section 1284.2 states a default rule that, unless the 
agreement specifies otherwise, parties to an arbitration will 
bear their own expenses.  However, Armendariz created an 
exception to this general rule for arbitrations of employment-
related disputes.  (See Armendariz, supra, 24 Cal.4th at pp. 110-
111.)9  Although the agreement anticipates that the “controlling 
case law” of Armendariz would prevail over the statutory default 
rule, One Toyota’s obligation to pay arbitration-related costs 
would not be evident to anyone without legal knowledge or 
access to the relevant authorities.  It is difficult to envision that 
Kho would have had any idea what the cited code section says 
or that a 13-year-old case creates a relevant exception to it.  This 
example illustrates the difficulty a layperson would have in 
                                        
9  
Under 
Armendariz, 
“when 
an 
employer 
imposes 
mandatory arbitration as a condition of employment, the 
arbitration agreement or arbitration process cannot generally 
require the employee to bear any type of expense that the 
employee would not be required to bear if he or she were free to 
bring the action in court.”  (Armendariz, supra, 24 Cal.4th at 
pp. 110-111.)  Armendariz concerned claims under the 
California Fair Employment and Housing Act (Gov. Code, 
§ 12900 et seq.), but One Toyota does not dispute that its holding 
applies equally to wage claims. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
19 
deciphering key terms.  It would have been nearly impossible to 
understand the contract’s meaning without legal training and 
access to the many statutes it references.  Kho had neither. 
Under these circumstances, Kho’s signature attesting to have 
read and understood the agreement appears formulaic rather 
than informed.  We agree with the Court of Appeal that the 
agreement appears to have been drafted with an aim to thwart, 
rather than promote, understanding. 
 
The document itself and the manner of its presentation did 
not promote voluntary or informed agreement to its terms.  
“Arbitration is favored in this state as a voluntary means of 
resolving disputes, and this voluntariness has been its bedrock 
justification.”  (Armendariz, supra, 24 Cal.4th at p. 115; see 
Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 252.)  
Arbitration contracts are vigorously enforced out of respect for 
the parties’ mutual and voluntary agreement to resolve disputes 
by this alternative means.  (See, e.g., Moncharsh, supra, 3 
Cal.4th at pp. 10-11.)  However, an inference of voluntary assent 
can be indulged only so far and must yield in the face of 
undisputed facts that undermine it.  Where an employee is 
induced to sign an arbitration agreement through “sharp 
practices” and surprise (see Gentry v. Superior Court (2007) 42 
Cal.4th 443, 469 (Gentry)),10 the consent rationale carries less 
force.  “[A]rbitration ‘is a matter of consent, not coercion.’ ”  
(Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. 
662, 681; see Lamps Plus, Inc. v. Varela (2019) __ U.S. __, __ 
                                        
10  
In Iskanian v. CLS Transportation Los Angeles, LLC 
(2014) 59 Cal.4th 348, 360, we recognized that Gentry’s holding 
regarding class arbitration waivers had been abrogated by 
United States Supreme Court precedent. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
20 
[139 S.Ct. 1407, 1415].)  On this record, it is virtually impossible 
to conclude that Kho knew he was giving up his Berman rights 
and voluntarily agreeing to arbitration instead. 
 
2. 
Substantive Unconscionability 
 
Substantive unconscionability examines the fairness of a 
contract’s terms.  This analysis “ensures that contracts, 
particularly contracts of adhesion, do not impose terms that 
have been variously described as ‘ “ ‘overly harsh’ ” ’ (Stirlen v. 
Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532), ‘ “unduly 
oppressive” ’ (Perdue v. Crocker National Bank (1985) 38 Cal.3d 
913, 925), ‘ “so one-sided as to ‘shock the conscience’ ” ’ 
(Pinnacle[, supra,] 55 Cal.4th [at p.] 246), or ‘unfairly one-sided’ 
(Little [v. Auto Stiegler, Inc. (2003)] 29 Cal.4th [1064,] 1071.)  All 
of these formulations point to the central idea that the 
unconscionability doctrine is concerned not with ‘a simple old-
fashioned bad bargain’ [citation], but with terms that are 
‘unreasonably favorable to the more powerful party.’ ”  (Sonic II, 
supra, 57 Cal.4th at p. 1145.)  Unconscionable terms “ ‘impair 
the integrity of the bargaining process or otherwise contravene 
the public interest or public policy’ ” or attempt to impermissibly 
alter fundamental legal duties.  (Ibid.)  They may include fine-
print terms, unreasonably or unexpectedly harsh terms 
regarding price or other central aspects of the transaction, and 
terms that undermine the nondrafting party’s reasonable 
expectations.  (Ibid.; see Sanchez, supra, 61 Cal.4th at p. 911.)  
These examples are illustrative, not exhaustive. 
 
Substantive terms that, in the abstract, might not support 
an unconscionability finding take on greater weight when 
imposed by a procedure that is demonstrably oppressive.  
Although procedural unconscionability alone does not invalidate 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
21 
a contract, its existence requires courts to closely scrutinize the 
substantive terms “to ensure they are not manifestly unfair or 
one-sided.”  (Gentry, supra, 42 Cal.4th at p. 469.)  We hold that, 
given the substantial procedural unconscionability here, even a 
relatively low degree of substantive unconscionability may 
suffice to render the agreement unenforceable.  (Carmona, 
supra, 226 Cal.App.4th at p. 85; A & M Produce, supra, 135 
Cal.App.3d at p. 487; see Armendariz, supra, 24 Cal.4th at 
p. 114.)   
 
Kho and the Labor Commissioner do not focus on the 
fairness of specific, isolated terms in the agreement.  Rather, 
they contend One Toyota’s arbitral process is so inaccessible and 
unaffordable, considered as a whole, that it does not offer an 
effective means for resolving wage disputes.  (See Sonic II, 
supra, 57 Cal.4th at p. 1146.)11  This is a close question, which 
cannot be resolved in the abstract.  It is important to stress that 
the waiver of Berman procedures does not, in itself, render an 
arbitration agreement unconscionable.  However, a substantive 
unconscionability analysis is sensitive to “the context of the 
rights and remedies that otherwise would have been available 
to the parties.”  (Sanchez, supra, 61 Cal.4th at p. 922.)  We must 
examine both the features of dispute resolution adopted as well 
as the features eliminated.  (Sonic II, supra, 57 Cal.4th at 
p. 1146.) 
                                        
11  
Separately, Kho asserts the agreement is unconscionable 
because it potentially extends to enforcement actions that may 
be brought by the Labor Commissioner.  We do not address this 
new argument because, as Kho concedes, no such claims are at 
issue here. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
22 
 
As to accessibility, Kho first observes that, unlike in 
Berman proceedings, the agreement does not explain how to 
initiate arbitration.  Industrial Welfare Commission (IWC) wage 
orders, required by law to be posted at the jobsite (Lab. Code, 
§ 1183, subd. (d)), direct employees to contact the Labor 
Commissioner about wage-related violations, providing for this 
purpose both the Department of Industrial Relations website 
and a list of local labor commissioner offices.  (See, e.g., IWC 
wage order No. 4-2001 (Cal. Code Regs., tit. 8, § 11040); IWC 
wage order No. MW-2019 (Cal. Code Regs., tit. 8, § 11000).)  An 
employee can start the Berman process by filling out a simple 
form found on the website and in local offices.  The form is 
rendered in many languages, and detailed instructions explain 
how to complete and file it.  In contrast, One Toyota’s agreement 
does not mention how to bring a dispute to arbitration, nor does 
it suggest where that information might be found.12  
Commercial arbitration providers, for example, frequently 
provide standardized forms to start the process.  Employees can 
also contact the provider for information on claim initiation.  
The agreement here, however, identifies no commercial 
providers.  In fact, it does not mention that such providers exist.  
It mandates that the arbitrator be a “retired California Superior 
Court Judge” but gives no indication how an employee might 
find such a person, let alone one willing to arbitrate a wage 
                                        
12  
A second document Kho signed the same day requires 
management to be notified in writing about compensation-
related disputes but gives no indication such a notice would be 
sufficient to initiate arbitration.  (See dis. opn., post, at p. 31.)  
Indeed, it would not be, since the agreement imposes no 
obligation on One Toyota to take any action upon receiving such 
a notice. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
23 
claim.  Although some employees might pursue other avenues 
for relief and reach arbitration after encountering a motion to 
compel, these additional steps will inevitably increase the delay 
and expense involved.  Other employees may be so confused by 
the agreement that they are deterred from bringing their wage 
claims at all.13 
 
Kho also contends it would be difficult for an 
unsophisticated, unrepresented wage claimant to effectively 
navigate the agreement’s arbitral procedure.  In the Berman 
process, a claimant need only fill out a complaint form, possibly 
assisted by a deputy labor commissioner, then attend a 
settlement conference and, in some cases, a hearing.  (See Sonic 
II, supra, 57 Cal.4th at p. 1128.)  By contrast, in the arbitration 
provided for here, the complaint must be framed in a legal 
pleading, and the claimant must respond to discovery demands 
and dispositive motions.  Whereas a Berman hearing is 
conducted by a deputy labor commissioner, who can explain 
terminology and assist with witness examination (see ibid.), the 
arbitration here must be conducted by a retired superior court 
judge, with procedures similar to a formal civil trial.  Evidence 
must conform to technical rules of evidence, whereas all 
                                        
13  
The dissent argues Kho could have deduced how to initiate 
arbitration by the agreement’s reference to the California 
Arbitration Act.  (Dis. opn., post, at p. 31.)  While still 
speculative, this assertion would have more force if Kho had 
been given a copy of the documents he signed.  It is undisputed 
he was not.  It seems quite a stretch to assert that a mere 
reference to the California Arbitration Act in the “visually 
impenetrable” (ante, at p. 17) paragraph Kho was given an 
inadequate opportunity to review, and which he would have had 
to recall without his own copy to assist him, informed Kho how 
to initiate arbitration. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
24 
relevant evidence is typically admitted in Berman hearings.  
(See ibid.; Cal. Code Regs., tit. 8, § 13502.)14  Collection is also 
                                        
14  
At oral argument, One Toyota’s counsel asserted that 
these procedural requirements would not apply in wage claim 
arbitrations because arbitrators would know to use simplified, 
Berman-like procedures instead.  This argument was never 
previously made and is contrary to One Toyota’s position 
throughout this appeal.  In the Court of Appeal, One Toyota 
defended the complexity of its arbitral process by arguing that 
the agreement’s “rules for discovery and motion practice are 
expressly the same as they would be in court—the same rules 
that the state legislature deemed fair enough to institute for all 
civil proceedings—with the only modifications noted in the four 
corners of the arbitration agreement and not requiring reference 
to any other documents.”  In its briefing here, One Toyota 
argued that what “Kho and the Labor Commissioner . . . both 
truly desire is an arbitration procedure that resembles the 
Berman hearing process.  However, an employee is not entitled 
to that . . . .”  One Toyota never suggested its arbitral process 
did, in fact, resemble the Berman procedures.  Moreover, 
counsel’s 
representation 
at 
oral 
argument 
is 
directly 
contradicted by the language of the arbitration agreement.  It 
states:  “To the extent applicable in civil courts, the following 
shall apply and be observed:  all rules of pleading (including the 
right of demurrer), all rules of evidence, all rights to resolution 
of the dispute by means of motions for summary judgment, 
judgment on the pleadings, and judgment under Code of Civil 
Procedure Section 631.8.  The arbitrator shall be vested with 
authority to determine any and all issues pertaining to the 
dispute/claims raised, any such determinations shall be based 
solely upon the law governing the claims and defenses pleaded, 
and the arbitrator may not invoke any basis (including but not 
limited to notions of ‘just cause’) for his/her determinations 
other than such controlling law.”  (Italics added.)  This language 
begins in the 32d line of the arbitration paragraph.  It clearly 
requires the parties to follow the same pleading, evidence, and 
motion practice rules that govern civil litigation.  Further, by 
requiring arbitration before a retired superior court judge, the 
agreement ensures the arbitrators will be experienced in 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
25 
simplified in the Berman context because the Labor 
Commissioner is responsible for enforcing the judgment.  
(§ 98.2, subd. (i).)  Or, if the employer unsuccessfully appeals the 
Labor Commissioner’s award, the claimant can collect on a 
posted bond.  (§ 98.2, subd. (b).)  In arbitration, a successful 
claimant must petition to confirm the award and reduce it to an 
enforceable judgment.  (Code Civ. Proc., §§ 1285, 1287.4.) 
 
The Berman process was specifically designed to give 
claimants a “speedy, informal, and affordable method” for 
resolving wage disputes.  (Cuadra, supra, 17 Cal.4th at 
p. 858.)15  The process advances “the very objectives of 
‘informality,’ ‘lower costs,’ ‘greater efficiency and speed,’ and use 
of ‘expert adjudicators’ that the high court has deemed 
‘fundamental attributes of arbitration.’ ”  (Sonic II, supra, 57 
Cal.4th at p. 1149; see Concepcion, supra, 563 U.S. at pp. 344, 
348.)16  By contrast, the arbitration provided for here 
                                        
enforcing these procedural rules.  It is difficult, if not impossible, 
to square the strict language of the contract with One Toyota’s 
belated assertion. 
15  
Although the resolution of this particular dispute has not 
been speedy, the delay is largely attributable to One Toyota.  
Kho filed a claim with the Labor Commissioner in October 2014.  
A settlement conference was held the next month, and a Berman 
hearing followed nine months later, in August 2015.  The Labor 
Commissioner issued an award only a week after the hearing, 
around 10 months after Kho filed his claim.  Litigation over One 
Toyota’s motion to compel arbitration then consumed the next 
four years. 
16  
The dissent raises the same criticisms of the Berman 
procedure that this court considered at length, and rejected, in 
Sonic II, supra, 57 Cal.4th at pages 1160-1162.  The Berman 
procedures remain the Legislature’s best “solution to the real-
world problems employees face in recovering wages owed.”  (Id. 
at p. 1162.)  These “informal procedures and incentives . . . make 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
26 
incorporates the intricacies of civil litigation.  An employee must 
surrender the benefits and efficiencies of the Berman process 
but does not gain in return any of the efficiencies or cost savings 
often associated with arbitration. 
 
We observed in Little v. Auto Stiegler, Inc., supra, 29 
Cal.4th at page 1075, footnote 1, that litigation-like procedures, 
on their own, are not necessarily so one-sided as to make an 
arbitration agreement unconscionable.  We certainly do not now 
suggest that a system of statutory and common law carefully 
crafted to ensure fairness to both sides, and subject to 
continuous review, is per se unfair.17  However, that carefully 
crafted process can be costly, complex, and time-consuming.  It 
is the opportunity to expedite and simplify the process that can 
motivate informed parties to agree to arbitration.  Furthermore, 
Little’s observation was made in the context of a suit alleging 
wrongful demotion and discharge.  (Id. at p. 1069.)  For such 
                                        
it more likely employees will be able to recover wages without 
incurring substantial attorney fees or the risk of liability for an 
employer’s attorney fees,” and help to “ensure that employees 
will be able to actually collect a favorable judgment.”  (Ibid.)  
Now, as in 2013, “[t]he dissent does not persuade us to second-
guess the efficacy of this legislative solution or to depart from 
this court’s consistent understanding of the Berman statutes’ 
benefits.”  (Ibid.) 
17  
It should be evident that our observations here, which the 
dissent quotes repeatedly (dis. opn., post, at pp. 1, 19, 42, 45, 48, 
55), pertain to civil litigation in general, not to the importation 
of civil litigation’s formalities into an arbitration scheme that 
was forced on an employee through oppression and surprise as 
a substitute for an administrative procedure that we have 
repeatedly found to be expedient and affordable.  (See, e.g., 
Sonic II, supra, 57 Cal.4th at pp. 1160-1161; Cuadra, supra, 17 
Cal.4th at p. 858.) 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
27 
claims, it may well be that an arbitration process closely 
resembling civil litigation can be as advantageous for the 
employee as for the employer.  (See id. at p. 1075, fn. 1.)  There 
is no Berman-like administrative process for wrongful discharge 
claims. 
 
Our cases have taken a different approach in evaluating 
the compelled arbitration of wage claims, as compared to the 
arbitration of other types of disputes.  Employees who agree to 
arbitrate claims for unpaid wages forgo not just their right to 
litigate in court, but also their resort to an expedient, largely 
cost-free administrative procedure.  We explained repeatedly in 
Sonic II that, while the waiver of Berman procedures does not 
in itself render an arbitration agreement unconscionable, the 
agreement must provide in exchange an accessible and 
affordable forum for resolving wage disputes.  (Sonic II, supra, 
57 Cal.4th at pp. 1146, 1147-1148, 1150.)  No specific procedures 
are required.  (See id. at pp. 1147, 1170-1171.)  But the arbitral 
scheme must offer employees an effective means to pursue 
claims for unpaid wages, and not impose unfair costs or risks on 
them or erect other barriers to the vindication of their statutory 
rights.  (See id. at pp. 1142, 1147-1148, 1157-1158.)  When 
imposed in a procedurally unconscionable fashion, such barriers 
to the vindication of rights may become unenforceable. 
 
