Filed 2/24/23 Rodriguez v. Club CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on 

opinions not certified for publication or ordered published, except as specified by rule 8.1115(a). This 

opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a). 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

YESSICA SHARLENE 

RODRIGUEZ,

Plaintiff and Respondent,

v.

JONATHAN CLUB et al.,

Defendants and Appellants.

B317622

Los Angeles County

Super. Ct. No.

21STCV25955

APPEAL from an order of the Superior Court of Los

Angeles County, Barbara M. Scheper, Judge. Affirmed.

Parker, Milliken, Clark, O’Hara & Samuelian, Edzyl G. 

Magante, David S. McLeod, Kristina L. Hohne, Karl A. Schmidt,

and Joseph P. Wohrle for Defendants and Appellants.

Valiant Law, Kamran Shahbi, and Aaron Bustos for 

Plaintiff and Respondent.
2

INTRODUCTION

Plaintiff Yessica Sharlene Rodriguez (plaintiff) sued her 

former employer Jonathan Club (Club) and its human resources 

director (Hiromi Oki) asserting a variety of employment-related 

claims. Club and Oki petitioned to compel arbitration of her 

claims, citing an arbitration provision found in the employee 

handbook and an acknowledgment plaintiff signed at the outset 

of her employment indicating that she agreed to be bound by the 

arbitration provision. The trial court denied the petition, finding 

that the arbitration agreement was unconscionable and therefore 

unenforceable. We agree with the court’s conclusion and therefore 

affirm.

FACTS AND PROCEDURAL BACKGROUND

1. Employment

Club hired plaintiff as Assistant Director of Human 

Resources on June 12, 2019. At the beginning of her employment, 

Club provided plaintiff with an employee handbook. The 

handbook was at least 47 pages in length and included a section

called “Employee Conduct.” That section laid out a four-step 

employee complaint resolution system:

“Complaint Resolution Procedure [¶] Jonathan Club 

recognizes that employees may have questions or problems 

regarding their work, working conditions, policies, procedures, or 

other work-related issues. In order to actively encourage 

employees to express their concerns and to seek resolution of 

their questions, the Club has established a problem resolution 

procedure for all employees. Jonathan Club is eager to have 

employee problems resolved as quickly as possible and in a 

considerate manner, free from any reprisals or recrimination for 
3

using the procedure. The Club retains the right to modify the 

following procedure in any way and under such circumstances as 

it deems appropriate in its sole discretion. If you have a 

complaint, you should take the following steps, as appropriate:

“Step One [¶] If the issue cannot be resolved informally, 

present the complaint to your immediate supervisor. If you do not 

feel comfortable raising the issue with your supervisor you may 

proceed to step two or three as appropriate. In cases of sexual 

harassment in particular, you may proceed directly to step three.

“Step Two [¶] If the issue cannot be, or is not resolved 

through discussion with your supervisor, or if the nature of the 

situation is such that you do not wish to discuss it with your 

supervisor, you are encouraged to request a meeting with your 

department head. In an effort to resolve the problem, the 

department head will consider the facts and make appropriate 

inquiries, and may review the matter with the Human Resources 

Department.

“Step Three [¶] If, after receiving your department head’s 

decision, you are still not satisfied, you must present your 

complaint to your Division Head before going to the Human 

Resources Director, who will fully consider all relevant facts and 

circumstances and issue a recommendation to the General 

Manager whose decision is final and binding. [¶] Jonathan Club 

does not tolerate any form of retaliation against employees 

availing themselves of this procedure.

“Step Four1 [¶] If the issue is still not resolved to your 

satisfaction by the Human Resources Department, Jonathan 

Club and you shall resolve, to the fullest extent permitted by law, 

1 We will refer to Step Four as the arbitration provision. 
4

any and all claims or controversies between us (or between you 

and any present or former officer, director, agent, or employee of 

Jonathan Club) relating in any manner to your employment or 

the termination of your employment shall be resolved [sic] by 

final and binding arbitration pursuant to the FAA, except to the 

extent that you elect to pursue such claim exclusively in the 

Small Claims Division of the Los Angeles Superior Court and 

limit your claim to its then jurisdictional amount, currently 

$10,000. Except as specifically provided herein, any arbitration 

proceeding shall be conducted in accordance with California Code 

of Civil Procedure §1280, et seq.

