Filed 1/13/23 U.S. Bancorp Investments v. Madison CA2/7

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

U.S. BANCORP INVESTMENTS,

INC. et al.,

Plaintiffs and Respondents,

v.

FARIBA MADISON,

Defendant and Appellant.

 B309732

 (Los Angeles County

 Super. Ct. No. 19STCP05647)

APPEAL from a judgment of the Superior Court of 

Los Angeles County. Lia R. Martin, Judge. Affirmed.

K&L Gates, Paul W. Sweeney, Jr., Christina N. Goodrich, 

Zachary T. Timm and Kate G. Hummel for Plaintiffs and 

Respondents.

Law Offices of Steve A. Buchwalter, Steve Buchwalter; Law 

Offices of Scot D. Bernstein and Scot D. Bernstein for Defendant 

and Appellant. 

_______________________
2

INTRODUCTION

Fariba Madison appeals from the trial court’s judgment 

confirming an arbitration award dated November 27, 2019, in 

favor of her former employer U.S. Bancorp Investments, Inc.

(USBI), David Matthew Terrell, and Sean Pong, and denying her 

motion to vacate the award. Madison contends the trial court 

erred because the arbitration award caused a waiver of her 

unwaivable statutory rights, the arbitration decision failed to 

provide adequate findings and conclusions, and she did not 

receive sufficient discovery. Finding no error, we affirm.

FACTUAL AND PROCEDURAL HISTORY

A. Madison’s Employment with USBI and Termination for 

Cause

Madison worked for USBI as a financial advisor from 

February 2006 to October 2012. USBI employed her at-will and 

paid her a salary plus a commission as set forth in annual

compensation plans that Madison signed each year. District 

sales manager Terrell supervised Madison from 2009 through 

2012. According to Terrell’s uncontradicted testimony, the plans 

had substantially similar language each year, and operated 

substantially the same. The plans described monthly “advances 

against future earned commissions” that Madison would receive 

based on prior production. The 2009 plan described that 

“commissions will be considered earned one year following the 

commissionable sale, to allow for reconciliation and offset of costs 

and chargebacks as provided in this plan. Until commissions are 

deemed earned, any advances will be subject to reduction, offset 
3

or repayment as provided in this plan.” The monthly 

compensation could decrease based on “Revenue Adjustments”—

deductions from the gross revenue—Madison had produced. The 

annual compensation plans also required Madison to share a 

percentage of her commissions with her sales assistant.

On October 17, 2012, USBI terminated Madison’s

employment. It concluded Madison had interfered with an 

internal compliance investigation into inconsistencies with 

Madison’s client account documents by attempting to obtain

client signatures on paperwork subject to the investigation.

Madison received her final paycheck on November 14, 2012.

B. Madison’s Arbitration Claims and Discovery

On January 15, 2016, Madison initiated arbitration against 

USBI, which proceeded before a three-member panel of the

Financial Industry Regulatory Authority (FINRA). Madison’s 

Statement of Claim asserted claims for unpaid wages (Lab. Code,

§ 201), back payment penalties (Lab. Code, § 203), unreimbursed 

expenses (Lab. Code, § 2802),

1 unjust enrichment, breach of the

implied covenant of good faith and fair dealing, violation of 

Business and Professions Code section 17200 et seq., defamation

(specifically by Pong, a USBI employee also supervised by Terrell,

in making derogatory statements about her after her 

termination), receipt of stolen property (Pen. Code, § 496, 

subd. (a)), failure to return employee bond payment (Lab. Code,

§§ 400-410), and illegal contract (Bus. & Prof. Code, § 16600). 

She also sought treble and punitive damages.

1 Further undesignated statutory references are to the Labor 

Code.
4

In support of her wage claims, Madison alleged USBI failed 

to pay or credit her for various commissions, including for “trades 

made before [her] termination but settled afterward,” and failed 

to reimburse “expenses she reasonably incurred on behalf of 

USBI in the performance of her duties.” She also alleged that 

“[b]y withholding and keeping for itself the compensation legally 

earned and payable” to her, USBI unjustly enriched itself at her

expense.