It is true, as One Toyota notes, that the results of a 
Berman hearing are nonbinding.  An appeal by either party will 
bring the parties to the superior court for de novo review, where 
litigation formalities may apply.18  But, as Sonic II explained, 
                                        
18  
The dissent contends efficiencies of the Berman process 
are illusory because de novo appeals will simply bring the 
matters to superior court.  (Dis. opn., post, at p. 30.)  However, 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
28 
the prospect of an appeal does not negate the efficiency or 
accessibility of the Berman process.  (Sonic II, supra, 57 Cal.4th 
at pp. 1160-1162, 1167.)  Appeals are discouraged by the 
requirement that employers post a bond (§ 98.2, subd. (b)) and 
pay the costs and attorney fees on appeal of any employee who 
recovers even a minimal amount (see § 98.2, subd. (c); Lolley, 
supra, 28 Cal.4th at p. 376).  If the employer does appeal, 
Berman claimants who cannot afford counsel may be 
represented by the Labor Commissioner.  Representation in a 
de novo appeal is guaranteed for indigent claimants who do not 
object to the commissioner’s final order.  (§ 98.4.)  Absent the 
agreement, Kho may well have been represented by the Labor 
Commissioner in any de novo appeal.  Moreover, all claimants 
will have a better understanding of how to support their wage 
claims as a result of having the commissioner’s assistance 
during the Berman process. 
                                        
the Labor Commissioner explained at oral argument that de 
novo appeals are relatively rare.  Most of the 30,000 to 40,000 
claims filed with the commissioner each year are resolved at the 
initial settlement conference, with only around 10,000 
proceeding to a Berman hearing.  Of those 10,000, fewer than 
500 cases result in a de novo appeal.  Moreover, although trial 
courts generally have the power “ ‘ “to adopt any suitable 
method of practice” ’ ” in cases before them (Murphy v. Kenneth 
Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1118), the Labor 
Commissioner represents that de novo appeals typically proceed 
directly to trial, without lengthy pretrial proceedings.  Formal 
discovery in the superior court, though permissible, is 
disfavored except in unusually high-value or complex wage 
disputes.  (Sales Dimensions v. Superior Court (1979) 90 
Cal.App.3d 757, 763.)  One Toyota has not challenged these 
representations.  (See Madera Police Officers Assn. v. City of 
Madera (1984) 36 Cal.3d 403, 407, fn. 5.) 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
29 
 
Because the complexity of One Toyota’s arbitral process 
effectively requires that employees hire counsel, there is also 
force to Kho’s argument that the procedure is not an affordable 
option.  An arbitration procedure may not impose such costs or 
risks on wage claimants that it “ ‘effectively blocks every forum 
for the redress of disputes, including arbitration itself.’ ”  (Sonic 
II, supra, 57 Cal.4th at p. 1148.) 
 
As noted, Armendariz, supra, 24 Cal.4th 83, requires that 
employers bear most arbitration costs, which, because they 
include the arbitrator’s compensation, can be substantial.  The 
Armendariz rule mitigates the unfairness of expecting that 
employees bear costs of a procedure to which they were required 
to agree.  Attorney fees are different, however, because they are 
not unique to arbitration.  It is true that employees are free to 
hire counsel, or not, whether they pursue their claims in court 
or in arbitration.  But wage claimants present a somewhat 
special case.  These employees can secure free legal assistance 
from the Labor Commissioner, both at the Berman hearing and 
in any subsequent appeal.  While all employees would likely 
benefit from having a lawyer in the litigation-like arbitration 
process here, only wage claimants have to pay for representation 
that was otherwise available to them for free.19 
                                        
19  
One Toyota suggests that the Labor Commissioner could 
represent claimants in arbitration.  An administrative agency’s 
authority is limited to that conferred by statute or the 
Constitution.  (Ferdig v. State Personnel Bd. (1969) 71 Cal.2d 96, 
103; Noble v. Draper (2008) 160 Cal.App.4th 1, 12.)  Although 
section 98.4 allows the Labor Commissioner to represent 
indigent claimants in de novo court proceedings following a 
Berman hearing, no statute authorizes the representation of 
claimants outside this specific context.  The commissioner does 
have the power to prosecute its own action for the collection of 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
30 
 
One Toyota notes that employees who hire counsel for 
wage-claim arbitrations may be able to recover their legal fees 
under an applicable fee-shifting statute.  (See Kirby v. Immoos 
Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1251.)  For example, 
section 218.5, subdivision (a) requires the court to award 
reasonable attorney fees and costs to the prevailing party in 
“any action brought for the nonpayment of wages” if fees are 
requested “upon the initiation of the action.”  The parties do not 
dispute that section 218.5 applies to most of Kho’s claims.  While 
section 218.5 permits an award of fees to either employees or 
employers who prevail (see Kirby, at p. 1251), employers may 
recover fees “only if the court finds that the employee brought 
the court action in bad faith.”  (§ 218.5, subd. (a); see Arave v. 
Merrill Lynch, Pierce, Fenner & Smith, Inc. (2018) 19 
Cal.App.5th 525, 545.) 
 
Although section 218.5 may mitigate some financial 
burden, employees still face a risk that they will not be 
designated 
the 
prevailing 
party, 
rendering 
their 
fees 
unrecoverable.  The prevailing party is the one that succeeds “on 
a ‘ “practical level” ’ ” and has “ ‘realized its litigation 
objectives.’ ”  (Sharif v. Mehusa, Inc. (2015) 241 Cal.App.4th 
185, 192.)  An employer might be deemed the prevailing party 
on a wage claim if the jury denies most or all of the wages 
sought, even if the employee prevails on other claims.  (See ibid.) 
                                        
unpaid wages and penalties on behalf of workers who are unable 
to afford counsel.  (§ 98.3; see § 98, subd. (a).)  Whether this 
discretionary authority extends to representing wage claimants 
in an arbitration is not readily apparent but, in any event, is a 
question beyond the scope of this appeal. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
31 
 
In contrast, the Berman statutes provide fee-shifting to 
wage claimants who secure any monetary recovery in an 
employer’s appeal.  (§ 98.2, subd. (c).)  Considering the 
simplified administrative procedures that can be navigated in 
propria 
persona, 
and 
the 
availability 
of 
the 
Labor 
Commissioner’s representation and favorable fee-shifting in a 
de novo appeal, claimants can successfully complete the Berman 
process without paying a cent to an attorney.  The calculus is 
significantly different for employees in the arbitration process 
here, despite section 218.5.  Assuming they can find counsel 
willing to represent them in One Toyota’s complex arbitral 
process, these employees will have to pay the attorney if they do 
not prevail and may have to pay their employer’s attorney fees 
upon a finding of bad faith.  (See § 218.5, subd. (a).)  Moreover, 
since section 218.5, subdivision (a) requires a fee request “upon 
the initiation of the action,” employees who hire counsel after 
filing suit or starting arbitration may unwittingly forfeit their 
right to fees by failing to make a timely request. 
 
Because the arbitration process here is no more 
complicated than ordinary civil litigation, it might be 
sufficiently accessible for wage claimants who are sophisticated, 
or affordable for those able to hire counsel.  But an 
unconscionability analysis must be sensitive to context.  Context 
includes both the commercial setting and purpose of the 
arbitration contract and any procedural unconscionability in its 
formation.  (Sanchez, supra, 61 Cal.4th at pp. 911-912.)  As 
noted, the procedural unconscionability showing here is 
exceptionally strong.  Although the same contract terms might 
pass muster under less coercive circumstances, a worker who is 
required to trade the Berman process for arbitration should at 
least have a reasonable opportunity to understand the bargain 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
32 
he is making.  Had One Toyota set out the terms of its 
agreement in a legible format and fairly understandable 
language, or had it given Kho a reasonable opportunity to seek 
clarification or advice, this would be a different case.   
 
Ultimately, the question is whether Kho, through 
oppression and surprise, was coerced or misled into making an 
unfair bargain.  (See Gentry, supra, 42 Cal.4th at pp. 469-470; 
see also Sanchez, supra, 61 Cal.4th at p. 912.)  The substantive 
fairness of this particular agreement must be considered in 
terms of what Kho gave up and what he received in return.  By 
signing the agreement, Kho surrendered the full panoply of 
Berman procedures and assistance we have described.  What he 
got in return was access to a formal and highly structured 
arbitration process that closely resembled civil litigation if he 
could figure out how to avail himself of its benefits and avoid its 
pitfalls.  Considering the unusually coercive setting in which 
this bargain was entered, we conclude it was sufficiently one-
sided as to render the agreement unenforceable.20 
 
3. 
Consistency with Federal Law 
 
Our 
holding 
rests 
on 
generally 
applicable 
unconscionability principles and heeds Concepcion’s counsel 
that arbitration agreements be placed “on an equal footing with 
other contracts.”  (Concepcion, supra, 563 U.S. at p. 339.)  
Nevertheless, our dissenting colleague renews several of the 
preemption arguments he made in Sonic II, insisting once again 
that this court’s approach to unconscionability contradicts the 
FAA and United States Supreme Court jurisprudence.  (See 
                                        
20  
In light of this conclusion, we need not decide the Labor 
Commissioner’s claim, raised below, that One Toyota forfeited 
its right to arbitrate.  
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
33 
Sonic II, supra, 57 Cal.4th at pp. 1184-1192 (conc. & dis. opn. of 
Chin, J.).)  We respectfully suggest these complaints are 
unfounded. 
 
The dissent’s primary objection is that our analysis 
evinces 
hostility 
to 
arbitration, 
discriminates 
against 
arbitration, or improperly prefers a nonarbitral forum.  (Dis. 
opn., post, at pp. 44-49.)  Yet arbitration is premised on the 
parties’ mutual consent, not coercion (see Stolt-Nielsen S. A. v. 
AnimalFeeds Int’l Corp., supra, 559 U.S. at p. 681), and the 
manner of the agreement’s imposition here raises serious 
concerns on that score.  Moreover, we have repeatedly stressed 
that the substantive unconscionability of an arbitration 
agreement “is viewed in the context of the rights and remedies 
that otherwise would have been available to the parties.”  
(Sanchez, supra, 61 Cal.4th at p. 922, citing Sonic II, supra, 57 
Cal.4th at pp. 1146–1148.)  The dissent supports its claim with 
repeated quotations to our observations about civil litigation, 
not the arbitral process under review.  The argument is thus 
premised on a false equivalence between the system of civil 
litigation and the complex arbitral procedure adopted in this 
case, which features few, if any, of the benefits typically 
associated with arbitration and regarded as fundamental.  (See 
Concepcion, supra, 563 U.S. at pp. 344-345.)  While “the Berman 
statutes promote the very objectives of ‘informality,’ ‘lower 
costs,’ ‘greater efficiency and speed,’ and use of ‘expert 
adjudicators’ that the high court has deemed ‘fundamental 
attributes of arbitration,’ ” the arbitration agreement here 
undermines those objectives by causing an “increase in cost, 
procedural rigor, complexity, or formality.” (Sonic II, supra, 57 
Cal.4th at p. 1149, quoting Concepcion, supra, 563 U.S. at 
p. 348.)  
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
34 
 
In comparing Berman’s administrative process with One 
Toyota’s arbitral procedure, we have simply evaluated the 
bargain at issue.  We have not said no arbitration could provide 
an appropriate forum for resolution of Kho’s wage claim, but 
only that this particular arbitral process, forced upon Kho under 
especially oppressive circumstances and erecting new barriers 
to the vindication of his rights, is unconscionable. 
 
Citing the protracted appellate proceedings here, the 
dissent also complains that evaluating unconscionability claims 
will erect the type of “preliminary litigating hurdle” to 
arbitration the high court disfavored in American Express Co. v. 
Italian Colors Restaurant (2013) 570 U.S. 228, 239.  For obvious 
reasons, the duration of this particular litigation can hardly be 
considered typical.  Few cases progress to appeal, and 
vanishingly few reach this court.  More importantly, the issue 
here is very different from that in Italian Colors.  Unlike the 
“judge-made exception to the FAA” the high court found 
problematic (Italian Colors, at p. 235), the unconscionability 
defense has long been recognized as a permissible ground for 
invalidating arbitration agreements under the FAA’s savings 
clause.  (9 U.S.C. § 2; see, e.g., Concepcion, supra, 563 U.S. at 
p. 339; Doctor’s Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 
687.)  The FAA thus contemplates that unconscionability 
claims, like other state law contract defenses, will be resolved 
before arbitration is enforced.  (See Sonic II, supra, 57 Cal.4th 
at p. 1167.)  If the defense cannot be addressed before 
arbitration, then the savings clause has no meaning.  The 
dissent also predicts delay from the case-by-case litigation of 
accessibility and affordability.  (See dis. opn., post, at p. 52.)  But 
this is an argument with the unconscionability defense itself, 
which is inherently fact-specific.  Once again, the dissent’s view 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
35 
would all but eliminate the unconscionability defense to 
arbitration agreements, rendering the FAA’s savings clause 
meaningless. 
 
“Under the dissent’s sweeping view of FAA preemption, no 
unconscionability rule may take into account the surrender of 
statutory protections for certain claimants, whether or not those 
protections 
interfere 
with 
fundamental 
attributes 
of 
arbitration.”  (Sonic II, supra, 57 Cal.4th at p. 1168.)  We 
rejected that view in Sonic II and continue to do so.  Sonic II’s 
“unconscionability rule does not treat arbitration agreements 
differently from nonarbitration agreements, does not remotely 
foreclose the enforceability of agreements to arbitrate wage 
disputes, and does not require such agreements to adopt any 
devices or procedures inimical to arbitration’s fundamental 
attributes.”  (Id. at p. 1171.)  Our application of that rule today 
fully complies with the FAA and governing law. 
C. 
Status of the Labor Commissioner’s Award 
 
As noted, the trial court granted One Toyota’s motion to 
vacate the Labor Commissioner’s award.  Because the Court of 
Appeal concluded the parties must arbitrate their wage dispute, 
it did not address the Labor Commissioner’s cross-appeal from 
the order vacating her award.  We consider the issue because 
the status of the Labor Commissioner’s award has continuing 
significance on remand. 
 
As One Toyota acknowledges, the issuance of such an 
award has several consequences even if not reduced to an 
enforceable judgment.  When, as here, a de novo appeal is taken, 
the employer must post bond in the amount of the award.  
(§ 98.2, subd. (b).)  Employees like Kho who do not contest any 
aspect of the award can be represented by the Labor 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
36 
Commissioner in the de novo proceedings (§ 98.4) and obtain 
attorney fees if they recover any amount.  (§ 98.2, subd. (c); see 
Lolley, supra, 28 Cal.4th at p. 377.)  Kho’s access to these 
benefits on remand depends on the status of the Labor 
Commissioner’s award.21  A properly vacated award could make 
these benefits unavailable.  However, it appears the order 
vacating the award was made in error. 
 
On the morning of the scheduled Berman hearing, One 
Toyota faxed the Labor Commissioner a letter.  The company 
explained it had filed a petition to compel arbitration and 
requested the hearing be taken off calendar until arbitration 
was complete.  The Labor Commissioner refused, proceeded 
with the hearing in One Toyota’s absence, and made an award 
for Kho.22  The trial court found that One Toyota was 
substantially justified in refusing to participate in the Berman 
hearing and that enforcing the award would violate One 
Toyota’s right to a fair administrative hearing.  The procedural 
                                        
21  
After the trial court vacated the award, One Toyota 
obtained an order releasing its appeal bond.  Whether 
section 98.2, subdivision (b) requires reinstatement or the 
posting of a new bond is a matter the trial court may consider 
on remand. 
22  
One Toyota argues the Labor Commissioner created a 
“catch-22” by asserting that One Toyota would waive its right to 
arbitrate if it participated in the Berman hearing.  The record 
directly belies this claim.  After One Toyota refused to 
participate in the hearing, the hearing officer notified it in 
writing:  “[I]n the event that your client disagrees with the 
Order, Decision, or Award in this matter you will then have the 
opportunity to file an appeal or compel arbitration at that time.”  
(Italics added.)  One Toyota cites nothing in the record to 
support its “catch-22” assertion. 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
37 
posture here requires reversal of the trial court’s order granting 
relief from the award. 
 
The court purportedly relied on Code of Civil Procedure 
section 1094.5, subdivision (b).  That statute authorizes a writ 
of mandate if an administrative tribunal “has proceeded 
without, or in excess of, jurisdiction; whether there was a fair 
trial; and whether there was any prejudicial abuse of 
discretion.”  (Code Civ. Proc., § 1094.5, subd. (b).)  The difficulty 
is One Toyota did not petition for a writ of mandate.  (See Code 
Civ. Proc., § 1094.5, subd. (a).)  It simply filed a motion to vacate 
the award.  Moreover, administrative mandate applies only to 
the results of “a proceeding in which by law a hearing is required 
to be given. . . .”  (Ibid., italics added.; see Keeler v. Superior 
Court (1956) 46 Cal.2d 596, 598-599.)  There is no requirement 
that a Berman hearing be held on a wage complaint.  The Labor 
Commissioner has discretion to hold a hearing, prosecute the 
case in court, or take “no further action . . . on the complaint.”  
(Lab. Code, § 98, subd. (a).)  Accordingly, Berman “hearings are 
not subject to review under Code of Civil Procedure section 
1094.5.”  (Corrales v. Bradstreet (2007) 153 Cal.App.4th 33, 55.) 
 
