Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_15-cv-02359/USCOURTS-caed-2_15-cv-02359-3/pdf.json

Parties Involved:
Danielle Cummings-Reed
Plaintiff
Optum360 Services, Inc.
Defendant
United Health Group
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

DANIELLE CUMMINGS-REED, an 

individual,

Plaintiff,

v.

UNITED HEALTH GROUP, OPTUM360 

SERVICES, INC., and DOES 2 

through 50, Inclusive,

Defendants.

No. 2:15-cv-02359-JAM-AC

ORDER GRANTING DEFENDANTS’ 

MOTION TO COMPEL ARBITRATION

Plaintiff Danielle Cummings-Reed (“Plaintiff”) brought this 

action against Defendants UnitedHealth Group (“UHG”) and Optum360 

Services, Inc. (“Optum”) (“Defendants”) alleging workplace 

discrimination and wrongful termination, among other things (Doc. 

#1). Defendants move to compel Plaintiff to submit her claims to 

arbitration and to stay or dismiss the case (Doc. #10). 

Plaintiff opposes the motion (Doc. #13).1

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Plaintiff began working for Defendants in May 2014 as a 

 

1 This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). The hearing was 

scheduled for March 22, 2016.

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Patient Registration Manager. See Exh. A to Declaration of 

Christopher Sprau (“Sprau Decl.”) (Doc. #10-4); First Amended 

Complaint (“FAC”) ¶ 16. About two months later, Plaintiff began 

a pregnancy leave. FAC ¶ 17. In September 2014, Plaintiff told 

Defendants that “she was suffering from complications related to 

her delivery, and that she had an ongoing disability which arose 

out of her pregnancy and childbirth.” Id. Defendants placed 

Plaintiff on a continuing leave. Id. In April 2015, Plaintiff 

told her supervisor that she could return to work soon but that 

she would need some accommodations because of her disability. 

Id. ¶ 18. Plaintiff’s supervisor allegedly told Plaintiff that 

“she would need to be released to return to work without any 

restrictions in order to return to work.” Id. Plaintiff claims 

she told her doctor about this, and Plaintiff’s doctor continued 

Plaintiff’s disability and gave her a return-to-work date of July 

30, 2015. Id. ¶ 20. Defendants allegedly called Plaintiff and 

told her that she “had been on leave too long” and she would be 

“administratively terminat[ed].” Id. ¶ 21. Plaintiff claims

that her termination was “substantially motivated by her sex and 

pregnancy.” Id. ¶ 22.

Plaintiff brings six claims against Defendants: 

(1) discrimination on the basis of sex and disability in 

violation of the Fair Employment and Housing Act (“FEHA”), 

(2) failure to provide reasonable accommodations in violation of 

FEHA, (3) failure to engage in the good faith interactive process 

in violation of FEHA, (4) retaliation in violation of FEHA and 

California’s Pregnancy Disability Leave Law (“PDLL”), (5) failure 

to prevent discrimination and relations from occurring in 

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violation of FEHA, and (6) wrongful termination in violation of 

public policy. Id. at 4-9. 

Plaintiff filed her complaint in state court in October 2015 

(Doc. #1). Defendants removed the case to federal court based on 

diversity jurisdiction (Doc. #1). 

II. OPINION

A. Request for Judicial Notice

Defendants request that the Court take judicial notice of 

the American Arbitration Association Employment Arbitration Rules 

and Mediation Procedures. Request for Judicial Notice (“RJN”) at 

1 (Doc. #10-2). The Court GRANTS Defendants’ request for 

judicial notice because the arbitration rules can be “accurately 

and readily determined from sources whose accuracy cannot 

reasonably be questioned.” Fed. R. Evid. 201. Defendants also 

request judicial notice of orders granting UHG’s motions to 

compel arbitration in two cases: Smith v. UnitedHealthcare

Insurance Company, et al., San Francisco Superior Court, Case No. 

CGC-13-530626 (Jul. 22, 2013) and Pettersson v. UnitedHealthcare 

Insurance Company, et al., San Francisco Superior Court, Case No. 

CGC-13-529263 (Jun. 6, 2013). RJN at 1-2. Judicial notice of 

court records is routinely granted. Rowland v. Paris Las Vegas, 

2014 WL 769393, at *3 (S.D. Cal. Feb. 25, 2014) (citing Valerio 

v. Boise Cascade Corp., 80 F.R.D. 626, 635, n.1 (N.D. Cal. 1978), 

aff'd, 645 F.2d 699 (9th Cir. 1981)). Accordingly, the Court 

GRANTS Defendants’ request for judicial notice of the orders 

compelling arbitration in the above two cases.

