Filed 1/25/16 Yeotis v. Warner Pacific Insurance Services CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

SOPHIA YEOTIS,

 Plaintiff and Respondent,

v.

WARNER PACIFIC INSURANCE 

SERVICES INC., et al.,

 Defendants and Appellants.

2d Civil No. B245770

(Super. Ct. No. 56-2012-

00423312-CU-WT-VTA)

(Ventura County)

Sophia Yeotis sued appellants Warner Pacific Insurance Services, Inc., North 

Ranch Insurance Services, Inc. and WPIM, LLC (hereafter, collectively “Warner”) after 

Warner terminated her employment. She sued. Warner moved to compel arbitration 

under its “Mutual Agreement to Arbitrate Disputes” (Agreement), which Yeotis signed. 

Finding the Agreement procedurally and substantively unconscionable, the trial court 

denied Warner’s motion. In the jargon of employment law, we conclude that the 

Agreement contained some “‘procedural and substantive unconscionability,’” which did 

not permeate it, or render it “‘unduly oppressive,’” or unenforceable.1 (Armendariz v. 

Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 83, 113-114 (Armendariz); 

 

1 We apply the jargon of cases discussing arbitration.
2

Civ. Code,2§ 1670.5.) We reverse and remand with instructions to sever the 

unconscionable terms of the Agreement, and enforce the modified Agreement.

FACTUAL AND PROCEDURAL BACKGROUND

In 2007, Warner hired Yeotis as a sales associate. In September 2011, she took a 

leave of absence of approximately two weeks to care for her husband, who was severely 

ill.

On October 5, 2011, Tracy Morris, Warner’s human resources director, sent an email to all Warner employees, including Yeotis. It stated:

“I have updated our Company Handbook for California Employees along 

with our company Injury & Illness Prevention Program (IIPP). Please 

review these documents along with the JAMS Employment Arbitration 

Rules.

“You can locate them on SharePoint under HR/Public Documents; Doc 

Type: Informational

“WP Handbook CA 2011-Final.pdf

“Injury & Illness Prevention Program Updated 2011.pdf

“JAMS-employment-arbitration rules-2009

“Upon reading the documents in their entirety, please print the attachment;

sign Appendix A, C and the Acknowledgment of Receipt and 

Understanding/At-Will Agreement and return (all pages) to me no later 

than October 20, 2011. 

“You may return [them] to me via mail, scan or fax (818) 575-2310.

“Thank you for your cooperation and please feel free to contact me with 

any questions.” (Bold omitted.)

On October 17, 2011, Yeotis signed the Agreement and other documents and 

acknowledged that she read them before signing them.

 

2 All statutory references are to the Civil Code unless otherwise stated.
3

On November 11, 2011, Warner terminated Yeotis’s employment “because of her 

excessive instances of tardiness in arriving to work.” In 2012, Yeotis filed a complaint 

alleging multiple causes of action against Warner.

3

 Warner filed a motion to compel 

arbitration. The parties submitted supporting declarations that addressed whether Yeotis 

received, or had access to, the Rules and Procedures of the Judicial Arbitration and 

Mediation Services/Endispute (JAMS rules) before she signed the Agreement. 

The trial court denied Warner’s motion, finding: the Agreement was a 

procedurally and substantively unconscionable adhesion contract; Yeotis “had no ability 

to reject it and still keep her job”; and Warner failed to attach the JAMS rules to the 

Agreement. Citing Armendariz, the court concluded the Agreement was substantively 

unconscionable because it required Yeotis “to pay fees that she would not otherwise have 

to pay in a court of law” and did not provide “all types of relief that would otherwise be 

available in court.” Statements in the court’s ruling imply it found the Agreement lacked

mutuality.