More fundamentally, One Toyota was not entitled to relief 
on its motion because it failed to exhaust its administrative 
remedies.  The Labor Code outlines two alternatives for 
challenging a Berman award.  (See Gonzalez v. Beck (2007) 158 
Cal.App.4th 598, 605.)  First, either party can file an appeal in 
the superior court.  (§ 98.2.)  Second, a defendant who has failed 
to answer or appear in the Berman proceedings can apply to the 
Labor Commissioner for relief under Code of Civil Procedure 
section 473.  (Lab. Code, § 98, subd. (f).)  Although an 
application to the Labor Commissioner need not precede a de 
novo appeal (see Jones v. Basich (1986) 176 Cal.App.3d 513, 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
38 
518), this administrative recourse must be sought before a 
motion to vacate the commissioner’s decision.  Section 98, 
subdivision (f) states:  “No right to relief, including the claim 
that the findings or award of the Labor Commissioner or 
judgment entered thereon are void upon their face, shall accrue 
to the defendant in any court unless prior application is made to 
the Labor Commissioner in accordance with this chapter.”  (See 
Gonzalez, at pp. 605-606.)  One Toyota tried to pursue both lines 
of attack.  It filed a de novo appeal and made a motion to vacate.  
Because it failed to seek relief from the Labor Commissioner, 
however, it was barred from obtaining the latter relief.  (§ 98, 
subd. (f).) 
 
If One Toyota wished to halt the Berman proceedings 
while pursuing arbitration, it could have requested a stay.  The 
filing of a petition to compel arbitration does not automatically 
stay ongoing proceedings; the party seeking arbitration must 
request one.  (Brock v. Kaiser Foundation Hospitals (1992) 10 
Cal.App.4th 1790, 1796.)  Under Code of Civil Procedure 
section 1281.4, “[i]f an application has been made to a court of 
competent jurisdiction . . . for an order to arbitrate a controversy 
which is an issue involved in an action or proceeding pending 
before a court of this State and such application is 
undetermined, 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 the application 
for an order to arbitrate is determined . . . .”  (Italics added.)  
One Toyota’s petition to compel did, somewhat vaguely, ask the 
court to stay “this action,” but it gave the court no opportunity 
to rule on its request.  The petition was filed with the court on 
the Friday before a Monday Berman hearing.  One Toyota did 
not ask the court for an emergency stay in light of its late filing, 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
39 
and no stay order was actually issued before One Toyota’s 
counsel unilaterally left the hearing. 
 
One Toyota argues the terms of Code of Civil Procedure 
section 1281.4 do not apply because Berman proceedings are not 
“pending before a court of this State.”  This assertion 
undermines One Toyota’s attempt to excuse its nonparticipation 
in the hearing and ignores the rule from Brock that a motion to 
compel does not effect an automatic stay.  Moreover, even if the 
language of section 1281.4 does not explicitly encompass 
proceedings before the Labor Commissioner, the superior court 
likely had the power to stay these administrative proceedings 
under Code of Civil Procedure section 1281.8, subdivision (a), 
which authorizes a range of provisional remedies in aid of 
arbitration, including injunctive relief.  Failing that, the court 
could have issued a stay under its inherent power.  “[A] court 
ordinarily has inherent power, in its discretion, to stay 
proceedings when such a stay will accommodate the ends of 
justice.”  (People v. Bell (1984) 159 Cal.App.3d 323, 329.)  As the 
court in Landis v. North American Co. (1936) 299 U.S. 248, 254 
explained, “the power to stay proceedings is incidental to the 
power inherent in every court to control the disposition of the 
causes on its docket with economy of time and effort for itself, 
for counsel, and for litigants.” 
 
One Toyota did not obtain a stay, but simply refused to 
participate in a hearing that had been set months before.  Under 
these circumstances, the Labor Commissioner did not act 
improperly in proceeding with the hearing after One Toyota and 
its counsel chose to depart.  Vacating that award was error.  
Nevertheless, One Toyota properly appealed the award under 
section 98.2, which forestalled the Labor Commissioner’s 
decision, terminated her jurisdiction, and vested jurisdiction in 
OTO, L.L.C. v. KHO 
Opinion of the Court by Corrigan, J. 
 
40 
the superior court.  (Murphy v. Kenneth Cole Productions, Inc., 
supra,  40 Cal.4th at p. 1116.)  Although the appeal terminates 
the commissioner’s jurisdiction, Kho will have the benefit of the 
Labor Code’s post-Berman hearing protections on remand.  (See 
§§ 98.2, 98.4.) 
III.  DISPOSITION 
 
The decision of the Court of Appeal is reversed.  The 
matter is remanded for return to the trial court for proceedings 
on One Toyota’s de novo appeal from the Labor Commissioner’s 
award. 
 
 
 
 
 
 
 
 
 
CORRIGAN, J. 
We Concur: 
CANTIL-SAKAUYE, C. J. 
LIU, J.   
CUÉLLAR, J. 
KRUGER, J.   
GROBAN, J. 
 
 
OTO, L.L.C. v. KHO 
S244630 
 
Dissenting Opinion by Justice Chin 
 
Today, the majority holds that an arbitration agreement 
is 
substantively 
unconscionable — 
and 
therefore 
unenforceable — precisely because it prescribes procedures that, 
according to the majority, have been “carefully crafted to ensure 
fairness to both sides.”  (Maj. opn., ante, at p. 25.)  If you find 
that conclusion hard to grasp and counterintuitive, so do I.  It is 
based on the majority’s view that arbitration with such 
procedures, though not unaffordable or inaccessible in the 
abstract or “per se unfair” (maj. opn., ante, at p. 25), is not as 
advantageous for employees with unpaid wage claims as the 
potentially multitiered, multistep, combined administrative and 
judicial statutory process known as the Berman procedure.  I 
believe the majority’s analysis and conclusion to be incorrect 
under state law in numerous respects.  I also believe the Federal 
Arbitration Act (FAA; 9 U.S.C. § 1 et seq.), as authoritatively 
construed in binding United States Supreme Court decisions, 
precludes the majority from invalidating this arbitration 
agreement based on its subjective view that, for the purpose of 
“vindicati[ng]” employees’ “statutory rights,” the prescribed 
arbitration procedure is not as effective as the statutory Berman 
procedure.  (Maj. opn., ante, at p. 25.)  I therefore dissent. 
DISCUSSION 
To explain why I do not join the majority, I begin by 
summarizing relevant state law unconscionability principles.  I 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
2 
then explain my disagreement with the majority’s view that “a 
relatively low degree of substantive” unfairness may be 
sufficient to render an arbitration agreement unenforceable on 
the grounds of unconscionability (maj. opn., ante, at p. 20), and 
with the majority’s analysis of procedural and substantive 
unconscionability.  Finally, I explain why I believe the majority’s 
analysis and conclusion are inconsistent with, and therefore 
preempted by, the FAA, as the United States Supreme Court 
has construed that law.  
A.  State Law Principles of Arbitration and 
Unconscionability.  
Several state law legal principles must guide our analysis.  
First, as the majority acknowledges, “California law strongly 
favors arbitration.”  (Maj. opn., ante, at p. 12.)  The clearest 
expression of this state policy appears in Code of Civil Procedure 
section 1281, which declares that “[a] written agreement to 
submit to arbitration an existing controversy or a controversy 
thereafter arising is valid, enforceable and irrevocable, save 
upon such grounds as exist for the revocation of any contract.”  
This section establishes the “fundamental policy” of California's 
arbitration scheme: “that arbitration agreements will be 
enforced in accordance with their terms.”  (Vandenberg v. 
Superior Court (1999) 21 Cal.4th 815, 836, fn. 10.)  It creates “a 
presumption in favor of arbitrability [citation] and a 
requirement that an arbitration agreement must be enforced on 
the basis of state law standards that apply to contracts in 
general.”  (Engalla v. Permanente Medical Group, Inc. (1997) 15 
Cal.4th 951, 971-972.)  The majority, after briefly mentioning 
arbitration’s favored status under state law early in its opinion, 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
3 
essentially ignores this principle in its analysis and in its refusal 
to enforce the arbitration agreement here.  
Second, although the doctrine of unconscionability, as a 
generally applicable contract defense, may be applied to 
invalidate an arbitration agreement, as the majority notes, the 
doctrine’s “application” in the arbitration context “must rely on 
the same principles that govern all contracts,” and “[t]he degree 
of unfairness required for unconscionability must be as rigorous 
and demanding for arbitration clauses as for any other contract 
clause.”  (Maj. opn., ante, at p. 13.)   
Third, under our generally applicable principles of 
unconscionability, “[a] party cannot avoid a contractual 
obligation merely by complaining that the deal, in retrospect, 
was unfair or a bad bargain” (Sanchez v. Valencia Holding Co., 
LLC (2015) 61 Cal.4th 899, 911 (Sanchez)) or by showing that 
the contract “gives one side a greater benefit”  (Pinnacle 
Museum Tower Assn. v. Pinnacle Market Development (US), 
LLC (2012) 55 Cal.4th 223, 246 (Pinnacle)).  Under state law, 
“[n]ot all one-sided contract provisions are unconscionable” 
(Sanchez, at p. 911), and even the “fact that the bargain is a very 
hard or unreasonable one is not generally sufficient per se to 
induce . . . courts to interfere” (Boyce v. Fisk (1895) 110 Cal. 107, 
116).  Instead, the party seeking to invalidate an arbitration 
agreement must show “a substantial degree of unfairness 
beyond ‘a simple old-fashioned bad bargain.’ ” (Sonic–Calabasas 
A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1160, italics added 
(Sonic II).)  The contract “must be ‘so one-sided as to “shock the 
conscience” ’ ” (Pinnacle, at p. 246), or, as alternatively 
formulated, 
“ ‘overly 
harsh,’ 
‘unduly 
oppressive,’ 
[or] 
‘unreasonably favorable.’ ”  (Sanchez, at p. 911.) 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
4 
Fourth, “contracts of adhesion . . . are indispensable facts 
of modern life” and “are generally enforced” even though they 
“contain a degree of procedural unconscionability.”  (Gentry v. 
Superior Court (2007) 42 Cal.4th 443, 469 (Gentry); see AT&T 
Mobility LLC v. Concepcion (2011) 563 U.S. 333, 346-347 
(Concepcion) [“the times in which consumer contracts were 
anything other than adhesive are long past”].)  “[A] contract of 
adhesion is fully enforceable according to its terms” unless it 
violates the “reasonable expectations of the weaker or ‘adhering’ 
party” or is “unduly oppressive or ‘unconscionable.’ ”  (Graham 
v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 819, 820 (Graham).)     
Fifth, the party seeking to avoid the contract must 
establish both procedural and substantive unconscionability, 
“the former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to 
unequal bargaining power, the latter on ‘ “overly harsh” ’ or 
‘ “one-sided” ’ results.”  (Armendariz v. Foundation Health 
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).)  
Although both must be present, we have stated that “they need 
not be present in the same degree.  ‘Essentially a sliding scale is 
invoked which disregards the regularity of the procedural 
process of the contract formation, that creates the terms, in 
proportion to the greater harshness or unreasonableness of the 
substantive terms themselves.’  [Citations.]  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.”  
(Ibid.) 
B.  The Majority’s Sliding Scale.  
At this point, I note my first concern about the majority’s 
analysis:  its assertion that “a relatively low degree of 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
5 
substantive unconscionability may suffice to render” an 
arbitration agreement “unenforceable” if the level of procedural 
unconscionability is “substantial.”  (Maj. opn., ante, at p. 20.)  To 
begin with, it is unclear what the majority means by “relatively 
low” (ibid.), and the majority sheds no light on this question.  
The majority’s unadorned and unexplained assertion inevitably 
poses — but does not answer — the following questions:  Low 
“relative[]” to what, and how “low” is enough? 
Nor do our precedents support or give meaning to the 
majority’s statement.  The only decision from this court the 
majority cites for its assertion is Armendariz.  (Maj. opn., ante, 
at p. 21.)  However, the majority notably precedes this citation 
with a “see” signal, which is the signal we use to introduce 
decisions that provide only “weaker support” for a given 
proposition, i.e., decisions that, as here relevant, “only indirectly 
support the text” or contain “supporting dicta.”  (Cal. Style 
Manual (4th ed. 2000) § 1:4, p. 9.)  Clearly, then, the majority 
itself does not believe that Armendariz provides more than 
indirect and weak support for its view.   
To the extent Armendariz bears on the issue, it states, as 
noted above, that the “ ‘sliding scale’ ” used in connection with 
procedural and substantive unconscionability “ ‘disregards the 
regularity of the procedural process of the contract formation . . . 
in proportion to the greater harshness or unreasonableness of 
the substantive terms themselves.’  [Citations.]  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, supra, 24 Cal.4th at p. 114.)  As is obvious, the 
main point of this passage is that where the degree of 
substantive unconscionability is high — i.e., the contract terms 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
6 
are extremely harsh or unreasonable — “evidence of procedural 
unconscionability” becomes less important, i.e., a court may 
“ ‘disregard[] the regularity of the procedural process of the 
contract formation’ ” and find the contract unconscionable based 
solely on the high level of substantive unfairness.  (Ibid.)  This 
court’s use of the phrase “vice versa” at the end of the second 
sentence (ibid.) means only that evidence of procedural 
unfairness 
becomes 
more 
important 
to 
a 
finding 
of 
unconscionability as the degree of substantive unfairness 
decreases.  That is not the same as saying that “a relatively low 
degree of substantive unconscionability may suffice” where the 
degree of procedural unconscionability is “substantial.”  (Maj. 
opn., ante, at p. 20.)  Notably, the majority cites not a single case 
in which we have applied Armendariz in the manner the 
majority now suggests. 
Indeed, the very concept of “a relatively low degree of 
substantive unconscionability” (maj. opn., ante, at p. 20)  is 
inconsistent with our prior pronouncements that a court may 
not invalidate “one-sided contract provisions” upon a mere 
showing that “the deal, in retrospect, was unfair or a bad 
bargain” (Sanchez, supra, 61 Cal.4th at p. 911) or “gives one side 
a greater benefit” (Pinnacle, supra, 55 Cal.4th at p. 246); that 
the contract “must be ‘so one-sided as to “shock the 
conscience” ’ ” (Id. at p. 246), or “ ‘overly harsh,’ ‘unduly 
oppressive,’ [or] ‘unreasonably favorable’ ”  (Sanchez, at p. 911); 
and that the party alleging unconscionability must establish “a 
substantial degree of unfairness beyond ‘a simple old-fashioned 
bad bargain’ ” (Sonic II, 57 Cal.4th at p. 1160, italics added).  
The majority’s assertion that “a relatively low degree of 
substantive unconscionability may suffice” (maj. opn., ante, at p. 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
7 
22) simply cannot be squared with these principles, and the 
majority does not even attempt to do so.  
For its assertion, the majority more directly relies on two 
Court of Appeal decisions (maj. opn., ante, at p. 22), but neither 
is persuasive.  In the first — Carmona v. Lincoln Millennium 
Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85 — the Court of 
Appeal stated:  “In light of the high degree of procedural 
unconscionability, 
even 
a 
low 
degree 
of 
substantive 
unconscionability could render the arbitration agreement 
unconscionable.”  But the court cited no authority of any kind to 
support this bare assertion.  (Ibid.)  And the statement was 
dictum because, in the very next sentence, the court stated that 
“[t]he degree of substantive unconscionability here was not 
particularly low.”  (Ibid., italics added.)   
In the second decision the majority cites — A & M Produce 
Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 487 (A & M 
Produce) — the Court of Appeal stated that the enforceability of 
a clause containing an “unreasonable risk reallocation[] . . . is 
tied to the procedural aspects of unconscionability [citation] 
such that the greater the unfair surprise or inequality of 
bargaining power, the less unreasonable the risk reallocation 
which will be tolerated.”  But in making this statement, the 
court cited no supporting decision from either California or any 
other jurisdiction; indeed, it acknowledged that regarding “the 
importance 
of 
both” 
procedural 
and 
substantive 
unconscionability, there was “little California precedent directly 
on point.”  (Ibid.)  Moreover, like the statement in Carmona, the 
statement in A & M was dictum, because the court never 
subsequently applied it in analyzing the unconscionability 
issue.  In any event, read carefully, the statement says no more 
than did Armendariz, i.e., that evidence of procedural 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
8 
unfairness 
becomes 
more 
important 
to 
a 
finding 
of 
unconscionability as the degree of substantive unfairness 
decreases.  Again, that is not the same as saying that “a 
relatively low degree of substantive unconscionability may 
suffice” where the degree of procedural unconscionability is 
“substantial.”  (Maj. opn., ante, at p. 20.)  Thus, neither A & M 
nor Carmona constitutes reasoned or persuasive support for the 
majority’s view, and no published California decision has 
actually applied either that or  a similar view to the facts of a 
case. 
This is an important issue, because the majority’s new rule 
will significantly impact the enforceability of virtually all 
mandatory, 
predispute 
arbitration 
agreements 
in 
the 
employment context.  This court has observed that “the 
economic pressure” employers exert “on all but the most sought-
after employees” to sign such mandatory arbitration contracts 
“may be particularly acute,” because the contract “stands 
between the employee and necessary employment, and few 
employees are in a position to refuse a job because of an 
arbitration requirement.”  (Armendariz, supra, 24 Cal.4th at p. 
115; see Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245 
(Baltazar); Sanchez, supra, 61 Cal.4th at p. 919; Sonic II, supra, 
57 Cal.4th at p. 1134; Sonic-Calabasas A, Inc. v. Moreno (2011) 
51 Cal.4th 659, 685 (Sonic I); Little v. Auto Steigler, Inc. (2003) 
29 Cal.4th 1064, 1071 (Little).)  Given this observation, in the 
typical case of an employee who cannot afford to refuse or lose a 
job because of an arbitration requirement, even were the other 
procedural circumstances the majority discusses supported by 
the record and recognized as significant by our case law — 
considerations I address below — those circumstances would 
not make the degree of procedural unconscionability here higher 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
9 
in any analytically or legally relevant sense.  Supporting this 
view is the fact that the majority in Sonic I found a “significant 
element of procedural unconscionability” (Sonic I, supra, 51 
Cal.4th at p. 686) based solely on the ground that “the 
agreement was one of adhesion and imposed as a condition of 
employment” (id. at p. 685, fn. 10).   
For this reason, the majority’s assurance that an identical 
arbitration provision “might pass muster under less coercive 
circumstances” (maj. opn., ante, at p. 31) rings hollow.  Because 
of the economic pressures faced by prospective and existing 
employees, the majority’s finding of unconscionability will 
surely be the rule in the vast majority of cases in the 
employment context, regardless of the other circumstances the 
majority cites.  In other words, with few exceptions, as to 
employees presented with a “sign or you’re unemployed” choice, 
the ability to read, reflect, and understand the agreement does 
not make the situation “less coercive” in any meaningful sense.  
(Maj. opn., ante, at p. 29.)  More broadly, because it would not 
be difficult for a court to find a “relatively low degree of 
substantive” unfairness in an adhesion contract (maj. opn., ante, 
at p. 20), the majority’s new rule casts significant doubt on the 
enforceability of many contractual terms in the employment 
context, not just arbitration provisions.  
C.  Procedural Unconscionability. 
I now turn to my next point of disagreement with the 
majority:  its analysis of procedural unconscionability.  Several 
aspects of that analysis are inconsistent with both established 
California law and the record in this case.   
First, in finding “significant oppression” (maj. opn., ante, 
at p. 16), the majority emphasizes that Kho “had no opportunity 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
10 
to read” the documents his  employer — plaintiff One Toyota of 
Oakland (OTO) — asked him to sign (maj. opn., ante, at p. 2), 
and that OTO, by having an employee from its human resources 
department “wait for the documents, . . . conveyed an 
expectation that Kho sign them immediately, without 
examination or consultation with counsel” (maj. opn., ante, at p. 
16).  However, in Sanchez, our procedural unconscionability 
discussion gave no weight to sworn statements of the party 
resisting arbitration that he “ ‘was presented with a stack of 
documents,’ ” “ ‘was simply told . . . where to sign and/or initial 
each one,’ ” and “ ‘was not given an opportunity to read any of 
[them].’ ”  (Sanchez, supra, 61 Cal.4th at p. 909.)  Instead, we 
explained that “even when a customer is assured it is not 
necessary to read a standard form contract with an arbitration 
clause, ‘it is generally unreasonable, in reliance on such 
assurances, to neglect to read a written contract before signing 
it.’ ”  (Id. at p. 915.)  Several of our Courts of Appeal have applied 
this principle in the context of employment arbitration 
agreements.  (Avery v. Integrated Healthcare Holdings, Inc. 
(2013) 218 Cal.App.4th 50, 65-66; 24-Hour Fitness, Inc. v. 
Superior Court (1998) 66 Cal.App.4th 1199, 1215.)  Moreover, in 
Sonic I, supra, 29 Cal.4th at page 686, the majority’s discussion 
of procedural unconscionability noted that “many employees 
may not give careful scrutiny to routine personnel documents 
that employers ask them to sign.”  These precedents are 
inconsistent with the majority’s view that the degree of 
procedural unconscionability here was higher because Kho did 
not have an opportunity to read the documents and OTO 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
11 
“conveyed an expectation that [he] sign them immediately, 
without examination.”1  (Maj. opn., ante, at p. 16.)   
Second, I disagree with the majority insofar as it 
emphasizes that “[n]either [the] contents nor significance” of the 
arbitration agreement “was explained” to Kho, that “there is no 
indication” in the record the employee who presented the 
agreement “had the knowledge or authority to explain its 
terms,” and that OTO, by “select[ing] a low-level employee . . . to 
present the [a]greement, creat[ed] the impression that no 
request for an explanation was expected and any such request 
would be unavailing.”  (Maj. opn., ante, at p. 16.)  The majority’s 
reliance on the absence of evidence regarding the employee’s 
ability and authority to explain the agreement’s terms is 
inconsistent with the fact that Kho bears “[t]he burden of 
proving unconscionability.”  (Maj. opn., ante, at p. 14.)  More 
broadly, the majority’s consideration of these circumstances is 
inconsistent with Sanchez and with the FAA.  In Sanchez, 
regarding procedural unconscionability, we stated that the 
party seeking to enforce an arbitration agreement “was under 
no obligation to highlight the arbitration clause of its contract” 
and was not “required to specifically call that clause to [the other 
party’s] attention.”  (Sanchez, supra, 61 Cal.4th at p. 914.)  We 
                                        