“Claims subject to arbitration shall include contract claims, 

tort claims, and common law claims, as well as claims based on 

any federal, state, or local law, statute or regulation (including 

but not limited to any claims arising under Title VII of the Civil 

Rights Act of 1964, the Age Discrimination in Employment Act, 

the Americans with Disabilities Act, and the California Fair 

Employment and Housing Act. Claims arising under the 

Employee Retirement Income Security Act (“ERISA”), or 

administrative claims of any kind demanding administrative 

remedies or benefits filed with any federal or state governmental 

agency including the National Labor Relations Board (“NLRB”), 

the Equal Opportunities Commission (“EEOC”), Department of 

Labor (DOL), Department of Labor Standards Enforcement 

(“DSLE”), Fair Employment and Housing Administration 

(“FEHA”), federal or state Occupational Health and Safety 

Administration (“OSHA”), the Workers’ Compensation Appeals 

Board, the Employment Development Department or other 

regulatory agencies are not covered by this Agreement. However, 

any right to litigate a Claim arising from the determination of 
5

any Administrative Agency is subject to mediation and 

arbitration under the terms of this Agreement. In addition, 

requests for temporary restraining orders and/or preliminary 

injunctions in the California Superior Court by either Jonathan 

Club or you, where such temporary equitable relief would 

otherwise be authorized by law, are allowed pursuant to CCP 

Sec. 1281.8. However, any trial on the merits of the underlying 

action relating to any such temporary restraining order or 

preliminary injunction shall occur in front of and will be decided 

by an Arbitrator as set forth in this Policy. Either you or 

Jonathan Club may also bring an action in any court of 

competent jurisdiction to compel arbitration of a matter covered 

by this Policy and to enforce an arbitration award. Labor Code 

Sec. 229 subjects are excluded from this Policy, unless the 

enforcement of that statute is prohibited by federal or state law.

“Under this Policy you agree that all claims you may make 

shall be adjudicated under the terms of this Agreement, and you 

specifically waive your right to act as a representative for any 

class or participate as a member in any class or collective action 

filed in connection with claims covered by this Agreement, 

irrespective of whether the class action is filed in state or federal 

court. Any arbitrator selected to arbitrate claims under the terms 

of this Agreement has no authority to consolidate or join claims of 

other employees or preside over any form of class action.

“Arbitration is a process in which a dispute is presented to 

a neutral third party, the arbitrator, for a final and binding 

written reasoned decision. The arbitrator makes this decision 

after both sides present their evidence and arguments at the 

arbitration hearing. There is no jury and there is only a limited 

form of judicial review. If you win, you can be awarded anything
6

you might seek through a court of law. The neutral party runs 

the proceeding, which is held privately.

“Though arbitration is much less formal than a court trial, 

it is an orderly proceeding, governed by rules of procedure and 

legal standards of conduct.

“The aggrieved party must give written notice of any claim 

subject to arbitration under this Policy to the other no later than 

the expiration of the statute of limitations that the laws of the 

State of California prescribe for such claim.

“The parties shall mutually select a neutral arbitrator who 

has at least ten (10) years of experience with respect to deciding 

disputes between employers and employees under California law. 

In the event the parties are unable to mutually agree upon an 

arbitrator, the parties shall select an arbitrator as provided for by 

the AAA rules governing employment disputes, or some 

comparable service providing neutral arbitrators, such as ADR 

Services, Inc. or ARC. The arbitration shall be conducted 

consistent with the rules of the American Arbitration Association 

(“AAA”), as set forth in the AAA National Rules For The 

Resolution of Employment Disputes, or its successors rules, as in 

effect on the date of the claim, to the extent they are not 

inconsistent with any provision of this Agreement, in which event 

the provisions of this Agreement shall govern. (A current copy of 

these rules is available on the AAA website at Employment 

Arbitration Rules & Mediation Procedures or from the Human 

Resources department.) The parties shall be entitled to discovery 

as provided by the aforesaid AAA rules. At least thirty (30) days 

before the arbitration hearing, the parties will exchange lists of 

witnesses, including any experts, and copies of all exhibits 

intended to be used at the arbitration. Either party may request 
7

such remedies and damages that are allowed by California law. 