//

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B. Governing Law

The parties disagree as to the law that governs this 

action. There is no choice-of-law provision in the arbitration 

agreement. Plaintiff argues that the California Arbitration Act 

(“CAA”) applies, Opp. at 4, while Defendants argue that the 

Federal Arbitration Act (“FAA”) governs, Reply at 1-2. 

“[T]he FAA applies to employment contracts if the 

employment affects interstate commerce.” CarMax Auto 

Superstores Cal. LLC v. Hernandez, 94 F. Supp. 3d 1078, 1100 

(C.D. Cal. 2015). “[T]here is a strong default presumption that 

the Federal Arbitration Act, not state law, supplies the rules 

for arbitration.” Fid. Fed. Bank, FSB v. Durga Ma Corp., 386

F.3d 1306, 1311 (9th Cir. 2004) (internal quotation marks 

omitted).

Despite such rulings in the Ninth Circuit, California 

courts have held that the party asserting that the FAA applies 

bears the burden of establishing that the employment affects 

interstate commerce “by declarations and other evidence.” 

Hoover v. Am. Income Life Ins. Co., 206 Cal. App. 4th 1193, 1207 

(2012). Under California law, the party arguing FAA 

applicability must show the employment contract’s connection to 

interstate commerce either through the “nature of the employer’s 

business” or the “scope of the employee’s work.” Carbajal v. 

CWPSC, Inc., 245 Cal. App. 4th 227, 239, (2016). California 

courts, by placing the burden on the party seeking FAA 

applicability to prove that the FAA applies, eliminated the 

presumption that that the FAA, rather than a state arbitration 

law, applies to arbitration agreements. 

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This Court is bound by the Ninth Circuit, and not by 

California courts interpreting the applicability of the FAA. 

See Windmill Health Products, LLC v. Sensa Products, 2015 WL 

6471180, at *3 (N.D. Cal. Oct. 27, 2015) (“[A] decision by the 

Ninth Circuit that a state statute is preempted by federal law 

is binding on district courts even where the highest court of 

the state has held to the contrary.”) Even applying the 

California rule, Defendants have met their burden to show that 

the FAA applies. Defendants’ human resources operations 

supervisor states that Defendants “operate in many states across 

the country . . . and provide healthcare services to many 

Americans nationwide.” Sprau Decl. ¶ 2. The presumption of FAA 

applicability coupled with evidence that Defendants operate

nationwide indicates that the FAA, and not the CAA, applies to 

the arbitration policy. 

C. Legal Standard

The FAA permits a party “aggrieved by the alleged failure, 

neglect, or refusal of another to arbitrate under a written 

agreement for arbitration” to petition a district court for an 

order compelling arbitration. 9 U.S.C. § 4. The FAA created a 

“strong federal policy favoring arbitral dispute resolution,” 

Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 720 (9th Cir. 1999), 

and courts have been directed to resolve “any doubts concerning 

the scope of arbitrable issues . . . in favor of arbitration,” 

Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 

24-25 (1983). As such, the party seeking to avoid arbitration 

under the FAA bears the burden of proving that the claims are 

unsuitable for arbitration. Green Tree Fin. Corp.-Alabama v. 

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Randolph, 531 U.S. 79, 91-92 (2000). When deciding whether to 

compel arbitration, the court’s sole role is “determining 

whether a valid arbitration agreement exists and, if so, 

whether the agreement encompasses the dispute at issue.” 

Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 

1012 (9th Cir. 2004). As to the first step of the Lifescan

analysis, arbitration agreements are to be placed on an “equal 

footing with other contracts.” AT&T Mobility LLC v. Concepcion, 

563 U.S. 333, 339 (2011). Thus, written arbitration agreements 

are “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. “Under the FAA, general state contract law applies 

to determine whether an agreement to arbitrate is valid and 

enforceable.” Raymundo v. ACS State & Local Sols., Inc., 2013 WL 

2153691, at *2 (N.D. Cal. May 16, 2013).

D. Analysis

Plaintiff argues that that the arbitration policy she 

accepted upon employment with Optum is unenforceable because it 

is illusory and procedurally and substantively unconscionable. 

Plaintiff’s Opposition (“Opp.”) at 1. Plaintiff does not argue 

that she never accepted the arbitration policy or that the

policy does not encompass this dispute. 