1  
The majority’s emphasis on these facts is also inconsistent 
with its own assertions that the arbitration agreement’s text is 
“ ‘visually impenetrable’ ” and virtually illegible (maj. opn., ante, 
at p. 17), and that its “substance” is so “opaque” (ibid.) that “[i]t 
would have been nearly impossible” for Kho “to understand the 
contract’s meaning” (maj. opn., ante, at p. 18).  If these 
assertions are accurate, then why does the majority find it 
significant that Kho had no opportunity to read the agreement? 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
12 
also stated that “[a]ny state law imposing such an obligation 
would be preempted by the FAA.”  (Ibid.)   
Third, I disagree that the “degree of procedural 
unconscionability” here was “unusually” or “ ‘extraordinarily 
high’ ” (maj. opn., ante, at pp. 2, 14) because “Kho was required 
to sign the agreement to keep the job he had held for three years” 
and OTO’s conduct “conveyed the impression that negotiation 
efforts would be futile” (maj. opn., ante, at pp. 17, 18).  These 
circumstances are what make the contract adhesive in the first 
place; as the majority earlier explains, “[a]n adhesive contract is 
standardized, generally on a preprinted form, and offered by the 
party with superior bargaining power ‘on a take-it-or-leave-it 
basis.’ ”  (Maj. opn., ante, at p. 14.)  They are also characteristics 
of all “mandatory employment arbitration agreements,” which 
this court has defined as “arbitration agreements that are 
conditions of new or continuing employment.”  (Sonic II, supra, 
57 Cal.4th at p. 1130.)  Thus, these circumstances neither 
distinguish this case in any way nor support a finding that there 
was a degree of procedural unconscionability beyond that found 
with any adhesive, mandatory employment arbitration 
agreement. 
Regarding surprise, the majority begins its analysis by 
assailing the arbitration agreement as being “a paragon of 
prolixity.”  (Maj. opn., ante, at p. 17.)  However, “prolixity” 
simply means the state or quality of being lengthy, protracted 
and drawn out, perhaps unduly or unnecessarily so.  (12 Oxford 
English Dict. (2d ed.1989) p. 608; Webster’s 3d New Internat. 
Dict. (2002) p. 1814; see Black’s Law Dict. (10th ed. 2014) p. 
1406, col. 1 [“prolixity” is “[t]he unnecessary and superfluous 
recitation of facts and legal arguments in pleading or 
evidence”].)  It is doubtful that the arbitration agreement in this 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
13 
case, consisting of a “single” paragraph with “51 lines,” meets 
this definition, let alone constitutes a “paragon” — i.e., a perfect 
example — of this concept.  (Maj. opn., ante, at p. 17.)   
In any event, contrary to what the majority suggests, our 
cases establish that prolixity itself is not problematic; for 
purposes of a procedural unconscionability analysis, surprise 
“ ‘ “occurs . . . where the allegedly unconscionable provision is 
hidden within a prolix printed form.” ’ ”  (Pinnacle, supra, 55 
Cal.4th at p. 247, italics added.)  There is nothing hidden about 
the arbitration agreement in this case.  It is not buried in a 
multipage document that addresses numerous other matters, 
but appears in a relatively short document that almost 
exclusively addresses arbitration.  In a heading at the top of the 
agreement’s first page, set apart from the body of the agreement, 
the word “ARBITRATION” appears in large, bolded, all caps 
type.  In a stand-alone provision at the top of the second page, 
the agreement states, in large, all caps, italicized type, that Kho 
is 
“AGREEING 
TO 
THIS 
BINDING 
ARBITRATION 
PROVISION.”  When Kho signed the arbitration agreement, he 
also signed a separate two-page agreement containing a stand-
alone, bolded-type paragraph explaining that the parties 
understood and were voluntarily agreeing to resolve “any 
disputes” 
regarding 
Kho’s 
employment 
“exclusively 
in 
accordance with binding arbitration,” and setting forth some of 
the features of the arbitration procedure, i.e., “a retired 
California Superior Court Judge” will conduct the arbitration 
and “[t]he arbitration proceedings shall be governed by the 
Federal Arbitration Act, and carried out in conformity with the 
procedures of the California Arbitration Act.”  The separate 
agreement also expressly stated that Kho had executed or would 
“execute a more comprehensive arbitration agreement with the 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
14 
Company.”  In finding surprise, the majority simply ignores 
these considerations, as well as precedent finding no surprise 
under analogous circumstances.  (Pinnacle, supra, 55 Cal.4th at 
p. 247, fn. 12 [in finding no surprise, citing fact that arbitration 
provisions “appear in a separate article under a bold, 
capitalized, and underlined caption titled ‘ARTICLE XVIII 
CONSTRUCTION DISPUTES’ ”]; Bigler v. Harker School 
(2013) 213 Cal.App.4th 727, 737 [no surprise where arbitration 
clause “located at the top of the second page in a two-page 
document with the heading ‘Arbitration’ in boldfaced font”]; 
Crippen v. Central Valley RV Outlet (2004) 124 Cal.App.4th 
1159, 1165 [emphasizing that arbitration provision “was printed 
on a separate page” with “ ‘Arbitration Addendum’ at the top,” 
and “was signed separately”].)   
For the preceding reasons, I conclude that the arbitration 
provision here is not unusual and that its substance does not 
contribute to a finding that the “degree of procedural 
unconscionability” in this case was, as the majority asserts, 
“unusually” and “ ‘extraordinarily high.’ ”  (Maj. opn., ante, at 
pp. 2, 14.)  Supporting this conclusion is the fact that in cases 
involving a virtually identical arbitration provision, we did not 
find an element of surprise that increased the degree of 
procedural unconscionability.  (Sonic II, supra, 57 Cal.4th at pp. 
1125-1126; Sonic I, supra, 51 Cal.4th at pp. 669-670; Little, 
supra, 29 Cal.4th at pp. 1069-1070.)   
The majority concludes its discussion of procedural 
unconscionability with a line of analysis that California courts 
have long and uniformly rejected.  The majority suggests that 
the arbitration agreement here is unenforceable because:  (1) 
arbitration “ ‘ “is a matter of consent, not coercion” ’ ”; and (2) we 
cannot “infer[]” that Kho’s “consent” to arbitrate was 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
15 
“voluntary,” given that his execution of the arbitration 
agreement was “induced . . . through ‘sharp practices’ and 
surprise” and he almost certainly did not know “he was giving 
up his Berman rights.”  (Maj. opn., ante, at p. 19.)  However, 
almost 40 years ago, we held that contracts of adhesion are “fully 
enforceable according to [their] terms” absent certain 
circumstances (Graham, supra, 28 Cal.3d at p. 819), even 
though they do not fit “the classical model of ‘free’ contracting 
by parties of equal or near-equal bargaining strength,” given 
that the weaker party’s only choices are “ ‘to adhere to the 
contract or reject it’ ” (id. at p. 817).  About 20 years later, we 
held that mandatory employment arbitration contracts are 
enforceable unless they contain “one-sided, substantively 
unconscionable terms,” even though “voluntariness” is the 
“bedrock justification” for arbitration and almost all employees 
presented with such contracts are under “acute” “economic 
pressure” to sign and effectively have no “choice” but to do so.  
(Armendariz, supra, 24 Cal.4th at p. 115.)  In subsequent years, 
we have repeatedly affirmed that mandatory employment 
arbitration agreements are enforceable unless substantively 
unconscionable.  (Baltazar, supra, 62 Cal.4th 1237, 1241; Sonic 
II, supra, 57 Cal.4th at p. 1125; Sonic I, supra, 51 Cal.4th at p. 
677; Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 
Cal.4th 665, 677; Little, supra, 29 Cal.4th at pp. 1068-1069.)   
Consistent with our decisions, California’s Courts of 
Appeal have expressly rejected the majority’s lack-of-consent 
line of analysis.  For example, in A & M Produce, supra, 135 
Cal.App.3d at pp. 486-487, the court explained:  “[T]he mere fact 
that a contract term is not read or understood by the nondrafting 
party or that the drafting party occupies a superior bargaining 
position will not authorize a court to refuse to enforce the 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
16 
contract.  Although an argument can be made that contract 
terms not actively negotiated between the parties fall outside 
the ‘circle of assent’ which constitutes the actual agreement 
[citation], commercial practicalities dictate that unbargained-
for terms only be denied enforcement where they are also 
substantively unreasonable.”  (Fn. omitted; see also Franco v. 
Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 956 
[“waivers that are obtained as a condition of employment . . . are 
not categorically invalid or unenforceable”]; Gutierrez v. 
Autowest, Inc. (2003) 114 Cal.App.4th 77, 88 [“unbargained-for 
term” in contract of adhesion, even if “not read or understood by 
the nondrafting party,” is enforceable unless “substantively 
unreasonable”]; Lagatree v. Luce, Forward, Hamilton & Scripps 
(1999) 74 Cal.App.4th 1105, 1129 [“compulsory nature of a 
predispute arbitration agreement does not render the 
agreement unenforceable on grounds of coercion or for lack of 
voluntariness”]; San Francisco Newspaper Printing Co. v. 
Superior Court (1985) 170 Cal.App. 3d 438, 443 [“failing to read 
the contract is no excuse, otherwise all contracts of adhesion 
would be unenforceable at the whim of the adhering party”].)  
Insofar as the majority’s analysis is contrary to this unbroken 
line of California authority, I disagree with it.2 
                                        
2  
To the extent the majority’s FAA preemption analysis 
raises a similar “concern[]” about  “consent” (maj. opn., ante, at 
p. 33), it  is erroneous for the same reason.  (See Lamps Plus, 
Inc. v. Varela (2019) __ U.S. __, __ [139 S.Ct. 1407, 1420] (dis. 
opn. of Ginsburg, J.) [“Arbitration clauses, the Court has 
decreed, may preclude judicial remedies even when submission 
to arbitration is made a take-it-or-leave-it condition of 
employment”]; Carnival Cruise Lines, Inc. v. Shute (1991) 499 
U.S. 585, 600 (dis. opn. of Stevens, J.) [“contracts of adhesion . . . 
offered on a take-or-leave basis” are enforceable if reasonable, 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
17 
Nevertheless, I ultimately agree there was sufficient 
procedural unconscionability here — given the adhesive nature 
of the contract and the circumstances under which OTO 
presented it to Kho for signature — to warrant scrutiny of the 
agreement’s substantive unconscionability.  To that issue, I now 
turn. 
D.  Substantive Unconscionability. 
The majority’s analysis of substantive unconscionability is 
difficult to follow, largely due to its shifting approach to that 
issue.  Initially, the majority seems to suggest that substantive 
unconscionability is irrelevant because there was “an unusually 
high degree of procedural unconscionability” here, and “an 
employee may not be coerced or misled into . . . trad[ing]” the 
Berman process for “a litigation-like arbitration procedure,” 
“[e]ven if” that procedure “may be an acceptable substitute for 
the Berman process in other circumstances.”  (Maj. opn., ante, 
at p.  2.)  Later, however, the majority expressly acknowledges 
that “[b]oth procedural and substantive unconscionability must 
be shown for the [unconscionability] defense to be established” 
(maj. opn., ante, at p. 13)  and asserts that at least “a relatively 
low degree of substantive unconscionability” is required to void 
the agreement, notwithstanding “the substantial procedural 
unconscionability here” (maj. opn., ante, at p. 21).  At one point, 
                                        
