1

Filed 5/25/23 Nathaniel v. Greene Motors CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or 

ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

VIRGIL NATHANIEL,

Plaintiff and Respondent,

v.

GREENE MOTORS, INC.,

Defendant and Appellant.

 A165056

 (Solano County

 Super. Ct. No. FCS056974)

Appellant Greene Motors, Inc., prevailed before the state Labor 

Commissioner on wage claims brought by respondent employee Virgil 

Nathaniel. When Nathaniel sought a de novo review of the commissioner’s 

order, Greene Motors filed a petition to arbitrate the matter. The trial court 

found that the parties’ arbitration agreement was procedurally and 

substantively unconscionable and thus unenforceable, and Greene Motors 

appealed. We affirm.

I.

FACTUAL AND PROCEDURAL

BACKGROUND

The record in this case is sparse and contains little detail about 

Nathaniel’s employment relationship with Greene Motors, a car dealership 

known as Avery Greene Honda in Vallejo. What we know is that Nathaniel 

applied for a job as a “Service–Advisor” with Greene Motors in fall 2015. He 
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signed an arbitration agreement printed on his form employment application, 

as all applicants are required to do. The font size of the agreement and the 

low quality of the copy in the appellate record make it difficult to discern each 

word of the clause governing alternative dispute resolution. 

Nathaniel was hired and in December 2015 he signed a second 

arbitration agreement as part of the “onboarding process,” again because he 

was required to do so to work for Greene Motors. We gather from the parties’ 

briefing in the trial court that this agreement was identical, “or nearly so,” to 

the one contained in Nathaniel’s employment application. A copy of the 

arbitration agreement Nathaniel signed in December 2015 appears in the 

record on a single page titled “AGREEMENTS.” Nathaniel’s signature 

appears after a paragraph titled “At Will Employment Agreement” that 

stated he agreed his employment and compensation were terminable at will. 

The remaining three-quarters of the page is filled with a single paragraph 

titled “Binding Arbitration Agreement.” As with the arbitration agreement 

Nathaniel signed when he applied for the job, the font size and low quality of 

the copy of this agreement in the record make it difficult to discern each word 

of the agreement. No evidence was presented in the trial court describing 

whether or how the original agreement Nathaniel signed differed from the 

copy as it appears in the record.

In the petition to compel arbitration, however, the text of the 

agreement was set forth, and we quote it in its entirety:

“I also acknowledge that the Company utilizes a system of alternative 

dispute resolution which involves binding arbitration to resolve all 

disputes which may arise out of the employment context. Because of 

the mutual benefits (such as reduced expense and increased efficiency) 

which private binding arbitration can provide both the Company and 

myself, I and the Company both agree that any claim, dispute, and/or 

controversy that either party may have against one another (including, 

but not limited to, any claims of discrimination and harassment, 
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whether they be based on the California Fair Employment and Housing 

Act, Title VII of the Civil Rights Act of 1964, as amended, as well as all 

other applicable state or federal laws or regulations) which would 

otherwise require or allow resort to any court or other governmental 

dispute resolution forum between myself and the Company (or its 

owners, directors, officers, managers, employees, agents, and parties 

affiliated with its employee benefit and health plans) arising from, 

related to, or having any relationship or connection whatsoever with 

my seeking employment with, employment by, or other association with 

the Company, whether based on tort, contract, statutory, or equitable 

law, or otherwise, (with the sole exception of claims arising under the 

National Labor Relations Act which are brought before the National 

Labor Relations Board, claims for medical disability benefits under the 

California Workers’ Compensation Act, and Employment Development 

Department claims) shall be submitted to and determined exclusively 

by binding arbitration. In order to provide for the efficient and timely

adjudication of claims, the arbitrator is prohibited from consolidating 

the claims of others into one proceeding. This means that an arbitrator 

will hear only my individual claims and does not have the authority to 

fashion a proceeding as a class or collective action or to award relief to 

a group of employees in one proceeding. Thus, the Company has the 

right to defeat any attempt by me to file or join other employees in a 

class, collective, representative, or joint action lawsuit or arbitration 

(collectively ‘class claims’). I and the Company both agree that any 

challenge to the prohibition against consolidating the claims of others 

into a single proceeding, whether as a class, a representative action or 

otherwise, is a gateway issue and shall be determined by the Superior 

Court; and any substantive claims shall not be decided by the 

arbitrator until after the gateway determination is made by the Court. 

