Filed 8/3/15



## IN THE SUPREME COURT OF CALIFORNIA

GIL SANCHEZ , ) ) Plaintiff and Respondent, ) ) S 199119
v. ) ) Ct.App. 2/1 B228027 VALENCIA HOLDING COMPANY, LLC, ) ) Los Angeles County Defendant and Appellant. ) Super. Ct. No. BC433634

________________________________ ____ )

T he automobile sales contract in the present case ha s an arbitration agreement that provide s , among ot her things, that arbi tral awards of $0 or over $100,000 as well as grants but not denials of injunctive relief may be appealed to a panel of arbitrators

. The arbitration agreement also has provision s that require the party appealing the award to front the costs of the appeal , preserve the right of the parties to go t o small claims court and to pursue self

- help remedies , and waive the right to class action l itigation or arbitration. The agreement further provides that if the class waiver is deemed unenforceable, then the entire arbitration agreement
shall be unenforceable. In this disp ute over the sale of a car, plaintiff Gil Sanchez filed a class
action law suit against defendant Valencia Holding Company (Valencia) , and
Valencia moved to compel arbitration. The trial court denied the motion, finding the class waiver and, in turn, the entire arbitration agreement unenforceable. Subsequently, the United State s Supreme Court held in AT&T Mobility LLC v.2

Concepcion (2011) 563 U.S. __ [ 131 S.Ct. 1740] ( Concepcion ) that the Federal Arbitration Act (FAA) preempts California‘s unconscionability rule prohibiting class waivers in consumer arbitration agreements. In d eciding Valencia‘s appeal from the trial court‘s denial of the motion to compel arbitration, t he Court of Appeal declined to address whether the class waiver was enforceable and instead
held that the arbitration appeal provision and the arbitration agreeme nt as a whole

were unconscionably one

- sided. Valencia sought our review, relying on Concepcion

. While c ircumscr ibing the ability of states to regulate the fairness of arbitration agreements , Concepcion reaffirmed that the FAA does not preempt

―  ̳ generally applicable contract defenses, such as fraud, duress, or unconscionability

. ‘ ‖ ( Concepcion , supra , 563 U.S. at p. __ [131 S.Ct. at
p. 1746].) Under the FAA, these d efenses may provide grounds for invalidating an arbitration agreement if they are enforced evenhandedly and do not ―interfere[] with fundamental attributes of arbitration.‖ ( Concepcion , at p. __ [131 S.Ct. at
p. 1748] ; see Sonic

- Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1143

– 1145 ( we will use common name, Sonic II ).) In the present case, we hold that Concepcion requires enforcement of the class waiver but does not limit the unconscionability rule s applicable to other provisions of the arbitration agreement. Applying those rules, we agree with Valen cia that the Court of Appeal erred as a matter of state law in finding the agreement unconscionable

. A ccordingly , we

reverse the judgment below

. I.
Plaintiff Gil Sanchez filed this class action in March 2010. Two months later, Sanchez filed a first amended complaint. The complaint arises from
Sanchez ‘ s purchase of a 2006 ― preowned ‖ Mercedes

- Benz S500V in 2008 for $53,498.60. Sanchez a lleged that Valencia violated the Consumer Legal3

R emedies Act (CLRA) ( Civ. Code, §§ 1750

– 1784) by making false representations about the condition of the au tomobile . Sanchez also alleged that
Valencia violated several other California laws by (1) failing to separately itemize the amount of the down payment that is deferred to a date after the execution of
the s ale c ontract, (2) failing to distinguish registr ation, transfer, and titling fees
from license fees , (3) charging the o ptional D epartment of M otor V ehicles

e lectronic f

iling f ee without discussing it or asking if he wanted to pay it, (4) charging ne w tire fees for used tires, and (5) r e quir ing him to pa y $3,700 to have the vehicle certified so he could qualify for the 4.99 percent interest rate , when that payment was actually for an optional extended warranty unrelated to the
interest rate. Sanchez alleged violations of the Automobile Sales Finance Act (Civ. Code, §§ 2981

– 2984.6), the unfair competition law (UCL) (Bus. & Prof. Code, §§ 17200

– 17210), the Song

- Beverly Consumer Warranty Act (Civ. Code, §§ 1790

– 1795.8), and Publ ic Resources Code section 42885

. The complaint further alleged that a class actio n was appropriate based on the large number of putative class members who have suffered similar violations , the predominance of common questions of law and fact, the typicality of the claims, and the superiority and benefits of class litigation. He propos ed f our distinct classes based on the different types of violations Valencia allegedly
committed

. Valencia filed a motion to compel arbitration pursuant to an arbitration
clause in the s ale c ontract that authorized either party to have any dispute between the parties decided by arbitration . The arbitration clause had a class action waiver:

― If a dispute is arbitrated, you will give up your right to participate as a class representative or class member on any class claim you may have against us including a ny right to class arbitration or any consolidation of individual
arbitrations. ‖4

The ar bitration claus e further provided: ― Arbitrators shall be attorneys or retired judges and shall be selected pursuant to the applicable rules. The arbitrator shall apply governing substantive law in making an award. The arbitration hearing shall be conducted in the federal district in which you reside

. . . . We will advance your filing, administration, service or case management fee and your arbitrator or hearing fee al l up to a maximum of $2500, which may be reimbursed by decision of the arbitrator at the arbitrator ‘ s discretion. Each party shall be responsible for its own attorney, expert and other fees, unless awarded by the

ar bitrator under applicable law

. . . . A r bitrator ‘ s award shall be final and binding on all parties, except that in the event the arbitrator ‘ s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief against a party, that party may request a n ew arbitration under the rules of the arbitration organization by a three

- arbitrator panel. The appealing party requesting new arbitration shall be responsible for the filing fee and other arbitration costs subject to a final determination by the arbitrat ors of a fair apportionment of costs. Any arbitration under this Arbitration Clause shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and not by any state law concerning arbitration.

― You and we retain any rights to self

- help remedie s, such as repossession. You and we retain the right to seek remedies in small claims court for disputes or
claims within that court ‘ s jurisdiction, unless such action is transferred, removed or appealed to a different court. Neither you nor we waive the right to arbitrate by using self

- help remedies or filing suit. Any court having jurisdiction may enter judgment on the arbitrator ‘ s award. This Arbitration Clause shall survive any termination, payoff or transfer of this contract. If any part of this A rbitration Clause, other than waivers of class action rights, is deemed or found to be unenforceable for any reason, the remainder shall remain enforceable. If a waiver5

of class action rights is deemed or found to be unenforceable for any reason in a

case in which class action allegations have been made, the remainder of this
Arbitration Clause shall b e unenforceable. ‖ As the Court of Appeal summarized: ― The Sale Contract is a preprinted document consisting of one page , 8 1/2 inches wide and 26 inches l ong. There are provisions on both sides that occupy the entire document, leaving little in the way of margins. Sanchez signed or initialed the front in eight places, each related to a different provision. No signatures, initials, or other handwriting ap pears on the
back

. The arbitration provision, entitled  ̳ ARBITRATION CLAUSE , ‘ is on the
back at the bottom of the page, outlined by a black box. It is the last provision of the Sale Contract concerning the purchase transaction; a provision related to the assignment of the contract appears below it. The buyer ‘ s final signature appears
near the bottom on the front side

. ‖ In opposing arbitration , Sanchez submitted a declaration that said : ― When I signed the documents related to my purchase of the Subject Ve hicle, I was presented with a stack of documents, and was simply told by the Dealership ‘ s employee where to sign and/or initial each one. All of the documents (including the purchase contracts) were pre

- printed form documents. When I signed the
documents , I was not given an opportunity to read any of the documents, nor was I given an opportunity to negotiate any of the pre

- printed terms. The documents were presented to me on a take

- it

- or

- leave

- it basis, to either sign them or not buy
the car

. . . . Ther e was no question of choice on my part or of my being able to

 ̳ negotiate ‘ anything. And I had no reason to suspect that hidden on the back of
the contracts

. . . was a section that prohibited me from being able to sue the Dealership in court if I had a pr oblem.

―

. . . When I signed the purchase contract and related documents, the Dealership did not ask me if I was willing to arbitrate any disputes with it, did not6

tell me that there was an  ̳ arbitration clause ‘ on the back side of the purchase contract, and I did not see any such clause before I signed the documents. The Dealership did not explain to me what an arbitration clause was. I was not given any opportunity at any time during my transaction with [the] Dealership to negotiate whether or not I would agree to arbitrate any potential disputes. I was not given an option whether to sign a contract with an arbitration clause or one
without. ‖ The trial court denied the motion to compel arbitration . It hel d the class
waiver unenforceable on the ground th at the CLRA expr essly provides for class action litig a tion and declares the right to a class action to be unwai vable. (See Civ. Code, §§ 1751, 1781 .) Because the arbitration clause provided that ― [i]f a waiver of class action rights is deemed or found to be unenforceable for any reason in a case in which class action allegations have been made, the remainder
of this Arbitration Clause shall be unenforceable , ‖ the court denied the motion to compel arbitration.
After the trial court‘s decision but before th e Court of Appeal‘s opinion in
this case was filed, the United States Supreme Court in Concepcion , supra , 563 U.S. __ [ 131 S.Ct. 1740] held that the FAA requires enforcement of class waivers in consumer arbitration agreements and preempts state law to the contrary

. The Court of Appeal declined to decide whether the class waiver at issue was enforceable and instead affirmed the trial court‘s decision on different ground s. First, the court concluded that the agreement contained elements of procedural

uncons cionability, both oppression and surprise. Second, the court held that four provisions made the agreement unfairly one

- sided in favor of Valencia. ― First, a party who loses before the single arbitrator may appeal to a panel of three
arbitrators if the aw ard exceeds $100,000. Second, an appeal is permitted if the award includes injunctive relief. Third, the appealing party must pay, in advance,7

 ̳ the filing fee and other arbitration costs subject to a final determination by the arbitrators of a fair appor tionment of costs. ‘ Fourth, the provision exempts repossession from arbitration while requiring that a request for injunctive relief be submitted to arbitration. Although these provisions may appear neutral on their face, they have the effect of placing an unduly oppressive burden on the buyer. ‖ We granted review.
II.
To aid understand ing of the issues in this case, we begin by discussing general principles of unconscionability. ―  ̳ One common formulation of
unconscion ability is that it refers to ―  ̳ an a bsence of meaningful choice on the part of one of the parties together with contract terms which are unreasonabl y favorable to the other party. ‘ ‖ [Citation.] As that formulation implicitly recognizes, the doctrine of unconscionability has both a procedu ral and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overl y harsh or one

- sided results. ‘ ‖ ( Sonic II , supra , 57 Cal.4th at p. 1133.)

―  ̳ The prevailing view is that [procedural and subs tantive unconscionability] must both be present in order for a court to exercise its
discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. ‘ [Citation.] But they need not be present in the same degree.

 ̳ Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. ‘ [Citations.] In othe r words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa. ‖ ( Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 1148

( Armendariz ) .) Courts may find a contract as a whole ―or any clause of the
contrat‖ to be unconscionable. (Civ. Code, § 1670.5, subd. (a).)
As we stated in Sonic II : ― The u nconscionability doctrine ensures that contracts, part icularly 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, 9 25 ( Perdue )),  ̳ ―so one

- sided as to  ̳ shock the conscience‘ ‖ ‘ ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55 Cal.4th 223, 246 ( Pinnacle )), or  ̳unfairly one

- sided‘ ( Little [ v. Auto Stiegler, Inc. ( 2003 ) ] 29 Cal.4th [1064], 1071). Al l of these formulations point to the central idea that unconscionability doctrine is concerned not with  ̳a simple
old

- fashioned bad bargain‘ ( Schnuerle v. Insight Communications Co. (Ky. 2012) 376 S.W.3d 561, 575 ( Schnuerle )), but with terms that are  ̳unre asonably favorable to the more powerful party‘ (8 Williston on Contracts (4th ed. 2010) § 18.10,
p. 91). These include  ̳terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine

- print terms, or provisions that seek to negate the reasonable expectations of the nondrafting party, or
unreasonabl y and unexpectedly harsh terms having to do with price or other central aspects of the transaction.‘ ( Ibid. )‖ ( Sonic II , supra , 57 Cal.4th at
p. 1145.) Because unconscionability is a contract defense, the party asserting the
defense bears the burden of proof. ( Id. at p

. 1148.)
We further observed in Sonic II , and reaffirm today, that ―an examination of the case law does not indicate that  ̳shock the conscience‘ is a different standard in practice than other formulations or that it is the one true, author itative standard for substantive unconscionability, exclusive of all others.‖ ( Sonic II , supra , 579

Cal.4th at p. 1159.) Nor do we see any conceptual difference among these
formulations. Rather, ―courts, including ours, have used various nonexclusive
for mulations to capture the notion that unconscionability requires a substantial degree of unfairness beyond ‘a simple old

- fashioned bad bargain.’ ‖ ( Id. at
p. 1160, italics added.) This latter q ualification is important. Commerce depends
on the enforceabi lity, in most instances, of a duly executed written contract. A party cannot avoid a contractual obligation merely by complaining that the deal, in retrospect, was unfair or a bad bargain. N ot all one

- sided contract provisions are unconscionable ; hence t he various intensifiers in our formulations: ― overly harsh,‖ ― unduly oppressive,‖ ― unreasonably favorable.‖ (See Pinnacle , supra , 55 Cal.4th at p. 246 [―A contract term is not substantively unconscionable when it merely gives one side a greater benefit

. . . . ‖].) We clarify today that these formulations, used throughout our case law, all mean the same thing. An evaluation of unconscionability is highly dependent on context. (See
Williams v. Walker

- Thomas Furniture Co. (D.C. Cir. 1965) 350 F.2d 445, 450 [―The test is not simple, nor can it be mechanically applied.‖].) The doctrine often requires inquiry into the ―commercial setting, purpose , and effect‖ of the contract or contract provision. ( Civ. Code, § 1670.5, subd. (b); accord, Sonic II , supra , 57 Cal.4th at pp. 1147

– 1148 ; Walker

- Thomas Furniture , at p. 450 [unconscionability must ―be considered  ̳in the light of the general commercial background and the commercial needs of the particular trade or case‘ ‖] .) As we have recognized , ―  ̳ a
contract can provide a ― margin of safety ‖ that provides the party with superior bargaining strength a type of extra protection for which it has a legitimate
commercial need without be ing unconscionable. ‘ ‖ ( Armendariz , supra , 24 Cal.4th at p. 117; see Walker

- Thomas Fu rniture , at p. 450 [ ―where no meaningful choice was exercised upon entering the contract,‖ the test is ―whether the terms are  ̳so extreme as to appear unconscionable according to the mores and business10

practices of the time and place‘ ‖ ].) And , as noted, the substantive unfairness of
the terms must be considered in light of any procedural unconscionability

. 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 sho uld withhold
enforcement.
Moreover , o ur unconscionability standard is, as it must be, the same for arbitration and nonarbitration agreements. ( Concepcion , supra , 563 U.S. at p.