DISCUSSION

Unconscionability

4

“If a court finds that an agreement to arbitrate or any clause of such an agreement 

is unconscionable, 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 

 

3 Yeotis sought damages for alleged violations of public policy and discrimination 

surrounding her requests for family and medical leave, in violation of the Fair 

Employment and Housing Act (FEHA) (Gov. Code, § 12940 et seq.); for interference 

with family medical leave, in violation of FEHA, the Family and Medical Leave Act (29 

U.S.C.A. § 2601 et seq.) and the California Family Rights Act (Gov. Code, § 12945.2) in 

violation of public policy; and for retaliation for complaints of pregnancy discrimination, 

in violation of FEHA and public policy.

4 We reject Warner’s claim that the unconscionability defenses are preempted by the 

Federal Arbitration Act (FAA) pursuant to AT&T Mobility LLC v. Concepcion (2011) 

563 U.S. 333). Our Supreme Court recently reaffirmed that the FAA does not preempt 

generally applicable contract defenses, such as unconscionability. (Sanchez v. Valencia 

Holding Co., LLC (2015) 61 Cal.4th 899, 906 (Sanchez); Sonic-Calabasas A, Inc. v. 

Moreno (2013) 57 Cal.4th 1109, 1142-1145 (Sonic II).)
4

application of any unconscionable clause as to avoid any unconscionable result.’ 

[Citation.]” (Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619, 

630-631 (Carlson); § 1670.5, subd. (a).) “‘One common formulation of 

unconscionability is that it refers to “an absence of meaningful choice on the part of one 

of the parties together with contract terms which are unreasonably favorable to the other 

party.” [Citation.] . . . [T]he doctrine of unconscionability has both a procedural and a 

substantive element, the former focusing on oppression or surprise due to unequal 

bargaining power, the latter on overly harsh or one-sided results.’” (Sonic II, supra, 57 

Cal.4th at p. 1133.) Both procedural and substantive unconscionability are necessary 

before a court may refuse to enforce an arbitration provision. (Armendariz, supra, 24 

Cal.4th at p. 114.) But they need not be present in the same degree. Generally, “a sliding 

scale approach is taken.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 714 (Fitz).) 

The more substantively oppressive the terms, the less evidence of procedural 

unconscionability is required, and vice versa. (Armendariz, supra, at p. 114.)

“‘The unconscionability doctrine ensures that contracts, particularly contracts of 

adhesion, do not impose terms that have been variously described as “‘“overly harsh”’” 

[citation], ‘“‘unduly oppressive’”’ [citation], ‘“‘so one-sided as to “shock the 

conscience”’”’ [citation], or “unfairly one-sided” [citation]. All of these formulations 

point to the central idea that the unconscionability doctrine is concerned not with “a 

simple old-fashioned bad bargain” [citation], but with terms that are “unreasonably 

favorable to the more powerful party” [citation]. . . .’ Because unconscionability is a 

contract defense, the party asserting the defense bears the burden of proof.” (Sanchez, 

supra, 61 Cal.4th at pp. 910-911, citing Sonic II, supra, 57 Cal.4th at pp. 1145, 1148.)

“‘There is no uniform standard of review for evaluating an order denying a motion 

to compel arbitration. [Citation.] If the court’s order is based on a decision of fact, then 

we adopt a substantial evidence standard. [Citations.] Alternatively, if the court’s denial 

rests solely on a decision of law, then a de novo standard of review is employed. 

[Citations.]’” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 

60.) “In keeping with California’s strong public policy in favor of arbitration, any doubts 
5

regarding the validity of an arbitration agreement are resolved in favor of arbitration.” 

(Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, 1144.) Section 1670.5, 

subdivision (a) permits a court to sever unconscionable portions of an arbitration 

agreement in order to make the remainder of the agreement enforceable. We review for 

abuse of discretion the trial court’s decision whether to sever unconscionable provisions 

or to refuse to enforce the entire agreement. The latter course is permitted only when the 

agreement is permeated by unconscionability. (Armendariz, supra, 24 Cal.4th at pp. 122,

124.) Here, the combined minimum degree of procedural unconscionability and 

moderate degree of substantive unconscionability did not render the agreement unduly 

oppressive or unenforceable. The trial court erred in denying the motion to compel 

arbitration.