During two years of litigation, Madison propounded and 

received a substantial amount of discovery, obtained two 

evidentiary hearing continuances, and filed three motions to

compel. Prior to the panel ruling on her motions, she reached an

agreement with USBI on production of documents related to her 

commission history and commission deductions (among other 

things). USBI ultimately produced over 20,000 pages of

documents to Madison. The panel denied Madison’s motion for a

third continuance prior to the evidentiary hearing and denied her

renewed motion for a third continuance the first morning of the 

evidentiary hearing in September 2018. The parties proceeded to 

an evidentiary hearing, beginning with four days devoted to

discovery matters. The panel denied Madison’s motion to compel 

further production of documents relevant to her wage claims. 

The panel chair stated, “I don’t see any evidence of documents 

being intentionally withheld other than those that are 

privileged,” and told Madison, “You certainly had the discovery 

for this issue.”
5

C. The Evidentiary Hearing on the Merits and Motion To 

Dismiss

In March 2019, the evidentiary hearing resumed. Madison 

spent 15 days presenting her case to the arbitration panel. As 

part of her case, Madison argued for the first time that USBI 

violated section 221 by imposing reversals and adjustments to 

her received compensation and by requiring her to share a 

percentage of her commission with her sales assistant.

2 Madison 

contended she was entitled to $623,036.43 in “commission

reversals” and $195,476.87 in “incentive statement summary

reversals” shown as negative entries on her commission reports,

which she characterized as improper wage deductions in violation 

of section 221. She also argued the sales assistant commission 

share was an improper business expense in violation of 

section 2802.

After Madison rested, USBI moved to dismiss all of her

claims pursuant to FINRA Rule 13504, subdivision (b). USBI 

argued Madison’s section 221 claim was procedurally improper 

and untimely. It also argued she had no legal right to recovery

because the evidence established the reversals were adjustments 

to advanced commissions under the annual compensation plans

signed by Madison, not deductions to earned wages. USBI also 

argued the sales assistant commission share did not violate

section 2802 as an improper wage deduction and business 

expense. In support, USBI contended the compensation plans 

Madison executed allowed her to receive advanced commissions,

which she did not actually “earn” until USBI completed all 

2 Section 221 provides, “It shall be unlawful for any employer 

to collect or receive from an employee any part of wages

theretofore paid by said employer to said employee.”
6

adjustments and reconciliations, including the sales assistant 

commission share, meaning USBI never deducted a commission 

share for her sales assistant from Madison’s earned wages. USBI 

also moved to dismiss Madison’s Penal Code section 496 claims 

on the grounds that employment compensation disputes did not 

constitute a Penal Code violation and therefore could not support 

recovery of treble damages.

After oral argument on the motion to dismiss, the panel

issued an order dismissing Madison’s section 221 claim for 

improper wage deductions, her section 2802 claim for improper 

deduction of wages and business expenses relating to the sales 

assistant commission share, and her Penal Code section 496

claims. The panel explained that it “struck the 221 claim simply 

because it wasn’t fair to have that in the case because it wasn’t in 

the Statement of Claim,” but that Madison could attempt to

maintain a claim to recoup her alleged improper reversals of 

compensation under other Labor Code sections as part of her 

remaining claims. The arbitrators suggested that it would be

“helpful to the panel” if USBI put on evidence why Madison was 

not entitled to the alleged reversals. The panel also explained 

that with regard to the sales assistant commission share, “[w]e 

agreed with the argument that it was a matter of contract and it

was appropriate for her to agree to share her commissions with 

her assistant.”

USBI presented its defense over four additional evidentiary 

hearing days. Madison’s former supervisor, Terrell, explained 

that USBI conditionally advanced commission payments to 

financial advisors prior to USBI receiving the actual revenue on 

the contract. USBI would then “chargeback,” reducing the 

advanced commission if the deal did not generate the expected 
7

revenue. Terrell also explained Madison received monthly 

commission reports. These reports detailed Madison’s advanced 

commissions and negative adjustments that resulted from

various types of required chargebacks pursuant to the terms of 

her compensation plan.