1. Illusoriness

Under California contract law, an arbitration agreement is 

illusory and therefore unenforceable if “the employer can 

unilaterally modify it.” Reyes v. United Healthcare Servs., 

Inc., 2014 WL 3926813, at *2 (C.D. Cal. Aug. 11, 2014) (citing 

Sparks v. Vista Del Mar Child & Family Servs., 207 Cal. App. 4th 

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1511, 1523 (2012)). “However, ‘the covenant of good faith and 

fair dealing may save an arbitration agreement from being 

illusory.’” Id. (citing Peleg v. Neiman Marcus Grp., Inc., 204 

Cal. App. 4th 1425, 1465 (2012)). 

Section D of the arbitration policy in this case states: 

UnitedHealth Group reserves the right to amend, modify, 

or terminate the Policy effective on January 1 of any 

year after providing at least 30 days notice of its 

intent and the substance of any amendment, modification 

or termination of the Policy. 

UnitedHealth Group Employment Arbitration Policy (“Arbitration 

Policy”) § D, attached to Declaration of Pritee K. Thakarsey as 

Exh. A (Doc. #10-3). The arbitration policy also states: “All 

arbitrations shall be conducted in accordance with the Policy in 

effect on the date the Corporate Legal Department receives the 

Demand for Arbitration.” Arbitration Policy § E.2

Plaintiff argues that the modification provisions render 

the arbitration policy illusory because they allow Defendants to 

unilaterally modify the policy after they learn of a possible 

claim but before the Corporate Legal Department has received an 

official Demand for Arbitration. Id. Defendants argue that 

“[a]llowing one party the power to modify an agreement does not 

render the agreement illusory or unenforceable because it is 

still subject to the implied duty of good faith and fair 

dealing.” Reply at 3.

In Reyes v. United Healthcare Services, Inc., the court 

found similar provisions to the modification provisions in this 

 

2 These two quoted segments of the arbitration policy will 

hereinafter be referred to as “the modification provisions.”

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case to be illusory because the agreement “allow[ed] the employer 

to manipulate the arbitration process, tailoring it to fit 

specific cases, either by making the process more difficult or 

expensive for the employee, or by revoking the Agreement in the 

belief that a judicial forum is preferable after it learns of a 

claim or a possible claim.” Reyes, 2014 WL 3926813, at *2 

(internal quotation marks omitted). The Reyes court stated that 

the agreement was illusory because the “modifications may apply 

to claims already accrued or known to United Health, provided 

that the claim was not filed until after the 30–day notice 

period.” Id. at *3 (emphasis in original). The court held that 

“the implied covenant of good faith and fair dealing [could not] 

save” the arbitration policy from illusoriness because resolving 

the problems created by the modification provisions “would 

require alteration of the express terms of the Policy.” Id.

Prior to the Reyes decision, the district court in Wilson v. 

UnitedHealth Grp., Inc., enforced an arbitration agreement that

allowed the employer to “amend, modify, or terminate the policy 

once a year as long as it [gave] its employees 30 days written 

notice.” Wilson v. UnitedHealth Grp., Inc., 2012 WL 6088318, at 

*3 (E.D. Cal. Dec. 6, 2012). The Wilson court, however, did not 

address the issue of whether an “effective date” provision 

rendered the arbitration agreement illusory. The Reyes court did 

address this issue, and stated that because the employer could 

modify the arbitration agreement after claims accrued but had not 

yet officially been filed, the “covenant of good faith and fair 

dealing [could not] save it.” Reyes, 2014 WL 3926813, at *3. 

This Court finds that the modification provisions render the 

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policy illusory and that the policy cannot be saved by the 

covenant of good faith and fair dealing.

Defendants argue that if the Court finds the modification

provisions illusory, it should sever them from the arbitration 

agreement and enforce the rest of the contract. Reply at 3. A 

court may sever “flawed provisions” of an arbitration agreement 

“if they are merely collateral to the main purpose of the 

arbitration agreement.” Totten v. Kellogg Brown & Root, LLC, 

2016 WL 316019, at *18 (C.D. Cal. Jan. 22, 2016) (citing Davis v. 

O’Melveny & Myers, 485 F.3d 1066, 1084 (9th Cir. 2007)) (internal 

quotation marks omitted). Here, the main purpose of the policy

is to compel employees to arbitrate; the modification provisions 

are merely ancillary to that purpose. Thus, this Court finds it 

is appropriate to sever the quoted modification provisions from 

the arbitration policy and enforce the rest of the contract.

