Filed 6/18/15 La Count v. Patina Restaurant Group CA2/8 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication o r ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

TERRILL LA COUNT,
Plaintiff and Respondent,

v.
PATINA RESTAURANT GROUP, LLC,
Defendant and Appellant. B256470
(Los Angeles County Super. Ct. No. BC528098)

APPEAL from a judgment of the Superior Court of Los Angeles County, Mark V. Mooney, Jr., Judge. Affirmed.

Sheppard, Mullin, Richter & Hampton, Ry an D. McCortney and Kevin P. Jackson for Defendant and Appellant.

Diversity Law Group, Howard L. Mage e; Hyun Legal and Dennis S. Hyun for Plaintiff and Respondent.

* * * * * *2 We affirm the trial court’s denial of Patina Restaurant Group, LLC’s (Patina) petition to compel arbitration of the lawsuit initiated by its former employee Terrill La Count. We conclude that the arbitration procedure was both procedurally and substantially
unconscionable.
FACTS AND PROCEDURE
La Count worked as a server for Patina beginning in 2003. In March 2007, La Count signed a “UNIT STAFF HANDBOOK RECEIPT OF ACKNOWLEDGMENT” (Acknowledgment), acknowledging receipt of the “Unit Staff Employee Handbook (effective February, 2005).” Th e Acknowledgment stated: “If I am dissatisfied or disagree with any action or failure to act by the Compa ny, its employees, agents or representatives, I agree to submit the matter to th e Grievance and Arbitration Pro cedure in effect at the time for final and binding resolution a nd will not initiate a lawsuit.” Although the Acknowledgment refers to th e “Unit Staff Employee Handbook,” there
was no such document. There was a “Unit Staff Manual.” Page 29 of 35 of Patina’s “Unit Staff Manual [¶] Revised February 2005” (Manual) provided: “All potential employment disputes, including disputes in volving termination, harassment, and discrimination, must be resolved through a Grievance an d Arbitration procedure. A copy can be obtained from the General Manager or the Human Resources Ma nager. Signing the acceptance for this manual stipulates that you are in agreement th at all employment disputes must be resolved through the Grievance and Arbitr ation procedure in place at the time that the dispute arose.” The terms of the separate four-page “ GRIEVANCE AND ARBITRATION
PROCEDURE ” available from the general manager or human resources manager will be quoted at length in the course of this opinion. Basically, the Grievance and Arbitration Procedure identified a lengthy grievance pro cess that the employee was required to follow
in order to later arbitrate his or her claim. If the extensive grie vance process was not successful, the employee was required within 30 da ys of its failure to give Patina notice of
his or her intention to arbitrate. Patina wa s excused from the grievance process, but was required to arbitrate any claims it had against its employees. There was a “presumption”3 that each party would be self-represented in a ny arbitration. There was no evidence Patina signed any of the documents it claimed formed the arbitration agreement. La Count filed a complaint alleging causes of action for racial and sexual orientation
discrimination and harassment. He also alleged causes of ac tion for wrongful termination, intentional infliction of emotional distress, a nd failure to prevent harassment, retaliation.
All of the causes of action arose out of cond uct during La Count’s employment at Patina and alleged wrongful termination of that employment. La Count alleged that he was warned if he complained of the conduct of the general manager he would be terminated or his life would be made “very difficult.” La Count also alleged that he was retaliated against for complaining of unlawful conduct to manageme nt. La Count alleged the general manager wrongly terminated him. Patina moved to compel arbitration, arguing the parties had an agreement to arbitrate, and the arbitration provision was not unconsciona ble because it satisfied the requirements of Armendariz v. Foundation Health Ps ychcare Services, Inc. (2000) 24 Cal.4th 83 ( Armendariz ). In Armendariz , our high court explained: “ ‘[U]nconscionability has both a “procedural” and a “substantive” element,’ th e former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining powe r, the latter on ‘ “overly harsh” ’ or ‘ “onesided” ’ results. [Citation.] ‘The prevailin g view is that [procedural and substantive unconscionability] must both be present in order for a cour t to exercise its discretion to
refuse to enforce a contract or clause unde r the doctrine of unconscionability.’ [Citation.] But they need not be present in the same degree. ‘Essentia lly a sliding scale is invoked which disregards the regularity of the procedur al process of the contract formation, that creates the terms, in proportion to the gr eater harshness or unreasonableness of the substantive terms themselves.’ [Citations.] In other words, the more substantively oppressive the contract term, the less evidence of procedural unconsci onability is required to
come to the conclusion that the term is unenforceable, and vice versa.” ( Id. at p. 114.) A court may refuse to enforce a contract found “to have been unconscionable at the time it was made.” (Civ. Code, § 1670.5, subd. (a).)4 In support of Patina’s mo tion to compel arbitration, Dawn Hernandez, Patina’s human resources director, attached the Acknow ledgment, a copy of the cover of the Manual and a copy of page 29 of the Manual , which included a provision entitled “ G RIEVANCE AND A RBITRATION .” The other portions of the Manual were not attached to her declaration. The Manual does not emphasize the arbitration provision. The f ont size, capitalization, and emphasis in the heading is the same as all of the headings, such as “ E NTERING & L EAVING