3 USBI’s expert witness addressed the 

various transactions in these commission reports. He concluded 

Madison’s calculation of purported negative “reversals” ignored 

related transactions that reflected corresponding credits. The 

expert witness concluded that USBI owed Madison no damages 

for unpaid commissions or improper deductions.

D. The Arbitration Award

On November 27, 2019, the panel issued a 10-page award 

in favor of USBI on all claims. The panel found that Madison 

failed to prove any of her claims by the necessary preponderance 

of the evidence. The claims based on sections 201, 203, and 2802

failed because the compensation she claimed USBI did not pay 

was only an advance, “subject to appropriate deductions and

adjustments made by USBI.” The advances became wages only 

after application of the deductions and adjustments, a process 

“explicitly provided for in USBI’s Financial Consultant 

Compensation Plan.” Regarding the claim for unpaid 

commissions, the panel credited USBI’s expert witness over 

Madison’s own testimony that USBI failed to pay any 

commissions Madison had earned. The panel similarly rejected 

3 The compensation plan contemplated “[r]evenue 

[a]djustments” for a variety of events, including (from the 2012 

plan) “services and transactions that were cancelled, that did not 

close, that were reversed or modified, that were incorrectly 

recorded or booked, and/or that USBI determines, in its 

discretion, violate USBI policy, this Plan, or business objectives.”
8

the unjust enrichment claim because Madison failed to prove 

USBI “unlawfully benefited from the deductions and adjustments 

to the advances.”

E. The Trial Court Confirms the Arbitration Award

On December 26, 2019, USBI filed a petition in the trial 

court to confirm the arbitration award. Madison opposed and 

moved to vacate the award. USBI replied, opposed Madison’s 

motion to vacate, filed objections to Madison’s evidence, and 

submitted its own summary of events as part of its opposition to 

Madison’s motion.

On September 2, 2020, the trial court sustained USBI’s 

objections to Madison’s evidence and issued a tentative ruling 

granting USBI’s petition to confirm the award and denying 

Madison’s motion to vacate. After a hearing on September 3, 

2020, the trial court adopted its tentative decision and issued an 

order confirming the award. The trial court’s order stated:

“Madison argues that she was denied her substantive 

rights as the arbitrators failed to follow 

[Armendariz v. Foundation Health Psychcare 

Services, Inc. (2000) 24 Cal.4th 83 (Armendariz)]. 

She was denied adequate discovery, did not receive a

complete award as the arbitrators failed to rule on all 

issues before them, received an award which violated 

public policy and received an award which caused 

Madison to waive unwaivable statutory protections 

and rights.

[¶]
9

“The documents Madison argues were not produced 

in discovery were the subject of at least three 

discovery hearings. USBI maintains that it produced 

all non-privileged documents in its possession, 

custody and control. Madison was unable to provide 

evidence that USBI did have documents it refused to 

produce, despite being granted continuances and 

evidentiary hearings to obtain such evidence. 

Madison did have adequate discovery.

“As to Madison’s arguments that the award was 

based on a waiver of non-waivable rights and violated 

public policy, whether the monies at issue were

wages is a factual issue. Evidence and authority was 

submitted by USBI that these were advances on 

commissions, which are not considered wages until 

earned and are subject to reconciliation, which 

includes deductions, prior to being considered wages. 

There was evidence explaining the deductions. 

Evidence was also submitted that sharing 

commissions is a standard industry practice which 

does not fall within the category of business expenses 

reimbursable by the employer. The sufficiency of 

that evidence is not subject to review. Madison has 

not established that the award requires a waiver of 

non-waivable rights or violated public policy.
10

“Pearson Dental Supplies, Inc. v. Sup.Ct. (2010) 

48 Cal.App.4th 665, 680,

4 does not support Madison’s 

argument. In that case, the claimant was denied a 

hearing on the merits of his FEHA claims, due to a

legal error by the arbitrator. The narrow exception 

in Pearson applies when there is the denial of a 

hearing due to a legal error in the framework of a 

non-waivable right. Here, Madison was given 

lengthy hearings, both on her discovery issues and on 

the merits on her claims. That issues were 

determined against her is not a ground to vacate the 

award.

