Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_17-cv-05840/USCOURTS-cand-3_17-cv-05840-0/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

PERRY WADLER, et al.,

Plaintiffs,

v.

CUSTARD INSURANCE ADJUSTERS, 

INC.,

Defendant.

Case No. 17-cv-05840-WHO 

ORDER ON MOTION FOR 

RECONSIDERATION

Re: Dkt. No. 38

Currently before me is plaintiff Wadler’s motion for reconsideration of the stay of his 

claims in light of newly discovered evidence concerning his employment agreement with 

defendant Custard Insurance Adjusters, Inc. (CIA). While the Arbitration Acknowledgment in the 

Employment Agreement and terms governing arbitration from the Handbook contain one 

substantively unconscionable provision – allowing defendant but not Wadler to seek equitable 

relief in court – that provision can be severed from the agreement to arbitrate, allowing the 

agreement to be enforced. For the following reasons, Wadler’s motion for reconsideration is 

GRANTED, the stay on Wadler’s claims (but not those of the other named plaintiffs) is LIFTED, 

and defendant’s motion to compel arbitration of Wadler’s claims is GRANTED. 

BACKGROUND

I. PROCEDURAL BACKGROUND

On December 6, 2017, by Minute Order, I granted CIA’s motion to stay the claims of the 

four named plaintiffs in this case pending the Supreme Court’s resolution of three cases 

addressing collective action waivers, and denied without prejudice CIA’s motion to compel 

arbitration. Dkt. No. 35. I also denied without prejudice plaintiffs’ motion for conditional 

certification under the Fair Labor Standards Act (FLSA). Id.

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 1 of 11
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Plaintiffs sought leave to file a motion for reconsideration on December 14, 2017, based on 

the recently produced “Employment Agreement” signed by one of the plaintiffs, Perry Wadler. 

Dkt. No. 36. I granted plaintiffs leave, and advised that if they wished to proceed with an 

adjudication of Wadler’s defenses to arbitration on the merits, they could file a motion for 

reconsideration. Dkt. No. 37. Plaintiffs filed that motion on January 12, 2018, and in moving for 

reconsideration, relied on additional newly secured evidence, namely CIA’s Employee Handbook 

that contained not only the Employment Agreement and the Arbitration Acknowledgment signed 

by Wadler but also a section regarding “Arbitration.” In light of that newly revealed Handbook

(which Wadler provided to his counsel on January 4, 2018, but was not produced by CIA to 

plaintiffs), I asked counsel to submit supplemental briefing addressing three discrete topics:

1. Whether the language in Arbitration section of the Handbook limiting the 

time for filing claims is unconscionable, even though the same sentence 

provides “unless a longer period of time is provided by the applicable 

statute of limitations.”

2. Whether the Arbitration section of the Handbook attempts to preserve the 

ability of defendant to pursue equitable claims in court while precluding an 

employee from doing the same, and whether that provision is therefore 

unconscionable.

3. If either of the provisions identified immediately above is unconscionable, 

whether it can be severed from the Arbitration Acknowledgment as 

incorporated and explained by the Handbook. 

February 14, 2018 Order at 4. Both parties submitted five page briefs addressing these three 

issues. Dkt. Nos. 41, 42. The matters are now fully briefed and before me for resolution.

I recognize that in my December 6, 2017 Minute Order granting defendant’s motion for a 

stay pending the Supreme Court’s resolution of three related cases,

1

and denying defendant’s

motion to compel arbitration without prejudice to it being renewed following the Supreme Court’s 

rulings, I did not lay out my thinking on plaintiff Wadler’s unconscionability challenges to the 

Arbitration Agreement he signed. I will do so now. Resolution of those challenges, in addition to 

the newly raised challenges based on the Handbook, is necessary in order to fully rule on Wadler’s 

motion for reconsideration, as that motion asks me to lift the stay as to Wadler and allow Wadler’s 

 

1

Ernst & Young LLP et al. v. Stephen Morris et al.; NLRB v. Murphy Oil USA Inc.; and Epic 

Systems Corp. v. Lewis. 

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 2 of 11
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

claims to proceed.