The parties shall be entitled to submit briefs to the arbitrator 

within 30 days of the close of the hearing. The Arbitrator shall 

issue a written arbitration decision that explains the reasons for 

the award, including the essential findings and conclusions on 

which the award is based so as to ensure meaningful judicial 

review of the decision. The Los Angeles Superior Court shall have 

jurisdiction to review the final award for errors of law and shall 

have the power to review any award of punitive damages to the 

same extent as such damages are reviewable on appeal from a 

court judgment.

“The procedural law of the FAA shall govern the 

enforcement and application of this Agreement. The substantive 

laws of the State of California shall be used by the arbitrator to 

determine the respective rights and obligations of the parties and 

in ruling on procedural and substantive issues raised in the 

arbitration itself. Jonathan Club shall pay the reasonable fees of 

the arbitrator and the expenses associated with the arbitration, 

to the extent that such fees and expenses exceed the amount you 

would have incurred had you initiated the claim(s) in the state or 

federal court having jurisdiction over the claim(s). You will pay to 

the arbitration service the filing fees you would have paid had 

you initiated the claims(s) in state or federal court. Each party 

will pay their own attorney’s fees and expenses associated with 

the arbitration unless a party prevails on a statutory claim and 

the statute provides that the prevailing party is entitled to 

payment of his or her attorneys’ fees. In that case, the arbitrator 

may award reasonable attorneys’ fees and costs to the prevailing 

party as provided by law. Except as otherwise provided herein, 

neither party shall initiate or prosecute any lawsuit in any way 
8

related to any arbitrable claim, including without limitation any 

claim as to the making, existence, validity, or enforceability of the 

agreement to arbitrate. All arbitration hearings shall be 

conducted in Los Angeles, California. Nothing herein precludes 

you from filing an administrative charge before any agency that 

has jurisdiction over an arbitrable claim.

“You are not required to hire a lawyer to participate in 

arbitration and no party may use a non-party lawyer in a Small 

Claims Court action. While the Club has access to legal advice 

through its outside lawyers, the Club will participate in 

arbitration without a lawyer, if you choose not to use a lawyer in 

the arbitration and notify the Club in advance of your decision.

“The Club remains of the view that only in extreme matters 

will arbitration or a Small Claims Court action be necessary. 

However, if you decide to commence a Small Claims Court 

Action, the Human Resources Department will provide you with 

either a Small Claims Court Complaint form or a Demand for 

Arbitration form.”

As a condition of her employment, plaintiff was required to 

sign an acknowledgment in which she confirmed that she had 

received a copy of Club’s employee handbook. As pertinent here, 

the acknowledgment included the following provisions:

“I acknowledge that I have received a copy of Jonathan 

Club’s Employee Handbook. I understand that I am responsible 

for knowing and adhering to the policies set forth in the 

Handbook during my employment with Jonathan Club.

“The policies contained in the Handbook are not intended 

to create any contractual rights or obligations, and Jonathan 

Club reserves the right to amend, interpret, modify, or withdraw 

any portion of this Handbook at any time.
9

“I understand and agree that my relationship with 

Jonathan Club is at will, which means that my employment is for 

no definite period and may be terminated by me or by Jonathan 

Club at any time and for any reason with or without cause or 

advance notice. I also understand that Jonathan Club may 

demote, discipline, transfer, or reassign me or alter the terms of 

my employment at any time at its discretion, with or without 

cause or advance notice.

“I understand that the Club has established a system of 

binding arbitration for the resolution of problems that is 

described in the handbook under the Dispute Resolution section. 

I further understand that, as a condition of employment and 

continued employment, I agree to submit any complaints or 

disputes to the problem resolution and arbitration process 

therein described. If not earlier resolved, I agree to abide by and 

accept the final decision of the arbitrator with respect to any and 

all events that relate[ ] to or arise out of my employment or the 

termination of my employment. I further understand that 

arbitration represents an alternative to a jury trial and that this 

constitutes a waiver of my right to a jury trial.”

Club apparently terminated plaintiff’s employment on or 

about February 3, 2020.