Procedural Unconscionability

“[P]rocedural unconscionability requires oppression or surprise. ‘“‘Oppression 

occurs where a contract involves lack of negotiation and meaningful choice, surprise 

where the allegedly unconscionable provision is hidden within a prolix printed form.”’”’ 

(Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 

Cal.4th 223, 247.) By their nature, employment contracts are adhesive, especially when 

compared with consumer contracts. For example, it is far easier to walk away from an 

automobile dealership than a job. Our Supreme Court “has acknowledged that adhesion 

contracts in the employment context typically contain some measure of procedural 

unconscionability.” (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1470.)

Yeotis argues that the Agreement is a contract of adhesion. There was disputed 

evidence regarding her option to negotiate its terms or reject it without jeopardizing her 

employment. In signing the Agreement, Yeotis acknowledged: “[I] have carefully read 

this Agreement[,] understand its terms [and] have been given the opportunity to discuss 

[it] with [my] own legal counsel, to ask questions about its meaning and to negotiate its 

terms[.] I understand that by entering into this Agreement, [I am] knowingly and 

voluntarily waiving [my] respective rights to have any claim of dispute governed by this 

Agreement decided by a court or in a jury trial.” (Italics added.) Her declaration 
6

presents a contrary view, stressing her inability to review the Agreement within the time 

provided by Warner, with ongoing reminders to sign it. In her declaration, Yeotis also 

states that based on her conversations with fellow Warner employees, she believed she

risked losing her job if she did not sign the Agreement. The trial court found that Yeotis

had no ability to reject the agreement and still keep her job, which supports its conclusion 

that the Agreement is an adhesion contract. “However, the fact that an agreement is 

adhesive is not, alone, sufficient to render it unconscionable.” (Malone v. Superior Court

(2014) 226 Cal.App.4th 1551, 1561.)

In concluding the Agreement was procedurally unconscionable, the trial court 

relied on Warner’s failure to attach the JAMS rules to the Agreement.

5

 Standing alone, 

however, the failure to attach the arbitration rules to an agreement is of minor 

significance in analyzing procedural unconscionability. (Lane v. Francis Capital 

Management LLC (2014) 224 Cal.App.4th 676, 691-692 (Lane).) For example, in Lane,

the court concluded that the failure to attach the American Arbitration Association 

(AAA) rules did not render an agreement procedurally unconscionable where the rules 

were readily available on the internet, and the plaintiff had the means to access them. 

Similarly, in Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1466, 1472, the 

court concluded the failure to attach the AAA rules, standing alone, did not support a 

finding of procedural unconscionability where an employee had 25 days to consider an 

offer that included an arbitration agreement. In Zullo v. Superior Court (2011) 197

Cal.App.4th 477, 485-486, the court concluded that the failure to attach the AAA rules 

added “a bit to the procedural unconscionability” of the agreement. (See Tiri v. Lucky 

Chances, Inc. (2014) 226 Cal.App.4th 231, 246, fn. 9.)

Here, the failure to attach the JAMS rules to the Agreement was of minor 

significance. Yeotis received Morris’s e-mail transmitting the Agreement on a computer 

 

5 Yeotis argues that the failure to attach the rules added an unfair element of surprise 

because there are significant discrepancies between the JAMS rules and the Agreement as 

to “other issues, such as discovery.” We disagree. As we explain hereafter, in discussing 

substantive unconscionability, any such discrepancies lack significance.
7

that she used at Warner. That e-mail identified the JAMS rules and their Warner network 

file name. In her declaration, Yeotis states that she “never received the ‘JAMS’ rules,”

but does not state that she tried, or was unable, to access them on the Warner network. 