2. Unconscionability 

Unconscionability is a generally applicable contract 

principle under which an arbitration agreement may be revoked. 

Rent-A-Center, West, Inc., v. Jackson, 561 U.S. 63, 68 (2010). 

District courts deciding a motion to compel look to state law to 

decide issues of contract validity. Wagner v. Stratton Oakmont, 

Inc., 83 F.3d 1046, 1049 (9th Cir. 1996). The parties here do 

not dispute that California supplies the applicable contract law 

in this case. Under California contract law, to prove that an 

agreement is unconscionable, one must demonstrate that the

agreement is both procedurally and substantively unconscionable. 

McMannus v. CIBC World Mkts. Corp., 109 Cal. App. 4th 76, 87 

(2003). “California law utilizes a sliding scale to determine 

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unconscionability—greater substantive unconscionability may 

compensate for lesser procedural unconscionability.” Chavarria 

v. Ralphs Grocery Co., 733 F.3d 916, 922 (9th Cir. 2013).

a. Procedural Unconscionability 

“Procedural unconscionability concerns the manner in which 

the contract was negotiated and the circumstances of the party 

at the time. Procedural unconscionability requires either of 

two factors: oppression or surprise.” Ferguson v. Countrywide 

Credit Indus., Inc., 298 F.3d 778, 783 (9th Cir. 2002) (internal 

quotation marks and citations omitted). “‘Oppression’ arises 

from an inequality in bargaining power which results in no real 

negotiation and an absence of meaningful choice.” Id. 

Here, Plaintiff argues only that the policy is oppressive; 

she does not present any claim regarding surprise. Plaintiff 

argues that the arbitration policy is oppressive because she had 

to accept the arbitration policy as a condition of employment. 

Opp. at 3. Defendants argue that “arbitration agreements are 

not invalid simply because they are imposed as a condition of 

employment.” Mot. at 7. 

“[I]mpositon of [an arbitration] agreement as a condition 

of employment is not per se oppressive.” Mok v. Optum, United 

Healthcare Servs., Inc., 2014 WL 10754130, at *2 (N.D. Cal. Feb. 

10, 2014). A take-it-or-leave-it employment agreement is

oppressive if the individual has “no bargaining power or 

opportunity to opt out.” Id. Nevertheless, absent a separate 

showing of surprise, the degree of procedural unconscionability 

is low.” Id. at *3. 

The policy in this case states that “[a]cceptance of 

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employment . . . with UnitedHealth Group is deemed to be 

acceptance of this Policy.” Arbitration Policy § A. There is 

no indication that Plaintiff had any bargaining power or the 

ability to negotiate the arbitration policy before accepting 

employment. Thus, the agreement is procedurally unconscionable. 

As noted above, however, Plaintiff does not attempt to make a 

separate showing of surprise. While the arbitration agreement 

is procedurally unconscionable, the degree of procedural 

unconscionability is too low to invalidate the entire agreement. 

See Mok, 2014 WL 10754130, at *3. 

b. Substantive Unconscionability 

Substantive unconscionability focuses on the results and 

outcomes of contracts. Armendariz v. Found. Health Psychcare 

Servs., Inc., 24 Cal. 4th 83, 114 (2000). A contract is 

substantively unconscionable and therefore unenforceable if it 

creates “overly harsh” or “one-sided” results. Id.

Plaintiff argues that the arbitration agreement is 

substantively unconscionable for five reasons: (1) it 

impermissibly limits class actions, (2) it is unilateral, (3) it 

is illusory, (4) it does not provide for adequate notice, and 

(5) it impermissibly limits discovery. Opp. at 3. 

(i) Limitation On Class Actions

Plaintiff argues that the arbitration agreement is 

unconscionable because it “prohibits employees from filing . . . 

class action arbitrations against Optum.” Opp. at 4; Arbitration 

Policy § B. Under the CAA, waivers of class action arbitration 

in contracts of adhesion are unconscionable. Discover Bank v. 

Superior Court, 36 Cal. 4th 148, 161 (2005). When an arbitration 

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agreement is governed by the FAA, however, the FAA preempts 

California’s Discover Bank rule. Concepcion, 563 U.S. at 351. 

As discussed above, the FAA governs the arbitration policy in 

this case. Under the FAA and Supreme Court precedent, a 

restriction on class action arbitration does not render an 

arbitration agreement unconscionable. Id.