I further understand that I will not be disciplined, discharged, or 

otherwise retaliated against for exercising my rights under Section 7 of 

the National Labor Relations Act, including but not limited to 

challenging the limitation on a class, collective, representative, or joint 

action. I understand and agree that nothing in this agreement shall be 

construed so as to preclude me from filing any administrative charge 

with, or from participating in any investigation of a charge conducted 

by, any government agency such as the Department of Fair 

Employment and Housing and/or the Equal Employment Opportunity 

Commission; however, after I exhaust such administrative 

process/investigation, I understand and agree that I must pursue any 

such claims through this binding arbitration procedure. I acknowledge 
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that the Company’s business and the nature of my employment in that 

business affect interstate commerce. I agree that the arbitration and 

this Agreement shall be controlled by the Federal Arbitration Act, in 

conformity with the procedures of the California Arbitration Act (Cal. 

Code Civ. Proc. sec 1280 et seq., including section 1283.05[1] and all of 

the Act’s other mandatory and permissive rights to discovery). 

However, in addition to requirements imposed by law, any arbitrator 

herein shall be a retired California Superior Court Judge and shall be 

subject to disqualification on the same grounds as would apply to a 

judge of such court. To the extent applicable in civil actions in 

California courts, the following shall apply and observed: all rules of 

pleading (including the right of demurrer), all rules of evidence, all 

rights to resolution of the dispute by means of motions for summary 

judgment, judgment on the pleadings, and judgment under Code of 

Civil Procedure section 631.8. Resolution of the dispute shall be based 

solely upon the law governing the claims and defenses pleaded, and the

arbitrator may not invoke any basis (including, but not limited to, 

notions of ‘just cause’) other than such controlling law. The arbitrator 

shall have the immunity of a judicial officer from civil liability when 

acting in the capacity of an arbitrator, which immunity supplements 

any other existing immunity. Likewise, all communications during or 

in connection with the arbitration proceedings are privileged in 

accordance with Cal. Civil Code section 47(b). As reasonably required 

to allow full use and benefit of this Agreement’s modifications to the 

Act’s[2] procedures, the arbitrator shall extend the times set by the Act 

for the giving of notices and settings of hearings. Awards shall include 

the arbitrator’s written reasoned opinion. If Section 1284.2 of the Code 

of Civil Procedure conflicts with other substantive statutory provisions 

or controlling case law, the allocation of costs and arbitrator fees shall 

be governed by said statutory provisions or controlling case law instead 

of Section 1284.2. Both the Company and I agree that any arbitration 

1 Code of Civil Procedure section 1283.05 provides for obtaining 

depositions and other discovery if the parties incorporate the statute’s 

provisions into their arbitration agreement (Code Civ. Proc., § 1283.1, 

subd. (b)). All undesignated statutory references are to the Code of Civil 

Procedure. 

2 By this point the agreement had named six legislative acts, but none 

of them were specifically defined as “Act.” It appears this was a reference to 

the California Arbitration Act.
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proceeding must move forward under the Federal Arbitration Act 

(9 U.S.C. §§ 3–4) even though the claims may also involve or relate to 

parties who are not parties to the arbitration agreement and/or claims 

that are not subject to arbitration: thus, the court may not refuse to 

enforce this arbitration agreement and may not stay the arbitration 

proceeding despite the provisions of California Code of Civil 

Procedure 1281.2(c).” 

Below this paragraph are the following two acknowledgements:

“I UNDERSTAND BY AGREEING TO THIS BINDING 

ARBITRATION PROVISION, BOTH I AND THE COMPANY GIVE UP 

OUR RIGHTS TO TRIAL BY JURY.”