2

 

II. FACTUAL BACKGROUND

CIA submits evidence that plaintiff Wadler was presented with an Arbitration 

Acknowledgement in paper form “in conjunction with a general employment agreement” when he 

started working for CIA. Declaration of Teresa McKinzie [Dkt. No. 20-3], ¶ 5. The “Arbitration 

Acknowledgment” signed by Wadler provided that “arbitration” under the rules of the American 

Arbitration Association (AAA):

shall be the sole and exclusive remedy for any alleged cause of 

action in any manner based upon or arising out of my employment 

with Custard. . . including any dispute based upon or arising from a 

written employment agreement (where applicable) or any of its 

subsidiaries or affiliated companies. I acknowledge that this 

agreement does not prevent CIA from seeking equitable relief in 

accordance with the provisions of any employment agreement 

between CIA and myself, where applicable. I agree that this 

requirement to arbitrate included any claims I might have against 

any employees of CIA, its affiliates, and subsidiaries, in any way 

relating to my employment relationship. I acknowledge that since 

arbitration is the exclusive remedy, I have no right to seek relief 

from any court.

Arbitration Acknowledgment, Ex. A to the Declaration of Teresa McKinzie. The Arbitration 

Acknowledgment was contained within the CIA Employee Handbook. That Handbook also 

contained “General Policies,” that included a section on Arbitration. Declaration of Corey B. 

Bennett (Dkt. No. 38-1) at ECF Pg. 45-46. 

The Arbitration section provided that “all claims and disputes” will be resolved through 

binding arbitration conducted by AAA. The section also required that “employees must initiate 

arbitration within one year of the time the dispute first arose unless a longer period of time is 

provided by applicable statute or law. The failure to initiate arbitration within this one year 

period, or time period provided by statute of law, will forever bar any claim involving that 

 

2

The three other named plaintiffs – Gerald Springer, Troy Willis, and Keith Tyner – signed 

arbitration agreements that contained collective action waivers. Wadler’s Arbitration

Acknowledgement did not. Given the differences between the agreements signed by Springer, 

Willis, and Tyner and the one signed by Wadler, and because it is not clear that the Handbook 

containing Wadler’s Employment Agreement and Arbitration Acknowledgment was used with 

respect to the employment of Springer, Willis and Tyner, the stay previously granted continues to 

apply to the claims of Springer, Willis, and Tyner. 

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 3 of 11
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

dispute.” Id. at ECF Pg. 45. Finally, the Handbook’s Arbitration provision explained:

nothing in this Policy shall be construed to prevent CIA from asking 

a court of competent jurisdiction to enter appropriate equitable relief 

to enjoin any violation of any written agreement between the 

Employee and the Company. CIA shall have the right to seek such 

relief in conjunction with or apart from the parties’ rights under this 

clause to arbitrate all disputes.

Id., ECF Pg. 46.

LEGAL STANDARD

Under the Federal Arbitration Act (“FAA”), a district court determines (1) whether a valid 

agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at 

issue. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). “To 

evaluate the validity of an arbitration agreement, federal courts should apply ordinary state-law 

principles that govern the formation of contracts.” Ingle v. Circuit City Stores, Inc., 328 F.3d 

1165, 1170 (9th Cir. 2003) (internal citation omitted). If the court is satisfied “that the making of 

the arbitration agreement or the failure to comply with the agreement is not in issue, the court shall 

make an order directing the parties to proceed to arbitration in accordance with the terms of the 

agreement.” 9 U.S.C. § 4. “Any doubts concerning the scope of arbitrable issues should be 

resolved in favor of arbitration.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 1999).

Under Section 2 of the Federal Arbitration Act, arbitration agreements “shall be valid, 

irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation 

of any contract.” 9 U.S.C. § 2.2. The Supreme Court of the United States has interpreted this 

language to mean that arbitration agreements may be “invalidated by generally applicable contract 

defenses, such as fraud, duress, or unconscionability” without contravening section 2. AT&T 

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1746 (2011). 