“Madison’s argument that she did not receive a fullyreasoned award as it did not include discussion of 

claims which were dismissed prior to the hearing is 

not persuasive. The arbitrators issued a lengthy 

award which addressed the ruling on the motion to 

dismiss.”

The trial court entered judgment on October 19, 2020.

Madison timely appealed.

DISCUSSION

A. Standard of Review

“‘“On appeal from an order confirming an arbitration 

award, we review the trial court’s order (not the arbitration 

award) under a de novo standard. [Citations.] To the extent that 

4 The correct citation is Pearson Dental Supplies, Inc. v. 

Superior Court (2010) 48 Cal.4th 665.
11

the trial court’s ruling rests upon a determination of disputed 

factual issues, we apply the substantial evidence test to those 

issues.”’” (ECC Capital Corp. v. Manatt, Phelps & Phillips, LLP

(2017) 9 Cal.App.5th 885, 900; accord, Roussos v. Roussos (2021) 

60 Cal.App.5th 962, 973 (Roussos); Douglass v. Serenivision, Inc.

(2018) 20 Cal.App.5th 376, 386 (Douglass); see Advanced Micro 

Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9

[reviewing de novo whether arbitrator exceeded his or her 

powers].) “[I]n reviewing a judgment confirming an arbitration 

award, we must accept the trial court’s findings of fact if 

substantial evidence supports them.” (Alexander v. Blue Cross of 

California (2001) 88 Cal.App.4th 1082, 1087; accord, Douglass, at 

p. 386.) “We also review de novo ‘legal issue[s] involving 

statutory construction and the ascertainment of legislative 

intent.’” (Roussos, at p. 973.)

We apply a different, “highly deferential standard of review 

to the award itself.” (Cooper v. Lavely & Singer Professional 

Corp. (2014) 230 Cal.App.4th 1, 11-12 (Cooper).) Ordinarily 

“‘[t]he merits of the controversy between the parties are not 

subject to judicial review.’” (Moncharsh v. Heily & Blase (1992) 

3 Cal.4th 1, 10-11 (Moncharsh).) Instead, the reviewing court

“‘restrict[s] [its] review to whether the award should be vacated 

under the grounds listed in [Code of Civil Procedure] 

section 1286.2.’” (EHM Productions, Inc. v. Starline Tours of 

Hollywood, Inc. (2018) 21 Cal.App.5th 1058, 1064.) Accordingly,

we do not review the arbitrator’s reasoning or the sufficiency of

the evidence, and “an arbitrator’s decision cannot be reviewed for 

errors of fact or law” absent “narrow exceptions.” (Moncharsh, at 

p. 11; accord, Cooper, at p. 12.) “These exceptions do not 

encompass all errors that are apparent on the face of the award 
12

and cause substantial injustice.” (Cooper, at p. 12; accord

Moncharsh, at p. 11.) 

B. The Trial Court Properly Confirmed the Arbitration Award

The trial court may vacate an arbitrator’s award if “[t]he 

arbitrators exceeded their powers and the award cannot be 

corrected without affecting the merits of the decision upon the 

controversy submitted.” (Code Civ. Proc., § 1286.2, subd. (a)(4).) 

“Arbitrators may exceed their powers by issuing an award that 

violates a party’s unwaivable statutory rights or that contravenes 

an explicit legislative expression of public policy.” (Richey v. 

AutoNation, Inc. (2015) 60 Cal.4th 909, 916; see Moncharsh, 

supra, 3 Cal.4th at p. 32 [the “limited and exceptional 

circumstances” where judicial review of an arbitrator’s decision is 

appropriate “include those in which granting finality to an 

arbitrator’s decision would be inconsistent with the protection of 

a party’s statutory rights”].) 