__ [131 S.Ct. at p. 1747].) Of course , unconscionability can manifest itself in different ways, depending on the contract term at issue. (See, e.g., Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 916

– 917 [choice of law clause]); City of Santa Barbara v. Superior Court (2007) 41 Cal.4th 747, 777 [waivers of liabili ty provision]); Moreno v. Sanchez (2003) 106 Cal.App.4th 1415, 1434 [statutes of limitation provision]; Smith, Valentino & Smith, Inc. v. Superior
Court (1976) 17 Cal.3d 491, 495

– 496 [forum selection clause].) But the application of unconscionability doct rine to an arbitration clause must proceed from general principles that apply to any contract clause. In particular, the standard for substantive unconscionability

— the requisite degree of unfairness beyond merely a bad bargain

— must be as rigorous and demanding for arbitration clauses as for any contract clause.
Valencia broadly contends that under Concepcion , ―absent exceptional circumstances, states

–– either judicially or legislatively

–– may not, under the guise of unconscionability, judge the suppo sed fairness of the parties‘ agreed
arbitration process .‖ In support of that assertion, Valencia cites ―the examples of
arbitration

- process unconscionability evaluations (ranging from discovery to evidentiary requireme nts) that the FAA precludes.‖ ( See C oncepcion , supra , 563
U.S. a t p. __ [131 S.Ct. at p. 1747].)11

We recently considered the effect of Concepcion on state law unconscionability doctrine and observed that ―after Concepcion , unconscionability remains a valid defense to a petition to compel arbi tration.‖ ( Sonic II , supra , 57 Cal.4th at p. 1142, citing Concepcion , supra , 563 U.S. at p. __ [131 S.Ct. at
p. 1746].) ―What is new,‖ we said, ―is that Concepcion clarifies the limits the FAA places on state unconscionability rules as they pertain to ar bitration agreements. It is well established that such rules must not facially discriminate against arbitration and must be enforced evenhandedly. Concepcion goes further to make clear that such rules, even when facially nondiscriminatory, must not
disfa vor arbitration as applied by imposing procedural requirements that

 ̳ interfere[] with fundamental attributes of arbitration, ‘ especially its  ̳ ―lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes. ‖ [Citation.] ‘ ( Concepcion , supra , 563 U.S. at pp. __, __ [131 S.Ct.at pp. 1748, 1751].) ‖ ( Sonic II , at p. 1143.) We proceeded to give examples of ―state law rules that do not  ̳interfere[] with fundamental attributes of arbitration‘ ‖ and thus ―do not implicate Concepcion ‘s limits on state unconscionability rules.‖ ( Sonic II , supra , 57 Cal.4th at p. 1143.) ―In Little , for example, we found unconscionable a $50,000 threshold for an arbitration appeal that decidedly favored defendants in employm ent contract disputes. ( Little [ v. Auto Stiegler, Inc. ] , supra , 29 Cal.4th at pp. 1071

– 1074.)‖ ( Id

. at p. 1144 .) As our reference to Little suggests, Concepcion does not immunize
adhesive arbitration processes from state law unconscionability principles as broadly as Valencia contends.
Justice Chin says allowing multiple formulations to capture the notion of substantive unconscionability will undermine predictability and will subject arbitration and nonarbitration provisions of a contract to different st andards. (Conc. & dis. opn., post , at pp. 14

– 15.) But we have just made clear that all the12

formulations ―mean the same thing‖ and ―must be as rigorous and demanding for arbitration clauses as for any contract clause.‖ ( Ante , at pp. 9, 10.) It seems t he main reason Justice Chin favors ―shock the conscience‖ as the sole formulation is
that he believes it is a higher standard than the alternatives. (Conc. & dis. opn.,
post , at p. 14.) A dopt ing his approach , however, would call into question a
number of c ases where we have found substantive unconscionability under other formulations. (See, e.g., Little , supra , 29 Cal.4th at p. 1074 [―unfairly one

sided‖]; Armendariz , supra , 24 Cal.4th at p. 114 [―  ̳ ―overly harsh‖ ‘ or  ̳ ―one

sided‖ ‘ ‖]; Graham v. Scisso r
- Tail, Inc. (1981) 28 Cal.3d 807, 820 ( Scissor

- Tail ) [―unduly oppressive‖].) We see no reason to disturb our precedents, and we reject
the view that ―shock the conscience‖ is a higher standard.
We turn now to Valencia ‘s alternative argument that the arbi tration agreement in this case was not unconscionable under state law

. III. Valencia does not dispute that the contract was adhesive; at oral argument, Valencia said the contract ―meets the definition of adhesive in California.‖ Instead, Valencia argues t hat ―adhesion contracts are not per se procedurally unconscionable,‖ noting that the car was a luxury item and that Sanchez was able to negotiate the price. Although Valencia says Sanchez has not shown he was unable to negotiate the arbitration provision (conc. & dis. opn., ante , at p. 12), Valencia does not contend in this court that Sanchez could have opted out of the arbitration agreement or that he could have negotiated a sales contract without an arbitration agreement. Indeed, Valencia acknowledged a t oral argument that ―[m]any people who are not legally trained do not understand the vast majority of what is in this contract‖ and that ―if you asked that dealer about everything other than the negotiable terms of price and interest, they probably don‘t understand that
either .

. . .‖ Moreover, in the context of consumer contracts , we have never13

required, as a prerequisite to finding procedural unconscionability, that the complaining party show it tried to negotiate standardized contract provisions. (Se e, e.g., Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 160, disapproved of on other grounds in Concepcion , supra , 563 U.S. __ [ 131 S.Ct. 1740] [cardholder agreement in ―bill stuffer‖ had an element of procedural unconscionability]; Perdue v. Crock er National Bank (1985) 38 Cal.3d 913, 924

– 925 [signature card ―offered to the customer without negotiation is a classic example of the contract of adhesion‖].) And although Valencia argues that 90 percent of the standardized contract was mandated by stat ute, it does not contend that the arbitration agreement was so mandated.
A s in many consumer transactions involving standard form contracts, Sanchez apparently did not read the entirety of his contract, including the arbitration clause. (See Consumer Fina ncial Protection Bur

. , Arbitration Study: Rep

. to Congress Pursuant to the Dodd

- Frank Act (Mar

. 2015) § 3, p. 19 [fewer than 7 percent of credit card consumers subject to predispute arbitration clauses
knew that they could not sue in court] ; cf. Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710

– 711 [applying ― the general rule that one who assents to a contract is bound by its provisions and cannot complain of unfamiliarity with [ its ] language ‖ to a nonadhesive health care contract negotiated by the Board of Administration of the State Employees Retirement System on the plaintiff ‘s
behalf ].) On the other hand, Valencia was under no obligation to highlight the
arbitration clause of its contract , n or was it required to specifically call that cla use to Sanchez‘s attention . A ny state law imposing such an obligation would be preempted by the FAA. (See Doctor ’ s Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 684, 687

– 688 [holding state statute requiring arbitration clause to be in underlined cap ital letters on the first page of a contract is preempted] ; but cf.14

Concepcion , supra , 563 U.S. at pp. __, fn. 6 [131 S.Ct. at p. 1750, fn. 6] [― States remain free to take steps addressing the concerns that attend contracts of
adhesion

— for example, requiri ng class

- action

- waiver provisions in adhesive arbitration agreements to be highlighted

. ‖]

. ) Furthermore, we have held that even
whe n a customer is assured it is not necessary to read a standard form contract with an arbitration clause, ―it is generally un reasonable, in reliance on such assurances, to neglect to read a written contract before signing it.‖ ( Rosenthal v. Great Western Fin. Securities Corp. ( 1996 ) 14 Cal.4th 394, 424 .)
Here t he adhesive nature of the contract is sufficient to establish some
d egree of procedural unconscionability . Yet ― a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one

- sided.‖ ( Gentry , supra , 42 Cal.4th at p. 469.) We
now address each of Sanchez‘s claims of substantive unconscionability.
A.
T he arbitration agreement in this case provides that an a rbitrator‘s award

― shall be final and binding on all parties, exc ept that in the event the arbitrator‘s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief against a party, that party may request a new arbitration under the rules of the arbitration organizatio n by a three

- arbitrator panel.‖ Valencia challenges the Court of Appeal‘s holding that this provision was unreasonably one

- sided and unenforceable.
In Little , we unanimously found unconscionable a n employment contract provision that permitted an appeal to a second arbitrator only if the arbitral award was greater than $50,000

. ( Little v. Auto Stiegler, Inc. , supra , 29 Cal.4th at
p. 107 3 ( Little ) ; id. at p. 1085 (conc. & dis. opn. of Baxter, J.); id. at p. 1089 (conc. & dis. opn. of Brown, J.).) In so concl uding , we discussed with approval two15

pertinent Court of Appeal cases. In Beynon v. Garden Grove Medical Group (1980) 100 Cal.App.3d 698 , 706 ( Beynon ), the court found unconscionable a provision of a mandatory arbitration agreement between a medical gro up and a patient that authorized the medical group, but not the patient, to reject the first arbitration award and submit the dispute to a second arbitration panel. In Saika v.
Gold (1996) 49 Cal.App.4th 1074 ( Saika ), the court found unconscionable a provis ion in a doctor

- patient agreement that allowed a party to request a trial de

n ovo in superior court when the award was over $25,000. ― The [ Saika ] court rejected the doctor ‘ s argument that the case was distinguishable from Beynon because the challenged arb itration provision permitted either party to request a trial de novo if the award exceeded the stated amount.  ̳ [I]n the vernacular of late 20th century America, let us ― get real. ‖ As a practical matter, the benefit which
the trial de novo clause confers on patients is nothing more than a chimera. The
odds that an award will both (a) clear the $25,000 threshold but (b) still be so low
that the patient would wa nt to have a trial de novo are so small as to be negligible.
Unless we are to assume that arbitr ators in medical malpractice cases regularly and capriciously make awards substantially below what justice requires

–– and that is an assumption which we will not indulge

–– the cases where the trial de novo clause could possibly benefit the patient are go ing to be rare indeed. ‘ ‖ ( Little , at
p p

. 1072

– 1073 , quoting Saika , at p. 1080.)
T he employer in Little attempt ed to distinguish these cases on the ground
that ― an arbitration appeal is less objectionable than a second arbitration , as in Benyon , or a tria l de novo , as in Saika , because it is not permitting a wholly new proceeding, making the first arbitration illusory, but only permitting limited appellate review of the arbitral award. ‖ ( Little , supra , 29 Cal.4th at pp. 1073

– 1074.) Rejecting this argumen t, we said: ― We fail to perceive a significant16

difference. Each of these provisions is geared toward giving the arbitral defendant a substantial opportunity to overturn a sizable arbitration award. ‖ ( Id. at p. 1074.)
Valencia argues that the present agr eement is distinguishable from Little in three respects. First, it provides that a party who is awarded nothing may appeal

. Second, the upper threshold for an appeal is $100,000 instead of $5 0,000

. Third,
this is a n auto sales agreement , not an employme nt contract

. According to
Valencia , because the purc hase price of an automobile averages around $30,000, the vast majority of awards are below $100,000 , in contrast to typically greater awards in employment cases

. (See, e.g., Roitz v. Coldwell Banker Res idential
Brothers (1998) 62 Cal.App.4th 716, 721 , 726 [upholding a $260,000 arbitral award for wrongful termination].) Thus , Valencia contends, both an award of $0
and an award greater than $100,000 are outliers in disputes between automobile buyers and s ellers , so the appeal thresholds are not significantly more beneficial to the seller, who is likely to be the defendant , than to the buyer, who is likely to be the plaintiff