“Should any term or provision, or portion thereof, be declared void or 

unenforceable it shall be severed and the remainder of this agreement 

shall be enforced. I hereby acknowledge that I have read the above 

statements and understand the same.” 

A copy of the original one-page agreement is attached as Exhibit A to 

Greene Motors’s petition to arbitrate, and Nathaniel’s signature appears at 

the bottom of the page.

The human resources administrator for Greene Motors attested that 

Nathaniel “was given all the time he needed to review these documents,” and 

he “was not rushed in signing these arbitration agreements, was provided an 

opportunity to ask questions about the agreement, and was free to seek 

outside counsel in connection with signing the arbitration agreement.” 

Nathaniel did not ask questions about the agreements or seek additional 

advice about signing them. 

At some point Nathaniel raised complaints about overtime wages, 

meal-period premium wages, liquidated damages, and waiting-time 

penalties. All we know about those complaints is that a Berman hearing was 

held before the Labor Commission, which denied relief to Nathaniel in an 
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order dated April 29, 2021. So far as this court can tell, neither party sought 

to arbitrate the matter in lieu of the Berman hearing.

In the order denying relief, Nathaniel was notified that the order would 

“become final and enforceable as a judgment in a court of law unless either or 

both parties exercise their right to appeal to the appropriate court [which was 

identified as the Solano County Superior Court] within ten (10) days.” (Lab. 

Code, § 98.2, subd. (a).) Using a state-approved form, Nathaniel filed an 

appeal for a de novo review of the order in the Solano County Superior Court. 

Greene Motors then filed a petition to compel arbitration in the trial 

court, arguing that Nathaniel’s “filing of his appeal in this Court was 

squarely inconsistent with an intent to submit his disputes to binding 

arbitration.” Nathaniel opposed the petition, arguing that the arbitration 

provisions were procedurally and substantively unconscionable. The trial 

court agreed with Nathaniel and denied the petition to compel. 

II.

DISCUSSION

Greene Motors argues that the trial court erred when it denied the 

petition to compel arbitration. We are not persuaded.

A. General Principles and the Standard of Review.

The Federal Arbitration Act (FAA, 9 U.S.C. § 1 et seq.) provides that a 

written agreement to arbitrate “shall be valid, irrevocable, and enforceable, 

save upon such grounds as exist at law or in equity for the revocation of any 

contract.” (9 U.S.C. § 2.) The FAA expresses favor for arbitration 

agreements. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development 

(US), LLC (2012) 55 Cal.4th 223, 235 (Pinnacle).) “In determining the rights 

of parties to enforce an arbitration agreement within the FAA’s scope, courts 

apply state contract law while giving due regard to the federal policy favoring 

arbitration.” (Id. at p. 236.)
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“The party seeking arbitration bears the burden of proving the 

existence of an arbitration agreement, and the party opposing arbitration 

bears the burden of proving any defense, such as unconscionability.” 

(Pinnacle, supra, 55 Cal.4th at p. 236.) Nathaniel does not dispute that he 

signed an arbitration agreement with Greene Motors or that if the agreement 

were valid it would cover his claims. He argues solely that the agreement 

was unconscionable.3

“The general principles of unconscionability are well established. A 

contract is unconscionable if one of the parties lacked a meaningful choice in 

deciding whether to agree and the contract contains terms that are 

unreasonably favorable to the other party. [Citation.] Under this standard, 

the unconscionability doctrine ‘ “has both a procedural and a substantive

element.” ’ [Citation.] ‘The procedural element addresses the circumstances 

of contract negotiation and formation, focusing on oppression or surprise due 

to unequal bargaining power. [Citations.] Substantive unconscionability 

pertains to the fairness of an agreement’s actual terms and to assessments of 

3 In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 (Sonic I) 

our State Supreme Court held that arbitration agreements requiring 

employees to waive Berman hearings were categorically unconscionable. But 

the Court also held that arbitration agreements could be enforced on appeals 

from Berman rulings. (Id. at p. 669.) The judgment in Sonic I was vacated 

by the United States Supreme Court, and the matter was remanded for 

consideration in light of AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 

333. On remand, our Supreme Court held that an arbitration agreement is 

not categorically unconscionable solely because it entails a waiver of the 

Berman procedure, and that an agreement to arbitrate wage disputes can be 

enforceable so long as it provides an accessible and affordable process for 

resolving those disputes. (Sonic-Calabasas A, Inc. v. Moreno (2013) 