Madison argues that because sections 201, 203, 221, and 

2802 are unwaivable pursuant to sections 219 and 2804,

5 the 

5 Section 219 provides, “[N]o provision of this article

[section 200 et seq.] can in any way be contravened or set aside 

by a private agreement, whether written, oral, or implied.”

Section 2804 provides, “Any contract or agreement, express or

implied, made by any employee to waive the benefits of this 

article [section 2800 et seq.] or any part thereof, is null and void, 

and this article shall not deprive any employee or his personal

representative of any right or remedy to which he is entitled

under the laws of this State.” “Labor Code section 2804 voids any 

agreement to waive the protections of Labor Code section 2802 as 

against public policy. . . . Courts have interpreted Labor Code 

section 2804 to apply to Labor Code section 2802, making all 

contracts that waive an employee’s right to indemnification null 
13

arbitration panel exceeded its authority by issuing an award that 

violated her unwaivable statutory rights and contravened public

policy. Madison’s argument fails.

1. The arbitration award did not waive Madison’s

unwaivable rights under Labor Code sections 201, 

203, and 2802

Madison contends she had the right to immediate payment 

of her final paycheck under section 201. Because USBI delivered 

her final paycheck 28 days after it terminated her employment, 

Madison sought waiting time penalties under section 203. 

Madison also asserted that USBI violated sections 201 and 2802 

by failing to reimburse her for all wages and costs incurred in

furtherance of her duties as an employee by not including in her 

final paycheck all amounts taken back from her past paychecks

and all deductions previously directed to her sales assistant.

Section 201 provides that when an employer discharges an 

employee, “the wages earned and unpaid at the time of discharge 

are due and payable immediately.” “‘Wages’ includes all amounts 

for labor performed by employees of every description, whether 

the amount is fixed or ascertained by the standard of time, task, 

piece, commission basis, or other method of calculation.” (§ 200, 

subd. (a).) Section 203 provides that if an employer willfully fails 

to pay in full any wages of a discharged employee, for up to 

30 days “the wages of the employee shall continue as a penalty 

from the due date thereof at the same rate until paid or until an 

action therefor is commenced.” Section 2802 entitles an employee 

to reimbursement from an employer “for all necessary 

and void.” (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 

937, 951.)
14

expenditures or losses incurred by the employee in direct 

consequence of the discharge of his or her duties, or of his or her

obedience to the directions of the employer.”

So long as it does so in writing, an employer can deem 

commissions not “earned” (for purposes of section 201) until the 

satisfaction of certain conditions precedent, including 

chargebacks. (DeLeon v. Verizon Wireless, LLC (2012) 

207 Cal.App.4th 800, 810 (DeLeon); accord, Sciborski v. Pacific 

Bell Directory (2012) 205 Cal.App.4th 1152, 1166-1167 [“‘“A 

commission is ‘earned’ when the employee has perfected the right 

to payment; that is, when all of the legal conditions precedent 

have been met.”’”].) “An advance is not a wage.” (Semprini v. 

Wedbush Securities, Inc. (2020) 57 Cal.App.5th 246, 255; accord, 

Steinhebel v. Los Angeles Times Communications, LLC (2005) 

126 Cal.App.4th 696, 705.) An advanced commission is not a 

wage because, by definition, “at the time of payment the 

employer cannot determine whether the commission will 

eventually be earned” and if the conditions on the employee’s 

right to the commission will occur. (Steinhebel, at p. 705.) 

The written incentive compensation plan approved by the 

DeLeon court resembles the ones at issue here and illustrates

these principles. The DeLeon plans “clearly and expressly stated”

that commissions were not earned at the time a salesperson sold 

a cell phone service plan. (DeLeon, supra, 207 Cal.App.4th at 

p. 810.) As here, “[w]hile commission payments were made in 

advance, commissions were earned only if the customer did not 

cancel the cell phone service before the expiration of the 

chargeback period.” (Ibid.) Thus, as in the DeLeon plan,

Madison’s commissions became wages only after calculation of 

the final net revenue amount, accounting for any adjustments. 
15

(See Prachasaisoradej v. Ralphs Grocery Co., Inc. (2007) 

42 Cal.4th 217, 229 [only final net profit figure for each store 

determined incentive compensation for store employees, and 

“[t]his final figure, and this figure only, once calculated, was the 

amount offered or promised”].)