THE P REMISES ,” “ E XIT I NTERVIEWS ,” and “ J OB D ESCRIPTIONS .” (In contrast to the arbitration provision, a provision stating that the Hollywood Bowl would accommodate patrons with disabilities was in a larger font si ze and in all capital letters.) Hernandez also attached a copy of Patina’s Gr ievance and Arbitration Procedur e, and represented that the procedures were referred to in the Manual. Hernandez’ s declaration was undisputed. In his opposition to the petiti on to compel arbitration, La Count argued among other things that the arbitration agreement was proc edurally and substantively unconscionable and that the offensive provisions were not severabl e. La Count averred that he was never given a copy of the Grievance and Arbitration Pr ocedure. He stated that he signed the Acknowledgment because he was told otherwise he “would not have a job.” According to him, Patina did not explain the significance of the Acknowledgment, and he was given only
a few minutes to review the document. Patina does not dispute any “fact” in La Count’s declaration. Patina replied to La Count’s op position to the motion to compel arbitration, arguing that the Grievance and Arbitration Pr ocedure do not contai n any unconscionable

terms. The trial court denied Patina’s motion to compel arbitration. The trial court concluded that the parties did not form a contract to arbitrate. The trial court’s written order did not discuss unconscionability. A copy of the reporter’s transc ript is not included in our
record.
DISCUSSION On appeal, “ ‘we review the correct ness of the order, and not the court’s reasons . . . .’ ” ( Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1201.) For purposes of this appeal only, we a ssume that the parties’ formed a contract to5 arbitrate. We conclude the trial court correc tly denied Patina’s petition to compel arbitration
because the contractual arbitra tion provision was unconscionable. 1 Unconscionability “Unconscionability has both a procedural and a substantive component under California law. [Citation.] Procedural un conscionability focuses on the elements of oppression and surprise. [Citation.] Oppressi on arises from an ine quality of bargaining power which results in no real negotiation and an absence of meaningful choice. Surprise
involves the extent to which th e terms of the bargain are hidden in a ‘ “ ‘ “ ‘ “prolix printed form” ’ ” ’ ” ’ drafted by a party in a superi or bargaining position. [Citation.] [¶] Substantive unconscionability focu ses on the actual terms of the agreement and evaluates whether they create ‘ “ ‘ “overly harsh” ’ ” or “ ‘ “one-sided” ’ resu lts.” ’ [Citation.] ‘Substantive unconscionability “may take vari ous forms,” but typically is found in the employment context when the arbitration agreem ent is “one-sided” in favor of the employer without sufficient justification, for exampl e, when “the employee’s claims against the employer, but not the employer’s cl aims against the employee, are subject to arbitration.” ’ ” ( Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.A pp.4th 165, 177.) Both the procedural and substantive un conscionability must be present before a
contract or term will be deemed unconscionable. Both, howeve r, need not be present to the same degree. A sliding scale is applied so that “ ‘ “ ‘the more substantively oppressive the contract term, the less eviden ce of procedural unc onscionability is required to come to the