Plaintiffs assert that the Arbitration Acknowledgment is unenforceable because it, as 

construed in conjunction with the terms of the Handbook, is both procedurally and substantively 

unconscionable. Whether a contract is unconscionable is a question of law. Patterson v. ITT 

Consumer Fin. Corp., 14 Cal. App. 4th 1659, 1663 (1993). In California, unconscionability 

includes an “absence of meaningful choice on the part of one of the parties together with contract 

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 4 of 11
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

terms which are unreasonably favorable to the other party.” Lhotka v. Geographic Expeditions,

Inc., 181 Cal. App. 4th 816, 821 (Ct. App. 2010) (citation omitted). Accordingly, 

unconscionability has both a “procedural” and a “substantive” element. Id. 

Procedural unconscionability occurs where a contract or clause involves oppression, 

consisting of a lack of negotiation and meaningful choice, or surprise, such as where the term at 

issue is hidden within a wordy document. Id. “California law treats contracts of adhesion, or at 

least terms over which a party of lesser bargaining power had no opportunity to negotiate, as 

procedurally unconscionable to at least some degree.” Bridge Fund Capital Corp. v. Fastbucks 

Franchise Corp., 622 F.3d 996, 1004 (9th Cir. 2010). 

Substantive unconscionability occurs where the provision at issue “reallocates risks in an 

objectively unreasonable or unexpected manner.” Lhotka, 181 Cal. App. 4th at 821 (citation 

omitted). “Substantive unconscionability focuses on the one-sidedness or overly harsh effect of 

the contract term or clause.” Id. at 824–25 (citation omitted).

Both procedural and substantive unconscionability must be found before a term will be 

deemed unenforceable, but both need not be present to the same degree. Rather, “the more 

substantively oppressive the contract term, the less evidence of procedural unconscionability is 

required to come to the conclusion that the term is unenforceable, and vice versa.” Armendariz v. 

Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000).

DISCUSSION

I. PROCEDURAL UNCONSCIONABILITY

“The term contract of adhesion signifies a standardized contract, which, imposed and 

drafted by the party of superior bargaining strength, relegates to the subscribing party only the 

opportunity to adhere to the contract or reject it.” Armendariz, 24 Cal. 4th at 113. The 

Acknowledgment signed by Wadler appears to be a standardized contact. But there is no evidence

about how or when the Acknowledgment or Handbook were presented to and signed by Wadler.3

 

3

In support of plaintiffs’ opposition to the motion to compel, plaintiffs submitted evidence 

regarding the other three named plaintiffs signing of their Agreements. Bennett Decl., Exs. E-G.

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 5 of 11
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

There is no evidence (much less strong evidence) that the Acknowledgment was a “take it or leave 

it” condition of commencing or continuing work for CIA. Nor is there evidence that plaintiff

Wadler was given the choice of accepting or rejecting the Arbitration Acknowledgment; even if he 

was not given a choice, “[s]uch a finding [] only indicates that the agreement is somewhat 

procedurally unconscionable, not that it is unenforceable.” Naria v. Trover, No. 13-02086, 2013 

WL 4516483, at *3 (N.D. Cal. August 23, 2013). 

Several additional aspects of the Acknowledgment weigh against finding it procedurally 

unconscionable. The Acknowledgment is set forth in a separate section of the Handbook with a 

clear “Arbitration Acknowledgement” title, was separately signed by Wadler, and is less than one 

page long. Kilgore v. KeyBank, Nat’l. Ass’n, 718 F.3d 1052, 1059 (9th Cir. 2013) (holding that 

there is no procedural unconscionability where arbitration clause was not “buried in fine print in 

the Note, but was instead in its own section” and “clearly labeled”).

Wadler complains that the Acknowledgment and presumably the Arbitration provision in 

the Handbook are procedurally unconscionable because the AAA rules that govern any invoked 

arbitration proceeding are not found within the signed agreements. Instead, employees are forced 

to “‘go to another source to find out the full import of what he or she is about to sign—and must 

go to that effort prior to signing.’” Carmona v. Lincoln Millennium Car Wash, Inc., 226 

Cal.App.4th 74, 84 (2014) (quoting Harper v. Ultimo, 113 Cal.App.4th 1402, 1406 (2003)). But

the mere failure to attach or provide the AAA rules does not make an arbitration agreement 

unconscionable unless plaintiffs are challenging a specific provision within those rules as

unconscionable itself. See, e.g., Da Loc Nguyen v. Applied Medical Resources Corporation, 4 