. We agree with Valencia that the appeal threshold provision does not , on its face, obviously favor the drafting party

. Assuming, as the parties do, the likely scenario of the buyer as plaintiff and the seller as defendant, t he unavailability of an appeal from an award that is greater than $0 but not greater than $100,000
means that the buyer may not appeal from a non

- $0 award that he or she bel ieves to be too small, nor may the seller appeal from a quite substantial award (up to $100,000) that it believes to be t oo big. It may be reasonabl e to assume that the ability to appeal a $0 awa rd will favor the buyer, while the ability to appeal a $100,000 or greater award will favor the seller . B ut nothing in the record indicates that the latter provision is substantially more likely to be invoked than the former.
W e cannot say that the risks imposed on the parties ar e one

- sided , much less unreasonably so

.17

As to the contract term providing that only arbitral grants of injunctive relief are subject to a second arbitration , Valencia notes that car sellers sometimes must seek an injunction in ord er to repossess a car from the buyer. But Valencia acknowledged at oral argument that overall the car buyer is more likely than the seller to seek injunctive relief. Nevertheless , we find significant Valencia ‘s

concern that the scope of an injunction can extend well beyond the transaction at issue and can compel a car sell er to change its business practices. Bec ause of the
broad impact that injunctive relief may have on the car selle r‘s business , the additional arbitral review when such relief is granted furnish es ―  ̳ a ― margin of safety ‖ that provides the party with superior bargaining strength a type of extra protection for which it has a legit imate commercial need

. ‘ ‖ ( Armendariz , supra , 24 Cal.4th at p. 117.) T he potentially far

- reaching nature of an injunctive relief remedy , which Sanchez does not dispute , is sufficiently apparent here to justify the extra protection of additional arbitral review. Of course, apart from the parties‘ particular interests, the public has a strong interest in ensuring th at fraudulent business practices are enjoined. I n Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066 , 1082

– 1084, and Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 316, we held that claims seeking injunctive relief designed to protect t he public by stopping ongoing practices unlawful under the CLRA and the UCL , respectively , were inarbitrable. Valencia argues that Broughton and Cruz are no longer good law in light of Concepcion

. (See Ferguson v. Corinthian Colleges, Inc. ( 9th C ir. 2013 ) 733 F.3d 928, 932

– 937 .) T he Court of Appeal below did not address whether Broughton or Cruz has been abrogated , and Sanchez takes no position on the issue in this appeal , focusing instead on the asymmetry of affording arbitral appeals to grants but not denials of injunctive relief

. We likewise do not address the continued viability of Broughton and Cruz in this case.18 B. The Court of Appeal also held that the provision concerning appellate arbitration filing fee s and costs contributed to the unconscionab ility of the arbitration agreement. As noted, the arbitration clause provides that Valencia will advance the car buyer ‘s filing, administration, service , and case management fees
and arbitrator or hearing fees ― up to a maximum of $2,500, which may be
reim bursed ‖ at the arbitrator ‘ s discretion. The cl a use also provi des that in case of

an appeal to a three

- arbitrator panel , the appealing party ― shall be responsible for the filing fee and other arbitration costs subject to a final determination by the
arbitr ators of a fair apportionment of costs. ‖ T he Court of Appeal held that this latter provision is inadequate for consumers ―  ̳ who cannot afford to initiate the [appe al] process in the first place ‘ ‖ given large arbitration costs. ― Items covered by an appea l payment made in advance include, a s stated in the Sale Contract,  ̳ the filing f ee and other arbitration costs. ‘ Arbitrator fees in Los Angeles average around $450 per hour. [Citation.] ) ‖ Contrasting this arbitral scheme with the
American Arbitration As sociation rules, which do not require consumer s to front arbitration fees, t he C ourt of Appeal concluded that ― [t] he requirement that the appealing party pay the filing fee and arbitration costs of both parties in advance puts an undu ly harsh burden on the buyer. ‖
I n the context of mandatory employment arbitration of unwaivable statutory rights , we have held that arbitration agreement s ― 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 .) I n the area of consumer arbitration, the Legislature has addressed costs in a different way. In 2002, shortly after Armendariz was decided , the Legislature ena cted Code of Civil Procedure section 1284.3 to addr ess fees an d
costs in consumer arbitration . Subdivision (a) of section 1284.3 provides that19

― [n]o neutral arbitrator or private arbitration company shall administer a consumer arbitration under any agreem ent or rule requiring that a consumer who is a party to the arbitration pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration, including, but not limited to, the fees and costs of the arbitrator, provider organization, attorney, or witnesses. ‖ Most pertinently, section 1284.3, s ubdivis ion (b)(1) provides that ― [a]ll fees and costs charged to or assessed upon a consumer party by a private arbitration company in a consumer arbitration, exclusive of arbitrato r fees, shall be waived for an indigent consumer. For the purposes of this section,  ̳ indigent consumer ‘ means a person having a gross monthly income that is less than 300 percent of the federal poverty guidelines. Nothing in this section shall affect the ability of a private arbitration company to shift fees that would otherwise be charged or assessed upon a
consumer par ty to a nonconsumer party. ‖ Sub division (b)(2) requires the arbitration provider to give notice of the fee waiver provision , and subdivi sion (b)(3) provides that ― [a]ny consumer requesting a waiver of fees or costs may establish his or her eligibility by making a declaration under oath on a form provided to the consumer by the private arbitration company for signature stating
his or her mo nthly income and the number of persons living in his or her household. No private arbitration company may require a consumer to provide any further statement or evidence of indigence. ‖ (Code Civ. Proc., § 1284.3 , subd. (b)(2) & (3).)
The l egislative hist ory shows that the statute ‘ s specific provisions were part of a general concern about the affordability of arbitration : ― One of the primary arguments advanced in support of mandatory consumer arbitration is that it is less costly than civil litigation. H owever, this argument is cast into significant doubt by the available evidence. In fact, arbitration costs are so high that many people drop their complaints because they can ‘ t afford to pursue them, a recent study by20

Public Citizen found. ‖ (Assem

. floor a nalysis , Assem. Bill No. 2915 (Reg. Sess.
2001

– 2002) as amended Aug. 26, 2002, at p. 2. ) The analysis observed that

― u nlike civil court, private arbitration is subject to no fee limitations. As a result, access to the system may be greatly affected by the wealth of the consumer. The author states that this bill addresses these inequities by prohibiting large private judging companies from conducting mandatory consumer arbitrations where a consumer who loses the case must pay the winning company ‘ s fees and costs. This bill also implements a fee waiver policy for indigent consumers akin to the long

- standing practice in public courts. This bill does not affect commercial
arbitrations between businesses. ‖ ( Ibid. )
As noted in Gutierrez v. Autowest, Inc. ( 2003) 114 Cal.App.4th 77 ( Gutierrez ) , on which the Court of Appeal below relied , the Legislature in enacting Code of Civil Procedure section 1284.3 ― did not adopt the Armendariz categorical approach and direct that all administrative fees be paid by

nonc onsumer parties without regard to the size of the costs or the w ealth of the

consumer

. . . . [T]he L egislature did adopt an ability

- to

- pay approach, which, though limited in this statute to indigents, provides direction for a rule applicable
to all consum ers faced with arbitral forum fees that are prohibitively high. In Armendariz the court signaled its deference to the Legislature in selecting a categorical rule. (

Armendariz , supra , 24 Cal.4th at pp. 112

– 113.) In this consumer case, that same deference leads us to adopt a case

- by

- case determination of affordability: plaintiffs suing under the [consumer protection] statutes may resist enforcement of an arbitration agreement that imposes unaffordable fees. ‖ ( Gutierrez , at pp. 97

– 98.)
We agree with Gutie rrez ‘ s approach. As Gutierrez said in distinguishing Armendariz ‘s categorical rule in the employment context , ―jobseekers are more likely to face  ̳particularly acute‘ economic pressure to sign an employment21

contract with a predi spute arbitration provision ,  ̳for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement.‘ ( Armendariz , supra , 24 Cal.4th at p. 115.) A family in search of a job conf ronts a very different set of burdens than one seeking a new vehicle. Consumers, who face significantly less economic pressure[,] would seem to require measurably less protection.‖ ( Gutierrez , supra , 114 Cal.App.4th at p. 97.) In enacting Code of Civil Procedure section 1284.3, the Legislature concluded that an ability

- to

- pay approach is appropriate in the context of consumer arbitration agreements

. Although the

statute specifically addresses the affordability of consumer arbitration for people
who are indigent , high arbitration fees can be unaffordable for nonindigent as well as indigent consumers, and nothing in the statute‘s text or legislative history preclude s courts from using unconscionability doctrine on a case

- by

- case basis to protect nonindigen t consumers against fees that unreasonably limit access to
arbitration. (See Sonic II , supra , 57 Cal.4th at p. 1145 [endorsing Gutierrez ‘s view that unaffordable arbitration costs that ―effectively blocks every forum for the redress of disputes‖ may rende r an arbitration agreement unconscionable].) In the present case , the arbitration agreement did not have to provide for an appeal. But having done so, the agreement may not structure the appeal process so that it unreasonably favors one party, jus t as the agreement may not authorize only one party and not the other to take an appeal. ( Little , supra , 29 Cal.4th at
pp. 1073

– 1074.) W e agree with the Court of Appeal below that a requirement that

a consumer front any appellate filing fees or other arbitration costs

— recall that

an appeal here requires not one but three arbitrators

— has the potential to deter
the consumer from using the appeal process. But given the Legislature ‘ s approach to the affordability of consumer arbitration, the provision can not be held unconscionable absent a showing th at appellate fees and costs in fact would be22

unaffordable or would have a substantial deterrent effect in Sanchez‘s case

. (See Gutierrez , supra , 114 Cal.App.4th at pp. 90

– 91.) Moreover, courts are required to determi ne the unconscionability of the contract ―at the time it was made.‖ (Civ. Code, § 1670.5 .) In light of this requirement , w e recently clarified the proper affordability inquiry in Sonic II in the context of employment arbitration : ―Because a predispute a rbitration agreement is an agreement to settle future disputes by arbitration, the proper inquiry is what dispute resolution mechanism the parties reasonably expected the employee to be able to afford. Absent unforeseeable (and thus not reasonably expecte d) circumstances, there is no reason to think that what an employee can afford when a wage dispute arises will materially differ from the parties‘ understanding of what the employee could afford at the time of entering the agreement.‖ ( Sonic II , supra , 57 Cal.4th at p. 1164 .) The same principle applies to consumer arbitration.
Justice Chin says American Exp ress Co. v. Italian Colors Restaurant (2013) 570 U.S. __ , __ –

__ [133 S.Ct. 2304 , 2310

– 2311 ] ( Italian Colors ) entails
that ―if a cost provision does not impose fees that  ̳make access to the forum impracticable‘ [citation], then the FAA precludes a court from invalidating it as unconscionable because of a subjective determination that it will, in a particular case,  ̳have a substantial deterrent effect‘ on a party‘s exercise of the right to request a second arbitration.‖ (Conc. & dis. opn., post , at pp. 23

– 24.) But i t is not
clear that the notion of ―impracticab[ility]‖ mentioned in passing in Italian Colors ( Italian Colors , at p. __ [133 S.Ct. at p. 2311] ) differs from ―a substantial deterrent effect‖ ( ante , at p. 21). In any event, w e explained in Sonic II that Italian Colors
reaffirm ed the principle stated in Concepcion that ―[ w ] he re a state

- law rule
interferes with fundamental attributes of arbitration , the FAA preempts the state

law rule even if the rule is designed to facilitate prosecution of certain kinds of claims.‖ ( Sonic II , supra , 57 Cal.4th at p. 1157.) Neither Concepcion nor Italian23

Colors precludes states from ensuring, through rules that d o not interfere with arbitration‘s fundamental attributes, that the arbitral scheme set forth in a contract is in practice ―an accessible, affordable process for resolving .

. . disputes.‖ ( Sonic
II , at p. 1158.) The dispute in this case concerns a high

- e nd luxury item. Sanchez does not claim, and no evidence in the record suggests , that the cost of appellate arbitration filing fees were unaffordable f o r him, such that it would thwart his ability to take

an appeal in the limited circumstances where such a ppeal is available. We
therefore conclude on the record before us that the arbitral appeal fee provision is
not unconscionable.
C.
T he arbitration agreement further provides: ― You and we retain any rights
to self

- help remedies, such as repossession. ‖ Th e Court of Appeal held that this provision also contributed to the unconscionability of th e arbitration agreement.
We disagree

. The Court of Appeal explained its conclusion as follows: ― By exempting repossession

— to which only the car dealer would resor t

— from arbitration, while subjecting a request for injunctive relief

— the buyer ‘ s comparable remedy

— to arbitration, the Sale Contract creates an unduly oppressive distinction in remedies. This is especially so given that the California Arbitration
Ac t (Code Civ. Proc., §§ 1280

– 1294.2) exempts preliminary injunctions from arbitration, allowing an application for  ̳ provisional ‘ remedies to be filed directly in court ( id. , § 1281.8 , subd. (b) ). Nevertheless, the Sale Contract dictates
otherwise. As seve ral courts have held, arbitration provisions are unconscionable if they provide for the arbitration of claims most likely to be brought by the weaker party but exempt from arbitration claims most likely to be filed by the stronger party. ‖24

As an initial mat ter, the arbitration agreement does not appear to preclude provisional injunctive relief authorized by statute. Code of Civil Procedure
section 12 8 1.8 , subdivision s (a) and (b) authorize a court to issue before
arbitration ― a provisional remedy .

. . upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief. ‖ Although the arbitration agreement in the present case provides that the arbitration
is to be governed by the FAA and not Calif ornia law , generally the California Arbitration Act governs arbitral procedures brought in California courts

. (S ee Cronus Investments, Inc. v. Concert Services (2005) 35 Cal.4th 376, 389

– 390.)
E ven if FAA procedures apply, federal courts have concluded that a court may

― issue interim injunctive relief on arbitrable claims if interim relief is necessary to preserve the status quo and the meaningfulness of the arbitration process

. ‖ ( Toy o Tire Holdings v. Continental Tire North Amer. (9th C ir. 2010) 609 F.3d 975 , 981,
and cases cited therein .) Regardless of whether an arbitration agreement could deprive a court of the power to grant preliminary injunctive relief, the present agreement does not do so. It addresses injunctive relief in connection with the
relief granted by the arbitrator, subjecting such a remedy to review by a panel of
three arbitrators

. The agreement does not purport to limit a court ‘ s power to issue preliminary injunctive relief to preserve the status quo pending a final judgment. Moreover, w e see nothing unconscionable about exempting the self

- help remedy of repossession from arbitration. First, although this remedy is favorable to the drafting party, the contract provision that preserves the ability of the parties to go to small claims court likely favors the car buyer. Second , arbitration is
intended as a n alternative to litigation , and the unconscionability of an arbitration agreement is viewed in the context of the rights and remedies that otherwise would
have been available to the partie s . (See Sonic II , supra , 57 Cal.4th at p p

. 1146

– 1148 .) Self

- help remedies are , by definition, sought outside of litigation , and they25

are expressly authorized by statute. Commercial Code section 9609, subdi visions (a)(1) and (b)(2) authorize a secured cr editor ― [ a ] fter default ‖ to ― [ t ] ake possession
of the collateral ‖ ― [ w ] ithout judicial process, if it proceeds without breach of the
peace. ‖ Civil Code sections 2983.2 and 29 8 3 .3 set forth the requirements for post

repossession notice and opportunity to cu re default in the case of automobile
loans. Moreover, it is undisputed that the remedy of repossession of collateral is an integral part of the business of selling auto mobiles on cr edit and fulfills a

―  ̳ legitimate commercial need

. ‘ ‖ ( Armendariz , supra , 24 Cal.4th at p. 117.) W e thus conclude that the exclusion of such a remedy from an arbitration agreement,
while favorable to Valencia, is not unconscionable.
IV.
T he trial court held , prior to Concepcio n , that the class waiver was
unconscionable and inv alidated the entire arbitration agreement based on a poison pill provision that said: ― I f a waiver of class action rights is deemed or found to be unenforceable for any reason in a case in which class action allegations have been made, the remainder of th is Arbitration Clause shall be unenforceable.‖ The Court of Appeal, deciding the case after Concepcion , took no position on the enforceability of the class waiver. Sanchez now advances several arguments for why the trial court‘s decision was correct, but none is persuasive.
In Discover Bank v. Superior Court (2005) 36 Cal.4th 148, we announced a
rule that class arbitration waivers in consumer contracts are unconscionable when they are found ―in a setting in which disputes between the contracting parties
p redictably involve small amounts of damages and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.‖ ( Id. at
pp. 162

– 163.) This rule was abrogated by Concepcion , supra , 563 U.S. at p. __ [131 S.Ct. at p. 1753 ] ; see Sonic II , supra , 57 Cal.4th at pp. 1137

– 1139

. ) As26

noted , t he imposition of class action arbitration or litigation interferes ―with
fundamental attributes of arbit ration and thus creates a scheme inconsistent with the FAA.‖ ( Concepcion , supra , 563 U.S. at p. __ [131 S.Ct. at p. 1748].) To find
the class waiver here unconscionable would run afoul of Concepcion

. Sanchez correctly notes that the CLRA sets forth a num ber of unwaivable rights, including the right to a class action. The anti

- waiver provision is found in Civil Code section 1751: ―Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.‖ Civil Code

s ection 1780 permits the consumer damaged by certain enumerated practices to seek various remedies including damages and injunctive relief. Civil Code s ection 1781, subdivision (a) provides: ―Any consumer entitled to bring an action under
Sect ion 1780 may, if the unlawful method, act, or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself and such other consumers to recover damages or obtain other relief as provided for in Section 1780.‖ Thus, class actions are among the provisions of the CLRA that may not be waived. (See Fisher v. DCH Temecula Imports LLC ( 2010) 187 Cal.App.4th 601, 613.) Nonetheless, Concepcion ‘s rule that states may not require a procedure that
interfere s with fundamental a ttributes of arbitration, ― even if it is desirable for unrelated reasons‖ ( Concepcion , supra , 563 U.S. at p. __ [131 S.Ct. at p. 1753]), applies equally to requirements imposed by statute or judicial rule. We conclude
that the CLRA‘s anti

- waiver provision is preempted insofar as it bars class waivers in arbitration agreements covered by the FAA. Sanchez‘s argument that enforcing the CLRA‘s anti

- waiver provision merely puts arbitration agreements on an equal footing with other contracts is unavailing. Con cepcion held that a state rule can be preempted not only when it facially di scriminates against arbitration but also when it disfavors arbitration as applied. ( Concepcion , supra , 563 U.S. at p. __ [13127

S.Ct. at pp. 1747].) Concepcion further held that a state rule invalidating class
waivers interferes with arbitration‘s fundamental attributes of speed and efficiency, and thus disfavors arbitration as a practical matter . ( Id. at pp. 1750

– 1753.) Finally, Sanchez contends that the language of the arbitratio n agreement

––

― I f a waiver of class action rights is deemed or found to be unenforceable for any

reason
. . . , the remainder of this Arbitration Clause shall be unenforceable‖

–– means that once a class action waiver is deemed unenforceable, as the trial court ruled here, then the rest of the agreement is likewise unenforceable. But plainly the quoted provision was not meant to apply when a trial court erroneously holds
the class waiver unenforceable and the error is co rrected on appeal. Rather, the
pro vision is most reasonably interpreted to permit the parties to choose class litigation over class arbitration in the event that the class waiver turns out to be legally invalid

. Because we conclude in light of Concepcion that the FAA preempts the trial co urt‘s invalidation of the class waiver on unconscionability grounds , the agreement‘s poison pill provision is inoperable.28 C ONCLUSION
T he judgment of the Cou rt of Appeal is reversed , and t he cause is remanded for proceedings not inconsistent with this opin ion

. LIU, J.

WE CONCUR: CANTIL

- SAKAUYE, C. J.

WERDEGAR, J. CORRIGAN, J. CUÉLLAR, J. KRUGER, J.1 CONCURRING AND DISSE NTING OPINION BY CHI N, J.

I agree with the majority that, under the high court‘s decision in AT&T Mobility LLC v. Conc epcion (2011) 563 U.S. _ _ [1 31 S.Ct. 1740] ( Concepcion ) , the Federal Arbitration Act (FAA) requires enforcement of the class arbitration
waiver in the contract between plaintiff Gil Sanchez and defendant Valencia Holding Company, LLC (Valencia) . I also ag ree with the majority that Sanchez has failed to carry his burden of establishing that the arbitration agreement in that contract is unconscionable. However, as explained below, my analysis of these issues differs from the majority‘s in several respects, and I do not endorse all of the majority‘s reasoning. Therefore, I concur only in the judgment.

FACTUAL AND PROCEDUR AL BACKGROUND On August 8, 2008, Sanchez went to Valencia‘s Mercedes

- Benz dealership to shop for a certified preowned car. In response t o his inquiry, a sales representative showed him a 2006 Mercedes

- Benz S500V with an advertised price of approximately $48,000. After negotiations regarding various terms of the purchase, Sanchez signed a contract entitled ―RETAIL INSTALLMENT SALE CONTRACT

— SIMPLE FINANCE CHARGE,‖ which specified the total amount financed as $47,032.99. This amount included a price for the car of approximately $39,800, sales tax of approximately $3,330, a service contract price of $3,700, a cash down payment of $15,000, a nd a net trade

- in amount for2

Sanchez‘s 2004 Cadillac of

- $14,800 (reflecting the amount Sanchez still owed on the car ($20,800) offset by its value ($6,000)). Sanchez later filed a class action against Valencia asserting violations of the Consumer Legal R emedies Act (CLRA) (Civ. Code, §§ 1750

– 1784) , the Automobile Sales Finance Act (Civ. Code, §§ 2981

– 2984.6), the unfair competition law (UCL) (Bus. & Prof. Code, §§ 17200

– 17210), the Song

- Beverly Consumer Warranty Act (Civ. Code, §§ 1790

– 1795.8), and Public Resources Code section 42885 . He alleged that Valencia had (1) made false representations about the car‘s condition , (2) failed separately to itemize the amount of the down payment that wa s deferred , (3) failed to distinguish registration, transfer, and titling fees from license fees, (4) charg ed an optional electronic filing fee without discussing it with him , (5) charged new tire fees for used tires, and (6) required
pay ment of $3,700 to have the car certified so he could qualify for a 4.99 percent inte rest rate, when that payment was actually for an optional extended warranty unrelated to the interest rate. Valencia moved to compel arbitration pursuant to a provision in the
contract that provided in relevant part: ―Any claim or dispute, whether in c ontract, tort, statute or otherwise .

. . between you and us .

. . which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship . . . shall, at your or our elec tion, be resolved by neutral, binding arbitration and not by a court action

. . . . Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action. You expressly waive any right you may have to arbitrate a class action. ‖ Sanchez opposed the motion, principally asserting that the arbitration provision was illegal and unenforceable insofar as it required him ―to waive his unwaivable right to file a class action under the CLRA.‖ The unenforceability of thi s waiver, he argued, rendered the entire arbitration agreement unenforceable under a clause stating, ― If a waiver of class action rights is deemed or found to be3

unenforceable for any reason in a case in which class action allegations have been made, the r emainder of this Arbitration Clause shall be unenforceable.‖ As an alternative ground for opposing the motion, Sanchez argued that the arbitration agreement was unenforceable because it was ― both procedurally and substantively unconscionable .‖ Based so lely on the invalidity of the class arbitration waiver, t he trial court denied the motion to compel , explaining: ―As the CLRA contains a right to bring class actions, a waiver of such right is contrary to public policy and is unenforceable. [Citation.] Thus, the class action waiver herein is unenforceable. As such, the entire clause is unenforceable, as specifically provided for in that clause.‖ The trial court did not address Sanchez‘s unconscionability claim. The Court of Appeal affirmed, but took t he opposite approach, i.e., it declined to consider whether the class arbitration waiver was unenforceable and held instead that ―the arbitration clause as a whole is unconscionable.‖ It is

― procedurally unconscionable ,‖ the court reasoned, ―b ecause it is adhesive and satisfies the elements of oppression and surprise; it is substantively unconscionable because it contains harsh terms that are one

- sided in favor of the car dealer to the detriment of the buyer. ‖ ― First, a party who loses before the single a rbitrator may appeal to a panel of three arbitrators if the award exceeds $100,000. Second, an appeal is permitted if the award includes injunctive relief. Third, the appealing party must pay, in advance,  ̳ the filing fee and other arbitration costs subje ct to a final determination by the arbitrators of a fair apportionment of costs. ‘ Fourth, the provision exempts repossession from arbitration while requiring that a request for injunctive relief be submitted to arbitration. Although these provisions may appear neutral on their face, they have the effect of placing an unduly oppressive burden on the buyer. ‖4 D ISCUSSION I. The FAA Requires Enforcement of the Class Arbitration Waiver.

In Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 161 ( Discov er Bank ), a four

- to

- three majority of this court held that certain waivers of classwide arbitration procedures are unconscionable and unenforceable because they ―may operate effectively as exculpatory contract clauses that are contrary to public policy.‖ This rule, the Discover Bank majority concluded, is not preempted by the FAA because (1) enforcement of arbitration provisions under the FAA ― is limited by certain general contract principles  ̳ ― at law or in equity for the revocation of any contract ‖ ‘ ‖ ( id. at p. 163), and (2) ― the principle that class action waivers are, under certain circumstances, unconscionable as unlawfully exculpatory is a principle of California law that does not specifically apply to arbitration agreements, but to contracts genera lly ,‖ i.e., ― it applies equally to class action litigation waivers in contracts without arbitration agreements as it does to class arbitration waiv ers in contracts with such agreements ‖ ( id. at pp. 165

- 166). The Discover Bank majority found ―[n] othing in ‖ the high court‘s decisions

― suggest [ing] that state courts are obliged to enforce contractual terms even if those terms are found to be unconscionable or contrary to public policy under general contract law principles. ‖ ( Id. at p. 166.) In other words, the Discover Bank majority declared, ―t he FAA does not federalize the law of unconscionability or related contract defenses except to the extent that it forbids the use of such defenses to discriminate against arbitration clauses .‖ ( Id. at p. 167.)
In Co ncepcion , the high court rejected the Discover Bank majority‘s preemption analysis and held that the FAA does, in fact, preempt Discover Bank ‘s rule against enforcement, on grounds of unconscionability, of class arbitration waivers. ( Concepcion , supra , 5 63 U.S. at p.