1 Although the trial court did not initia lly determine whether the contract was unconscionable, no party argues th at any question of fact requires determination in the trial court. At oral argument, both sides expressly requested this court consider the issue, which was fully briefed on appeal. The “facts” in the declarations attached to the motion to compel arbitration and opposition are undisputed. Patina argues “[t]he facts here are simple and undisputed.” Patina furthe r argues “[t]he extrinsic eviden ce submitted by the parties in connection with Patina’s motion to compel arbitration did not co nflict or create any disputed factual issues.” Patina represented that the tr ial court made no factual findings and did not provide a reporter’s transcript of the hearing in the record on app eal. Absent a factual dispute, the issue may be determined for the first time on appeal. ( Lennar Homes of California, Inc. v. Stephens (2014) 232 Cal.A pp.4th 673, 686.)6 conclusion that the term is unenfor ceable, and vice versa.’ ” ’ ” ( Serafin v. Balco Properties Ltd., LLC, supra , 235 Cal.App.4th at p. 178.) Unconscionability is assessed at the time the contract was made, not based on subsequent events. ( American Software, Inc. v. Ali (1996) 46 Cal.App.4th 1386, 1391, 1392.) We discuss procedural and substantive unconscionability separately and conclude that there was a high level of each. 1. Procedural Unconscionability “Procedural unconscionability fo cuses on the factors of surpri se and oppression . . . .” ( Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406 ( Harper ).) “Oppression generally ‘takes the form of a contract of adhesion, “ ‘which, imposed and drafted by the party of superior bargaining strength, relegates to th e subscribing party only the opportunity to adhere to the contract or reject it.’ ” ’ [Citation. ] In the case of arbitr ation agreements in the employment context, ‘ “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 employme nt, and few employees are in a position to refuse a job because of an ar bitration require ment.” ’ ” ( Carmona v. Linc oln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84.)
In Harper , the parties signed a contract including an arbitration provision requiring
that controversies related to the contract “wer e to be settled ‘in accord ance with the Uniform Rules for Better Business Bureau Arbitration,’ ” which were not attached to the contract. ( Harper, supra , 113 Cal.App.4th at p. 1405.) The cour t found “surprise” in that the rules of the Better Business Bureau limited a plai ntiff’s ability to recover damages. ( Id . at p. 1406.) Because the rules were not attached, the custom er could not learn of this limitation without going to another source prior to signing the agreement. ( Ibid .) The court found the arbitration provision particularly oppressive because “[a]s written, th e clause pegs both the scope and procedure of the arbitration to ru les which might change. And it is unclear
whether an arbitration would be conducted unde r the Better Business Bure au rules as of the time of contracting, or at the time of arbitration. Thus even a customer who takes the trouble
to check the Better Business Bureau arbitration rules before signing the contract may be in7 for a preliminary legal battle in the event that Better Business Bureau arbitration rules were to become substantively less fa vorable in the interim.” ( Id . at p. 1407.) “The procedural element of an unconscionable contract ge nerally takes the form of a contract of adhesion, ‘ “which, imposed and dr afted by the party of superior bargaining strength, relegates to the subscr ibing party only the o pportunity to adhere to the contract or reject it.” ’ ” ( Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064 , 1071.) Here, it is undisputed that the arbitration provision was in a contract of adhesion, i.e., a standardized contract drafted by the party with superior bargaining strength. ( Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 12 51-1252.) The Manual, which was drafted solely by Patina