57 Cal.4th 1109, 1146.) The parties do not argue, and we therefore do not 

decide, whether employers may forfeit their right to compel arbitration of a 

Berman appeal when they fail, as Greene Motors failed here, to seek to 

compel arbitration of the Berman hearing.
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whether they are overly harsh or one-sided.’ ” (OTO, L.L.C. v. Kho (2019) 

8 Cal.5th 111, 125.) Both procedural and substantive unconscionability must 

be shown to establish the defense. (Ibid.)

The doctrine of unconscionability ensures that contracts, particularly 

those of adhesion, do not impose terms that are overly harsh, unduly 

oppressive, or are so one-sided as to shock the conscience. (Sanchez v. 

Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910 (Sanchez).) It does not, 

however, encompass a simple bad bargain. (Id. at p. 911.) “An evaluation of 

unconscionability is highly dependent on context.” (Ibid.) “The doctrine often 

requires inquiry into the ‘commercial setting, purpose, and effect’ of the 

contract or contract provision.” (Ibid.) “[T]he 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 should 

withhold enforcement.” (Id. at p. 912.) 

“Where, as here, the evidence is not in conflict, we review the trial 

court’s denial of arbitration de novo.” (Pinnacle, supra, 55 Cal.4th at p. 236.) 

We review the trial court’s order denying arbitration and not its reasoning, 

affirming it if it is correct on any theory that may be found in the record. 

(Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686.)

B. The Trial Court Correctly Found Procedural Unconscionability.

Greene Motors first argues that Nathaniel “failed to establish a high 

degree of procedural unconscionability.” (Formatting omitted.) Even if we 

agreed that the level of procedural unconscionability was not extreme, we 

conclude that Nathaniel established sufficient procedural unconscionability.

“A procedural unconscionability analysis ‘begins with an inquiry into 

whether the contract is one of adhesion.’ [Citation.] An adhesive contract is 
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standardized, generally on a preprinted form, and offered by the party with 

superior bargaining power ‘on a take-it-or-leave-it basis.’ [Citations.] 

Arbitration contracts imposed as a condition of employment are typically 

adhesive.” (OTO, L.L.C. v. Kho, supra, 8 Cal.5th at p. 126.) The question 

then becomes “whether circumstances of the contract’s formation created 

such oppression or surprise that closer scrutiny of its overall fairness is 

required. (Ibid.) “ ‘ “ ‘Oppression occurs where a contract involves lack of 

negotiation and meaningful choice, surprise where the allegedly 

unconscionable provision is hidden within a prolix printed form.’ ” ’ ” (Ibid.) 

Where a party had no ability to individually negotiate a contract’s terms, 

could not opt out of an arbitration provision, and thus had no meaningful 

choice but to accept an arbitration provision as drafted by the other party, 

this establishes at least a minimal level of procedural unconscionability. 

(Bakersfield College v. California Community College Athletic Assn. (2019) 

41 Cal.App.5th 753, 762–763.) “[I]n the case of preemployment arbitration 

contracts, the economic pressure exerted by employers on all but the most 

sought-after employees may be particularly acute, 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 v. Foundation Health Psychcare Services, Inc.

(2000) 24 Cal.4th 83, 115 (Armendariz).) 

The trial court acknowledged that Nathaniel did not produce evidence 

about the circumstances under which he was presented with the arbitration 

agreements and asked to sign them. The court concluded, though, that “a 

facial review” of the agreements revealed “that both are complex, difficult to 

read and contain lengthy run-on sentences that are not separated by topic or 

paragraph. Each utilizes a small font. The language itself is replete with 
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significant legal[ese] and numerous references to state and federal statutes. 

The language utilized is intended for lawyers, not an unsophisticated 

applicant or employee.” The court concluded that “[t]he document speaks for 

itself,” and its language and presentation supported a finding of procedural 

unconscionability. 