The arbitration panel determined, “[Madison]’s claims 

based upon California Labor Code §§ 201, 203, and 2802 are not 

applicable to her case because her compensation for her sales 

transactions were only advances, subject to appropriate 

deductions and adjustments made by USBI, and became wages 

only after such deductions and adjustments were made, which 

was explicitly provided for in USBI’s Financial Consultant 

Compensation Plan.” The trial court concluded: “As to Madison’s 

arguments that the award was based on a waiver of non-waivable 

rights and violated public policy, whether the monies at issue 

were wages is a factual issue. Evidence and authority was 

submitted by USBI that these were advances on commissions, 

which are not considered wages until earned and are subject to 

reconciliation, which includes deductions, prior to being 

considered wages. There was evidence explaining the deductions.

Evidence was also submitted that sharing commissions is a 

standard industry practice which does not fall within the 

category of business expenses reimbursable by the employer. The 

sufficiency of that evidence is not subject to review. Madison has 

not established that the award requires a waiver of non-waivable 

rights or violated public policy.”

We agree up to a point. USBI certainly presented evidence 

that Madison signed a compensation agreement providing for 

advances. USBI also established, pursuant to the compensation 

agreement, that Madison did not “earn” the commissions 
16

reflected by those advances until the occurrence of certain 

conditions over time. As a factual matter, USBI proved that it 

paid Madison in accordance with the provisions of the 

compensation plans; that is, it made deductions from the 

advances and finalized Madison’s earned commission pursuant to 

the compensation plan provisions. The panel found that the

disputed deductions and post-payment reversals constituted

standard adjustments—not unlawful deductions from earned 

wages—to Madison’s advanced commissions and permissible

commission sharing with her sales assistant, all as specified by

the compensation plans. We take “as correct” these factual 

findings. (Panoche Energy Center, LLC v. Pacific Gas & Electric 

Co. (2016) 1 Cal.App.5th 68, 99.) 

On the other hand, whether USBI paid Madison advances 

or wages when it made the monthly payments to her presents at 

least a mixed question of fact and law. Per the arbitration panel, 

Madison’s commissions became earned wages only after USBI 

charged back the deductions and adjustments. The panel also 

made a finding, largely by crediting Terrell’s testimony about the 

compensation plans and their implementation, that Madison’s

paychecks constituted advances of her sales commissions, not 

wages. Regardless of whether this presents a factual issue, a

legal issue, or a mixture of the two, we agree with the arbitration 

panel and the trial court that Madison signed an agreement to

receive advances, with the express understanding that the 

advances would not become earned wages until USBI made the 

adjustments specified in the plan. (See DeLeon, supra,

207 Cal.App.4th at p. 810.) We also agree that USBI’s initial 

payments to Madison amounted to advances that Madison did 

not earn until the occurrence of certain conditions as specified in 
17

the plans. Because Madison’s compensation initially consisted of 

advances and not earned wages, she may not pursue claims 

invoking sections 201, 203, and 2802 because those sections apply 

only to earned wages. (See Sciborski v. Pacific Bell Directory, 

supra, 205 Cal.App.4th at pp. 1166-1167.)

Madison concedes UBSI’s compensation plan designates 

commission compensation as an advance until certain conditions

occur, but she disputes the panel’s determination that her final 

compensation consisted of an advance. She also argues “the 

arbitrators’ ruling that Ms. Madison’s final paycheck was an

advance makes no logical sense whatsoever,” and that the 

commissions reflected in her final paycheck should be considered 

earned wages, not an advance. As it did in the trial court, this 

argument goes to the merits of her dispute with USBI by

relitigating the panel’s reasoning and conclusions. We do not

review the arbitrators’ reasoning. (Moncharsh, supra, 3 Cal.4th 

at pp. 10-11.) Simply because Madison did not receive a 

favorable determination on the merits does not mean the 

arbitration award violated her statutory rights. Generally “it is 

within the ‘powers’ of the arbitrator to resolve the entire ‘merits’

of the ‘controversy submitted’ by the parties[;]” including “all the 

contested issues of law and fact submitted to the arbitrator for 

decision. The arbitrator’s resolution of these issues is what the

parties bargained for in the arbitration agreement[;] . . . the 

arbitrator’s award does no more than resolve that dispute.” (Id.