_ _ [131 S.Ct. at p. 1753].) The court explained that, under certain circumstances, the FAA‘s preemptive effect5

―extend[s] even to grounds‖ ―normally thought to be generally applicable, such

as

. . . unconscionability.‖ ( Id. at p. __ [131 S. Ct. at p. 1747].) The FAA preempts such ― generally applicable contract defenses ‖ if they ― stand as an obstacle to the accomplishment of the FAA ‘ s objectives .‖ ( Id. at p. __ [131 S.Ct. at p. 1748].) The Discover Bank rule stands as such an obstacle for t wo reasons. First, it contravenes the FAA‘s ―  ̳principal purpose,‘ ‖ which ―is to  ̳ ensur[e] that private arbitration agreements are enforced according to their terms

. ‘ [Citations.] ‖ ( Id

. at p. __ [131 S.Ct. at p. 1748], italics added.) Second, it frust rates the FAA‘s goal of encouraging ―efficient, streamlined,‖ speedy procedures. ( Id. at p. __ [131 S.Ct. at p. 1749].) B ecause , in these respects, the Discover Bank rule ―  ̳s tands as an obstacle to the accomplishment and execution of the full purposes a nd objectives of Congress, ‘ ‖ the FAA preempts it

. ( Id. at p. __ [131 S.Ct. at p. 1753].) As the majority explains, under Concepcion, the FAA ― requires enforcement ‖ of the class arbitration waiver at issue in this case. (Maj. opn., ante , at p. 2.) Al though I also agree with the majority that, under Concepcion , unconscionability remains a valid defense to a petition to compel arbitration (maj.
opn., ante , at p. 11), I do not subscribe to the majority‘s broad dictum that Concepcion ― does not limit the u nconscionability rules applicable to other provisions of the arbitration agreement ‖ (maj. opn., ante , at p. 2). Indeed, as the majority later explains, under Concepcion , in order to avoid FAA preemption, our standard for unconscionability ― must be [] the s ame for arbitration and nonarbitration agreements. ‖ (Maj. opn., ante , at p. 10.) In other words, ― the application of unconscionability doctrine to an arbitration clause must proceed from general principles that apply to any contract clause. In particula r, the standard for substantive unconscionability

. . . must be as rigorous and demanding for arbitration clauses as for any contract clause. ‖ ( Ibid .) Moreover, Concepcion declares that, although ―[s] tates remain free to take steps addressing the concern s that attend contracts of adhesion ,‖ those steps ― cannot

. . . conflict with the FAA or frustrate its purpose to ensure that private arbitration agreements are enforced6

according to their terms. ‖ ( Concepcion , supra , 563 U.S. at p.

__ [131 S.Ct. at p. 175 0], fn. 6.) Concepcion also declares that ―[w] hen state law prohibits outright the arbitration of a particular type of claim, ‖ the state law ― is displaced by the FAA .‖ ( Id. at p. __ [131 S.Ct. at p. 1747].) The high court has subsequently made clear tha t this principle precludes courts from basing a finding of unconscionability on a state rule that precludes, as a matter of state public policy, arbitration of certain types of claims. ( Marmet Health Care Center Inc. v. Brown (2012) __ U.S. __, __ [1 32 S. Ct. 1201, 1204 ].) These general principles from Concepcion do, in fact, ―limit the unconscionability rules applicable to ‖ provisions of arbitration agreement s other than class arbitration waivers. ( M aj. opn., ante , at p. 2

. )

II. Sanchez Has Not Establis hed Unconscionability. Unconscionability has both a procedural and substantive element , and the party asserting the defense bears the burden of proving both by a preponderance of the evidence. ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246

- 247 ( Pinnacle ); Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 ( Engalla ).) Below, I explain my reasons for agreeing with the majority that Sanchez has failed to establish substantive unconscionab ility. Before that, I explain why I do not endorse the majority‘s discussion of procedural unconscionability.
1. We need not decide, and the record fails to establish, procedural unconscionability. Initially, it is both unnecessary and , on the state of the record here, improper under our case law to decide that the agreement was procedurally unconscionable. It is unnecessary given the majority‘s conclusion, with which I agree, that the arbitration provision is not substantively unconscionable. (Maj.

o pn., ante , at p. 2.) Because, as explained above, a showing of both procedural7

and substantive unconscionability is required to render a contract unenforceable, a contract that is not substantively unconscionable is fully enforceable regardless of procedu ral unconscionability. Given our unanimous conclusion regarding substantive unconscionability, ―a dherence to judicial restraint and economy counsels against an unnecessary detour into an analysis ‖ of procedural unconscionability. ( People v. Mosley (2015) 60 Cal.4th 1044, 1055, fn. 7; see Brown v. Wells Fargo Bank, NA (2008) 168 Cal.App.4th 938, 956 [declining to consider procedural unconscionability given finding of no substantive unconscionability]; Crippen v. Central Valley RV Outlet (2004) 124 Cal.App. 4th 1159, 1167 ( Crippen ) [declining to consider substantive unconscionability given finding of no procedural unconscionability].) It is improper to decide the issue because, as explained earlier, the trial court made no findings regarding unconscionability and denied Valencia‘s motion to compel based solely on its conclusion that the class arbitration waiver constituted an illegal and unenforceable waiver of Sanchez‘s ―unwaivable right to file a class action under the CLRA.‖ Thus, the trial court has never resolved factual conflicts that must be resolved in Sanchez‘s favor in order to warrant a finding of procedural unconscionability (discussed post ). Our decisions establish that where a trial court fails to resolve factual conflicts that must be resolved in favor of a party who alleges that an arbitration provision is unenforceable, the proper course for an appellate court is to remand the case to the trial court to determine those factual issues, not to determine them itself in the first instance. ( Engal la , supra , 15 Cal.4th at pp. 972

- 973; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394 , 414.) Under these decisions, were a finding on procedural unconscionability necessary, the majority should remand for the trial court to consider the issue rather than resolve it in Sanchez‘s favor in the first instance on appeal. The majority offers no explanation for departing from our precedents.8

On the merits, the majority‘s summary dicta is incomplete and unpersuasive. The only basis the ma jority offers for finding ―some degree of procedural unconscionability‖ is the ―adhesive nature of the contract

. ‖ 1 (Maj.
opn., ante , at p. 1 4 .) But the majority offers no independent legal analysis for establishing that the contract was adhesive, asserti ng instead that ― Valencia does
not dispute that the contract was adhesive

. ‖ ( Id. at p. 12.) It is true that Valencia‘s counsel stated at oral argument that the contract was ― adhesive in the sense that it is . . . a form contract. ‖ But the circumstance t hat a contract is ― standardized in form ‖ does not alone establish adhesive ness. ( Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309, 1318 ( Izzi ); see Federico v. Frick (1970) 3 Cal.App.3d 872, 875 [―nothing in the record provid[es] evidentiary suppo rt for th [e] conclusion ‖ that ―[t] he standard union employment contract before us ‖ is ― a contract of adhesion ‖].) The additional characteristics of adhesiveness are that the
contract was drafted and imposed ―  ̳ by the party of superior bargaining strength ‘ ‖ ( Graham v. Scissor

- Tail, Inc. (1981) 28 Cal.3d 807, 817) ―  ̳ on essentially a ―take it or leave it‖ basis without affording the consumer a realistic opportunity to bargain and under such conditions that the consumer cannot obtain the desired product or s ervices except by acquiescing in the form contract‘ ‖ ( Victoria v. Superior Court (1985) 40 Cal.3d 734 , 743 ( Victoria )). At all levels of this litigation, Valencia clearly has disputed whether Sanchez has met his burden to prove by a preponderance of th e evidence that these additional characteristics of adhesiveness are present. In the Court of Appeal,

1 The majority states that ― Sanchez apparently did not read the entirety of his contract, including the arbitration cl ause ‖ (m aj. opn., ante , at p. 13), but it does not conclude that this circumstance contributes to a finding of procedural unconscionability. I agree. As the majority explains, ―even where a customer is assured it is not necessary to read a standard form contract with an arbitration clause,  ̳it is generally unreasonable, in reliance on such assurances, to neglect to read a written contract before signing it.‘ ‖ ( Id . at p. 14.)9

Valencia argued that the contract, although ―a pre

- printed form contract,‖ was ―not a contract of adhesion‖ and that, as relevant to this issue, Sanche z had failed to show that he ―had no realistic choice,‖ that he could not have ―negotiate[d] a contract term‖ had he attempted to do so, that ―he was under any compulsion to finalize the purchase of a vehicle at any particular point in time ,‖ that the car ―was unique,‖ or that he could not have purchased it without agreeing to arbitration from either a private individual or from one of the other five Mercedes

- Benz dealers ―[w]ithin 25 miles of‖ Valencia . Valencia made the same arguments in the trial court` and asserted in its opening brief in this court that Sanchez had failed to satisfy his ―burden of proof‖ because he ―made no showing that he could not negotiate the arbitration provision or that he lacked other alternatives, suc h as going to another deale r.‖ Thus, the record reflects that Valencia does , in fact,

― dispute that the contract was adhesive‖ and that, as part of its argument, has emphasized both in the lower courts and ―in this court‖ Sanchez ‘s failure to show he could not ― have opted out of th e arbitration agreement ‖ or ― negotiated a sales contract without an arbitration agreement

. ‖ 2 (M aj. opn., ante , at p. 12

. ) Indeed, the majority‘s discussion overlooks the legal significance of the fact that the burden of proof was on Sanchez to establish procedural unconscionability

. Valencia‘s asserted failure to ―dispute‖ the contract‘s adhesive

nature or to ―contend in this court ‖ that Sanchez could have obtained the car without accepting the arbitration agreement (maj. opn., ante , at p. 12), even if consistent with the record , does not substitute for evidence that satisfies Sanchez’s burden to establish procedural unconscionability. This is especially true given the

2 After stating at oral argument that the contract was ― adhesive in the se nse that it is . . . a form contract ,‖ Valencia‘s counsel added: ―I think that meets the definition of adhesive in California. But I think adhesive without more does not get .

. . one unconscionability.‖ Unlike the majority ( see m aj. opn., ante , at p . 1 2), I do not, in the context of the entire record, view these additional statements as a basis for dispensing with a proper and complete analysis of adhesiveness.10

procedural posture of this case, i.e., the trial court made no findings regarding

unc onscionability, and the majority is deciding the issue on appeal in the first instance. The majority also overlooks the fact that case law strongly supports Valencia‘s arguments. In Crippen , supra , 124 Cal.App.4th at page 1165, the Court of Appeal, in or dering enforcement of an arbitration agreement between a dealer and the purchaser of a motor home, rejected the argument that the agreement was ―a contract of adhesion and therefore procedurally unconscionable‖ simply ―because [it] was a form contract [the dealer] used with many customers.‖ The court explained: ―[T] here is no general rule that a form contract used by a party for many transactions is procedurally unconscionable. Rather,  ̳ [p]rocedural unconscionability focuses on the manner in which the di sputed clause is presented to the party in the weaker bargaining position.

. . . There is no reason in this case to conclude that plaintiff lacked power to bargain. In general, nothing prevents purchasers of

. . . vehicles from bargaining with dealers, ev en though dealers use form contracts, and nothing in the record shows that plaintiff could not bargain in this case. ‖ ( Id. at pp. 1165

- 1166 .) ― There is nothing in this buyer

- seller relationship from which we can infer a great disparity of bargaining powe r. ‖ ( Id. at p. 1166; cf. Izzi , supra , 186 Cal.App.3d at p. 1318 [although the contract was standardized, ― no presumption is warr anted that plaintiffs had no choice or power to negotiate as to the terms of their purchase agreement or that they could not ob tain comparable or superior terms on a suitable condominium nearby ‖] .) Indeed, the record here is consistent with the analysis in Crippen and supports Valencia‘s arguments. It indicates that Sanchez had significant financial

means when he signed the c ontract, which is the relevant time for judging unconscionability (Civ. Code, § 1670.5, subd. (a)) . He contracted to pay nearly $50,000 for a luxury automobile for personal use, traded in a relatively new (four

year old) luxury automobile as part of the p urchase and, at the time he signed the11

contract, wrote a $10,000 check for the down payment and agreed to put down more money within 30 days if necessary. Over the course of the next week, he returned to Valencia and increased his down payment by $5,000, for a total of $15,000. The record also shows that Sanchez actually bargained for a substantial reduction in the car‘s purchase price. Finally, the record contains evidence

— submitted by Sanchez

— that, during the time period when he executed the
contra ct, contracts without an arbitration provision were available to Valencia‘s buyers; that Valencia had not used contracts with arbitration clauses since August 29, 2008, a few weeks after Sanchez signed the contract; and that Valencia no longer uses contrac ts with arbitration clauses. Thus, the record fails to show that Sanchez lacked bargaining power or that he could not have obtained the car, either from Valencia or elsewhere, ―  ̳except by acquiescing in the form contract.‘ ‖ ( Victoria , supra , 40 Cal.3d at p. 743.) The majority‘s response to my analysis

— that ―in the context of consumer contracts, we have never required ‖ a party asserting procedural unconscionability to ―show it tried to negotiate standardized contract p rovisions‖ ( m aj. opn., ante , at
p p