2. Complaint

In July 2021, plaintiff obtained a right to sue letter from 

the Department of Fair Employment and Housing. She 

subsequently filed a complaint against Club and Club’s Director 

of Human Resources Hiromi2 Oki. The complaint asserts a broad 

2 The complaint erroneously names “Horimi” Oki.
10

range of causes of action: disability discrimination (Gov. Code,

§ 12900 et seq. (FEHA)), failure to engage in the interactive 

process (FEHA), failure to provide reasonable accommodation 

(FEHA), disparate treatment (FEHA), retaliation (FEHA), 

retaliation (Lab. Code, § 1102.5), failure to prevent 

discrimination, harassment and retaliation (FEHA), wrongful 

termination in violation of public policy, intentional infliction of 

emotional distress, negligent infliction of emotional distress, 

waiting time penalties (Lab. Code, § 201 et seq.), and negligent 

retention and supervision. Plaintiff sought damages in excess of 

$2 million and, inter alia, restitution, civil penalties, punitive 

damages, litigation costs, and attorney’s fees.

3. Petition to Compel Arbitration

3.1. Petition

In response to plaintiff’s complaint, Club3 petitioned to 

compel arbitration. Club asserted that plaintiff had received a 

copy of its employee handbook, the handbook contained an

arbitration provision, and plaintiff signed an acknowledgment

stating she had received the employee handbook. The signed

acknowledgment specifically referenced, in underlined text, the 

arbitration provision in the employee handbook and stated that 

by signing the acknowledgment, the employee was agreeing to be 

bound by the arbitration provision and the arbitration result.

Plaintiff also continued her employment after receiving the 

handbook and signing the acknowledgment. Accordingly, Club 

argued, plaintiff had agreed to arbitrate the claims set forth in

3 Oki was represented by Club’s counsel and moved jointly with Club to 

compel arbitration.
11

her complaint. Plaintiff, however, had refused Club’s request to 

arbitrate her claims.

Club asserted that the Federal Arbitration Act (FAA) 

applied to the dispute because Club provided services related to 

interstate commerce. Further, Club argued that the arbitration 

provision and the acknowledgment were valid under the FAA and 

required plaintiff to submit her claims to arbitration. Citing Code 

of Civil Procedure section 1281.2, Club asked the court to submit 

the controversy to arbitration and stay all court proceedings.

3.2. Opposition

Plaintiff opposed the petition on a variety of grounds. First, 

plaintiff argued that the signed acknowledgment contained a 

provision stating that the handbook did not create any 

contractual rights or obligations and therefore no contractual 

agreement to arbitrate existed. Second, she asserted no 

agreement to arbitrate existed because the arbitration provision

was not conspicuous, was hidden in a section titled “Employee 

Conduct,” and she had no notice that the employee handbook 

contained an arbitration provision. Third, plaintiff claimed that 

because the Club reserved the right to change its policies at any 

time, any agreement to arbitrate was illusory and therefore 

unenforceable. Fourth, plaintiff contended she had no notice that 

she had waived her right to a jury trial and, in the absence of 

informed consent, no agreement to arbitrate was created. Fifth, 

and finally, plaintiff urged that the arbitration provision was 

unenforceable because it was unconscionable. Procedurally, the 

provision was unconscionable because it was a contract of 

adhesion and was the result of surprise, due to the confusing 

language of the acknowledgment and the failure to call the 

arbitration provision to the reader’s attention in the employee 
12

handbook. Further, plaintiff claimed, the arbitration provision 

was substantively unconscionable because it limited plaintiff’s 

available remedies and required plaintiff to utilize a one-sided 

internal dispute resolution procedure.

3.3. Reply

In reply, Club defended the validity of the arbitration 

provision mainly by refuting plaintiff’s claims of 

unconscionability.

4. Ruling and Appeal

The court heard argument on the petition to compel 

arbitration on December 9, 2021. The court adopted its tentative 

ruling as its final ruling by minute order of the same date.

As an initial matter, the court found that a valid agreement 

to arbitrate (i.e., the handbook’s arbitration provision and the 

signed acknowledgment agreeing to be bound by that provision) 

existed and that the FAA applied to that agreement. The court 

also found that the agreement was valid under California law 

relating to agreements to arbitrate claims brought under the Fair 

Employment and Housing Act (Gov. Code, § 12900 et seq.) 

(FEHA).

4 The court concluded, however, that the arbitration 

agreement was unconscionable and therefore unenforceable.

As to procedural unconscionability, the court noted that the 

arbitration agreement was a contract of adhesion and that 

4 Our Supreme Court has held that any agreement to arbitrate FEHA 

claims must not limit statutory damages, must allow for discovery, 

must be in writing and allow for judicial review, and must provide that 

the employer pays the costs of arbitration. (Armendariz v. Foundation 

Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 101–113

(Armendariz).)
13

plaintiff was required to agree to it as a condition of employment. 