referenced the Grievance and Arbitration Proc edure, which also was drafted solely by Patina. It is undisputed that La Count wa s required to sign the Acknowledgment if he wanted to continue working for Patina. There was no evidence the Grievance and Arbitration Procedure was negotiable; to the c ontrary, they were on a form available only from the Patina general manager or human resources director. Additionally, as in Harper , there was “surprise” because La Count could not have learned the terms of the arbitration provision ev en if he investigated prior to signing the Acknowledgment. Under the provision in th e Manual, not only was an employee required to ask for the separate document, but also Patina reserved the right to modify the arbitration procedures at any time during the parties’ relationship. The ar bitration provision at the time the dispute arose governed. The Manu al provided that employment disputes “must be resolved through the Grievanc e and Arbitration procedure in place at the time that the dispute arose.” Thus even an employee who investigated Patina’s Grievance and Arbitration Procedure prior to signing the Acknowledgment would not know the full import of what he or she signed. Patina’s ability to modify its procedures guaranteed “surprise” because an employee canno t learn the specific terms of the arbitration procedures prior to agreeing to them. (See Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721.) The
Grievance and Arbitration Procedure was procedurally unconscionable.8 2. Substantive Unconscionability “ ‘Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they ar e overly harsh or one-sid ed. [Citations.] A contract term is not substantively unconsciona ble when it merely gives one side a greater benefit; rather, the term must be “so one-s ided as to ‘shock the conscience.’ ” ’ ” ( Carmona
v. Lincoln Millennium Car Wash, Inc., supra , 226 Cal.App.4th at p. 85.) “ ‘ “[T]he paramount consideration in assessing [substan tive] conscionability is mutuality.” ’ ” ( Id . at p. 85.) Patina argues that the arbitration provis ion is mutual because, like its employees, Patina was required to submit its claims to arb itration. Patina cites the following sentence in
Grievance and Arbitration Proced ure as the sole support for its argument: “In the event the Company desires to assert a cl aim against an employee, the claim shall be submitted to final and binding arbitration.” Alth ough that sentence supports Pa tina’s argument, the remainder of the four-page Grievance and Arbitration Pr ocedure does not. The requirement that both parties arbitrate is not dispositive. ( Little v. Auto Stig ler, Inc., supra , 29 Cal.4th at pp. 1070, 1072-1073 [finding a portion of the agreement was unconscionabl e even though both parties were obligated to arbitrate].) Most of the provisions in the Grievance and Arbitration Procedure were not mutual. First, the procedure sets forth a burdensome three-step grievance procedure only the employee was required to follow. (See Pokorny v. Quixtar, Inc . (9th Cir. 2010) 601 F.3d 987, 999 [under California law, obligation to engage in nonmutual conciliation process among other factors supported unconscionability].) The empl oyee was required to discuss his or her grievance with his or her immediate s upervisor within 90 days after it arose. If the supervisor failed to timely respond, the employee bore the burden to obtain assistance from Patina’s general manager (the same pers on La Count alleged wr ongfully terminated him) or human resources manager. If the employ ee received an unsatisfactory answer, he or she was required to provide a wr itten grievance to his supervisor within 10 days of receiving the unsatisfactory answer. If that still proved unsatisfactory to the employee, the employee9 was next obligated to file a written grievance with the huma n resources manager within 10 days of receiving a resp onse from the supervisor. An employee’s failure to follow this grieva nce procedure would result in forfeiture of the employee’s claim. The Grie vance and Arbitration Procedure provides: “The failure to pursue a grievance in a timely fashion shall result in the waiver of your right to pursue the underlying issue in court or arbitration.” (Italics added.) The grievance procedure recommended the employee seek assistance from the general manager or human resources
director who “will also serve as a resource to the Company” or another employee. Such recommendation imposed an unfair burden on the employee, who is unlikely to obtain genuine assistance from the general manager or human resources manager when that person represents the company (especially in a case such as this one in which La Count alleged the general manager retaliated against hi m and wrongfully terminated him). In other words, Patina is exempt from its own grievance procedure. The Grievance and Arbitration Procedure provid es: “These [employer] claims need not first be processed through the grievance portion of the Procedure.” Therefore the grievance procedures and its waiver provisions are not mutual. Moreover, requiring the employee to discuss a grievance with his or her immediate supervisor (who may be the source of the grievance) and with the general manager or human resour ces director allows the employer an advantage in gaining