The JAMS rules are readily available on the internet. Any failure by Warner to attach 

them to the Agreement contributed a minimal degree to its procedural unconscionability. 

Substantive Unconscionability

“Substantive unconscionability focuses on the actual terms of the agreement and 

evaluates whether they create ‘“‘overly harsh’”’ or ‘“‘one-sided’”’ results.” (Roman v. 

Superior Court, supra, 172 Cal.App.4th at p. 1469.) Warner contends the Agreement is 

not substantively unconscionable. We conclude that, given the minimal degree of its 

procedural unconscionability, the degree of substantive unconscionability is not sufficient 

to render the Agreement unenforceable.

Costs

Warner argues that the trial court erred in finding that the costs provision of the 

Agreement is substantively unconscionable. We disagree.

“[W]hen an employer imposes mandatory arbitration as a condition of 

employment, the arbitration agreement or arbitration process cannot generally require the 

employee to bear any type of expense that the employee would not be required to bear if 

he or she were free to bring the action in court.” (Armendariz, supra, 24 Cal.4th at pp. 

110-111, italics in original.) This principle is necessary to “ensure that employees 

bringing [unwaivable statutory] claims will not be deterred by costs greater than the usual

costs incurred during litigation, costs that are essentially imposed on an employee by the 

employer.” (Id. at p. 111; Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal.App.4th 

708, 718-719.) “[B]ecause arbitrators, unlike judges, are paid by the parties, an equal 

division of costs between employer and employee has the potential in practice of being 

unreasonably one-sided or burdening an employee’s exercise of statutory rights.” (Sonic 

II, supra, 57 Cal.4th at pp. 1143-1144.)

The trial court found that the Agreement required Yeotis “to pay fees that she 

would not otherwise have to pay in a court of law.” The language of the Agreement, 
8

when read with the JAMS rules, arguably suggests that an employee may be required to 

pay half of all administrative and arbitrator fees, which may be $400 per day per party for 

the first three days of a hearing, and a lower rate thereafter.6 In essence, Warner argues 

that the costs provision is not unconscionable because as applied, the Agreement will not 

result in the imposition of administrative and arbitration costs upon Yeotis. In so 

arguing, Warner stresses that the Agreement only requires the employee to pay for half of 

such costs “to the extent it is required to do so by California law,” and that California law 

requires the employer to pay such fees and costs. (Italics added.) Warner’s argument is 

not persuasive. “[T]he risk that a claimant may bear substantial costs of arbitration, not 

just the actual imposition of those costs, may discourage an employee from exercising the 

right to pursue any remedy against the employer.” (Carlson, supra, 239 Cal.App.4th at 

pp. 636-637, italics added.) An employee cannot reasonably be expected to know the 

extent to which California law requires an employer to bear the costs of arbitration. 

Consequently, the costs provision produces an unacceptable chilling effect on the 

exercise of an employee’s right to pursue a remedy. (Ibid.) We will direct the trial court 

to sever the costs provision from the Agreement.

Mutuality

Yeotis contends that the Agreement is substantively unconscionable because it 

lacks mutuality in exempting certain claims which favor employers from arbitration. We 

conclude that any lack of mutuality is limited.

“‘An arbitration agreement 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 occurrences . . . .” [Citation.]’ [¶] ‘Courts have found one-sided 

 

6

The costs provision follows: “The Company will pay the administrative costs and 

arbitrator’s fees associated with the arbitration to the extent it is required to do so by 

California law. Where not so required, however, the Company and I will share equally 

the expense of the administrative costs and arbitrator’s fees associated with the 

arbitration.” The Agreement states that arbitrations shall be conducted pursuant to the 

JAMS rules, which are identified in the Morris e-mail as the 2009 JAMS rules. Under 

those rules, each party may be required to pay $400 per day for the first three days of a 

hearing, and a lower rate thereafter.
9

employer-imposed arbitration provisions unconscionable where they provide that 

employee claims will be arbitrated, but the employer retains the right to file a lawsuit in 

court for claims it initiates, or where the types of claims likely to be brought by 

employees (wrongful termination, discrimination etc.) are the only ones made subject to 

arbitration. [Citation.]’” (Carlson, supra, 239 Cal.App.4th at p. 634.)