notwithstanding argument that they cannot “justifiably be 
enforced . . . under traditional contract theory because the 
adhering party generally enters into them without manifesting 
knowing and voluntary consent to all their terms”].)  The 
majority’s discussion of lack of consent, though off the mark as 
to Kho’s unconscionability claim and FAA preemption, would be 
apropos had Kho asserted and pursued a separate contract 
defense:  fraud in the execution of the contract.  
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
18 
the majority indicates that “ ‘the [substantive] unconscionability 
inquiry focuses on whether the arbitral scheme imposes costs 
and risks on a wage claimant that make the resolution of the 
wage dispute inaccessible and unaffordable,’ thus effectively 
blocking every forum for redress including arbitration itself.”  
(Maj. opn., ante, at p. 12.)  At another point, the majority 
indicates that the question is whether the arbitral scheme 
“offer[s] employees an effective means to pursue claims for 
unpaid wages, and [does] not impose unfair costs or risks on 
them or erect other barriers to the vindication of their statutory 
rights.”  (Maj. opn., ante, at p. 27.)  At still another point, the 
majority states that the question is whether “the bargain” 
between the parties “was sufficiently one-sided as to render the 
agreement unenforceable” (maj. opn., ante, at p. 32), i.e., “so 
unfairly one-sided that it should not be enforced” (maj. opn., 
ante, at p. 11).  Finally, shifting gears one last time, the majority 
declares in the final paragraph of its analysis that the 
substantively unconscionable “question” here “[u]ltimately” is 
whether the bargain was simply “unfair.”  (Maj. opn., ante, at p. 
32.)   
This court’s most relevant decision on the issue — Sonic 
II — is quite specific as to the applicable standard.  Under the 
majority opinion in that case, an agreement requiring 
arbitration of claims otherwise subject to the Berman procedure 
is not substantively unconscionable “so long as the arbitral 
scheme, however designed, provides employees with an 
accessible, affordable process for resolving wage disputes that 
does not ‘effectively block[] every forum for the redress of [wage] 
disputes, including arbitration itself.’ ”  (Sonic II, supra, 57 
Cal.4th at pp. 1157-1158.)  The majority here expressly 
acknowledges that the majority opinion in Sonic II “focused 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
19 
repeatedly on the need for accessible and affordable arbitration” 
(maj. opn., ante, at p. 11), and that under Sonic II, “[a]n 
agreement to arbitrate wage disputes can be enforceable so long 
as it provides an accessible and affordable process for resolving 
those disputes” (maj. opn., ante, at pp. 1-2).  Indeed, the majority 
even sets forth the Sonic II test at several points.   (Maj. opn., 
ante, at pp. 12, 29).  Surprisingly, however, it never applies that 
test; it nowhere states that arbitration under the agreement 
here is inaccessible or unaffordable to the point that it 
“ ‘effectively block[s] every forum for the redress of [wage] 
disputes, including arbitration itself.’ ”  (Sonic II, at p. 1158.) 
Indeed, in several ways, the majority’s analysis supports 
the conclusion that the arbitration agreement here does not 
meet the Sonic II test for substantive unconscionability.  To 
begin with, the majority concedes that that the arbitration 
process here — which permits “discovery” (maj. opn., ante, at p. 
3) and calls for “the same pleading, evidence, and motion 
practice rules that govern civil litigation” (maj. opn., ante, at p. 
24, fn. 14) — is no more complicated than ordinary civil 
litigation . . . .”  (Maj. opn., ante, at p. 31.)  Thus, arbitration 
under the agreement cannot be any more unaffordable or 
inaccessible for Kho than “ordinary civil litigation” (ibid.), a 
system that, according to the majority, has been “carefully 
crafted to ensure fairness to both sides” and is not “per se unfair” 
(maj. opn., ante, at p. 26).  The majority also concedes that under 
the arbitration agreement, Kho would be entitled to “reasonable 
attorney fees and costs” were he to be “the prevailing party in 
‘any action brought for the nonpayment of wages.’ ”  (Maj. opn., 
ante, at p. 30.)  This aspect of the agreement, the majority 
observes, “may mitigate some financial burden” of the 
arbitration.  (Ibid.) 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
20 
The majority also recognizes that in Little, we held in the 
arbitration context that use of “litigation-like procedures” does 
“not necessarily . . . make” a mandatory employment arbitration 
agreement “unconscionable.”  (Maj. opn., ante, at p. 26, italics 
added.)  Notably, in reaching this conclusion, we rejected the 
claim that “such procedures detract from the inherent 
informality of arbitration” and necessarily “inordinately benefit 
[employers] rather than [employees].”  (Little, supra, 29 Cal.4th 
at p. 1075, fn. 1.)  Consistent with Little’s analysis, the majority 
concedes that, for certain claims, “it may well be that an 
arbitration process closely resembling civil litigation can be as 
advantageous for the employee as for the employer.”  (Maj. opn., 
ante, at pp. 26-27.)   
Inexplicably discarding Sonic II’s test for substantive 
unconscionability, the majority bases it conclusion on the 
alternative substantive unconscionability tests it sets forth.  
According to the majority, because “Kho surrendered the full 
panoply of Berman procedures and assistance,” and “received” 
nothing “in return” but “access to a formal and highly structured 
arbitration process,” his “bargain” with OTO was both “unfair” 
and “sufficiently one-sided as to render the [arbitration] 
agreement unenforceable.”  (Maj. opn., ante, at p. 32.)   
I disagree with the majority’s analysis and conclusion in 
several respects.  Initially, as already explained, our precedents 
establish 
that 
for 
an 
agreement 
to 
be 
substantively 
unconscionable, it is not enough that it is merely “unfair” or 
“one-sided.”  (Maj. opn., ante, at p. 32.)  Rather, it must cause “a 
substantial degree of unfairness beyond ‘a simple old-fashioned 
bad bargain.’ ” (Sonic II, supra, 57 Cal.4th at p. 1160, italics 
added.)  It “must be ‘so one-sided as to “shock the conscience” ’ ” 
(Pinnacle, supra, 55 Cal.4th at p. 246), or, as alternatively 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
21 
formulated, 
“ ‘overly 
harsh,’ 
‘unduly 
oppressive,’ 
[or] 
‘unreasonably favorable.’ ”  (Sanchez, supra, 61 Cal.4th at p. 
911.)  
Next, to the extent an evaluation of the benefits Kho 
relinquished and received is necessary, the majority’s analysis 
is improperly narrow.  As the majority acknowledges, “ ‘the 
unconscionability inquiry requires a court to examine the 
totality of the agreement’s substantive terms’ ” and to determine 
the fairness of the parties’ “ ‘overall bargain.’ ”  (Maj. opn., ante, 
at p. 11.)  Consistent with this observation, under basic contract 
law, “new and different consideration” is not required for “every 
individual promise in a contract.”  (Martin v. World Savings & 
Loan Assn. (2001) 92 Cal.App.4th 803, 809.)  Instead, “one 
promise in a contract ‘may be consideration for several counter 
promises.’ ”  (Ibid; see Foley v. Interactive Data Corp. (1988) 47 
Cal.3d 654, 679 [“ ‘ “[a] single and undivided consideration may 
be bargained for and given as the agreed equivalent of one 
promise or of two promises or of many promises” ’ ”].)   
Viewed from this perspective, Kho received several 
substantial benefits “in return” for agreeing to arbitration.  
(Maj. opn., ante, at p. 29.)  First and foremost, he received the 
benefit of continued employment.  Kho was an at-will employee 
and, according to the majority, “was required to sign the 
agreement to keep [his] job.”  (Maj. opn., ante, at p. 16.)  Under 
our precedents, Kho’s “ ‘continuing employment’ ” under such 
circumstances constitutes “ ‘consideration’ ” from OTO that 
“ ‘support[s]’ ” the arbitration agreement.  (Asmus v. Pacific Bell 
(2000) 23 Cal.4th 1, 14; see DiGiacinto v. Ameriko-Omserv Corp. 
(1997) 59 Cal.App.4th 629, 638 [“ ‘neither party to an at-will 
relationship has any obligation to perform in the future, and so 
doing so can provide valuable consideration for a modification of 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
22 
the contract’ ”].)  Second, the agreement here, considered in its 
entirety, is not merely a Berman waiver, but is a broad, bilateral 
arbitration provision that applies, with only a few exceptions, to 
“all disputes” between the parties “arising from, related to, or 
having any relationship or connection whatsoever with [Kho’s] 
seeking employment with, employment by, or other association 
with” OTO.  It thus confers on Kho the benefits of arbitration as 
to claims not subject to the Berman procedure, unless it may be 
said there are no such benefits in any covered context.  The 
majority improperly ignores these benefits and incorrectly 
evaluates the arbitration agreement as if it were only “a waiver 
of Berman procedures.”  (Maj. opn., ante, at p. 11.)  
Moreover, under basic contract law, the receipt of a benefit 
is not the exclusive measure of consideration; “a detriment to” 
one party is sufficient consideration for a contract even if the 
other contracting party receives no “benefit for his promise.”  
(Westphal v. Nevills (1891) 92 Cal. 545, 548.)  As here relevant, 
“ ‘[a]ny suspension or forbearance of a legal right constitutes a 
sufficient consideration.’ ”  (Adolph Ramish, Inc. v. Woodruff 
(1934) 2 Cal.2d 190, 207.)  In this case, OTO’s “promise[] . . . to 
arbitrate [its] disputes” with Kho and “to forego” its right to 
“judicial determination” of those disputes — including the right 
to a jury trial — “provide[d] consideration” for the agreement, 
as did Kho’s similar promise.  (Strotz v. Dean Witter Reynolds, 
Inc. (1990) 223 Cal.App.3d 208, 216; see Peleg v. Neiman Marcus 
Group, Inc. (2012) 204 Cal.App.4th 1425, 1449 [“ ‘mutual 
promises to submit all employment disputes to arbitration 
constituted sufficient consideration, because both parties were 
bound to the promises to arbitrate’ ”].) 
In any event, even insofar as the agreement constitutes a 
Berman waiver, I disagree that Kho received nothing “in return” 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
23 
but “access to a formal and highly structured arbitration 
process.”  (Maj. opn., ante, at p. 29.)  The Berman procedure is 
potentially a three-step process.  First is the administrative 
hearing, assuming the Labor Commissioner, as a matter of 
discretion, accepts the matter and decides to hold a hearing.  
(Maj. opn., ante, at p. 7.)  Step two is a trial de novo in superior 
court (maj. opn., ante, at p. 8), which either party may request 
without having even participated in the administrative 
procedure.  (Jones v. Basich (1986) 176 Cal.App.3d 513.)  This 
de novo proceeding is “ ‘ “a trial anew in the fullest sense” ’ ” 
(Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 948), 
in which the superior court proceeds “ ‘as a court of original 
jurisdiction, with full power to hear and determine [the matter] 
as if it had never been before the labor commissioner’ ” (Murphy 
v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1119). 
Thus, as the majority notes, in the de novo proceeding, 
“litigation formalities may apply.”  (Maj. opn., ante, at p. 26.)  
Moreover, the administrative decision “is ‘entitled to no weight 
whatsoever.’ ”  (Post, at p. 948) and the employer “is not bound 
by the defenses it raised” at the Berman hearing; it may 
“abandon, change, or add defenses not brought before the Labor 
Commissioner” (Murphy, at p. 1119) and may present “entirely 
new evidence” (Post, at p. 948).  Step three of the Berman 
procedure is “a conventional appeal to an appropriate appellate 
court” after the trial court’s decision upon the de novo hearing.  
(Ibid.)   
In signing the arbitration agreement, as to claims covered 
by the Berman statutes, Kho gained access to a procedure with 
no preliminary, nonbinding administrative process; no potential 
for formal civil litigation in court; only limited judicial review; 
and some, but not all, of the “litigation formalities” that, as the 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
24 
majority concedes, may apply in a de novo proceeding under the 
Berman statutes.  (Maj. opn., ante, at p. 26.)  And he gained 
OTO’s legal commitment and obligation to pay any and all costs 
“unique” to this procedure.  (Armendariz, supra, 24 Cal.4th at p. 
113.)  Thus, “in return” for waiving the Berman procedure, Kho 
received considerably more than just “access to a formal and 
highly structured arbitration process.”  (Maj. opn., ante, at p. 
29.)  The majority may think he made a “ ‘bad bargain’ ” (Sonic 
II, supra, 57 Cal.4th at p. 1160), that he “could have done better” 
(id. at p. 1148), or that the agreement “ ‘gives [OTO] a greater 
benefit’ ” (id. at p. 1160), but our precedents preclude us from 
declaring an agreement to be unconscionable and unenforceable 
on any of those grounds.  
In an attempt to diminish the value of what Kho received 
and inflate the value of what he gave up, the majority asserts 
that the Berman procedures “discourage[]” de novo proceedings 
by requiring appealing employers to post undertakings and 
requiring unsuccessful appellants to pay the other side’s costs 
and reasonable attorney fees.  (Maj. opn., ante, at p. 26.)  But 
the former requirement would seem to provide little 
disincentive, given that the employer’s only alternative to filing 
an appeal and posting an undertaking is actually paying the 
award.  And the latter provision also discourages employees from 
appealing, because it requires them to pay costs and attorney 
fees if they appeal and are “unsuccessful,” meaning they do not 
obtain an “award[] . . . greater than zero.”  (Lab. Code, § 98.2, 
subd. (c).)  Of course, the record here provides further reason to 
doubt the deterrent value of these provisions; after the 
administrative decision, OTO, which declined even to 
participate in the Berman hearing, filed for a de novo trial, 
completely undeterred by the statutes.  In any event, having 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
25 
provisions that assertedly provide some undetermined and 
factually unproven disincentive to seeking a trial de novo is not 
at all the same as having access to an arbitration procedure that 
enables Kho to eliminate even the possibility that recovery of 
unpaid wages will require a formal civil trial in court — with 
attendant “litigation formalities” (maj. opn., ante, at p. 
27) — after a preliminary and nonbinding administrative 
procedure or as a matter of first resort in lieu of that procedure.  
As the majority explains, “[i]t is the opportunity to expedite and 
simplify the process that can motivate informed parties to agree 
to arbitration.”3  (Maj. opn., ante, at p. 26.) 
                                        
3  
In rejecting my analysis, the majority relies on the 
statement of counsel for the Labor Commissioner at oral 
argument that his “understand[ing]” is that there are “probably” 
fewer than 500 de novo proceedings per year.  (See maj. opn., 
ante, at p. 27, fn. 17.)  Reliance on this statement of counsel’s 
“understand[ing],” which obviously lacks foundation and is 
hearsay, is improper under our “ ‘settled’ ” rule that “ ‘on a direct 
appeal from a judgment [we] will not consider matters outside 
the record.’ ”  (People v. Gardner (1969) 71 Cal.2d 843, 854.)  The 
majority in both Sonic I and Sonic II followed this settled rule 
and expressly declined to rely on factual representations about 
the arbitration process counsel made “[a]t oral argument” in an 
effort to support the arbitration agreement’s validity.  (Sonic II, 
supra, 57 Cal.4th at p. 1147; Sonic I, supra, 51 Cal.4th at p. 681, 
fn. 4.)  It is noteworthy that the majority here ignores the rule 
in order to establish the arbitration agreement’s invalidity, an 
issue on which Kho bears the burden of proof.  The majority’s 
inadequate response — that OTO did not “challenge[]” counsel’s 
statement  (maj. opn., ante, at p. 28, fn. 18) — fails to recognize 
that counsel made the statement during rebuttal argument, 
after OTO’s argument, so OTO had no opportunity to respond.  
In any event, the majority’s response misses an essential point:  
By agreeing to arbitration, Kho eliminated any possibility that 
recovery of unpaid wages would require a formal civil trial in 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
26 
The majority’s view that Kho received little or nothing “in 
return” (maj. opn., ante, at p. 32) for the Berman waiver rests on 
numerous 
other 
exaggerations, 
unproven 
or 
erroneous 
assumptions, miscalculations, and/or mischaracterizations 
regarding the value of the Berman procedures.  First, as the 
majority 
acknowledges, 
when 
an 
employee 
files 
an 
administrative claim, “[t]here is no [statutory] requirement that 
a Berman hearing be held” (maj. opn., ante, at p. 32) and the 
Labor Commissioner has “discretion to . . . take ‘no further 
action . . . on the complaint’ ” (ibid., quoting Lab. Code, § 98, 
subd. (a)).  Thus, when Kho signed the arbitration agreement — 
which is the relevant time for assessing unconscionability (Civ. 
Code, § 1670.5, subd. (a)) — it was entirely speculative whether 
any of the Berman procedure’s asserted benefits would be 
available to him, and the only thing he actually relinquished 
was the opportunity to ask the Labor Commissioner to exercise 
discretion to conduct legally nonbinding administrative 
proceedings on a claim.   
Second, 
the 
majority’s 
view 
that 
the 
Berman 
administrative procedure is more advantageous for employees 
because it has “no discovery process” (maj. opn., ante, at p. 7) is 
inconsistent with our case law.  In Armendariz, supra, 24 
Cal.4th 83, which involved a mandatory employment arbitration 
agreement, the majority held that “the provision of adequate 
discovery” is one of the “minimum requirements” of a valid and 
enforceable arbitration provision (id. at p. 91, italics added) and 
explained that “from [an] employee’s point of view,” more 
“limited 
discovery” 
is 
typically 
one 
of 
the 
“potential 
                                        
court, either after a nonbinding administrative procedure or in 
lieu of such a procedure.      
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
27 
disadvantages” of arbitration (id. at p. 115, italics added).  In 
Gentry, supra, 42 Cal.4th at page 457, the majority extended the 
discovery requirement to an unpaid wage claim.  Kho’s actions 
confirm this court’s previous statements regarding the 
importance of discovery to employees with wage claims; during 
the administrative Berman proceedings, he “requested that a 
subpoena be issued for various work related documents.” 
Third, the Berman procedure is not, as the majority 
asserts, necessarily “ ‘speedy’ ” or “expedient.”  (Maj. opn., ante, 
at pp. 24, 25.)  As explained above, a Berman procedure is 
potentially a three-step, combined administrative and judicial 
process, which may include a civil trial in court with “litigation 
formalities.”  (Maj. opn., ante, at p. 16.)  This three-step process 
has the potential to substantially delay any recovery.  Indeed, 
the first administrative step by itself can take years.  (Sonic I, 
supra, 51 Cal.4th at p. 681, fn. 5.)  [noting several 
“documented” cases in which it took “slightly under one year” to 
commence the Berman hearing, and one in which it took 
“slightly under four years”].)  In this case, for example, the 
Berman hearing was not held for about 10 months after Kho 
filed his claim, and the Labor Commissioner’s award was made 
some 16 months after Kho’s termination.  Two weeks later, OTO 
requested a trial de novo.  (Maj. opn., ante, at pp. 5, 33.)  Thus, 
nothing at the time that Kho signed the contract — and nothing 
that actually happened in the Berman proceedings that followed 
Kho’s termination — supports the majority’s view that, by 
signing the arbitration agreement, Kho gave up a “ ‘speedy’ ” or 
“expedient” administrative procedure.  (Maj. opn., ante, at pp. 
24, 25.)  Nor is there any basis in the record for the majority’s 
implicit conclusion that arbitration under the agreement 
here — 
which 
involves 
no 
preliminary, 
nonbinding 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
28 
administrative process and only limited appellate review — 
would take longer than the Berman procedure.  The majority’s 
reliance on factually unsupported and unproven assumptions 
about the Berman procedure’s speed is contrary to the fact that 
Kho bears “[t]he burden of proving unconscionability.”4  (Maj. 
opn., ante, at p. 14.)   
Indeed, in light of the facts of this case and the Sonic II 
majority’s discussion of this issue, the majority’s steadfast 
reliance here on the asserted speediness of the Berman 
procedure is as ironic as it is legally erroneous.  In Sonic II, I 
argued that the potentially three-step Berman procedure is not 
necessarily “speedier or more streamlined than arbitration.”  
(Sonic II, supra, 57 Cal.4th at p. 1181 (conc. & dis. opn. of Chin, 
J.).)  The majority rejected my argument, asserting it rested on 
“bare assertions” that had “no evidentiary support.”  (Sonic II, 
at p. 1167.)  At the same time, the majority left the question 
open, “direct[ing] the trial court on remand to consider” this 
issue — and the claim of unconscionability — “in light of any 
relevant evidence.”  (Sonic II, supra, 54 Cal.4th at p. 1162.)  
Contrary to that admonition, the majority here dismisses the 
                                        