(ii) Injunctive Relief

The arbitration policy states that both employees and the 

employer may seek injunctive relief in Court. Arbitration Policy

§ B. Plaintiff argues that while this provision is equitable on 

its face, it renders the agreement unconscionable because the 

provision has the “practical effect of being invoked only, or far 

more often, by the employer.” Opp. at 5. Defendants argue that 

“the notion that Defendants are more likely to seek injunctive 

relief is questionable . . . [and] [e]mployees can and do seek 

preliminary injunctions.” Reply at 2. 

The plaintiff in the Mok case made the same argument as 

Plaintiff makes here. See Mok, 2014 WL 10754130, at *5. The Mok

court found that the injunctive relief provision rendered the 

provision substantively unconscionable. See id. (“Injunctive 

relief clauses, which may appear bilateral on their face, have 

the practical effect of being invoked only, or far more often, by 

the employer. Accordingly, the provision is substantively 

unconscionable.”). The Mok court also stated that “[t]he 

injunction provision can be severed and clearly is not the 

purpose of the agreement.” Id. at *6. This Court agrees. The 

injunctive relief provision in the arbitration policy is, in 

effect, substantively unconscionable. The provision, however, is 

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not the main purpose of the policy, and the Court will therefore 

sever the following sentence without invalidating the rest of the 

policy: “In addition, this Policy does not preclude either an 

employee or UnitedHealth Group from seeking emergency or 

temporary injunctive relief in a court of law in accordance with 

applicable law.” Arbitration Policy § B.

(iii) Illusoriness

As discussed above, the modification provisions render the

arbitration agreement illusory, but the Court has found that 

these provisions should be severed rather than invalidate the 

entire agreement. 

(iv) Service of Process

The arbitration policy allows for employees to be served 

with “a written demand for arbitration” via certified or 

overnight mail to the “employee’s last home address of record.” 

Arbitration Policy § C(1)(b). Plaintiff argues that this method 

of service violates employees’ due process rights. Opp. at 6. 

Due process requires “notice reasonably calculated, under 

all the circumstances, to apprise interested parties of the 

pendency of the action and afford them an opportunity to present 

their objections.” Mullane v. Cent. Hanover Bank & Trust Co.,

339 U.S. 306, 314 (1950). In Mullane, the Court approved of

providing notice through the mail. Id. at 319. The arbitration 

policy provides for notice to be sent the employee’s address of 

record, which comports with the Mullane standard. The method of 

service in the arbitration agreement does not render the 

agreement unconscionable. 

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(v) Discovery 

Plaintiff argues that the arbitration policy’s limits on 

discovery render the agreement substantively unconscionable. 

Opp. at 7. The policy allows for one interrogatory, twenty-five 

requests for production, and two depositions. Arbitration Policy 

§ 14(a)-(c). The policy also states that “[t]he arbitrator shall 

have the authority to resolve all issues concerning discovery 

that may arise between the parties.” Id. § 14(e). Defendants 

argue that section 14(e) gives the arbitrator “unrestricted 

authority to allow for additional discovery,” and that therefore 

the discovery provisions are not unconscionable. Reply at 4. 

In reviewing nearly identical language regarding the

arbitrator’s authority, the Mok court stated that the language 

gave the arbitrator “discretion to order additional discovery” 

and did not “require [the plaintiff] to show compelling or 

substantial need in order to obtain such relief.” Mok, 2014 WL 

10754130, at *4. The Mok court held that the discovery 

limitations were not unconscionable because the arbitrator 

retained the power to order more discovery and because the 

discovery provisions restricted both parties equally. Id. This 

Court again finds the holding in Mok to be persuasive. The 

limitations on discovery do not render the arbitration agreement 

substantively unconscionable. 

E. Severance 

While the Court has found the arbitration policy is 

illusory because of the modification provisions, those 

provisions are severable. The Court has also found that the

injunctive relief provision is unconscionable, but that too is 

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severable. Neither of these severable terms permeate the 

arbitration agreement with unconscionability and therefore the 

Court hereby exercises its lawful discretion to sever the 

modification provisions and the injunctive relief provision and 

enforce the remainder of the arbitration agreement.

III. ORDER

For the reasons set forth above, the Court GRANTS 

Defendant’s Motion to Compel Arbitration and dismisses this 

action without prejudice. 

IT IS SO ORDERED.

Dated: April 29, 2016

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