. 12

- 13, italics added)

— is unpersuasive. Although we may never have required such proof, we have expressly stated that ―freedom to choose whether or not to enter a contract of adhesion is a factor weighing against a finding of procedural unconscionab ility.‖ ( G entry v. Superior Court (2007) 42 Cal.4th 443, 470.) Notably, the decision we cited in support of this statement

— Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758

— involved ―the context of consumer contracts‖ (maj. opn., ante , at p. 12), a circumstance we expressly acknowledged in our explanation of that decision: ― agreement between brokerage house and sophisticated consumer of financial services that included a $50 termination fee on an IRA account was not unc onscionabl e where competing IRA‘ s without the challenged fee were freely available .‖ ( Gentry , supra , at p. 470, italics added.)12

Indeed, Discover Bank , which the majority cites in support of its response, actually confirms the validity of this principle ―in the c ontext of consumer contracts.‖ (Maj. opn., ante , at p. 12.) There, a majority of this court stated that

― when a consumer is given an amendment to its cardholder agreement in the form of a  ̳ bill stuffer ‘ that he would be deemed to accept if he did not clo se his account, an element of procedural unconscionability is present. ‖ ( Discover Bank , supra , 36 Cal.4th at p. 160.) In making this statement, we relied on Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094 . There, consistent with our precedents, the Court of Appeal stated that ―[t] he availability of similar goods or services elsewhere may be relevant to whether the contract is one of adhesion

. . . .‖ ( Id. at p. 1100 .) The court then explained that, on ―the [particular] facts in the case,‖ this was ―not the deciding factor‖ because of the ―oppressive‖ manner in which the defendant had ―imposed‖ the arbitration provision; the record showed that the consumer, who already had a ―Cardholder Agreement‖ with the defendant, subsequently

― received ‖ an ― amend ment ‖ imposing the arbitration provision ― in a bill stuffer ‖ and ― was told to  ̳ take it or leave it. ‘ H is only option, if he did not wish to accept the amendment, was to close his account. ‖ ( Ibid .) The facts in Discover Bank were virtually identical. ( D iscover Bank , supra , at pp. 153

- 154.) The facts in this case are completely different. Thus, although Discover Bank is factually distinguishable, legally, it confirms that Sanchez‘s failure to show he was unable to obtain the car from Valencia or elsewhe re without agreeing to arbitration is an important factor in determining procedural unconscionability. Even more supportive of this conclusion is the other decision the majority cites in support of its response: Perdue v. Crocker National Bank (1985) 3 8 Cal.3d 913 . (Maj. opn., ante , at p. 13.) There, we considered the legal sufficiency of the plaintiff‘s claim that the fee the defendant bank charged customers for returned checks was unconscionable. ( Perdue , supra , 38 Cal.3d at p p

. 920

- 921 .) In addre ssing this question, we first reaffirmed the principle that the determination of procedural unconscionability ―may turn on the absence of meaningful choice.‖13

( Id. at p. 927.) In holding that the plaintiff had sufficiently stated a claim for relief, we th en stressed that he had ― alleged

. . . that similar arrangements would be imposed by other banks .‖ ( Id. at p. 927, fn. 12, italics added.) This ―allegation[],‖ we explained, rendered ―distinguish[able]‖ a decision in which a court had ―r eject [ed]‖ a simi lar unconscionability claim because of the p laintiffs ‘

―  ̳ fail [ure] to show that they were deprived of a meaningful choice of banks with which they could do business .‘ ‖ ( Ibid. ) Thus, like Discover Bank , Perdue confirms the significance of Sanchez‘s fail ure to show (or even allege) that he either tried to negotiate with Valencia or could not have obtained a similar car elsewhere without agreeing to arbitration. Consistent with these precedents, our Courts of Appeal have, in rejecting claims of adhesiven ess, relied in part on the absence of evidence that the complaining parties tried to negotiate the terms they were seeking to invalidate. ( Spinello v. Amblin Entertainment (1994) 29 Cal.App.4th 1390, 1397 ; Union Bank
v. Ross (1976) 54 Cal.App.3d 290 , 296 ( Union Bank ).) Thus, under existing California case law, Sanchez‘s failure to show that he ― tried to negotiate ‖ the arbitration provisions ( m aj. opn., ante , at p. 13) is an important factor in determining whether he has established adhesivenesss. The maj ority‘s contrary view, which is not supported by our precedents, effectively disapproves these decisions. I also disagree with the majority that the statements of Valencia‘s counsel at oral argument regarding the clarity of the contract are relevant. (Ma j. opn.,

ante , at p. 12.) Counsel stated : ―I think many people who are not legally trained don‘t understand the vast majority of what is in this contract. My guess is that if you asked that dealer about everything other than the negotiable terms of pri ce and interest they probably don‘t understand that either, even though that language is required by statute.‖ Unlike the majority, I would not rely on counsel‘s ―guess‖ about these matters, which lack s any evidentiary support in the record. Indeed, the
contract here clearly provided for arbitration of ―[a]ny claim or dispute . . .14

between‖ Sanchez and Valencia, and there is no reason Sanchez would have been unable to understand this had he read the contract

. Moreover, if, as the majority asserts, Sanche z ― did not read ‖ the contract (see maj. opn., ante , at p. 13) , then under existing case law, he ― may not ,‖ in asserting adhesiveness, ― properly argue that he did not give an  ̳understanding consent.‘ ‖ ( Union Bank , supra , 54 Cal.App.3d at p. 296 .) Finally , ―[t]he general rule‖ in California, established now for over 100 years, ―is that, when a person with the capacity of reading and understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its contents, and is estopped f rom saying that its provisions are contrary to his intentions or understanding.‖ ( Smith v. Occidental etc. Steamship (1893) 99 Cal. 462, 470

- 71.) For these reasons, the majority‘s reliance on counsel‘s ―guess‖ during oral argument is misplaced. In any e vent, our prior decisions establish that adhesiveness does not alone necessarily establish procedural unconscionability. In Pinnacle , the trial court, on grounds of unconscionability, refused to enforce against a condominium homeowner s association an arbi tration provision in the condominium‘s covenants, conditions, and restrictions (CC&R ‘ s) . ( Pinnacle , supra , 55 Cal.4th at p. 234.) It based a finding of procedural unconscionability on the fact that ―the [a] ssociation had no opportunity to participate in the drafting of ‖ the CC&R‘s because they

were recorded ― before the [a]ssociation was formed

. ‖ ( Id. at p. 247.) We disagreed with the trial court‘s conclusion, explaining: ― That the

. . . CC&R ‘ s were drafted and recorded before the sale of any u nit and without input from the [a] ssociation was a circumstance dictated by the legislati ve policy choices embodied in the Davis

– Stirling Act.

. . . Thus, while a condominium declaration may perhaps be viewed as adhesive , a developer ‘ s procedural compliance with the Davis

– Stirling Act provides a sufficient basis for rejecting an association ‘ s claim of procedural unconscionability .‖ ( Id. at pp. 247

- 248, italics added, fn. omitted.) Here, Valencia asserts

— and Sanchez does not dispute

— ―that over 90% of the

cont ract is statutorily dictated in both form and content‖ by the Automobile Sales15

Finance Act (Civ. Code, § 2981 et seq.). Therefore, as Valencia argues, under Pinnacle , the contract is not procedurally unconscionable even if it could ―be viewed as adhesive. ‖ ( Pinnacle , supra , at p. 248.) T his conclusion does not , as the majority suggests, depend on whether the arbitration agreement ―was mandated by statute‖ (maj. opn., ante , at p. 1 3 ) , b ecause the arbitration agreement in Pinnacle was not statutorily requi red ( Pinnacle , supra , at pp. 235

- 242 ; see Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1320 [ ―adhesion contracts‖ are ―not always‖ procedurally unconscionable ]). California has a ―strong public policy in favor of enforcing arbitration
ag reements.‖ ( Broughton v. Cigna Healthplan s (1999) 21 Cal.4th 1066, 1073.)

― In keeping with [this] strong public policy

. . . , any doubts regarding the validity of an arbitration agreement [must be] resolved in favor of arbitration.‖ ( Samaniego v. Empir e Today LLC (2012) 205 Cal.App.4th 1138, 1144; Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 821.) Consistent with these principles, were it either necessary or appropriate to decide the issue, I would, for the reasons set forth above , find that Sanchez has failed to prove adhesiveness that supports a finding of procedural unconscionability.
2. Sanchez has not established substantive unconscionability.

― Civil Code section 1670.5, subdivision (a), au thorizes a court, upon finding  ̳ as a matter of law ‘ that a  ̳ contrac t or any clause of the contract‘ was

 ̳ unconscionable at the time it was made,‘ to  ̳refuse to enforce the contract,‘ to

 ̳ enforce the remainder of the contract wit hout the unconscionable clause,‘ or to

 ̳ so limit the applicatio n of any unconscionable clause as to a void any unconscionable result.‘ The official Assembly comment accompanying this section explains:  ̳ The basic test [of unconscionability] is whether, in the light of the general background and the needs of the partic ular case, the clauses involved

are so one

- sided as to be unconscionable under the circumstances existing at the time of the making of the contract.

. . . The principle is one of prevention of16

oppression and unfair surprise [citation] and not of disturbanc e of allocation of risks becaus e of superior bargaining power.‘ (Rep. on Assem. Bill No. 510 (1979

– 1980 Reg. Sess.) 5 Assem. J. (1979

– 1980 Reg. Sess.) p. 9231, reprin ted as Legis. Com. com., 9 West‘ s Ann. Civ. Code (2011 ed.) p. 74 (Official Comment).) ‖ ( Sonic

- Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1176 (conc. & dis. opn. of Chin, J.) (commonly known as Sonic II ).) Consistent with these legislative pronouncements, in Pinnacle , we recently explained that ―[a] contract term,‖ including an arbit ration provision , ― is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be  ̳so one

- sided as to ―shock the conscience.‖ ‘ ‖ ( Pinnacle , supra , 55 Cal.4th at p. 246 .) The ―  ̳ ―shock the conscience‖ ‘ ‖ st andard we applied in Pinnacle is the standard this court has been applying for well over 100 years. (E.g., Herbert v. Lankershim (1937) 9 Cal.2d 409 , 475 [inadequacy of consideration must be ―  ̳ so gross as to shock the conscience and common sense of all m en ‘ ‖]; Boyce v. Fisk (1895) 110 Cal. 107 , 116 [contract must be ―  ̳grossly against conscience,‘ ‖ and ―  ̳ the mere fact that the bargain is a very hard or unreasonable one is not generally sufficient ‘ ‖]; see also Tarver v. State Bar (1984) 37 Cal.3d 122 , 134 [test for whether an attorney ‘ s fee is unconscionable is whether it is ―  ̳ ―  ̳ so exorbitant and wholly disproportionate to the services performed as to shock the conscience ‘ ‖ ‘ ‖].) It is ― derivative of the term

 ̳ unconscionable .‘ ‖ ( California Groce rs Assn. v. Bank of America (1994) 22 Cal.App.4th 205, 215.) It is the standard we should continue to apply. I thus agree with the majority‘s discussion insofar as it reaffirms the validity of the shock the conscience standard. (Maj. opn., ante , at p p. 8

- 9.) However, I part company with the majority insofar as it continues to endorse several alternative formulations for substantive unconscionability. i.e., overly harsh, unduly oppressive, unfairly one

- sided. (Maj. opn., ante , at pp.8

- 9.) As the majori ty observes, this court has sometimes used these formulations instead of the shock the conscience standard. ( Ibid .) This practice has generated17

confusion and uncertainty, because our lower courts have understood the se different formulations as stating a lower standard for substantive unconscionability than ―shock the conscience.‖ ( Sonic II , supra , 57 Cal.4th at p. 1178 (conc. & dis. opn. of Chin, J.) [ ― o ur Courts of Appeal have consistently recognized [ that ] s hock the conscience is not

. . .  ̳synonymous with ―unreasonable‖ ‘ ‖ ]; Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1469 [ shock the conscience is ―  ̳a higher standard‘ ‖ than one

- sided or overly harsh ]; Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 88 ( Gutierrez ) [same].) Today , the majority declares that these alternative formulations ―all mean the same thing‖ as ―shock the conscience.‖ (Maj. opn., ante , at p. 9.) If that is true, then why not settle on the traditional ―shock the conscience‖ test as the single formulation ? W hy perpetuate the uncertainty that arises fro m having multiple formulations? The majority‘s only answer

— that adopting ―shock the conscience‖ as the sole formulation somehow ―would call into question‖ decisions in which we have used ―other formulations‖ (maj. opn., ante, at p. 12)

— is unpersuasive. I f, as the majority states, those other formulations are not conceptually or practically different from, and mean the same thing as, ―shock the conscience‖ ( id . at pp. 8

- 9) , then why would adopting a single standard call any of our prior decisions into question? We could simply make clear that we are clarifying the law, without suggesting that our earlier cases were wrongly decided. Moreover, maintaining multiple formulations is problematic for several

rea sons. First, although, as the majority recognizes, ―[c]ommerce depends on the enforceability, in most instances, of a duly executed, written contract‖ ( m aj. opn.,

ante , at p . 9), it also depends on ―certainty and predictability‖ of enforcement ( Phillippe v. Shapell Industries (1987) 43 Cal.3d 1247, 1269.) As we have explained, ―[p] arties enter into contracts to allocate risks and to bring certainty, order, and predictability to their mutual relations. One of the principal aims of contract law is to assis t contracting parties in achieving this objective by making the outcome of legal disputes clear and predictable. ‖ ( Nedlloyd Lines B.V. v.18