Cal.App.5th 232, 249 (2016) (“the failure to attach the applicable AAA rules did not increase the 

procedural unconscionability of the application or its arbitration provision.”).4 Moreover, the 

Arbitration provision of the Handbook summarized key provisions of any invoked AAA 

arbitration--the right to an arbitrator experienced in employment law, the right to discovery, and 

 

4 Nguyen relied on the California Supreme Court opinion in Baltazar v. Forever 21, Inc., 62 

Cal.4th 1237, 1243 (2016). Baltazar came out a month after the case relied on by plaintiffs here, 

Carbajal v. CWPSC, Inc., 245 Cal.App.4th 227 (2016). 

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 6 of 11
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

the payment of fees and expenses. 

The Arbitration Acknowledgement and provisions in the Handbook are, at most, only 

slightly procedurally unconscionable.5

II. SUBSTANTIVE UNCONSCIONABILITY

In the initial opposition to CIA’s motion to compel and on reconsideration, Wadler makes

a number of arguments that his Arbitration Acknowledgment and the Arbitration provisions of the 

Handbook are substantively unconscionable. 

A. Lack of Mutuality

Plaintiffs argue that Wadler’s agreement to arbitrate is substantively unconscionable 

because there is a lack mutuality to the arbitration requirement, creating “overly harsh one-sided” 

results. They point out that Wadler’s Acknowledgment and the Handbook provisions require that 

any claim Wadler might bring against CIA be arbitrated, but both provisions allow CIA to go to 

court to pursue “equitable” relief, as further explained by the Handbook “to enjoin any violation of 

any written employment agreement.” Handbook at Dkt. No. 38-1 ECF pg. 46.

Plaintiffs point to cases that have found that where an arbitration agreement carves out 

claims for injunctive relief from its scope, the provision is essentially non-mutual and, therefore,

substantively unconscionable, because only the employer is likely to bring claims for injunctive 

relief. Carbajal v. CWPSC, Inc., 245 Cal. App. 4th 227, 248 (2016) (relying on Trivedi v. Curexo 

Technology Corp., 189 Cal.App.4th 387 (2010)). But the language from Trivedi that the Carbajal

court and plaintiffs rely on here (Oppo. to Motion to Compel [Dkt. No. 27] at 19) was disapproved 

of by the California Supreme Court in Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1248 

 

5 Repeating part of the argument with respect to procedural unconscionability, plaintiffs also 

initially argued (before they had received the Handbook and only with respect to Wadler’s 

Acknowledgment), that arbitration could not be enforced against Wadler because of a lack of 

“mutual assent.” Plaintiffs’ Oppo. to Motion to Compel [Dkt. No. 27] 14-15. Plaintiffs rest that 

argument on CIA’s failure (1) to sign the Acknowledgment and (2) failure to include the AAA 

rules or describe the major provisions of those rules (e.g., how an arbitrator will be chosen,

whether discovery is allowed, whether a written award will be issued, the type of relief available, 

and cost and/or fee-sharing. Id. at 14. The second set of arguments have been addressed and 

rejected based on the rationale of Da Loc Nguyen v. Applied Medical Resources Corporation, 4 

Cal.App.5th 232, 249 (2016). As to the first, the lack of a signature, plaintiffs cite no authority 

requiring one.

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 7 of 11
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

(2016). Baltazar confirmed that arbitration agreements that simply preserve the right of “any 

party” to seek provisional injunctive relief during the pendency of an arbitration, as allowed under 

California Code of Civil Procedure Section 1281.8(b), are not substantively unconscionable even 

if an employer is more likely than an employee to seek that injunctive relief. Id. at 1247-48.