In addition, the court agreed with plaintiff’s contention that the 

arbitration agreement resulted from surprise because the 

acknowledgment referencing the arbitration provision directed 

plaintiff to a nonexistent section of the employee handbook titled 

“dispute resolution,” whereas the arbitration provision was 

actually found in a section titled “employee conduct.” Accordingly, 

the court found a high degree of procedural unconscionability 

existed.

The court also found that substantive unconscionability 

was present. Specifically, the court found that the arbitration 

agreement was one-sided because “[t]he Agreement only seems to 

address claims that Plaintiff might bring and does not address 

any claims that [Club] may have arising out of the employment 

relationship.” In addition, citing Nyulassy v. Lockheed Martin 

Corp. (2004) 120 Cal.App.4th 1267 (Nyulassy), the court noted 

that under Club’s employer-controlled complaint resolution 

procedure, an employee was required to present any complaint to 

a supervisor or department head before pursuing arbitration. 

That procedure, the court noted, would give Club a “free peek” at 

an employee’s case and result in an unfair advantage to Club at 

any arbitration.

In light of its unconscionability findings, the court denied 

Club’s petition to compel arbitration. This timely appeal followed.

DISCUSSION

Club contends the court erred in finding that the 

arbitration agreement is unconscionable. We disagree.
14

1. Standard of Review

The applicable standard of review is well established. 

“ ‘ “[W]e review the arbitration agreement de novo to determine 

whether it is legally enforceable, applying general principles of 

California contract law.” ’ [Citation.] Thus, unconscionability is a 

question of law we review de novo. [Citation.] To the extent the 

trial court’s determination on the issue turned on the resolution 

of contested facts, we ... review the court’s factual determinations 

for substantial evidence. [Citation.]” (Carmona v. Lincoln 

Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 82; accord,

OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO) [noting 

generally applicable contract defenses, such as unconscionability, 

may be applied to invalidate arbitration agreements without 

running afoul of the FAA or California law]; Swain v. LaserAway 

Medical Group, Inc. (2020) 57 Cal.App.5th 59, 65–66 (Swain).) In 

keeping with the strong public policy in favor of arbitration, any 

doubts regarding the validity of an arbitration agreement are 

resolved in favor of arbitration. (Coast Plaza Doctors Hospital v. 

Blue Cross of California (2000) 83 Cal.App.4th 677, 686; and see

Armendariz, supra, 24 Cal.4th at pp. 83, 97–98, abrogated in part 

by AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 340

[noting strong public policy in favor of arbitration under both 

federal and California law].)

2. The Arbitration Agreement Is Unconscionable

Club challenges both the procedural and substantive 

unconscionability findings by the court. We address these issues 

in turn.
15

2.1. General Legal Principles

“The general principles of unconscionability are well 

established. ... [T]he unconscionability doctrine ‘ “has both a 

procedural and a substantive element.” ’ [Citation.] ‘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.’ [Citation.] [¶] Both procedural and substantive

unconscionability must be shown for the defense to be 

established, but ‘they need not be present in the same degree.’ 

[Citation.] Instead, they are evaluated on ‘ “a sliding scale.” ’

[Citation.] ‘[T]he more substantively oppressive the contract 

term, the less evidence of procedural unconscionability is 

required to’ conclude that the term is unenforceable. [Citation.] 

Conversely, the more deceptive or coercive the bargaining tactics 

employed, the less substantive unfairness is required

[citations] ... ‘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.’ ” (OTO, supra, 8 Cal.5th at pp. 125–126; Swain, 

supra, 57 Cal.App.5th at p. 67; see also Civ. Code, § 1670.5, 

subd. (a) [“If the court as a matter of law finds [a] contract or any 

clause of the contract to have been unconscionable at the time it 

was made the court may refuse to enforce the contract, or it may 

enforce the remainder of the contract without the unconscionable 

clause, or it may so limit the application of any unconscionable 

clause as to avoid any unconscionable result.”].)
16

2.2. Procedural Unconscionability

Our Supreme Court has often explained that “[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 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[.])” (OTO,

supra, 8 Cal.5th at p. 126.) The agreement here is no exception

and Club does not contend otherwise. Both the employee 

handbook and the acknowledgment were preprinted and 

prepared by Club. And plaintiff was told she was required to sign 

the acknowledgment form as a condition of her employment—a 

classic “take it or leave it” situation.