In arguing that the Agreement lacks mutuality, Yeotis refers to the following 

provision which exempts certain claims and proceedings from mandatory arbitration: 

“Notwithstanding the foregoing, however, the Company and I understand that this 

Agreement: (1) does not prohibit me from filing complaints with government agencies, . 

. . or administrative charges with the Equal Employment Opportunity Commission, the 

Department of Fair Employment and Housing . . . ; (2) does not apply to claims arising 

out of any benefit plan provided by the Company through a third-party contractual 

arrangement (such as medical benefits, life insurance, etc.); (3) does not prohibit court 

proceedings to obtain injunctive or other provisional relief as permitted by applicable 

law, such as proceedings to obtain public injunctive relief pursuant to the Labor Code or 

the Unfair Business Practices Act or injunctive proceedings to prevent disclosure of trade 

secrets or other confidential information or to interpret or enforce the Confidentiality 

and Non-Solicitation Agreement I have signed in connection with my employment; and 

(4) applies only to judicially cognizable claims (e.g., claims that could have been filed in 

a court of law) and not to resolution of internal Company or other disputes that could not 

otherwise be filed and maintained in a court of law.” (Italics added.) (We hereafter refer 

to this provision as the “exemption clause.”)

Provisions which permit judicial proceedings for injunctive relief (and 

thus exempt them from mandatory arbitration) are often deemed to favor employers, even 

where the exemption applies to employees as well as the employer. (Trivedi v. Curexo 

Technology Corp. (2010) 189 Cal.App.4th 387, 397 [“it is far more likely that employers 

will invoke the court’s equitable jurisdiction in order to stop employee competition or to 

protect intellectual property”]; Carlson, supra, 239 Cal.App.4th at p. 634.) In this case, 

however, to the extent that the exemption clause favors Warner, it is not overly one-
10

sided. Warner, the drafter of the exemption clause, clearly states that it applies only to 

requests for injunctive or other provisionary relief. Further, Warner admits that it must 

arbitrate claims based upon unfair competition and trade secret violations against former 

employees, and submit requests for enforcement of confidentiality and nonsolicitation 

agreements to an arbitrator. The exemption clause contributes a minimal degree to the 

substantive unconscionability of the Agreement, and we will direct the trial court to sever 

it from the Agreement.

Award

Warner argues that the trial court erred by finding that the Agreement was 

substantively unconscionable because it did not provide for “all types of relief that would 

otherwise be available in court” or specify “what types of awards may be had,” and it was 

“silent as to the award that may be had under arbitration.” We agree. The Agreement 

authorizes the arbitrator to award “all damages or other relief provided by California 

law.” It requires a written decision or award, which states “the basis for the decision with 

sufficient specificity to allow meaningful, limited judicial review as may be permitted by 

law, and shall be final and binding.”

Arbitrator Selection and Discovery Procedures

The trial court’s ruling did not cite any deficiency in the arbitrator selection 

provisions, or the discovery provisions, of the Agreement. Yeotis nonetheless argues that 

those provisions are substantively unconscionable. We disagree.

Citing Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 178 (Mercuro), 

Yeotis argues the Agreement fails to provide for a truly neutral arbitrator. In Mercuro, 

the parties were limited to a pool of only eight individuals. Here, however, the arbitrator 

selection procedures in the Agreement and the JAMS rules are not restrictive or 

unreasonably limited. Absent a different agreement by the parties for arbitrator selection, 

JAMS rule 15 provides a strike and ranking process from a list of five potential 

arbitrators selected by JAMS. The parties, however, “may agree on any procedures not

specified” in the JAMS rules that are “consistent with the applicable law.” (JAMS rule 

2.) The arbitrator must be a retired judge or a lawyer experienced in employment law 
11

and licensed to practice in California. The rules do not prohibit the parties agreeing upon 

a non-JAMS arbitrator.