Superior Court (1992) 3 Cal.4th 459, 494.) Having multiple formulations for determining whether a contract is substa ntively unconscionable, and therefore unenforceable, undermines the certainty and predictability that are vital to

commerce. Second, the need for a uniform standard is crucial in light of the FAA. As already explained, the FAA requires that our standard for unconscionability be

― the same for arbitration and nonarbitration agreements , ‖ i.e., that it be ― as rigorous and demanding for arbitration clauses as for any contract clause.‖ (Maj.
opn., ante , at p. 10.) However, as Valencia argues, ―[i]f there are multiple unconscionability standards, then arbitration provisions may well be subjected, in practice, to a different standard than other contract provisions.‖ Indeed, this court first articulated the ―unfairly one

- sided‖ formulation specifically in the co ntext of

a n unconscionability challenge to an arbitration provision ( Armendariz v. Foundation Health Psych c are Services, Inc. (2000) 24 Cal.4th 83, 117 ( Armendariz ) ), and the formulation has since been used almost exclusively in that
context. Notably, i n Concepcion , the high court, immediately after explaining that ―judicial hostility‖ towards arbitration has ―manifested itself in  ̳a great variety‘ of  ̳devices and formulas , ‘ ‖ observed ―that California‘ s courts have been more likely to hold contracts to ar bitrate unconscionable than other contracts. [Citations.]‖ ( Concepcion , supra , 563 U.S. at p. __ [1 31 S.Ct. at p. 1747 ].) Having multiple formulations lends substantial credence to the ―loud chorus of courts and commentators‖ who assert that, contrary t o the high court‘s decisions, we are using unconscionability ― as a ruse for a  ̳ new judicial hostility ‘ toward arbitration .‖ ( Aragaki , AT&T Mobility v. Concepcion and the Antidiscrimination Theory of FAA Preemption (2012

- 2013) 4 Y .B. Arb. & Mediation 39, 6 0.) Although the majority‘s endorsement of multiple formulations is problematic for these reasons, several of its related comments are worthy of note. First and foremost is the majority‘s statement, as noted above, that all of the alternative formulation s ―mean the same thing‖ as ―shock the conscience.‖ (Maj.19

opn., ante , at p. 9.) Second, the majority emphasizes that ―  ̳central‘ ‖ to all of its formulations is that substantive unconscionability is more than just ―  ̳ ― a simple old

- fashioned bad bargain .‖ ‘ ‖ ( Id. a t p . 8.) Thus, ―[a] party cannot avoid a contractual obligation merely by complaining that the deal, in retrospect, was unfair or a bad bargain. ‖ ( Id . at p. 9.) Instead, the party resisting contract enforcement must prove, and a court must f ind, ―  ̳ a substantial degree of unfairness beyond ― a simple old

- fashioned bad bargain

. ‖ ‘ ‖ ( Ibid .) A contractual term does not meet this test merely because it can be characterized as being ― one

sided ‖ or ―  ̳giv[ing] one side a greater benefit.‘ ‖ ( Ibid .) Moreover, one

- sidedness is not unconscionable if it ―  ̳ ― provides the party with superior bargaining strength a type of extra protection for which it has a legitimate commercial need. ‖ ‘ ‖ ( Ibid .) The majority‘s endorsement of various alterative form ulations must be understood in light of these statements. I also part company with the majority insofar as its one

- sidedness analysis focuses separately on each of the challenged provisions in isolation, rather than the parties‘ bargain as a whole. Our de cisions establish that, in assessing a claim that a contract or a clause in a contract is unconscionable, a court must ― examine the totality of the agreement’s substantive terms as well as the circumstances of its formation to determine whether the overall bargain was ‖ so one

- sided as to be substantively unconscionable . ( Sonic II , supra , 57 Cal.4th at p. 1146 , italics added. ) As Valencia explains, ―[t]here are trade

- offs in every contract. Lien and security rights favor one party. Payment favors the sel ler; required delivery of goods favors the buyer. Notice and an opportunity to cure usually favor the party in the position to default. But these types of provisions are almost inevitably not unconscionable, because in the context of the transaction as a whole, they are fair and reasonable.

. . . [¶] The same is true of arbitration provisions. They, too, must be evaluated as a whole. The provision itself may contain trade

- offs, e.g., one side pays certain fees, the other side gains a measure of protect ion from outlier results, such that the entire provision needs to be examined based on its overall effect.20

And, even then the arbitration provision needs to be evaluated in the context of the overall transaction.‖ Taking this approach, I conclude that th e arbitration clause, viewed as a whole, is not substantively unconscionable under any of the formulations the majority endorses. As Valencia argues, the clause ―is even

- handed. It is well justified by the business realities of the buyer

- dealer relations hip and the threats posed by outlier results. . . . It involves mutual tradeoffs and a rational relationship to the nature of automobile purchases in general and to the specific transaction at issue

— the purchase of a $50,000 pre

- owned luxury automobile.‖ ―There is a balance of clauses. There is an opportunity for further arbitral scrutiny for outlier results. But given the nature of the disputes, that will be the exception, not the rule. And, further review works both ways; both buyers and dealers can seek review of outlier awards. Self

- help remedies, such as repossession, that would be more often invoked by the dealer are excluded, but they are by definition outside even the litigation process; and comparable small claims remedies more likely invoked by the customer are also excluded. [¶] Finally, the dealer pays the buyer‘s initial arbitration expenses, up to $2,500. Only if the buyer loses a first round and wants to seek further arbitral review does the buyer have to advance further arbitration expenses (the review arbitrators ultimately allocate expenses). That‘s reasonable: That the party (buyer or dealer) losing the first round has to bear the expense of the finality round is common sense and furthers the interests of formality. Indeed, tha t‘s how the judicial system handles appeals

— the appellant pays for the record on appeal and pays a higher fee than the respondent. [¶] And, in return, individuals get a speedy, cheaper, surer mechanism for resolving disputes.‖ I agree with this analys is and would hold that the arbitration provision, evaluated as a whole, is not substantively unconscionable. Nevertheless, I also agree with the majority that each of the challenged provisions, considered individually, is not substantively unconscionable, although I do not endorse all of the majority‘s reasoning. Regarding the provision allowing21

a second arbitration if the arbitrator‘s award is either $0 or over $100,000 , as noted above, this provision benefits both Valencia and Sanchez by protecting them in
most cases from the cost of a second arbitration while offering both access to further review of extreme, outlier awards . Also mutually beneficial is the provision making grants, but not denials, of injunctive relief subject to a second arbitration. T he Court of Appeal invalidated this provision based on the view that it benefits ―only‖ Valencia because ― the buyer, not the car dealer,

. . . would be seeking preliminary or permanent injunctive relief .‖ But, as the majority correctly notes, ―car sellers sometimes must seek an injunction in order to repossess a car from the buyer.‖ (Maj. opn., ante , at p. 17.) Thus, while it is true, as the majority observes, that injunctive relief may have a ―broad impact‖ on Valencia by requiring it to ―change its bus iness practices‖ ( ibid. ), such relief also may have a substantial impact on buyers by forcing them to surrender their means of transportation. Accordingly, as Valencia argues, ―both [parties] would benefit from a process that allows second

- level review wh en their liberty is constrained by arbitral decisions requiring them to do or refrain from doing certain activities.‖ Because these provisions do not ―inordinately benefit‖ Valencia, u nder our decisions , they are not ―unconscionably one

- sided‖ ( Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064 , 1075, fn. 1 ( Little ) ), regardless of whether Valencia is ―more likely‖ (maj. opn., ante , at p. 17 ) or even ―substantially more likely‖ to invoke them ( id. at p. 16). 3

3 Although mentioning the public‘s interest in injunctive relief, the majority notes that this case does not involve the ―continued viability,‖ in light of Concepcion , of Broughton and Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, in which a majority of this court held that the FAA permits California to prohibit arbitration of claims for injunctive relief under the CLRA and the UCL

. (Maj. opn., ante , at p. 17.) That question is pending before us in McGill v. Citibank, N.A. ( S224086 , review granted Apr. 1, 2015.)22

As my earlier discussion indicates, I also agree with the majority that there is ―nothing unconscionable‖ about the provision exempting repossession from arbitration. (Maj. opn., ante , at p. 24.) Because, as the majority explains, this self

help remedy is ― outside of litigation, ‖ there is nothing unconscionable about not making it subject to arbitration , which is a litigation substitute. ( Ibid .) Moreover, as the majority also explains, the provision that preserves the parties‘ ability to go to small claims court ― likely favors the car buyer. ‖ ( Ibid .) Thus, the exclusion of repossession from arbitration is not unfair, one

- sided, or unconscionable. Regarding the costs of a second arbitration, I first note that the Court of Appeal erred in stating that provision in question requires the party requesting the second arbitration to pay filing fees and other arbitration costs ― in advance .‖ T he provision states that the requesting party ― shall be responsible for ‖ such fees and costs, but says nothing about the time of payment. The record otherwise provides no support for the Court of Appeal‘s statement. 4 Moreover, I agree with the majority that the record contains ― no evidence ‖ that, at the time Sanchez signed the contract, the cost of a second arbitration would be ― unaffordable ‖ to him . (Maj. op n., ante , at p. 23.) On the contrary, as earlier explained, the record indicates that Sanchez had significant financial means when

4 T he contract gives Sanchez the option of having arbitration conducted by, and under the rules of, the American Arbitration Association (AAA), the National Arbitration Forum, ―or any other organization that [he] may choose subject to [Valencia‘s] approval.‖ There is no basis to conclude or assume that, at the time the contract was executed, the selected organization would have required advance payment of all filing fees and other costs. Indeed, although t he AAA rules in effect in 2008 call ed for advance payment of certain costs (AAA, Commercial Arbitration Rules an d Mediation Procedures (amend . & eff. Sept. 1, 2007) rules R

4(a)(ii), R

- 49, O

- 8 (AAA General Rules); AAA, Supplementary Procedures for Consumer

- Related Disputes (2005) rules C

- 2(a), C

- 2(e), C

- 8 (AAA Supplementary Rules)) , they also provided for ―defer[ral ]‖ of this payment ―in the event of extreme hardship on the part of any party‖ (AAA, General Rules, rule R

49)

. As to other arbitration expenses, the rules made advance payment subject to the AAA‘s discretion. ( Id. , rule R

- 52.)23

he signed the contract

. In addition, at that time, one of the organizations the contract authorized to conduct the arbitrat ion ha d established a substantially reduced fee schedule ―for consumer

- related disputes‖ in order ―to make arbitration costs reasonable for consumers‖ (AAA General Rules, Administrative Fees) and had provided for reduction or elimination of administrative fees in cases of hardship. 5 Given these circumstances, the provision r egarding the costs of a second arbitration does not support a finding of unconscionability. Although I agree with the majority that the provision is not unconscionable, I disagree wit h the majority‘s analysis in several respects. The majority suggests that a finding of substantive unconscionability may be premised on a finding that the fee provision ―would have a substantial deterrent effect in Sanchez‘s case.‖ (Maj. opn., ante , at p . 22.) But d eterr ence is surely an important

— and permissible

— purpose of the provision

. After all, at issue here are the costs of a second, de novo arbitration based on one party‘s dissatisfaction with the results of the first. Moreover, the provisio n‘s deterrent effect applies mutually to both parties; if Valencia is dissatisfied with an award and seeks a new arbitration, then it also is ―responsible for the filing fee and other arbitration costs subject to a final determination by the arbitrators of a fair apportionment of costs.‖ In order to promote finality and secure the cost benefit s of arbitration, parties to an arbitration agreement may want to discourage each other from invoking a contractual right to

5 The AAA‘s generally a pplicable rules provided: ―The AAA may, in the event of extreme hardship on the part of any party, . . . reduce the administrative fees.‖ (AAA General Rules, rule R

- 49.) Its Supplementary R ules for consumer

related disputes expressly incorporated Civil Code section 1284.3, stating: ―Pursuant to Section 1284.3 of the California Code of Civil Procedure, consumers with a gross monthly income of less than 300% of the federal poverty guidelines are entitled to a waiver of arbitration fees and costs, exclusiv e of arbitrator fees. This law applies to all consumer agreements subject to the California Arbitration Act, and to all consumer arbitrations conducted in California.‖ (AAA Supplementary Rules, rule C

- 8.)24

a second, new arbitration. Indeed, litig ants wanting to appeal in court face similar deterrence, as they are responsible for appellate filing fees and, if unsuccessful, the other party‘s appellate costs. (Cal. Rules of Court, rules 8.25, 8.278(a).) Surely such mutual deterrence is permissible if, as the majority correctly states, ― the arbitration clause did not have to provide for an appeal ‖ at all. (Maj. opn., ante , at p. 21.) However, the majority continues, having provided for ―an appeal,‖ the arbitration clause ― may not structure the app eal process so that it unreasonably favors ‖ Valencia. (Maj. opn., ante , at p. 21.) Under this analysis, the question should not be, as the majority suggests, whether the provision would substantial ly deter Sanchez from requesting a second arbitration

— w hich, as just explained, is one of its permissible and mutually applicable purposes