However, there is a different problem with the Acknowledgement and Handbook 

provisions governing Wadler’s agreement to arbitration; only CIA is allowed to seek that 

injunctive relief. Wadler is not allowed to seek “any relief” from any court. CIA argues that it is 

“ambiguous” whether Wadler could seek equitable relief in court and, as such, the language 

should be construed against CIA (the drafter) to allow Wadler to likewise pursue equitable claims 

in court. Defendant’s Oppo. to Reconsideration [Dkt. No. 42] at 4. CIA’s argument ignores the 

explicit language in the Acknowledgment that “I have no right to seek relief in any court.” That 

language is not ambiguous. CIA’s argument that the language in paragraph 5 of the Arbitration 

section of the Handbook, identifying the venue and jurisdiction for disputes “submitted to a court 

rather than an arbitrator, including actions to compel arbitration,” is likewise ambiguous and 

“seems to grant” Wadler the right to pursue equitable claims in the appropriate court, is also not 

persuasive. Id. 

The Acknowledgment and Arbitration provision in the Handbook allow CIA, but not 

Wadler, to seek equitable relief in court. The one-sided nature of the equitable relief carve out is 

substantively unconscionable.6

B. Non-Signatory Enforcement 

Plaintiffs argue that because Wadler’s Acknowledgment allows CIA’s “affiliates and 

subsidiaries” to enforce the arbitration agreement even though they are not signatories to the 

Acknowledgment, it is substantively unconscionable. However, because affiliates and subsidiaries 

may be recognized as CIA’s “agents,” and under California law, and agents are entitled to enforce 

arbitration agreement to the same extent CIA is, there is no substantive unconscionability. See, 

 

6 Given the stay, I do not address the argument that the Tyner/Willis/Springer Agreements suffer 

from additional non-mutuality defects because they carve out breach of non-disclosure and noncompete agreement claims from the scope of arbitration. 

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 8 of 11
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

e.g., Laswell v. AG Seal Beach, LLC, 189 Cal. App. 4th 1399, 1406 (2010) (“nonparties to 

arbitration agreements are allowed to enforce those agreements where there is sufficient identity of 

parties.”).7

C. Statute of Limitations

Based on language in the arbitration provision of the Handbook, Wadler makes a new 

substantive unconscionability argument on reconsideration. Wadler notes that in the Handbook’s 

provision, “employees must initiate arbitration within one year of the time the dispute first arose 

unless a longer period of time is provided by applicable statute or law.” Dkt. No. 38-1 at ECF Pg. 

45. Wadler argues this provision is substantively unconscionable because it “created the illusion” 

of a time-bar that is contrary to the applicable statute of limitations for the claims at issue here and 

whose only effect is to deter employees from filing claims. Plaintiffs’ Mot. for Reconsideration 

[Dkt. No. 38] at 10. Plaintiffs rely on Martinez v. Master Protec. Corp., 118 Cal. App. 4th 107

(Cal. App. 2d Dist. 2004), which held that an arbitration provision cannot impose a “vastly 

shortened statute of limitations” upon employee claims because that “constitutes an unlawful 

attempt” to “restrict its employees’ statutory rights.” Id. at 117.

The provision here, however, adds qualifying language: “unless a longer period of time is 

provided by applicable statute or law.” CIA points out that almost identical language was 

addressed and unconscionability rejected in Harris v. Halliburton Co., 116CV00281LJOJLT, 

2016 WL 3255074, at *12 (E.D. Cal. June 13, 2016), report and recommendation adopted, 

116CV00281LJOJLT, 2016 WL 4204604 (E.D. Cal. Aug. 9, 2016). The court in Harris reviewed 

an arbitration agreement that provide that claims must be initiated “‘within one year after the event 

which gives rise to the Dispute or the time allowed by applicable law for the filing of a judicial 

complaint, whichever is longer.’” Id. at *12. The court concluded that the “whichever is longer” 

language meant that “the arbitration agreement does not impose a shortened statute of limitations 

upon the parties, and there is no imposition or undue advantage.” Id.

Acknowledging but not distinguishing Harris, plaintiffs contend that the language in 

 

7 Of course application of the “sufficient identity” of the parties test would depend on the facts; 

facts not at issue here.

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 9 of 11
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

CIA’s Handbook is nonetheless problematic for two reasons. First, plaintiffs argue that the 

shortened statute suggested by the Handbook (even with the “unless” language) is an 

impermissible attempt to mislead and ultimately deter employees from filing claims. It is, 

according to plaintiffs, yet another attempt to force employees to find “applicable rules” outside of 

the scope of the arbitration agreement itself, like the AAA rules argument addressed above. 