On appeal, Greene Motors does not dispute that the agreements

Nathaniel signed were adhesive. It acknowledges that the agreements 

“therefore bear some degree of procedural unconscionability.” Rather than 

directly addressing the trial court’s reasons for finding procedural 

unconscionability, the company focuses on the arguments Nathaniel made 

below when he opposed the petition to compel arbitration. 

It may be true that the long, run-on, legalistic second agreement that 

Nathaniel signed is clearly titled “Binding Arbitration Agreement,” as Greene 

Motors stresses. And the acknowledgement at the bottom of the document 

that Nathaniel gives up his right to jury trial is in bold text and is legible, in 

contrast to the substantive terms of the agreement that are in small type. 

But these arguments sidestep the actual reasons the trial court articulated in 

concluding that the agreement is procedurally unconscionable. We agree 

with the trial court that the agreement Nathaniel signed is printed in small 

font, the run-on sentences are poorly organized, and the text is written for 

lawyers, not layperson job applicants. These facts support a finding of 

surprise. (OTO, L.L.C. v. Kho, supra, 8 Cal.5th at p. 128 [agreement was “a 

paragon of prolixity,” was “written in an extremely small font,” and the 

“single dense paragraph” was “ ‘visually impenetrable’ and ‘challenge[d] the 

limits of legibility’ ”].) Because Greene Motors acknowledges some procedural 

unconscionability and does not challenge the trial court’s findings that also 
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support finding procedural unconscionability, we proceed to examine whether 

the agreement was substantively unconscionable. 

C. The Trial Court Correctly Found Substantive Unconscionability. 

Greene Motors contends that the trial court also erred when it 

concluded that the arbitration agreement was substantively unconscionable. 

Although this is a closer question, we are guided by OTO, L.L.C. v. Kho, 

supra, 8 Cal.5th 111, and agree with the trial court that the agreement is 

substantively unconscionable.

“Substantive unconscionability pertains to the fairness of an 

agreement’s actual terms and to assessments of whether they are overly 

harsh or one-sided. [Citations.] A contract term 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.) Under Armendariz, arbitration of claims under the 

California Fair Employment and Housing Act (FEHA, Gov. Code, § 12900 et 

seq.) is subject to certain minimal requirements: (1) the arbitration 

agreement may not limit damages otherwise available under the statute,

(2) there must be sufficient discovery to adequately arbitrate the claim, 

(3) there must be a written arbitration decision with judicial review sufficient 

to ensure that arbitrators comply with statutory requirements, and (4) the 

employer must pay all types of costs that are unique to arbitration. 

(Armendariz, supra, 24 Cal.4th at pp. 103, 106, 113.) These requirements 

apply to wage claims. (OTO, L.L.C. v. Kho, supra, 8 Cal.5th at p. 128 & 

fn. 9.)

The trial court concluded that the arbitration agreement was 

substantively unconscionable because it failed to address where to initiate 

arbitration, failed to afford discovery, and impermissibly shifted the expense 
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of arbitration to the employee while preserving Greene Motors’s right to file 

costly and extensive motions (i.e., demurrer and motion for summary 

judgment). Although we agree with Greene Motors that the agreement’s 

reference to section 1283.05 (covering depositions and other discovery in 

arbitration) and its “mandatory and permissive rights to discovery” provided 

sufficient discovery rights,4 we conclude that other reasons cited by the trial 

court properly support a determination that the agreement is substantively 

unconscionable.

To begin with, we agree with the trial court that the arbitration 

agreement’s failure to specify where or how the employee is to initiate 

arbitration supports a determination of substantive unconscionability. The 

agreement asserts that Greene Motors “utilizes a system of alternative 

dispute resolution which involves binding arbitration,” but it provides no 

explanation on how the employee is supposed to access any such system. 