Given that the agreement to arbitrate is adhesive, we must 

consider “whether circumstances of the contract’s formation 

created such oppression or surprise that closer scrutiny of its 

overall fairness is required. [Citations.]” (OTO, supra, 8 Cal.5th 

at p. 126.) Oppression means that a contract “ ‘ “lack[s] ...

negotiation and meaningful choice” ’ ” whereas surprise occurs 

when the arbitration “ ‘ “is hidden within a prolix printed 

form.” ’ ” (Pinnacle, supra, 55 Cal.4th at p. 247; OTO, at p. 126.)

The court found that the agreement to arbitrate resulted 

from surprise mainly because the acknowledgment states that 

the employee agrees to be bound by the “system of binding 

arbitration for the resolution of problems that is described in the 
17

handbook under the Dispute Resolution section.” As the court 

noted, the handbook does not contain a section titled “dispute 

resolution,” and the arbitration provision is instead found in a 

section titled “employee conduct” under the heading “complaint 

resolution procedure.” The arbitration provision is found on pages 

28 to 30 of a handbook that is at least 47 pages in length.

Although the acknowledgment is not a model of clarity, it 

does highlight, in underlined text, the critical aspects of 

arbitration: it is binding, and it delegates the resolution of 

complaints to an arbitrator rather than a jury. Specifically, the 

following text, which was included in the single-page 

acknowledgment and was underlined, explains the agreement the 

employee was making by signing the acknowledgment: “I further 

understand that, as a condition of employment and continued 

employment, I agree to submit any complaints or disputes to the 

problem resolution and arbitration process therein described. If 

not earlier resolved, I agree to abide by and accept the final 

decision of the arbitrator with respect to any and all events that 

relate[ ] to or arise out of my employment or the termination of 

my employment. I further understand that arbitration represents 

an alternative to a jury trial and that this constitutes a waiver of 

my right to a jury trial.” In sum, the acknowledgment standing 

alone advised plaintiff that by signing it, she agreed to arbitrate 

all employment-related claims.

Plaintiff relies on Bruni v. Didion (2008) 160 Cal.App.4th 

1272 (Bruni), to support the court’s finding that a “high degree of 

procedural unconscionability” exists due to surprise. Bruni is one 

of numerous cases holding that a visually undistinguished 

arbitration provision buried in a mountain of paperwork may

support a finding of surprise. (Id. at p. 1293; Knight, et al., Cal. 
18

Practice Guide: Alternative Dispute Resolution (The Rutter 

Group 2022) ¶ 5:150.5c.) But Bruni is distinguishable with 

respect to the scale of the surprise. There, homebuyers signed a 

voluminous set of documents in connection with a home 

purchase. (Bruni at p. 1282.) They were told not to review the 

documents at the time of signing and were not given time to do 

so. (Ibid.) The arbitration provision at issue was contained on one 

page of a 30-page booklet in which the text was single-spaced and 

in 10-point type. The provision was not visually distinguished 

(such as by the use of boldface or italics) and the booklet itself 

was buried within a voluminous stack of documents relating to 

the home purchase. And the homebuyers were not even asked to 

acknowledge receipt of the booklet. (Id. at p. 1293.) The only 

document the homebuyers signed—an application—did state that 

the booklet contained an arbitration provision, but it did not 

disclose the scope or effect of the provision. (Ibid.)

Here, by contrast, plaintiff was given the employee 

handbook and asked to acknowledge the receipt of the book and 

to agree to binding arbitration. The acknowledgment was only 

one page, and the arbitration-related text was visually 

distinguished with underlining. The acknowledgment also 

disclosed the material consequences of binding arbitration. 

Further, and unlike Bruni, there is no indication that either the 

handbook or the acknowledgment was buried in a stack of other 

documents or that plaintiff was told not to read the handbook.

In sum, we agree with the court’s conclusion that 

procedural unconscionability is present, but it is not the “high 

degree of procedural unconscionability” found to exist by the trial 

court. But “ ‘a finding of procedural unconscionability does not 

mean that a contract will not be enforced, but rather that courts 
19

will scrutinize the substantive terms of the contract to ensure 

they are not manifestly unfair or one-sided.’ [Citation.]” 

(Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 

915.) We continue our analysis on that point.

2.3. 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 oldfashioned bad bargain’ [citation], but with terms that are 

“unreasonably favorable to the more powerful party.” ’ (Sonic[-

Calabasas A, Inc. v. Moreno (2013)] 57 Cal.4th 1109[, 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.)” (OTO, supra, 8 Cal.5th at pp. 129–

130.)

The court found that the arbitration agreement was 

substantively unconscionable for two reasons. First, the court 
20

concluded that the arbitration agreement “only seems to address 

claims that Plaintiff might bring and does not address any claims 

that [Club] may have arising out of the employment 

relationship.” We agree. As our high court recognized in 

Armendariz, “an arbitration agreement imposed in an adhesive 

context lacks basic fairness and mutuality if it requires one 

contracting party, but not the other, to arbitrate all claims 

arising out of the same transaction or occurrence or series of 

transactions or occurrences.” (Armendariz, supra, 24 Cal.4th at p.

120.)

The court relied on Nyulassy, supra, 120 Cal.App.4th 1267 

a case in which a predispute arbitration clause contained in the 

employment agreement provided, “ ‘If I object to or disagree with 

any Lockheed Martin personnel decision relating to or affecting 

the terms and conditions of my Lockheed Martin employment ..., 

I agree I shall seek to resolve my objection or disagreement 

through discussions within successive levels of my supervisory 

chain of command, until the objection or disagreement is resolved 

or I have had the opportunity to discuss the matter with the Vice 

President, Human Resources, or such other senior management 

official responsible for human resources matters within the 

Lockheed Martin business unit to which I am assigned. I 

understand and agree that if the dispute or controversy is not 

resolved to my satisfaction by means of such discussion(s), my 

sole and exclusive remedy and avenue of redress is through 

arbitration proceedings conducted in accordance with the 

employment dispute resolution rules of the American Arbitration 

Association. ... I understand that by agreeing to arbitration of any 

and all such disputes and controversies ... I hereby knowingly, 

willingly and advisedly waive any and all rights to pursue 
21

judicial proceedings or actions and remedies which I might 

otherwise have been entitled to pursue, or which might otherwise 

have been available to me, in the absence of the waiver 

established by this sentence. ...’ ” (Id. at p. 1273, fn. 4, 

capitalization omitted.) The agreement also required the 

employee to file a demand within 180 days of the employer’s 

termination decision and provided the failure to satisfy the 

limitations period resulted in a waiver of the employee’s claims. 

(Ibid.)

The Court of Appeal determined the agreement was 

unilateral and contained other substantively unconscionable 

elements. (Nyulassy, supra, 120 Cal.App.4th at pp. 1282–1283.) 

Specifically, the arbitration provision in Nyulassy was triggered 

only by the employee’s “objection or disagreement” with a 

personnel decision relating to or affecting his or her employment. 

By its terms, it applied only to the employee’s claims and not to 

the employer’s.

Here, like Nyulassy, the context and language of the 

arbitration provision indicate that it only applies to complaints 

by the employee against Club. The arbitration provision is found, 

for example, in the section of the employee handbook titled 

“employee conduct.” And the introductory paragraph of the 

subsection titled “complaint resolution procedure,” for example, 

provides context for the four-step process that follows. That 

paragraph states that “employees may have questions or 

problems regarding their work, working conditions, policies, 

procedures, or other work-related issues” and indicates that the 

complaint resolution procedure is designed “to actively encourage 

employees to express their concerns and to seek resolution of their 

questions.” It also states that Club “is eager to have employee 
22

problems resolved as quickly as possible and in a considerate 

manner, free from any reprisals or recrimination for using the 

procedure,” again indicating that the process relates to concerns

expressed by employees, rather than Club. The closing sentence 

affirms the application of the process: “If you [i.e., the employee] 

have a complaint, you should take the following steps, as 

appropriate ... .” (Italics added.) In sum, like the agreement in 

Nyulassy, the first paragraph of the arbitration provision makes 

plain that the conflict resolution procedure expressly relates to 

complaints by employees and it is therefore substantively 

unconscionable. (Armendariz, supra, 24 Cal.4th at p. 119 [holding 

arbitration provision that requires only the weaker party to 

arbitrate is substantively unconscionable].)