information about the em ployee’s case prior to an arbitration. The employer gets a “ ‘free peek’ ” at the employee’s case. (See Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1282-1283.) As in Pokorny v. Quixtar, Inc., supra , 601 F.3d at page 999, the grievance procedure “amounts to little more th an an exploratory evidentiary hearing” for
Patina.
The Grievance and Arbitration Procedur e placed an additional burden on the employee not placed on the employer with respect to notice of th e intent to arbitrate. The employee must give “written notice of the inten tion to arbitrate within 30 calendar days of receipt of the mailing of the . . . written decisi on [following the grievanc e procedure].” The failure to comply with the 30-day period results in forfeitur e of the claim. Specifically, the10 Grievance and Arbitration Proced ure provides: “A failure to file the notice within the 30- day time period shall constitute a waiver of the dispute in any forum.” (Italics added.) Whereas the employer may give notice of th e intent to arbitrate at any time “within the period of time allowed by that statute of limitations,” the employee has much more burdensome time restrictions. (See Nyulassy v. Lockhead Martin Corp., supra , 120 Cal.App.4th at p. 1283 [finding that shor tened limitations period was factor supporting substantive unconscionability]; Davis v. O’Melveny & Myers (2007) 485 F.3d 1066, 1076- 1078 [finding a one-year limitation period for employment-related statutory claims to be unconscionable], overruled on other grounds in Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 933.) The reduced lim itations period afforded the employee is not
mutual. The presumption that the parties will be “self-represen ted” in an arbitration proceeding further burdened the employee more than the employer. Patina had a human resources manager to assist in personnel matter s (and she filed a declaration in this case). The employee in contrast has no similar represen tation. Moreover, Patina is more likely to be a sophisticated party familiar with arbitr ation procedures and more knowledgeable in drafting pre- and posthearing briefs permitted by the Grievanc e and Arbitration Procedure than a server (such as La Coun t) working in its restaurant. Finally, the employee faces the
additional burden on his or her right to counsel of providing written notice of the intention to use counsel “within 15 days after the request to arbitrate has been submitted.” Thus, although under the Grievance a nd Arbitration Proce dure Patina would be required to arbitrate a claim against an employee , the bulk of the provisions in the Grievance and Arbitration Procedure placed undue burden on the employee not similarly shouldered by the employer. The majority of the provisi ons were not mutual. The sheer number of infirmities militates against severing the unconscionable portion and enforcing the remainder of the agreement. “ ‘An arbitra tion agreement can be co nsidered permeated by unconscionability if it “contains more than one unlawful provi sion . . . . Such multiple defects indicate a systematic effort to impose arb itration . . . not simply as an alternative to litigation, but as an inferior forum that wo rks to the [stronger party’s] advantage.”11 [Citation.] “The overarching in quiry is whether ‘ “the interests of justice . . . would be furthered” ’ by severance.” ’ ” ( Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, 1149.) La Count argues the unconscionable provis ions cannot be severed. Patina does not
contest that assertion in its briefs on appeal. Nor did it re quest the trial court sever any unconscionable portion. We conclude that th e substantively unconscionable provisions are not severable. (See Armendariz, supra , 24 Cal.4th at p. 124 [more than one unlawful provision militates agains t severance].) As in Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 488, in which the appellate cour t ordered the trial court to vacate its order compelling arbitration and enter a new order denying the petition to compel arbitration, “[t]here is no single provision we can strike in order to rem ove th[e] unconscionable taint.” The trial court therefore properly denied Patina’s petition to compel arbitration. 2
DISPOSITION The order denying Patina’s petiti on to compel arbitration is affirmed. La Count is entitled to costs on appeal.

FLIER, J.
WE CONCUR:

RUBIN, Acting P. J.

GRIMES, J.

2 We need not consider the impact of the Federal Arbitrat ion Act (9 U.S.C. 1 et seq.) because no party argues that it applies to this case.