Greene Motors maintains there is generally no requirement for such a 

specification and that parties may petition the court to select an arbitrator

when they are uncertain how to engage one. (§ 1281.6; see American Home 

Assurance Co. v. Benowitz (1991) 234 Cal.App.3d 192, 199.) But this ignores 

that the Supreme Court has made clear that circumstances and context are 

particularly important in evaluating unconscionability in cases, such as this 

4 Nathaniel contends that section 1283.05 is “limited by” section 1283.1. 

Section 1283.1 mandates that section 1283.05 be conclusively incorporated 

into any arbitration agreement covering wrongful death of another, whether 

or not the statute is specifically mentioned. (§ 1283.1, subd. (b).) But an 

agreement can specifically incorporate the terms of section 1283.05, which 

was done here. (§ 1283.1, subd. (b).) True, section 1283.05 may not provide 

“the full panoply of discovery,” as Nathaniel argues. But even in the 

employment context, parties to arbitration are “permitted to agree to 

something less than the full panoply of discovery provided in Code of Civil 

Procedure section 1283.05.” (Armendariz, supra, 24 Cal.4th at pp. 105–106.)
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one, involving an employee’s wage claim. (OTO, L.L.C. v. Kho, supra, 

8 Cal.5th at p. 136; see Sanchez, supra, 61 Cal.4th at p. 911.)

OTO, L.L.C. v. Kho, supra, 8 Cal.5th 111, provides significant guidance 

on how to evaluate the agreement here because it involved the fairness of an

agreement, strikingly similar to the one at issue here, that was used to try 

and compel the arbitration of an employee’s wage claims in lieu of a Berman 

hearing. (Id. at pp. 117–118.) OTO concluded that the agreement’s failure to 

explain how to initiate arbitration or to specify a commercial arbitration 

provider were significant factors causing the agreement to be substantively 

unconscionable. (Id. at p. 131.) The court observed that the “agreement does 

not mention how to bring a dispute to arbitration, nor does it suggest where 

that information might be found. Commercial arbitration providers, for 

example, frequently provide standardized forms to start the process. 

Employees can also contact the provider for information on claim initiation. 

The agreement here, however, identifies no commercial providers. In fact, it 

does not mention that such providers exist.” (Ibid, fn. omitted.) In addition, 

the court observed that the agreement “mandates that the arbitrator be a 

‘retired California Superior Court Judge’ but gives no indication how an 

employee might find such a person, let alone one willing to arbitrate a wage 

claim.” (Ibid.) The arbitration agreement here has the same omissions and 

includes the identical reference to a retired superior court judge. As the court 

in OTO pointed out, these omissions and references reflect substantive 

unconscionability because they mean that some employees “may be so 

confused by the agreement that they are deterred from bringing their wage 

claims at all.” (Ibid.)

The confusing nature of the terms here was exacerbated by other 

circumstances in this case. Greene Motors did not seek to compel arbitration 
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in lieu of the Berman hearing itself, leaving the impression that it was not 

interested in pursuing arbitration. And, under the order resulting from the 

Berman hearing, Nathaniel was correctly told that he was required under 

Labor Code section 98.2 to file a notice of appeal within 10 days or the order 

issued after the Berman hearing would have become a final and enforceable 

judgment. 

Under these circumstances, Nathaniel cannot reasonably have been 

expected to discern, much less navigate, the arbitration agreement’s murky 

arbitral procedures. Greene Motors itself seems uncertain on precisely what 

Nathaniel should have done. In its petition in the trial court, it took the 

position that Nathaniel’s filing of the notice of appeal was in “repudiation” of 

the arbitration agreement, suggesting that Nathaniel should not have filed 

the notice. We flatly reject any such suggestion since Labor Code 

section 98.2, subdivision (a) requires the filing of a notice of appeal to 

preserve a challenge to an order resulting from a Berman hearing.