Club points to some general language contained in the 

arbitration provision to the effect that the provision relates to 

“any and all claims or controversies” between the employee and 

Club. Of course, context is important. The arbitration provision 

states at the outset: “Step Four [¶] If the issue is still not resolved 

to your satisfaction by the Human Resources Department, 

Jonathan Club and you shall resolve, to the fullest extent 

permitted by law, any and all claims or controversies between us 

(or between you and any present or former officer, director, agent, 

or employee of Jonathan Club) relating in any manner to your 

employment or the termination of your employment shall be 

resolved [sic] by final and binding arbitration pursuant to the 

FAA, except to the extent that you elect to pursue such claim 

exclusively in the Small Claims Division of the Los Angeles 

Superior Court and limit your claim to its then jurisdictional 

amount, currently $10,000.” In other words, by its terms the 

arbitration provision applies to an employee complaint that has 
23

already moved through the first three steps of the conflict 

resolution process and has not been resolved to the employee’s 

satisfaction. The last portion of the sentence also plainly applies 

only to employee complaints, as it states “except to the extent 

that you [i.e., the employee] elect to pursue such claim ... .”

(Italics added.)

Club also cites language authorizing both the employee and 

Club to seek a restraining order or preliminary injunction as 

evidence that the arbitration provision is meant to apply to its

claims against an employee as well as an employee’s claims 

against it. But the cited language immediately follows a lengthy 

list of the sorts of claims covered by the arbitration provision. As 

Club notes, this list is prefaced by broad language indicating it is 

for purposes of example. Nevertheless, each claim listed would 

only be brought by an employee against an employer, e.g., claims 

under state and federal law relating to discrimination on the 

basis of age or disability.

We see additional unconscionability in the judicial review 

provision which benefits Club but not the employee. The 

arbitration provision provides for limited review of the 

arbitrator’s decision, as is the norm, but allows for a full judicial 

review of an award of punitive damages—something that would 

almost certainly benefit only Club. This provision contributes to 

the arbitration provision’s one-sidedness.

Club cites two cases in support of its contention that the 

arbitration provision is bilateral and therefore not substantively

unconscionable, Roman v. Superior Court (2009) 172 Cal.App.4th 

1462 and Nguyen v. Applied Medical Resources Corp. (2016) 4 

Cal.App.5th 232. These cases are not on point, as they relate to 

arbitration provisions that used the language “I agree” 
24

throughout the text and the Court of Appeals’ determinations

that such language did not necessarily render an arbitration 

provision unilateral. (Roman, at p. 1473 [rejecting argument that 

the language “I agree” in an arbitration agreement, standing 

alone, rendered the agreement unilateral]; Nguyen, at p. 252 

[declining to find that “ ‘the mere inclusion of the words “I agree”

by one party in an otherwise mutual arbitration provision 

destroys the bilateral nature of the agreement’ ”].) We do not 

ground our analysis in such language here, however.

The trial court found the arbitration provision

unconscionable for a second reason. Specifically, the court noted 

that under the conflict resolution procedure, Club’s “employees

must present their claims to a supervisor or department head 

before they may present their claim for arbitration.” The court 

determined that “ ‘[g]iven the unilateral nature of the arbitration 

agreement, requiring plaintiff to submit to an employercontrolled dispute mechanism, (i.e., one without a neutral

mediator) suggests that defendant would receive a “free peek” at 

plaintiff’s case, thereby obtaining an advantage if and when 

plaintiff were to later demand arbitration.’ ” (See Nyulassy, 

supra, 120 Cal.App.4th at pp. 1282–1283.)

On the record before us, the court’s reasoning is 

inapplicable. Plaintiff did not use the conflict resolution 

procedure before filing her complaint in this action and Club has 

not demanded that she do so now. Club has received no 

advantage here and therefore we need not consider whether, in 

the abstract, Club’s policy is substantively unconscionable on 

that basis as well.
25

DISPOSITION

The order denying the petition to compel arbitration is 

affirmed. Plaintiff shall recover her costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

LAVIN, J.

WE CONCUR:

EDMON, P. J.

NGUYEN, J.*

* Judge of the Los Angeles Superior Court, assigned by the Chief 

Justice pursuant to article VI, section 6 of the California Constitution.