4  
The majority concedes that resolution of this case through 
the Berman administrative process “has not been speedy,” but 
asserts that “the delay is largely attributable to” OTO.  (Maj. 
opn., ante, at p. 25, fn. 14.)  The majority offers no factual basis 
for this assertion, and nothing in the record supports it.  For 
example, nothing indicates why it took several months just for 
Kho to receive a response from the Labor Commissioner to his 
request for a Berman hearing, or why the hearing was finally 
set for “some 9 months” after he made his request.  (Maj. opn., 
ante, at p. 4.)  In any event, whether OTO or a representative of 
the Labor Commissioner was responsible for the delay is 
irrelevant to my point that the Berman process is not 
necessarily speedy.  
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
29 
“relevant evidence” in the record showing that the Berman 
procedure is not speedy.  (Ibid.)  Instead of considering that 
evidence, the majority does precisely what the Sonic II majority 
incorrectly accused me of doing in that case:  relying on “bare 
assertions” that have “no evidentiary support.”5  (Sonic II, at p. 
1167.)  
Fourth, the Berman procedure is not as “ ‘informal’ ” as 
the majority suggests.  (Maj. opn., ante, at p. 7.)  The Labor 
Commissioner’s published policies and procedures stress that 
Berman hearings “are formal procedures” at which each party 
has the right to be represented by counsel, to present evidence, 
to testify under oath, to have other witnesses testify under oath, 
to cross-examine the opposing party and witnesses, and to 
subpoena witnesses, documents and records.  (Dept. of 
Industrial Relations, Div. of Labor Stds. Enforcement (DLSE), 
Policies and Procedures for Wage Claim Processing (2012 rev.) 
pp. 2–4 (DLSE Policies).)  Moreover, the judicial trial de novo 
procedure to which either side is entitled after a Berman 
                                        