We also agree with the trial court that the arbitration agreement’s cost 

provision evinces substantive unconscionability. The provision is convoluted 

and drafted in a way to favor Greene Motors. To reiterate, the agreement 

provides that “[i]f Section 1284.2 of the Code of Civil Procedure [providing 

that parties to arbitration pay their own share of costs] conflicts with other 

substantive statutory provisions or controlling case law, the allocation of 

costs and arbitrator fees shall be governed by said statutory provisions or 

controlling case law instead of Section 1284.2.” Section 1284.2 states, 

“Unless the arbitration agreement provides or the parties to the arbitration 

otherwise agree, each party to the arbitration shall pay his pro rata share of 

the expenses and fees of the neutral arbitrator, together with other expenses 

of the arbitration incurred or approved by the neutral arbitrator, not 
15

including counsel fees or witness fees or other expenses incurred by a party 

for his own benefit.” But under Armendariz, section 1284.2’s cost-sharing 

terms do not apply in employment cases, such as this one. (Armendariz, 

supra, 24 Cal.4th at p. 113.)

Thus, the agreement’s passage creates both procedural and substantive 

unconscionability concerns. In discussing the procedural unconscionability of 

an identical term, OTO explained that “[i]t is difficult to envision that [the 

employee] would have had any idea what the cited code section says or that a 

13-year-old case creates a relevant exception to it. . . . It would have been 

nearly impossible to understand the contract’s meaning without legal 

training and access to the many statutes it references.”5 (OTO, L.L.C. v. Kho, 

8 Cal.5th at p. 129.) In addition to procedural unconscionability, the 

provision evinces substantive unconscionability. The convoluted passage’s 

references to section 1284.2 and the mandatory use of a retired superior court 

judge deter employees from filing arbitration claims because they incorrectly 

suggest that the employees might be required to pay a portion of arbitration 

costs.

We recognize that a Berman hearing took place in this case and 

rendered a decision in favor of Greene Motors. We accept the company’s 

point that the procedural posture of this case is thus different from the 

procedural posture in OTO, L.L.C. v. Kho, supra, 8 Cal.5th 111, which makes

this case perhaps a closer call. Greene Motors contends the distinction 

5 This may be what the trial court was getting at when it found that the 

agreement “inappropriately shifts the expense of an arbitration to the 

employee.” In other words, one possible interpretation of the agreement is 

that the employee must bear his or her costs. We agree with Greene Motors

that, taking into account the caselaw not mentioned in the agreement, the 

clause cannot be fairly read to shift expenses to Nathaniel. 
16

means it did not use the arbitration agreements “to effectuate a waiver of 

Berman rights or the replacement of simplified administrative claims with 

the complexities of civil litigation.” But the procedures in a de novo review 

have some apparent advantages for the employee that do not appear 

available in Greene Motors’s opaque “system of alternative dispute 

resolution.” (See, e.g., OTO, L.L.C. v. Kho, supra, 8 Cal.5th at p. 123

[procedures permit “the [Labor C]ommissioner to represent claimants on 

appeal and facilitate award collection”].) We reject the notion that the 

arbitration agreement, which under OTO clearly would have been 

unenforceable at the Berman hearing stage of the proceedings, has somehow 

become enforceable at the de novo stage of the proceedings.6

Finally, it does not appear that Greene Motors requested in the trial 

court that any part of the arbitration agreement be severed in the event that 

the court found unconscionability. And since the company likewise has not 

advanced any severance argument in this court, we need not consider the 

issue.

III.

DISPOSITION

The trial court’s order denying the petition to arbitrate is affirmed. 

Nathaniel shall recover his costs on appeal.

6 After briefing was complete in this case, Division Eight of the Second 

Appellate District filed two cases enforcing arbitration agreements between 

car dealerships and their employees because the agreements lacked 

substantive unconscionability. (Basith v. Lithia Motors, Inc. (2023) 

90 Cal.App.5th 951, 953; Fuentes v. Empire Nissan, Inc. (2023) 

90 Cal.App.5th 919, 923.) These cases are distinguishable because they did 

not involve wage claims or implicate the Berman process. (Basith at p. 953 

[plaintiff sued dealership “for firing him”]; Fuentes at p. 926 [plaintiff sued 

“for discrimination and wrongful termination”].)
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_________________________

Humes, P.J.

WE CONCUR:

_________________________

Banke, J.

_________________________

Swope, J.*

*Judge of the Superior Court of the County of San Mateo, assigned by 

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

Constitution.

Nathaniel v. Green Motors, Inc. A165056