Plaintiffs’ Supp. Brief at 2. However, that plaintiffs need to consult with outside sources (to locate 

the AAA rules or determine applicable statute of limitations) does not make the arbitration 

provision unconscionable. 

Second, plaintiffs argue that the use of the term “when the dispute first arose” is 

problematic because it purports to “deprive employees of relief under the continuing violation 

doctrine.” Id. at 3. But whether a continuing violations theory is legally viable is not determined

or limited in any way by the arbitration provision Wadler agreed to. The provision at issue is 

significantly different from arbitration agreements that attempt to expressly impose a shorter 

statute of limitations on employee claims than allowed by law. See, e.g., Cir. City Stores, Inc. v. 

Adams, 279 F.3d 889, 894 (9th Cir. 2002); Ingle v. Cir. City Stores, Inc., 328 F.3d 1165, 1175 (9th 

Cir. 2003).

D. Severability of Any Substantively Unconscionable Provisions

Generally, only where there are arbitration provisions with “several” unconscionable terms

will severance be rejected as a solution. See, e.g., Farrar v. Direct Com., Inc., 9 Cal. App. 5th 

1257, 1274 (Cal. App. 1st Dist. 2017) (citing California cases and severing a single 

unconscionable provision exempting claims of breach of confidentiality from scope of arbitration 

agreement). While plaintiffs claim there are multiple unconscionable elements in the arbitration 

provisions agreed-to by Wadler, I have found only one; the one-sided carve out for equitable 

claims. 

Plaintiffs argue, however, that this unconscionable provision is especially significant 

because there are other, non-arbitration-related provisions in Wadler’s Employment Agreement 

and Handbook that are illegal: most importantly, illegal non-compete agreements and unlawful 

vacation and overtime policies. Plaintiffs’ Supplemental Brief [Dkt. No. 41] at 5. Wadler argues 

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 10 of 11
11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

that because CIA reserved the right to itself to seek equitable relief to enforce these illegal policies 

in court, the nature of the unconscionability is arguably larger and cannot be cured through 

severance. I disagree. The only issue before me is whether I can sever the one unconscionable 

term in the arbitration provision.

Here, the appropriate course is to sever out the sections allowing CIA to seek equitable 

relief in court and the one preventing Wadler from seeking “any relief” in court. That would solve

the non-mutuality problem. That would also protect CIA’s expected and protected interests, 

because both CIA and Wadler would retain the right under California law to seek injunctive relief 

under California Code of Civil Procedure § 1281.8(b).8 See Farrar, 9 Cal. App. 5th at 1275 

(reversing trial court’s failure to severe from arbitration agreement exception allowing claims 

arising from a confidentiality agreement to be litigated in court, concluding intent to preserve 

ability to seek appropriate injunctive relief in aid of the parties’ agreements was preserved by 

C.C.P. § 1281.8(b)).9

CONCLUSION

Plaintiffs’ motion for reconsideration is GRANTED. The stay in Wadler’s claims is lifted 

and defendant’s motion to compel Wadler’s claim to arbitration is GRANTED. The prior stay

remains in effect for the claims of Tyner, Willis, and Springer.

IT IS SO ORDERED.

Dated: April 11, 2018

William H. Orrick

United States District Judge

 

8 C.C.P. § 1281.8(b) provides that: “A party to an arbitration agreement may file in the court in the 

county in which an arbitration proceeding is pending, or if an arbitration proceeding has not 

commenced, in any proper court, an application for a provisional remedy in connection with an 

arbitrable controversy, but only upon the ground that the award to which the applicant may be 

entitled may be rendered ineffectual without provisional relief.”

9 CIA asserts a host of evidentiary objections to the evidence, particularly the Handbook, relied on 

by plaintiffs in moving for reconsideration. Dkt. No. 39-1. The objections for lack of foundation, 

relevance, hearsay, and that the evidence relied on by plaintiffs is either not new or exceeds the 

scope of my December 29, 2017 order are DENIED.

Case 3:17-cv-05840-WHO Document 44 Filed 04/11/18 Page 11 of 11