5 
The Sonic II majority was incorrect about my analysis 
because I expressly referenced the fact that the employer in that 
case had “documented” three cases in which it took “a year or 
more” just to commence the Berman hearing.  (Sonic II, supra, 
57 Cal.4th at p. 1181 (conc. & dis. opn. of Chin, J.); see Sonic I, 
51 Cal.4th, supra, at p. 681, fn. 5 [petition to compel arbitration 
“documented” two cases in which it took “slightly under one 
year” to commence the Berman hearing, and one in which it took 
“slightly under four years”].)  The Sonic II majority simply chose 
to ignore this reference and the documented evidence in the 
record.  The majority here adopts the same head-in-the-sand 
approach, simply dismissing evidence that the Berman 
procedure is not, in reality, speedy, and relying instead on 
assertions about what the Berman procedure was, in theory “ 
‘designed to provide.’ ”  (Maj. opn., ante, at p. 7.) 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
30 
hearing is ordinary civil litigation, including both trial in the 
superior court and appeal.  At both judicial levels, as the 
majority acknowledges, “litigation formalities may apply.”  (Maj. 
opn., ante, at p. 26.)  Thus, all of the features of the arbitration 
agreement that are problematic for the majority — a superior 
court judge, discovery, and rules of pleading, evidence and 
motion practice — are actually built into the Berman procedure, 
and then some. 
The 
majority 
emphasizes 
that 
the 
deputy 
labor 
commissioner who conducts the Berman hearing “can explain 
terminology and assist with witness examination.”  (Maj. opn., 
ante, at p. 22.)  But nothing requires the hearing officer to 
provide such help; the decision whether to do so is left to the 
hearing officer’s “sole authority and discretion.”  (DLSE Policies, 
supra, at p. 3.)  In any event, nothing in the arbitration 
agreement precludes the arbitrator from providing similar 
assistance, and the majority never asserts otherwise.  (See Sonic 
II, supra, 57 Cal.4th at p. 1164 [“arbitrators have discretion to 
decide on features of arbitration that are not specified in the 
agreement”]; Sanchez v. Western Pizza Enterprises, Inc. (2009) 
172 Cal.App.4th 154, 177 [“An arbitrator ordinarily has broad 
discretion with respect to the procedures and law governing the 
arbitration”].)   
Fifth, the majority’s discussion of the relative ease of 
initiating arbitration and the Berman procedure is faulty in 
several respects.  The arbitration agreement is problematic for 
the majority because it “does not explain how to initiate 
arbitration.”  (Maj. opn., ante, at p. 21.)  However, the second 
agreement Kho signed when he executed the arbitration 
agreement informed him that he should “notify the Dealership’s 
General Manager in writing” if he “dispute[d] the amount of 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
31 
wages paid to” him.  This agreement informed Kho that all he 
had to do to initiate arbitration was to submit to OTO a written 
claim for unpaid wages.  Moreover, the arbitration agreement 
itself expressly referenced and incorporated — by both name 
and specific statutory citation — the California Arbitration Act 
(Code Civ. Proc., § 1280 et seq.), which sets forth the petition 
procedure for initiating arbitration if “a party to the 
[arbitration] agreement refuses to arbitrate” a controversy.  
(Code Civ. Proc., § 1281.2.)  Notably, although we dealt with 
similar arbitration agreements in Sonic I, Sonic II, and Little, 
in none of those decisions did we even mention their failure to 
explain how to initiate arbitration. 
On the other side of its “initiation” equation, the majority, 
in relying on two wage orders of the Industrial Welfare 
Commission (IWC)  (maj. opn., ante, at p. 22), is truly grasping 
at straws.  To begin with, the majority does not suggest, and 
nothing in the record indicates, that these wage orders were 
ever handed to Koh, in his possession, or called to his attention 
in any way.  Indeed, Kho could not have seen one of the wage 
orders, because it post-dated his employment with OTO by 
almost five years.  (IWC Wage Order No. MW-2019.)  The other 
order states, contrary to the majority’s assertion, that posting is 
unnecessary “[w]here the location of work or other conditions 
make [posting] impractical,” in which case the employer need 
only “keep a copy of th[e] order and make it available to every 
employee upon request.”  (IWC Wage Order No. 4-2001, § 22.)  
Again, the majority does not suggest, and nothing in the record 
indicates, that the wage order was actually posted at Kho’s 
worksite.   
Even had the wage order that actually existed when Kho 
worked at OTO been posted, nothing suggests Kho ever saw it, 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
32 
let alone read it.  And even had he read it, he surely would not 
have understood it if, as the majority asserts, “[i]t would have 
been nearly impossible” for him “to understand” the arbitration 
agreement’s meaning given his lack of “legal training and access 
to” the statutes it references.  (Maj. opn., ante, at p. 19.)  To the 
extent, if any, the text of the single paragraph arbitration 
agreement is, as the majority asserts, “ ‘visually impenetrable’ ” 
(maj. opn., ante, at p. 17), the text of the wage order — 
comprising 10 pages of densely packed, single-spaced type with 
22 sections, multiple subsections, and multiple subparts to the 
multiple subsections — is far more visually impenetrable.  And 
to the extent, if any, the arbitration agreement’s “substance” is, 
as the majority asserts “opaque” (maj. opn., ante, at p. 17), again, 
the wage order’s substance is far more opaque.  The wage order 
contains more  “statutory references and legal jargon” than the 
arbitration agreement, and its “legal jargon” is much more 
complicated than the arbitration agreement’s.  (Maj. opn., ante, 
at p. 17.)  To borrow the words of the majority, “a layperson 
trying to navigate” the wage order “text would not have an easy 
journey.”  (Maj. opn., ante, at p. 18.)  Indeed, assuming the wage 
order applied to Kho — something the majority does not actually 
assert — it would have been hard for him to have understood 
this fact even had he read it; in complexly structured, multipart 
sections containing highly technical “legal jargon” and many 
“statutory references” (maj. opn., ante, at p. 18), the first three 
pages of the wage order set forth 21 definitions and numerous 
coverage exemptions (Wage Order No. 4-2001, §§ 1, 2). 
As for informing Kho about the Berman procedure, the 
wage order contains not a single mention of that procedure as a 
means for resolving wage disputes, either by name or by 
statutory reference.  Nor, contrary to the majority’s suggestion, 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
33 
does the sentence on which the majority relies even expressly 
refer to “wage-related violations.”  (Maj. opn., ante, at p. 22.)  It 
refers instead only generally to “QUESTIONS ABOUT 
ENFORCEMENT of the Industrial Welfare Commission orders 
and reports of violations.”  (Wage Order No. 4-2001, p. 9.)  For 
Kho to have known that this sentence related to “wage-related 
violations” (maj. opn., ante, at p. 22), he would have needed to 
understand that the acts he wanted to challenge were addressed 
by the wage order and constituted violations of its complicated, 
legally technical provisions.  Finally, the sentence in question 
appears at the end of the 10-page wage order, after the last of its 
22 sections.  (Wage Order No. 4-2001, p. 9.)  Thus, Kho would 
not have even come across it unless he first made his way all the 
way through the rest of the long, complex, legally technical wage 
order.  In other words, this sentence, unlike the arbitration 
provision, truly is “ ‘ “hidden within a prolix printed form.” ’ ”  
(Pinnacle, supra, 55 Cal.4th at p. 247, italics added.) 
The other wage order — which, again, did not exist during 
Kho’s employment with OTO — is, in addition, similarly 
problematic.  Though shorter, it comprises five sections of 
densely-packed, single-spaced, small font type; written in very 
technical legal jargon; containing both statutory references and 
references to other wage orders; setting forth exceptions to its 
application; and including complicated charts.  (Wage Order 
No. MW-2019.)   It makes no mention of the Berman procedure, 
either by name or by statutory reference, and contains no 
express reference to “wage-related violations.”  (Maj. opn., ante, 
at p. 22.)  Instead, at the bottom, in tiny type, its states that 
“Questions about enforcement should be directed to the Labor 
Commissioner’s Office.”  (Wage Order No. MW-2019.)   
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
34 
In short, the wage orders that, according to the majority, 
demonstrate the Berman procedure’s superiority in terms of 
initiating action, demonstrate just the opposite.  To the extent, 
if any, the arbitration agreement is problematic in the ways the 
majority asserts, the wage orders are more problematic in each 
of those ways.  And they are problematic in additional ways that 
the majority does not even assert characterize the arbitration 
agreement. 
In addition, the majority’s assertion about only needing to 
“fill[] out a simple form” to initiate the Berman procedure (maj. 
opn., ante, at p. 21) is inaccurate.  Upon examination, the form 
to which the majority refers turns out not to be so “simple” at 
all.  (Maj. opn., ante, at p. 21.)  It requires an employee to know 
and provide a considerable amount of detailed information, 
including: whether the claim is “about a public works project”; 
whether there is “a union contract covering [the] employment,” 
in which case a copy should be attached; the “total number of 
[the employer’s] employees”; and a complete breakdown of the 
unpaid amounts into “regular wages,” “overtime wages,” “meal 
period wages,” “rest period wages,” “split shift premium,” 
“reporting 
time 
pay,” 
“commissions,” 
“vacation 
wages,” 
“business expenses,” “unlawful deductions,” and “other.”  
(DLSE, Initial Report of Claim (DLSE Form 1) (rev. July 2012).)  
This is far more information than is necessary to file a civil 
complaint.  Indeed, unlike the majority, the DLSE recognizes 
that the claim initiation form is not so simple; with it, the DLSE 
offers two pages of densely-packed “Instructions for Filing A 
Wage Claim” and, attached to the instructions, a densely-
packed, three-page “Guide to Completing ‘Initial Report or 
Claim’ Form (DLSE Form 1).”   
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
35 
Moreover, initiating the Berman procedure may actually 
require more than filling out that single form.  Additional forms 
must be filled out and submitted “if the claim involves 
“commission pay” or “vacation wages,” or “if the plaintiff’s work 
hours or days of work varied per week or were irregular and the 
plaintiff is seeking unpaid wages or premium pay for meal or 
rest period violations.”  (DLSE Policies, supra, at p. 1.)  
Employees are also directed to submit a variety of other 
supporting documents — time records, paychecks and paystubs, 
bounced checks, notice of employment information — if they 
have them.  (Ibid.)  Given the above, the majority has 
exaggerated the ease of initiating the Berman procedure. 
Sixth, the majority’s discussion of how “[c]ollection . . . in 
the Berman context” is “simplified” compared to arbitration 
(maj. opn., ante, at p. 23) ignores aspects of arbitration that 
undermine its view.  The majority emphasizes that where “the 
employer unsuccessfully appeals the Labor Commissioner’s 
award, the claimant can collect on a posted bond.”  (Maj. opn., 
ante, at p. 24.)  However, an employee who arbitrates a 
controversy may obtain provisional remedies — such as an 
attachment or a preliminary injunction requiring payment of 
wages during the arbitration — in connection with the 
controversy.  (Code Civ. Proc., § 1281.8.)  No comparable 
provision enables an employee actually to obtain any payment 
during the Berman procedure.   
Seventh, the majority’s discussion of the relative costs of 
arbitration and the Berman procedure is misleading and 
incomplete.  According to the majority, by agreeing to arbitrate 
a wage claim, an employee gives up a “largely cost-free 
administrative procedure.”  (Maj. opn., ante, at p. 25.)  But an 
employee who requests a subpoena for documents, records or 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
36 
witnesses — as Kho did in this case — is responsible for the 
“[c]osts incurred in the service of a subpoena, witness fees and 
mileage.”  (DLSE Policies, supra, at p. 3.)  And employees who 
file de novo appeals from awards by the Labor Commissioner 
must pay (1) a court filing fee (Lab. Code, § 98.2, subd. (a)) and 
(2) the employer’s “costs and reasonable attorney’s fees” if they 
fail to recover “an amount greater than zero” (id., subd. (c)).  In 
any event, as the majority correctly notes, the arbitration 
agreement “anticipates” that, consistent with Armendariz, OTO 
has the “obligation to pay arbitration-related costs.”  (Maj. opn., 
ante, at p. 18.)  Thus, if there are any costs “unique to 
arbitration” under the agreement — such as costs incident to 
discovery, preparation of proper pleadings, and/or motion 
practice — then OTO must pay them.  (Armendariz, supra, 24 
Cal.4th at p. 113.)  As the majority explains, this payment 
obligation “mitigates the unfairness of expecting that [Kho] bear 
costs of a procedure to which [he was] required to agree.”  (Maj. 
opn., ante, at p. 29, italics added.)   
So it turns out that the majority’s only real concern about 
costs relates to “[a]ttorney fees,” which, says the majority, are 
“different” from other costs “because they are not unique to 
arbitration.”  (Maj. opn., ante, at pp. 26-27.)  According to the 
majority, “employees can secure free legal assistance from the 
Labor Commissioner, both at the Berman hearing and in any 
subsequent appeal.”  (Maj. opn., ante, at p. 27.)  By contrast, in 
the arbitration, they must “pay for [legal] representation.”  
(Ibid.) 
The majority’s analysis is problematic for several reasons.  
First, to be clear, according to the majority, the commissioner 
may not provide an employee with “representation” by “a 
lawyer” at a Berman hearing (maj. opn., ante, at p. 27), because 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
37 
“no statute authorizes” such representation (maj. opn., ante, at 
p. 27, fn. 13).  Instead, in terms of providing “free legal 
assistance” (maj. opn., ante, at p. 27) at the Berman hearing, the 
commissioner only may “assist . . . with cross-examination and 
explain issues and terms involved” (maj. opn., ante, at p. 8).  
Second, as noted above, nothing in the arbitration agreement 
precludes the arbitrator from providing similar assistance, and 
the majority never asserts otherwise.  Third, even as to de novo 
appeals, not all employees are eligible for legal representation 
by the commissioner, and even fewer are absolutely entitled to 
such representation.  Employees who are “financially []able to 
afford counsel” are not eligible for representation by the 
commissioner.  (Lab. Code, § 98.4.)  If they are “financially 
unable to afford counsel,” but are “objecting to any part of the 
Labor Commissioner’s final order,” they are eligible for 
representation, but the commissioner has discretion not to 
provide it.  (Ibid.)  Thus, employees requesting a trial de novo 
are never guaranteed representation by the commissioner, 
because they are, by definition, objecting to part of the final 
order; representation of such employees is always a matter for 
the commissioner’s discretion.  Only those employees who are 
both “financially unable to afford counsel” and “not objecting to 
any part of the Labor Commissioner’s final order” are statutorily 
guaranteed representation by the commissioner.  (Ibid.)   
Fourth, the majority gives short shrift to OTO’s claim that 
“the Labor Commissioner could represent claimants in 
arbitration.”  (Maj. opn., ante, at p. 27, fn. 13.)  The majority 
states that “no statute authorizes the representation of [wage] 
claimants outside th[e] specific context” of de novo proceedings 
following a Berman hearing.  (Maj. opn., ante, at p. 27, fn. 13.)  
However, Labor Code section 98.3, subdivision (a), states that 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
38 
“[t]he Labor Commissioner may prosecute all actions for the 
collection of wages, penalties, and demands of persons who in 
the judgment of the Labor Commissioner are financially unable 
to employ counsel and the Labor Commissioner believes have 
claims which are valid and enforceable.”  The majority asserts 
that this statute only gives the commissioner “the power to 
prosecute its own action . . . on behalf of workers” (maj. opn., 
ante, at p. 27, fn. 13), but the statutory language on its face does 
not seem so confined, and the majority offers no analysis for its 
restrictive reading.  Moreover, Labor Code section 98.3, 
subdivision (b), states that “[t]he Labor Commissioner may 
prosecute action for the collection of wages and other moneys 
payable to employees or to the state arising out of an 
employment relationship or order of the Industrial Welfare 
Commission.”  These provisions, and OTO’s argument, merit 
more in depth and definitive consideration if, as the majority 
reasons, the asserted unavailability of free counsel in 
arbitration is the primary reason the arbitration agreement is 
substantively unconscionable. 
Finally, the majority’s comparison of the employee’s 
ability to recover attorney fees in arbitration and in a Berman 
procedure is misleading.  As noted above, the parties agree — 
and the majority does not dispute — that were Kho to hire 
counsel to assist in an arbitration and were he to prevail, as “to 
most of [his] claims,” he would be entitled to “reasonable 
attorney fees and costs” under Labor Code section 218.5.  (Maj. 
opn., ante, at p. 27.)  Nevertheless, the majority continues, he 
“face[s] a risk that [he] will not be designated the prevailing 
party” under the fee statute.  (Maj. opn., ante, at p. 28.)  By 
contrast, the majority asserts, “The Berman statutes provide 
fee-shifting to wage claimants who secure any monetary 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
39 
recovery in an employer’s appeal.”  (Maj. opn., ante, at p. 28.)  Of 
course, this means that claimants who recover nothing in an 
employer’s appeal are not entitled to recover attorney fees.  And 
the majority’s use of the limiting phrase “in an employer’s 
appeal” (ibid.) means that in an appeal by the employee, the 
employee 
may 
not 
recover 
attorney 
fees 
under 
any 
circumstances, even upon securing full monetary recovery.  
(Sonic I, supra, 51 Cal.4th at p. 673 [in de novo proceeding, 
“successful appellants may not obtain [attorney] fees”].)  
Moreover, appealing employees, even if “financially unable to 
afford counsel,” are not guaranteed representation by the Labor 
Commissioner, because they would be “objecting to [some] part 
of the Labor Commissioner’s final order.”  (Lab. Code, § 98.4.)  
In this respect, arbitration, by making attorney fees potentially 
available to employees even if they are appealing parties, is 
actually more accessible and affordable for employees.   
The majority offers little response to my detailed analysis, 
other than to say I am simply “rais[ing] the same criticisms of 
the Berman procedure that [the majority] considered at length, 
and rejected” in Sonic II.  (Maj. opn., ante, at p. 25, fn. 15.)  
Although some of the points I make here about the Berman 
procedure are the same as points I made in Sonic II, many are 
not.  The majority simply ignores the points that are new.  It 
also ignores the evidence I cite to refute its assessment of the 
Berman procedure, which is based solely on this court’s 
assertions about what that procedure was, in theory “ ‘designed 
to provide.’ ”  (Maj. opn., ante, at p. 7.)   
Moreover, contrary to the majority’s assertion, I am not 
making “criticisms” of the Berman procedure.  (Maj. opn., ante, 
at p. 25, fn. 15.)  I am simply pointing out relevant aspects of the 
Berman procedure that are inherent in the statutory provisions 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
40 
themselves or that have revealed themselves through actual 
administration of those provisions.  This level of detailed inquiry 
is necessary because of the basis for the majority’s 
unconscionability finding:  its assessment of the Berman 
procedure’s benefits relative to those of the arbitration 
procedure.  A proper evaluation of that finding requires close 
examination of the majority’s assumptions and of any real, 
substantive differences between the two procedures.  The court 
should not cavalierly invalidate this arbitration agreement 
based on erroneous assumptions or assertions about its 
procedures as compared to the Berman procedure.  In light of 
the above considerations, it is impossible to reach a reliable, 
accurate, or definitive conclusion that the Berman procedure is 
less costly than the arbitration procedure.  Given the 
uncertainties regarding such a comparison, the majority’s 
analysis provides an insufficient basis for concluding that Kho 
has carried his burden to prove that the agreement was 
“unconscionable at the time it was made.”  (Civ. Code, § 1670.5, 
subd. (a).)  
Of 
course, 
reasonable 
people may 
reach 
different 
conclusions about the inchoate value, at the time the arbitration 
agreement was signed, of a Berman procedure’s potential 
benefits in comparison to the inchoate value of the arbitration 
procedure’s potential benefits.  But a court’s after-the-fact, 
subjective assessment of the relative benefits of the two 
procedures should not be the basis for exercising the judicial 
power to declare that an agreement was “unconscionable at the 
time it was made” (Civ. Code, § 1670.5, subd. (a)), and thus 
unenforceable.  This should be especially true where, as here, 
the basis for the court’s conclusion is that the arbitration 
procedure is simply too much like a procedure — ordinary civil 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
41 
litigation — that, according to the majority, has been “carefully 
crafted to ensure fairness to both sides.”  (Maj. opn., ante, at p. 
25.)    
Which brings me to my next point of disagreement with 
the majority:  its view that our case law allows invalidation of 
this arbitration agreement based on the relative benefits of the 
arbitration procedure and the Berman procedure.  To be sure, 
the majority in Sonic II, supra, 57 Cal.4th at page 1149, said 
that a court, “in determining whether an arbitration agreement 
is unconscionable,” may “consider the value of benefits provided 
by the Berman statutes” that the employee has “surrender[ed].”  
However, the Sonic II majority also emphasized:  that an 
“employee’s surrender of such benefits does not necessarily 
make the agreement unconscionable” (id. at p. 1125); that a 
finding of substantive unconscionability may not be “premised 
on the superiority of the Berman hearing as a dispute resolution 
forum” (id. at p. 1149); that “the unconscionability doctrine does 
not mandate the adoption of any particular form of dispute 
resolution mechanism, and courts may not decline to enforce an 
arbitration agreement simply on the ground that it appears to 
be a bad bargain or that one party could have done better” (id. 
at p. 1148); that “[t]he unconscionability inquiry is not a license 
for courts to impose their renditions of an ideal arbitral scheme” 
(ibid.); that the party seeking to compel arbitration need not 
“justify the [arbitration] agreement through provision of 
benefits comparable to those otherwise afforded by statute” (id. 
at p. 1152); that “parties may opt out of the Berman process with 
any agreement that provides for accessible, affordable 
arbitration of wage disputes” (id. at p. 1168); that “[o]ur rule 
requires only that wage claimants have an accessible and 
affordable mechanism for dispute resolution, not that the 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
42 
mechanism adopt any particular procedure or assume any 
particular form” (id. at pp. 1170-1171); and that “an adhesive 
arbitration agreement that compels the surrender of Berman 
protections as a condition of employment” (id. at p. 1150) is 
enforceable “so long as” it “provides employees with an 
accessible, affordable process for resolving wage disputes that 
does not ‘effectively block[] every forum for the redress of [wage] 
disputes, including arbitration itself’ ” (id. at pp. 1157, 1158).   
As noted earlier, the majority acknowledges that the 
features of the arbitration procedure here were “carefully 
crafted to ensure fairness to both sides” (maj. opn., ante, at p. 
25) and are not “per se unfair” (maj. opn., ante, at p. 25), and the 
majority does not find that arbitration is so unaffordable or 
inaccessible for Kho as to effectively block every forum for 
redress.  If the statements of the Sonic II majority have any 
meaning, then that should end the inquiry, and the arbitration 
agreement should be enforced.  But the majority nevertheless 
invalidates the agreement because, in its view, the arbitration 
procedure is not as advantageous for Kho as the Berman 
procedure.  In this regard, the majority’s analysis and 
conclusion are inconsistent with the Sonic II majority’s many 
statements and assurances regarding the enforceability of 
arbitration agreements in this context, especially its statement 
that a finding of substantive unconscionability may not be 
“premised on the [purported] superiority of the Berman hearing 
as a dispute resolution forum.”  (Sonic II, supra, 57 Cal.4th at p. 
1149.)   
The majority here essentially ignores the Sonic II 
majority’s statements, proclaiming that “the question” here 
“[u]ltimately” is whether Kho “was coerced or misled into 
making an unfair bargain” that is too “one-sided” to be enforced.  
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
43 
(Maj. opn., ante, at p. 32.)  To be sure, the Sonic II majority 
stated that “courts may examine the terms of adhesive 
arbitration agreements to determine whether they are 
unreasonably one-sided.”  (Sonic II, supra, 57 Cal.4th at p. 
1145.)  But the Sonic II majority also stated that, with respect 
to claims that qualify for the Berman procedure, “arbitration 
conducted with many of the formalities of litigation is not 
unconscionably one-sided” if it provides “accessible and 
affordable resolution of wage disputes.”  (Id. at p. 1163.)  And 
the Sonic II majority expressly “reaffirm[ed]” Little’s discussion 
on this point (ibid.), where we said “[i]t is not at all obvious” that 
provisions incorporating “legal formalities into” an arbitration 
agreement — i.e., “the rules of pleading and evidence” and 
“traditional judicial motions such as demurrer and summary 
judgment” — “would inordinately benefit [the employer] rather 
than [the employee]” (Little, supra, 29 Cal.4th at p. 1075, fn. 1).  
The majority’s analysis and conclusion are inconsistent with 
these statements.   
Finally, even were the majority correct that the agreement 
is one-sided with respect to claims covered by the Berman 
procedure — and as I have demonstrated, it is not — the 
majority’s analysis is contrary to the Sonic II majority opinion’s 
discussion of one-sidedness.  Consistent with my earlier 
discussion of basic contract law, the Sonic II majority stated that 
whether a contract is “unreasonably one-sided” must be 
determined based on “the overall bargain.”  (Sonic II, supra, 57 
Cal.4th at p. 1146.)  Thus, even were it true that the arbitration 
procedure provides Kho with little or no benefit with respect to 
claims covered by the Berman procedure, that would not mean 
the parties’ “ ‘overall bargain’ ” was “ ‘one-sided,’ ” let alone  
“ ‘unreasonably one-sided.’ ” (Maj. opn., ante, at p. 11).  Only by 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
44 
evaluating the arbitration agreement as if it were merely “a 
waiver of Berman procedures” (maj. opn., ante, at p. 11) and 
ignoring the overall benefits Kho received and the detriment 
OTO suffered — all in disregard of our precedents — can the 
majority assert that, given what Kho “received in return” for 
“surrender[ing] the full panoply of Berman procedures and 
assistance” (maj. opn., ante, at p. 32), the agreement is “so 
unfairly one-that it should not be enforced” (maj. opn., ante, at 
p. 11). 
For all of the preceding reasons, the majority’s analysis 
and conclusion are incorrect as a matter of state law. 
E.  Federal Law — The FAA 
The final reason I do not join the majority opinion is that 
its analysis is inconsistent with — and thus preempted by — the 
FAA, as the high court has construed that law.   
The high court cases applying the FAA authoritatively 
establish at least two principles that are fatal to the majority’s 
analysis and conclusion.  First, an arbitration agreement’s 
enforceability may not “turn[] on” a state’s “judgment 
concerning the forum for enforcement of [a] state-law cause of 
action.”  (Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 
U.S. 440, 446 (Buckeye).)  Thus, as the Sonic II majority stated, 
the FAA precludes a court from “finding an arbitration 
agreement unconscionable” based on “the fact that arbitration 
supplants an administrative hearing.”  (Sonic II, supra, 57 
Cal.4th at p. 1146.)  Second, judges may not declare an 
arbitration agreement to be unenforceable based on their 
subjective view that the arbitration procedure would not provide 
“ ‘effective vindication’ ” of a statutory right, unless the 
agreement goes so far as to “forbid[] the assertion of certain 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
45 
statutory rights,” and “perhaps” if it imposes “filing and 
administrative fees . . . that are so high as to make access to the 
forum impracticable.”  (American Express Co. v. Italian Colors 
Restaurant (2013) 570 U.S. __, __ [133 S.Ct. 2304, 2310-2311] 
(Italian Colors).)   
The majority’s analysis and conclusion violate both of 
these binding FAA principles.  Again, the majority, though 
recognizing that the arbitration procedure here was “carefully 
crafted to ensure fairness to both sides” (maj. opn., ante, at p. 
25) and is not “per se unfair,” unaffordable, or inaccessible 
(ibid.), nevertheless invalidates the arbitration agreement 
based on its view that the procedure is not as advantageous for 
Kho and other employees as the Berman procedure.  In other 
words, contrary to high court precedent, the majority makes the 
agreement’s enforceability “turn[] [entirely] on” a state court’s 
“judgment” that the Berman procedure provides a better “forum 
for enforcement of [a] state-law cause of action” (Buckeye, supra, 
546 U.S. at p. 446), and that the arbitration procedure 
“supplants” that more advantageous “administrative” forum 
(Sonic II, supra, 57 Cal.4th at p. 1146).  Also contrary to high 
court precedent, the majority expressly has rested its conclusion 
on the view that the arbitration procedure, as compared to the 
Berman procedure, “erect[s] . . . barriers to the vindication of 
[employees’] statutory rights.”  (Maj. opn., ante, at p. 27.)  Under 
binding high court case law, the FAA does not permit 
invalidation of the arbitration agreement on these grounds.   
It is true that under the FAA, enforcement of an 
arbitration agreement is subject to “such grounds as exist at law 
or in equity for the revocation of any contract.”  (9 U.S.C. § 2.)  
It is also true that under this clause — which is known as the 
saving clause — unconscionability, as a “ ‘generally applicable 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
46 
contract defense[],’ ” may be the basis for declining to enforce an 
arbitration agreement.  (Concepcion, supra, 563 U.S. at p. 339.)   
However, the FAA imposes substantial limits on what a 
court may do in the name of unconscionability.  To begin with, 
“[a] court may not . . . construe [an arbitration] agreement in a 
manner different from that in which it otherwise construes 
nonarbitration agreements under state law.”  (Perry v. Thomas 
(1987) 482 U.S. 483, 493, fn. 9 (Perry).)  Nor may a court apply 
the unconscionability doctrine “in a fashion that disfavors 
arbitration” or “ ‘rely on the uniqueness of an agreement to 
arbitrate as a basis for a state-law holding that enforcement 
would be unconscionable.’ ”  (Concepcion, supra, 563 U.S. at p. 
341.)  In short, the saving clause “establishes an equal-
treatment principle:  A court may invalidate an arbitration 
agreement based on ‘generally applicable contract defenses’ like 
fraud or unconscionability, but not on legal rules that ‘apply only 
to arbitration or that derive their meaning from the fact that an 
agreement to arbitrate is at issue.’ ”  (Kindred Nursing Centers 
Ltd. Partnerships v. Clark (2017) __ U.S. __, __ [137 S.Ct. 1421, 
1426] (Kindred Nursing).)  As this court has explained, this 
equal treatment principle mandates that our unconscionability 
standard “be . . . the same for arbitration and nonarbitration 
agreements” (Sanchez, supra, 61 Cal.4th at p. 912) and that we 
enforce our unconscionability rules “evenhandedly” (Sonic II, 
supra, 57 Cal.4th at p. 1143).  It preempts any rule of 
unconscionability that “discriminat[es] on its face against 
arbitration.”  (Kindred Nursing, at p. 1426.)   
But the equal treatment principle extends beyond overt 
discrimination, 
“displac[ing] 
any 
[state] 
rule 
[of 
unconscionability] that covertly accomplishes the same 
objective” (Kindred Nursing, supra, __ U.S. at p. __ [137 S.Ct. at 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
47 
p. 1426]) or that employs “more subtle methods” to “target 
arbitration” (Epic Systems Corp. v. Lewis (2018) __ U.S. __, __ 
[138 S.Ct. 1612, 1622] (Epic)).  Thus, as this court has explained, 
the FAA “preempts even a ‘generally applicable’ state law 
contract defense if that defense (1) is ‘applied in a fashion that 
disfavors arbitration’ [citation], or (2) ‘interferes with 
fundamental attributes of arbitration’ [citation], such as ‘ “lower 
costs, greater efficiency and speed, and the ability to choose 
expert adjudicators to resolve specialized disputes.” ’ ”  (McGill 
v. Citibank, N.A. (2017) 2 Cal.5th 945, 964 (McGill).)  In other 
words, although the FAA’s “saving clause preserves generally 
applicable contract defenses,” it does not “preserve state-law 
rules that stand as an obstacle to the accomplishment of the 
FAA’s objectives.”  (Concepcion, supra, 563 U.S. at p. 343).  Nor 
does it permit state courts, in “addressing the concerns that 
attend contracts of adhesion,” “to take steps” under the rubric of 
unconscionability that “conflict with the FAA or frustrate its 
purpose to ensure that private arbitration agreements are 
enforced according to their terms.”  (Id. at p. 347, fn. 6.)  Thus, 
“[t]he ‘grounds’ ” for invalidating an arbitration agreement that 
the saving clause preserves do not “ ‘include a State’s mere 
preference for procedures that are incompatible with arbitration 
and that “would wholly eviscerate arbitration agreements.” ’ ”  
(Id. at p. 343.) 
By refusing to enforce the arbitration agreement based on 
its view that the arbitration procedure is less advantageous for 
Kho and other employees than the Berman procedure, the 
majority runs afoul of these governing principles.  Given the 
majority’s recognition that the arbitration procedures have been 
“carefully crafted to ensure fairness to both sides” (maj. opn., 
ante, at p. 25), and are not “per se unfair,” unaffordable, or 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
48 
inaccessible (maj. opn., ante, at p. 25), the majority’s 
“comparative benefit” basis for invalidating the agreement 
constitutes nothing more than a “ ‘mere preference’ ” for the 
“ ‘procedures’ ” prescribed by the Berman statutes.  (Concepcion, 
supra, 563 U.S. at p. 343.)  By insisting that the arbitration 
agreement have more features comparable to those of the 
Berman procedure, the majority is “frustrat[ing]” the FAA’s 
“purpose to ensure that private arbitration agreements are 
enforced according to their terms.”  (Id. at p. 347, fn. 6.)  The 
majority’s effort to disguise this obvious preference for the 
Berman procedure under the cloak of unconscionability does not 
render its analysis and conclusion valid under the FAA; as 
explained above, the FAA’s equal treatment principle extends 
beyond overt discrimination, “displac[ing] any [state] rule [of 
unconscionability] that covertly accomplishes the same 
objective” (Kindred Nursing, supra, __ U.S. at p. __ [137 S.Ct. at 
p. 1426]) or employs “more subtle methods” to “target 
arbitration” (Epic, supra, __ U.S. at p. __ [138 S.Ct. at p. 1622]). 
But the majority’s effort is perhaps not as subtle or covert 
as it might at first appear.  The high court, in discussing the 
“ ‘great variety’ of ‘devices and formulas’ ” that judges hostile to 
arbitration have used to invalidate arbitration agreements, has 
expressly “not[ed] that California’s courts have been more likely 
to hold contracts to arbitrate unconscionable than other 
contracts.”  (Concepcion, supra, 563 U.S. at p. 342.)  Any reader 
of this court’s opinions would surely be able to confirm the high 
court’s observation.  Any such reader would also be able to 
discern that the unconscionability analysis and contract 
principles this court applies in arbitration cases — including the 
majority’s “comparative benefit” rationale for invalidating the 
arbitration agreement here, its insistence that there be separate 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
49 
consideration for Kho’s agreement to arbitrate claims covered by 
the Berman procedure, its failure to consider the parties’ overall 
bargain and the detriment OTO suffered in determining what 
Kho received in return for his agreement to arbitrate, and its 
reliance on factors to find procedural unconscionability that our 
precedents hold are not factors — are indeed very different from 
the analysis and principles the court applies in nonarbitration 
cases. 
Indeed, a majority of this court long ago expressly 
announced that with respect to arbitration agreements, it would 
apply “the ordinary principles of unconscionability . . . in forms 
peculiar to the arbitration context.”  (Armendariz, supra, 24 
Cal.4th at p. 119.)  Here, the majority again explicitly 
acknowledges that the “approach” it uses in “evaluating” the 
unconscionability 
of 
“compelled 
arbitration 
of 
wage 
claims” otherwise subject to the Berman procedure is “different” 
from the approach this court uses in evaluating other 
unconscionability claims.  (Maj. opn., ante, at p. 25.)  This 
unique, Berman-specific approach — and the majority’s 
analysis and conclusion in this case — violate, and are thus 
preempted by, the FAA and its equal treatment principle, which 
preclude a court from “constru[ing an arbitration] agreement in 
a manner different from that in which it otherwise construes 
nonarbitration agreements under state law” (Perry, supra, 482 
U.S. at p. 493, fn. 9), from applying the unconscionability 
doctrine “in a fashion that disfavors arbitration,” and from 
“ ‘rely[ing] on the uniqueness of an agreement to arbitrate as a 
basis for a state-law holding that enforcement would be 
unconscionable’ ” (Concepcion, supra, 562 U.S. at p. 341).  As 
this court has held, the FAA’s equal treatment principle 
mandates that our unconscionability standard “be . . . the same 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
50 
for arbitration and nonarbitration agreements” (Sanchez, supra, 
61 Cal.4th at p. 912) and that we enforce our unconscionability 
rules “evenhandedly” (Sonic II, supra, 57 Cal.4th at p. 1143).  In 
this case, the majority, once again, fails to heed this court’s own 
pronouncements. 
Moreover, this case confirms my view, as set forth in Sonic 
II, that the unique unconscionability analysis a majority of this 
court applies to compulsory arbitration of Berman claims is 
incompatible with, and therefore preempted by, the FAA for 
another reason:  it “ ‘ “stand[s] as an obstacle to the 
accomplishment and execution of [Congress’s] full purposes and 
objectives” ’ in passing the FAA.”  (Sonic II, supra, 57 Cal.4th at 
p. 1187 (conc. & dis. opn. of Chin, J.).)  In Italian Colors, supra, 
570 U.S. __ at pages __, __ [133 S.Ct. 2304, 2311-2312], the high 
court rejected an approach that would “ ‘require courts to 
proceed case by case to tally the costs and burdens to particular 
plaintiffs in light of their means’ ” and “ ‘the size of their 
claims.’ ”  “Such a preliminary litigating hurdle,” the court 
explained, “would undoubtedly destroy the prospect of speedy 
resolution that arbitration in general and bilateral arbitration 
in particular was meant to secure.  The FAA does not sanction 
such a judicially created superstructure.”  (Id. at p. __ [133 S.Ct. 
at p. 2312].)  As I explained in Sonic II, the unconscionability 
inquiry the Sonic II majority set forth — by requiring a 
“minitrial” in superior court “on the comparative costs and 
benefits of arbitration and the Berman procedure for a 
particular employee” and possible “appellate review of the trial 
court’s decision” — creates “the very type of ‘superstructure’ ” 
that, according to the high court, “the FAA prohibits.”  (Sonic II, 
at p. 1188 (conc. & dis. opn. of Chin, J.).)   
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
51 
In rejecting my view, the Sonic II majority confidently 
responded that its approach would “not erect a ‘preliminary 
litigating hurdle’ of the sort prohibited by Italian Colors.”  (Sonic 
II, supra, 57 Cal.4th at p. 1167.)  To support its view, the 
majority asserted that a wage claim “is simpler than the 
antitrust claim at issue in Italian Colors,” that courts “have 
routinely decided whether arbitration is affordable in a given 
case,” and that applicable statutes would facilitate “summary” 
disposition of unconscionability claims.  (Id. at p. 1157.)  
The facts and the majority’s conclusion in this case 
validate my analysis.  OTO moved to compel arbitration in 
August 2015.  The trial court denied the motion four months 
later, in December 2015.  OTO then appealed, and in August 
2017 — two years after OTO moved to compel arbitration — the 
Court of Appeal disagreed with the trial court and ordered the 
motion granted.  Now, after another two years of litigation, a 
majority of this court is reversing the Court of Appeal based on 
a different assessment of the arbitration procedure’s benefits 
relative to a Berman procedure.  Thus, as the majority 
acknowledges, the “[l]itigation” in this case just to apply Sonic 
II’s unique unconscionability test has “consumed . . . four years.”  
(Maj. opn., ante, at p. 24, fn. 12, italics added.)  Even still, says 
the majority, its decision does not settle the question of whether 
an identical arbitration agreement would be enforceable “under 
less coercive circumstances.”  (Maj. opn., ante, at p. 32.)  The 
length of this litigation and the majority’s case-specific 
limitation on its holding confirm my view that the 
unconscionability analysis this court has prescribed for 
agreements to arbitrate claims the Berman procedure covers 
creates a preliminary litigating hurdle that, according to Italian 
Colors, is incompatible with, and thus preempted by, the FAA.   
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
52 
The majority’s response — that this inordinate delay in 
arbitration 
is 
permissible 
under 
the 
FAA 
because 
unconscionability is a generally applicable contract defense that 
“has long been recognized as a permissible ground for 
invalidating arbitration agreements under the FAA’s savings 
clause” (maj. opn., ante, at p. 34) — is simply incorrect.  Under 
high court precedent, the unconscionability defense does not 
“qualify for protection under the saving clause” if it is applied so 
as to “interfere[] with a fundamental attribute of arbitration.”  
(Epic, supra, __ U.S. at p. __ [138 S.Ct. at p. 1622].)  Consistent 
with this precedent, we unanimously stated just two years ago 
that the FAA “preempts even a ‘generally applicable’ state law 
contract defense if that defense . . . ‘interferes with fundamental 
attributes of arbitration,’ ” including “ ‘ “lower costs [and] 
greater efficiency and speed.” ’ ”  (McGill, supra, 2 Cal.5th at p. 
964, italics added.)  Because the extended litigation made 
necessary by a majority of this court’s unique approach to 
unconscionability in the Berman waiver context substantially 
interferes with these fundamental attributes of arbitration, the 
FAA preempts that approach notwithstanding the fact that 
unconscionability is otherwise a generally applicable contract 
defense.6 
                                        