Yeotis also claims the Agreement’s discovery provisions are unconscionable 

because they place her at a “significant disadvantage.” She rests this claim on her 

perception that the JAMS rules conflict with the Agreement in limiting each party to one 

deposition, unless the arbitrator approves additional depositions. The record belies her 

claim. The Agreement states: “The parties shall be entitled to conduct discovery as 

though the proceeding had been brought in a court of law.” JAMS rule 2 provides that 

the parties “may agree on any procedures not specified herein or in lieu of these Rules 

and JAMS policies” and the party-agreed procedures “shall be enforceable as if contained 

in these Rules.” Because the procedures in the Agreement govern, and both parties have 

the right to conduct discovery as they would in a court proceeding, any discrepancies 

concerning discovery between the JAMS rules and the Agreement are insignificant.

Evidentiary Claims

Warner argues, as it did in the trial court, that certain statements in Yeotis’s 

declaration are inadmissible because they are lacking in foundation. (Evid. Code, §§ 400, 

403, subd. (a)(2).) We disagree. We review the trial court’s rulings on the admissibility 

of evidence for abuse of discretion. (Pannu v. Land Rover North America, Inc. (2011) 

191 Cal.App.4th 1298, 1317.) We find none here. We will not further discuss the 

evidentiary claims, however, because we reverse the order denying the motion to compel 

arbitration, for reasons explained above.

Severance

Section 1670.5, subdivision (a) permits a court to refuse to enforce an 

unconscionable agreement, or sever an unconscionable clause in order to make the 

remainder of the agreement enforceable. (Armendariz, supra, 24 Cal.4th at pp. 121-122.) 

A court should refuse to enforce an agreement only when it is permeated by 

unconscionability. (Id. at p. 124.) “In keeping with California’s strong public policy in 

favor of arbitration, any doubts regarding the validity of an arbitration agreement are 
12

resolved in favor of arbitration. [Citations.]” (Samaniego, supra, 205 Cal.App.4th at p. 

1144.)

The Agreement is procedurally unconscionable to a minimum degree, and 

substantively unconscionable to a moderate degree. It is not, however, permeated by 

unconscionability. The Agreement entitles the parties to conduct discovery as though the 

proceeding had been brought in a court of law and authorizes the arbitrator to award all 

damages or other relief provided by California law in a written decision, which must 

“state the basis for the decision with sufficient specificity to allow meaningful, limited 

judicial review as may be permitted by law.” The presence of deficient provisions in the 

Agreement does not “‘“indicate a systematic effort to impose arbitration on an employee 

not simply as an alternative to litigation, but as an inferior forum that works to the 

employer’s advantage.” [Citation.]’” (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 

975, 986.) Because the Agreement is not permeated by unconscionability, the trial court 

should have severed its unconscionable provisions and enforced the Agreement as 

modified. Thus, we will reverse the order denying the motion to compel arbitration.

DISPOSITION

The judgment (order denying motion to compel arbitration) is reversed. We direct 

the trial court to sever the exemption clause and the costs provision from the Agreement

and grant the motion to compel arbitration pursuant to the modified Agreement. 

Warner is awarded its costs on appeal.

NOT TO BE PUBLISHED.

PERREN, J.

We concur:

GILBERT, P. J.

YEGAN, J.
13

Rebecca S. Riley, Judge

Superior Court of Ventura County

______________________________

Jackson Lewis, Ann Haley Fromholz, Sherry L. Swieca and Andranik Tsarukyan 

for Defendants and Appellants.

Weidman & Yun, Weidman & Farrar, Mark Weidman and Kim Farrar for Plaintiff 

and Respondent.