— but should be whether the level of deterrence ―unreasonably favors‖ Valencia. ( Ibid .) In other words, a finding of substantive unconscionability would, under the majori ty‘s analysis, require determination of (1) the provision‘s relative deterrent effect on Valencia and Sanchez

— which, in turn, would require evidence of the provision‘s deterrent effect at the time the contract was signed on both Valencia and Sanchez

— an d (2) whether the difference, if any, in deterrent effect was unjustified by ―  ̳ ― a legitimate commercial need ‖ ‘ ‖ and established ―  ̳a substantial degree of unfairness beyond ― a simple old

- fashioned bad bargain .‖ ‘ ‖ ( Id. at p. 9.) In my view, this con voluted and complicated inquiry is unnecessary; that the provision might have a greater ― deterrent effect‖ ( id. at p. 2 2 ) on one of the parties to this contract for a $50,000 luxury car does not render it one

- sided or substantively unconscionable. Indeed, given, as noted above, that litigants wanting to appeal in court face similar deterrence

— in that they are responsible for appellate filing fees and, if unsuccessful, the other party‘s appellate costs

— to the extent the provision would deter Valencia le ss than Sanchez from requesting a second arbitration, it ―confer[s] no more of an advantage than would be the case had the25

action been brought in court,‖ and thus is not unconscionable. ( Little , supra , 29 Cal.4th at p. 1075, fn. 1.) Moreover, the FAA pree mpts the majority‘s rule insofar as it makes a

― substantial deterrent effect ‖ sufficient to establish substantive unconscionability. (Maj. opn., ante , at p. 2 2 .) In American Exp. Co. v. Italian Colors Restaurant (2013) __ U.S. _

_ [1 33 S.Ct. 2304, 2308

- 23 11] ( Italian Colors ) , the high court held that the FAA required enforcement of an arbitration clause notwithstanding uncontested proof that it would impose prohibitive costs on plaintiffs suing under the federal antitrust laws. The plaintiffs, in resistin g enforcement, relied on ― a judge

- made exception to the FAA ‖

— known as ―[t]he  ̳effective vindication‘ exception‖

— w hich allows federal courts to invalidate arbitration agreements

― that prevent the  ̳ effective vindication ‘ of a federal statutory right. ‖ ( Id. at p.

__ [1 33 S.Ct. at p. 2310] .) This exception, the high court explained, ―finds its origin in the desire to prevent  ̳prospective waiver of a party‘s right to pursue statutory remedies,‘ [citation]. That would certainly cover a provision in an arb itration agreement forbidding the assertion of certain statutory rights. And it would perhaps cover filing and administrative fees attached to arbitration that are so high as to make access to the forum impracticable. [Citation.] But the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy. [Citation.]‖ ( Id . at pp. __ [1 33 S.Ct. at pp. 2310

– 2311 ] .) Under this binding precedent , if a cost provision does
not i mpose fees that ― make access to the forum impracticable‖ ( ibi d. ) , then the FAA precludes a court from invalidat ing it as unconscionable because of a subjective determination that it will, in a particular case, ― have a substantial26

deterrent effect ‖ on a par ty‘s exercise of the right to request a second arbitration. 6 (Maj. opn., ante , at p. 2 2 .) I also disagree with the majority‘s view that parties asserting unconscionability based on their inability to afford arbitration costs may satisfy their burden with evidence of their financial situation at the time a ―  ̳dispute arises.‘ ‖ (Maj. opn., ante , at p. 22.) As the majority correctly recognizes ( ibid. ), a determination of unconscionability must be based on the circumstances that existed ―at the time [the c ontract] was made‖ (Civ. Code, § 1670.5, subd. (a)), not on hindsight in light of subsequent events. ( Setzer v. Robinson (1962) 57 Cal.2d 213, 217; Colton v. Stanford (1890) 82 Cal. 351.) Thus, in determining affordability, Sanchez must submit evidence sh owing , not what he (and, under the majority‘s approach, Valencia) could afford when the dispute arose, but what he could have afforded at the time he signed the contract

. The majority‘s assertion otherwise ― is contrary to statute .‖ ( Parada v. Superior Co urt (2009) 176 Cal.App.4th 1554, 1583.) Finally, the majority‘s analysis of the cost provision improperly blurs distinct grounds on which this court has relied in prior decisions to invalidate arbitration provisions: unconscionability, which is at issue h ere, and public policy,

6 Even under the view of the dissent in Italia n Colors , the FAA would, for two reasons, preempt the majority‘s rule

. First, the effective vindication exception is inapplicable when a party ― could feasibly vindicate‖ his or her claim in arbitration. ( Italian Colors , supra , __ U.S. at p. _ _ [1 33 S.Ct. at p. 232 0 ] (dis. opn. of Kagan, J.) .) A second arbitration is not infeasible merely because a cost provision has ― a substantial deterrent effect ‖ on a party‘s decision to request a second arbitration. ( M aj. opn., ante , at p. 2 2.) Second, concerns abou t enforcing

― state law‖ do not even ―implicate the effective

- vindication rule

. When a state rule allegedly conflicts with the FAA, [courts] apply standard preemption principles, asking whether the state law frustrates the FAA ‘ s purposes and objectives. I f the state rule does so

— as

. . . in [ Concepcion ]

— the Supremacy Clause requires its invalidation

. ‖ ( Italian Colors , supra , at p. __ [133 S.Ct. at p. 2320] (dis. opn. of Kagan, J.), final italics added.)27

which is not. As the majority explains (maj. opn., ante , at p. 18), in Armendariz , supra , 24 Cal.4th at pages 11 0

- 111, this court held that ―when an employer imposes mandatory arbitration as a condition of employment, the a rbitrati on 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.‖ However, contrary to what the majority‘s discussion suggests, this holding was not based on unconscionability. Rather, it was based on the view that forcing employees to pay costs in arbitration they would not have to pay in court would be ―contrary to public policy‖ ( i d. at p. 110 ) in that it would ―effe ctively prevent[] them from vindicating‖ ( id . at p. 107) unwaivable statutory rights established for a public reason ( id . at pp. 100

- 101). (See Little , supra , 29 Cal.4th at p. 1084 [ Armendariz ‘ s rule ― is derived from state contract law principles regardin g the unwaivability of certain public rights ‖].) Similarly, the discussion from Gutierrez on which the majority relies (maj. opn.,

ante , at pp. 20

- 21) addressed, not unconscionability, but whether contractual terms, by ―undercut[ting] unwaivable state sta tutory rights,‖ ―violate[d] the public policy underlying [those] rights.‖ ( Gutierrez , supra , 114 Cal.App.4th at pp. 94

- 95.) ―[T] he public policy and unconscionability defenses ‖ this court has announced ― are different in important respects. A public poli cy defense is concerned with the relationship of the contract to society as a whole, and targets contractual provisions that undermine a clear public policy, such as an unwaivable statutory right designed to accomplish a public purpose. [Citation.] Uncon scionability is concerned with the relationship between the contracting parties and one

- sided terms [citation] , such that consent in any real sense appears to be lacking. Contracts can be contrary to public policy but not unconscionable [c itation] and vic e versa [citation].‖ ( Sonic

- Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 , 686 ( Sonic I ).) The majority loses sight of these differences in its discussion of Armendariz and Gutierrez

.28

But there is another important reason for not applying Armendariz ‘ s categorical rule here, in addition to the fact that i t i s not based on unconscio na bility: under Italian Colors , the FAA preempts it. As earlier explained, the high court held in that case that the FAA required enforcement of an arbitration clause notwi thstanding uncontested proof that it would impose prohibitive costs on plaintiffs, thus preventing them from effectively vindicating their rights under the federal antitrust laws . ( Italian Colors , supra , __ U.S. at pp.

__ [1 33 S.Ct. at pp. 2308

- 2311.) Th e effective vindication exception, the high court held, ― perhaps ‖ covers cost provisions that make access to arbitration

― impracticable ,‖ but does not cover provisions that merely make a federal claim

― not worth the expense ‖ to prove

. ( Id. at pp. __ [1 33 S.Ct. at pp. 2310

– 2311 ] .) Armendariz ‘s categorical rule is based, not on proof that arbitration would, in fact, be financially impracticable for a particular employee, but on the view that the mere ―possibility‖ employees ―will be charged substantial foru m costs‖ in arbitration would ―chill[] the exercise‖ of their statutory right. ( Armendariz , supra , 24 Cal.4th at p. 110.) If, as Italian Colors holds, the FAA requires enforcement of an arbitration provision despite actual proof it would impose prohibiti ve costs, then surely it precludes courts from invalidating an arbitration clause based on the theoretical, unproven chilling effect of imposing ―any type of expense that the [party resisting arbitration] would not be required to bear ‖ in a

court action

. 7 (

Armendariz , supra , 24 Cal.4th at p

. 110 .) For the preceding reasons, I agree that Sanchez has failed to establish substantive unconscionability. I therefore concur in the judgment.
CHIN, J.

7 For the same reasons previously discussed i n connection with the majority‘s substantial deterrence standard ( ante , p. 26, fn. 6), eve n under the view of the dissent in Italian Colors , the FAA would preempt Armendariz’s prophylactic, categorical rule

.1

See last page for addresses and telephone numbers for counsel who argued in Supreme Court. Name of Opinion Sanchez v. Valencia Holding Company, LLC

__________________________________________________________________________________ Unpublished Opinion Original Appeal Original Proceeding Review Granted XXX 201 Cal.Ap p.4th 74 Rehearing Granted

__________________________________________________________________________________ Opinion No. S199119 Date Filed: August 3, 2015

__________________________________________________________________________________ Court: Superi or County: Los Angeles Judge: Rex Heeseman

__________________________________________________________________________________ Counsel: Tharpe & Howell, Christopher S. Maile, Soojin Kang; Callahan Thompson Sherman & Caudill, Robert W. Thompson, Charles S . Russell; Atkinson, Andelson, Loya, Ruud & Romo, Kellie S. Christianson; Greines, Martin, Stein & Richland, Robert A. Olson, Edward L. Xanders, Meehan R. Rasch and David E. Hackett for Defendant and Appellant. Sheppard, Mullin, Richter & Hampton and Anna S. McLean for Toyota Motor Credit Corporation and General Motors Financial Company, Inc., as Amici Curiae on behalf of Defendant and Appellant. Pillsbury Winthrop Shaw Pittman, Richard M. Segal and Nathaniel R. Smith for Nissan Motor Acceptance Corporati on as Amicus Curiae on behalf of Defendant and Appellant. Littler Mendelson, Henry D. Lederman, Alexa L. Woerner, Anthony Ly; Simpson, Cameron, Medina & Autrey and Erin Nemirovsky Medina for Volt Management Corp. and Volt Information Sciences, Inc., as Am ici Curiae on behalf of Defendant and Appellant. Horvitz & Levy, Lisa Perrochet, Felix Shafir, Robert H. Wright and John F. Querio for California New Car Dealers Association as Amicus Curiae on behalf of Defendant and Appellant.
Severson & Werson, Jan T. Chilton and Donald J. Querio for American Financial Services Association, California Financial Services Association and California Bankers Association as Amici Curiae on behalf of Defendant and Appellant.

Erika C. Frank and Fred J. Hiestand for The Calif ornia Chamber of Commerce and The Civil Justice Association of California as Amici Curiae on behalf of Defendant and Appellant. Mayer Brown, Donald M. Falk, Andrew J. Pincus, Evan M. Tager, Archis A. Parasharami and Brian J. Wong for The Chamber of Commer ce of the United States of America, The Association of Global Automakers, Inc., and The Alliance of Automobile Manufacturers as Amici Curiae on behalf of Defendant and Appellant.2

Page 2

– S199119

– counsel continued

Counsel:

Deborah J. La Fetra for Pacific Legal Foundation as Amicus Curiae on behalf of Defendant and Appellant. Toschi, Sidran, Collins & Doyle, David R Sidran, Thomas M. Crowell; Manning Leaver Bruder & Berberich, Robert D. Daniels and Crystal S. Yagoobian for Federated Mutual Insuranc e Company as Amici Curiae on behalf of Defendant and Appellant. Rosner, Barry & Babbitt, Hallen D. Rosner, Christopher P. Barry and Angela J. Smith for Plaintiff and Respondent.
Kreindler & Kreindler, Gretchen M. Nelson and Jacob H. Mensch for Consumer A ttorneys of California as Amicus Curiae on behalf of Plaintiff and Respondent.
Chavez & Gertler, Mark A. Chavez and Nance F. Becker for Arthur Lovett as Amicus Curiae on behalf of Plaintiff and Respondent. Aimee Feinberg for Consumers for Auto Reliabilit y and Safety as Amicus Curiae on behalf of Plaintiff and Respondent. Arbogast Law and David M. Arbogast for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiff and Respondent. McKenna Long & Aldridge and J. Alan Warfield for Associat ion of Southern California Defense Counsel as Amicus Curiae.3

Counsel who argued in Supreme Court (not intended for publication with opinion):

Robert A. Olson Greines, Martin, Stein & Richland 5900 Wilshire Boulevard, 12th Floor Los Angeles, CA 90036 (310) 859

- 7811

Hallen D. Rosner Rosner, Barry & Babbitt 10085 Carroll Canyon Road, Suite 100 San Diego, CA 92131 (858) 348

- 1005