6  
The majority’s other response — that this case is atypical 
because “[f]ew cases progress to appeal, and vanishingly few 
reach this court” (maj. opn., ante, at p. 34) — ignores (1) the cost 
and delay attributable to the superior court proceedings, and (2) 
the fact that between 10,000 and 15,000 appeals are filed in our 
Courts of Appeal each year.  (Jud. Council of Cal., 2017 Court 
Statistics Report, Statewide Caseload Trends:  2006-2007 
Through 2015-2016, p. 48.) 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
53 
The majority opinion here also confirms another aspect of 
my FAA preemption analysis in Sonic II.  There, I explained 
that the Sonic II majority’s unconscionability analysis is 
“inconsistent with” the FAA, as the high court construed it in 
Southland, because it “is not a ground that exists at law or in 
equity for the revocation of any contract, but is . . . merely a 
ground that exists for the revocation of arbitration provisions in 
contracts subject to the Berman statutes or to other statutes 
that ‘legislatively’ afford to ‘a particular class . . . specific 
protections in order to mitigate the risks and costs of pursuing 
certain types of claims.’ ”  (Sonic II, supra, 57 Cal.4th at p. 1190 
(conc. & dis. opn. of Chin, J.).)  Consistent with my analysis, the 
majority, in finding unconscionability here, concedes that it is 
using “a different approach in evaluating the compelled 
arbitration of wage claims, as compared to the arbitration of 
other types of disputes.”  (Maj. opn., ante, at p. 25.)  That 
approach, the majority continues, is not appropriate for 
“wrongful demotion and discharge” claims because “[t]here is no 
Berman-like administrative process for” such claims (maj. opn., 
ante, at p. 25) and no provision for “free legal assistance” (id. at 
p. 27) as there is with the Berman procedure; “[w]hile all 
employees would likely benefit from having a lawyer in the 
litigation-like arbitration process here,” “wage claimants 
present a somewhat special case” because “only [they] have to 
pay for representation that was otherwise available to them for 
free” (ibid.).  Thus, although arbitration with “litigation-like 
procedures” is permissible for some employment claims, it is 
unacceptable as a “substitute for [the Berman] administrative 
procedure.”  (Maj. opn., ante, at p. 16.)  These statements 
reinforce the view I stated in Sonic II:  This court’s rule of 
unconscionability for agreements requiring arbitration of 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
54 
unpaid wage claims otherwise eligible for the Berman procedure 
is “inconsistent with” the FAA because it “is not a ground that 
exists at law or in equity for the revocation of any contract, but 
is . . . merely a ground that exists for the revocation of 
arbitration provisions in contracts subject to the Berman 
statutes.’ ”  (Sonic II, supra, at p. 1190 (conc. & dis. opn. of Chin, 
J.).) 
Under the 
FAA, 
“[p]arties may 
generally 
shape 
[arbitration] agreements to their liking by specifying with whom 
they will arbitrate, the issues subject to arbitration, the rules by 
which they will arbitrate, and the arbitrators who will resolve 
their disputes.  [Citation.]  Whatever they settle on, the task for 
courts and arbitrators at bottom remains the same:  ‘to give 
effect to the intent of the parties.’ ”  (Lamps Plus, Inc. v. Varela, 
supra, __ U.S. at p. __ [139 S.Ct. at p. 1416].)   
California law embodies a similar principle; as this court 
has explained, by enacting the California Arbitration Act, “the 
Legislature has determined that the parties shall have 
considerable leeway in structuring the dispute settlement 
arrangements by which they are bound . . . .”  (Graham, supra, 
28 Cal.3d at p. 825.)  This “leeway . . . permit[s] the 
establishment of arrangements which vary to some extent from 
the dead-center of ‘neutrality,’ ” so long as they meet “certain 
‘minimum levels of integrity.’ ” (Ibid.)  In light of the public 
policy strongly favoring arbitration, those arrangements should 
be enforced — and “the matter should be permitted to proceed 
to arbitration” — absent a “clear[]” showing that they 
“essentially preclude the possibility of a fair hearing.”  (Id. at p. 
826, fn. 23.)  “If, in the course of arbitration proceedings, the 
resisting party is actually denied a fair opportunity to present 
OTO, L.L.C. v. KHO 
Chin, J., dissenting 
55 
his position, ample means for relief are available through a 
subsequent petition to vacate the award.”  (Ibid.) 
The majority violates these federal and state law 
principles by invalidating the arbitration rules to which the 
parties in this case agreed — even though those rules have been 
“carefully crafted to ensure fairness to both sides” (maj. opn., 
ante, at p. 25) and do not make arbitration “per se unfair,” 
unaffordable, or inaccessible (ibid.) — because they are not, in 
the majority’s view, as advantageous for Kho as the Berman 
procedure.  This conclusion is both inconsistent with California 
law and preempted by the FAA.   
For the foregoing reasons, I dissent.  
CHIN, J. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion OTO, L.L.C. v. Kho 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 14 Cal.App.5th 691 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S244630 
Date Filed: August 29, 2019 
__________________________________________________________________________________ 
 
Court: Superior 
County: Alameda 
Judge: Evelio M. Grillo 
 
__________________________________________________________________________________ 
 
Counsel: 
 
Fine, Boggs & Perkins, John P. Boggs and Roman Zhuk for Plaintiff and Appellant. 
 
Fisher & Phillips, Wendy McGuire Coats and Katherine P. Sandberg for California New Car Dealers 
Association as Amicus Curiae on behalf of Plaintiff and Appellant. 
 
Fernando Flores, Miles E. Locker and Theresa Bichsel for Intervener and Appellant. 
 
Weinberg, Roger & Rosenfeld, David A. Rosenfeld, Caren P. Sencer and Caroline N. Cohen for Defendant 
and Respondent. 
 
 
 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
John P. Boggs 
Fine, Boggs & Perkins 
80 Stone Pine Road, Suite 210 
Half Moon Bay, CA  94019 
(650) 712-8909 
 
Miles E. Locker 
Division of Labor Standards Enforcement 
Department of Industrial Relations 
455 Golden Gate Avenue, 9th Floor 
San Francisco, CA  94102 
(415) 703-4863 
 
David A. Rosenfeld 
Weinberg, Roger & Rosenfeld 
1001 Marina Village Parkway, Suite 200 
Alameda, CA  94501 
(510) 337-1001