at p. 28.) Under the circumstances here, the panel did not exceed

its powers in resolving the questions of law and fact presented to 

it, and the trial court did not err in concluding that no statutory 

ground asserted by Madison warranted vacating the arbitration 

award.
18

2. The arbitration panel did not improperly shift the 

burden of proof onto Madison or waive Madison’s 

unwaivable rights under section 221

Madison contends the arbitration panel “reversed” the

burden of proof on her statutory wage claims, depriving her of the 

ability to vindicate her unwaivable statutory rights. As USBI 

points out, section 221 is the only statute asserted by Madison

where the burden of proof may shift to the employer. “An 

employee seeking to recover under Labor Code section 2802 for 

business expenses paid out of pocket must show that the 

expenditures were ‘necessarily expend[ed] in direct consequence 

of the discharge of the employee’s duties[.]’” (Davis v. Farmers 

Ins. Exchange (2016) 245 Cal.App.4th 1302, 1337 (Davis).) 

However, where an employee establishes her employer deducted

“apparently business-related expenses” from her paychecks, 

“[u]nder Labor Code sections 221 and 224, the employer bears the 

burden of establishing that such deductions are authorized by 

law.” (Davis, at p. 1337.)

As the panel found, Madison failed timely to assert a

section 221 claim that would trigger a burden-shifting analysis. 

Although Madison relies on section 221 for her argument about

improper wage deductions, she did not assert a claim for 

improper wage deductions in violation of section 221 in her

Statement of Claim or pursue a section 221 claim for improper 

wage deductions during discovery, and she never filed an 

amended Statement of Claim adding any causes of action based 

on section 221. Rather, she argued for the first time at the 

evidentiary hearing that various post-paycheck adjustments to 

compensation, and her commission shared with her sales

assistant, constituted improper wage deductions in violation of 
19

section 221. The panel dismissed the section 221 claim as 

improper because Madison did not include it in her Statement of 

Claim, but the panel did permit her to maintain a claim to recoup 

her alleged improper reversals of compensation under her 

remaining Labor Code causes of action. Because Madison neither

sought nor obtained leave to amend her Statement of Claim, the 

panel acted well within its authority to dismiss the section 221 

claim. (See FINRA rule 13309(b) [party may only amend 

pleading if panel grants a motion that includes with it copy of the 

proposed amended pleading].) We do not revisit that decision

here.

In any event, even if Madison properly had presented a 

section 221 claim for improper wage deductions, it would suffer 

the same flaw as Madison’s other claims. The panel found

Madison’s compensation prior to adjustment consisted of 

advances, not earned wages. These commissions did not become

earned wages until USBI adjusted them with the chargebacks. 

We do not second guess or disturb these findings on appeal.

(Moncharsh, supra, 3 Cal.4th at p. 11.)

C. Madison Conducted Adequate Discovery To Arbitrate Her 

Statutory Claims

An arbitration “permits an employee to vindicate his or her 

statutory rights” only if it “meet[s] certain minimum 

requirements, including neutrality of the arbitrator, the provision 

of adequate discovery, a written decision that will permit a 

limited form of judicial review, and limitations on the costs of

arbitration.” (Armendariz, supra, 24 Cal.4th at pp. 90-91

[addressing arbitration of FEHA claims]; see Mercuro v. Superior 

Court (2002) 96 Cal.App.4th 167, 180 (Mercuro) [“[W]e see no 
20

reason why Armendariz’s ‘particular scrutiny’ of arbitration 

agreements should be confined to claims under FEHA. Rather, 

under the Supreme Court’s analysis, such scrutiny should apply 

to the enforcement of rights under any statute enacted ‘for a 

public reason.’”].) “These requirements were founded on the 

premise that certain statutory rights are unwaivable.” (Little v. 

Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076.) Parties to an 

arbitration must have discovery “sufficient to adequately 

arbitrate their statutory claim, including access to essential 

documents and witnesses, as determined by the arbitrator(s) and 

subject to limited judicial review pursuant to Code of Civil 

Procedure section 1286.2.” (Armendariz, at p. 106.)

Here, over two years of discovery, Madison propounded 

more than 80 written discovery requests on USBI, obtained two 

evidentiary hearing continuances, and reached agreement with 

USBI after she filed three motions to compel to produce specific 

documents relating to her commission history and deductions. 

USBI produced over 20,000 pages of documents. This discovery

included USBI’s annual compensation plans signed by Madison

detailing how financial advisors earned commissions and other 

incentive pay, Madison’s entire detailed pay history and monthly 

incentive pay detail, and Madison’s 2010-2012 monthly 

commission reports showing revenue, deductions and 

adjustments made to Madison’s advanced commissions. Over 

USBI’s objections, and with the benefit of multiple continuances, 

Madison participated in four days of discovery hearings.

Ultimately, the panel concluded USBI did not improperly 

withhold any documents.
21

Notwithstanding USBI’s voluminous document production 

Madison contends she still did not receive sufficient discovery 

regarding the adjustments and reconciliations made to her

advance commissions or “evidence that would enable her to show 

that USBI did not have a legitimate reason for taking back her 

earned wages.” “‘[A]dequate’ discovery does not mean unfettered 

discovery,” and “[u]ltimately it is up to the arbitrator and the 

reviewing court to balance the need for simplicity in arbitration 

with the discovery needs of the parties.” (Mercuro, supra,

96 Cal.App.4th at p. 184.) Madison propounded and received

more than adequate discovery to vindicate her statutory rights as 

required under Armendariz.

D. The Arbitration Decision Was Sufficiently Detailed To

Permit Judicial Review

Madison contends the written arbitration decision further 

violates Armendariz because it lacked sufficient detail and failed 

to set forth reasons for the rulings made. As noted, Armendariz

requires arbitrations to result in “a written decision that will

permit a limited form of judicial review.” (Armendariz, supra,

24 Cal.4th at p. 91.) The arbitrator “must issue a written 

arbitration decision that will reveal, however briefly, the 

essential findings and conclusions on which the award is based.” 

(Id. at p. 107.)

The arbitration award in this case satisfies that 

requirement. The 10-page decision includes sufficient clarity and 

detail that we can review the panel’s conclusion rejecting

Madison’s claims under sections 201, 203, and 2802 based on its

finding that Madison’s paychecks consisted of commission

advances rather than earned wages, and its conclusion that she 
22

received adequate discovery. As did the trial court, we also find

unpersuasive Madison’s argument she did not receive a fully

reasoned award because it did not include discussion of her Penal 

Code section 496, subdivision (a), claims or attempted section 221 

claim that the panel dismissed. The award noted the panel’s

rulings on USBI’s motion to dismiss the Penal Code and 

section 221 claims, which adequately reveals the panel’s reason 

for not discussing those claims further. Regarding the 

section 221 claim, Madison cites no authority requiring an 

arbitration decision to discuss a claim not asserted in the 

Statement of Claim and dismissed after being untimely raised at

the arbitration hearing, and where the panel explained its 

reasoning for the dismissal on the record. 

The panel’s decision allows judicial review sufficient to 

ensure the panel complied with the requirements of the statutes 

on which Madison based her claims.
23

DISPOSITION

The judgment confirming the arbitration award is affirmed. 

USBI shall recover its costs on appeal.

HOWARD, J.

*

We concur:

SEGAL, Acting P. J.

FEUER, J.

* Judge of the Marin County Superior Court, assigned by the 

Chief Justice pursuant to article VI, section 6 of the California

Constitution.