Filed 5/9/23 Rice v. Gulfstream Aerospace CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

ROBERT RICE,

Plaintiff and Respondent,

v.

GULFSTREAM AEROSPACE 

CORPORATION,

Defendant and Appellant.

 B316079

 (Los Angeles County

Super. Ct. No. 21LBCV00176)

APPEAL from an order of the Superior Court of 

Los Angeles County, Michael P. Vicencia, Judge. Affirmed.

Gibson Dunn & Crutcher, Scott A. Edelman, Jesse A. 

Cripps and Monica B. Paladini for Defendant and Appellant.

Peretz & Associates, Yosef Peretz and Shane Howarter for 

Plaintiff and Respondent.

_______________________
2

Robert Rice was laid off from his employment at 

Gulfstream Aerospace Corporation (Gulfstream) on May 1, 2020. 

He sued Gulfstream for wrongful termination, age 

discrimination, retaliation, violation of wage and hour laws, and 

various other employment-related claims.

Gulfstream moved to compel arbitration, arguing Rice had 

agreed to arbitration when he signed an employment application

stating applicants were bound by the company’s dispute 

resolution policy. In opposition, Rice disputed that a valid 

agreement to arbitrate was formed but argued that, even if he 

had agreed to arbitrate, the agreement was unconscionable.

The court denied the motion, concluding the agreement was 

unconscionable. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Evidence Regarding Contract Formation

1. Rice’s Employment Application

Rice was hired by Gulfstream in April 1986 and was laid off 

in May 2009. In February 2010, he submitted an employment 

application and was rehired.

In a box above Rice’s signature, the employment 

application stated: “I agree to the exclusive resolution of all 

claims arising out of or relating to my application for 

employment, employment or termination of employment by the 

Company by the procedures set forth in the Company’s Dispute 

Resolution Policy. The claims covered by this agreement shall 

include, but are not limited to, claims for wages, breach of any 

express or implied promises, torts, and discrimination on any 

basis, but shall not include claims for workers compensation, 
3

unemployment or claims under any benefit or pension plans or 

other agreements between the Company and me. I understand 

that as a result of my and the Company’s mutual agreement to 

resolve claims exclusively through the Company’s Dispute 

Resolution Policy, I and the Company hereby waive any rights to 

a jury trial.”

It is undisputed that the company’s dispute resolution 

policy was not attached to the application and that Rice was not 

provided with a copy to review at the time he signed the 

application. Gulfstream’s human resources representative 

declared the policy was available to job applicants “by request.”

2. Conflicting Evidence as to Whether Rice Ever

Received a Copy of the Dispute Resolution Policy

The parties dispute whether Rice ever received a copy of 

the dispute resolution policy, either before or after Rice signed 

the application. Gulfstream contends that Rice had received a 

copy six years earlier, when he had previously been employed by 

the company, and that he received another copy in March 2010 

during the new employee orientation. Rice does not recall ever 

receiving a copy during his prior employment and denies he 

received a copy at the new employee orientation.

Gulfstream provided declarations of two human resources

representatives, Trevor Clifton and Ronda Londen. Clifton 

declared Gulfstream implemented its dispute resolution policy in 

July 2002 with an effective date of August 2002. Gulfstream 

mailed a copy of the policy to its employees along with a letter 

informing them they could opt out within 30 days of receiving it. 

Gulfstream’s records show that the policy was mailed to Rice’s 

home in 2002 and that Rice did not opt out.
4

Clifton further declared Gulfstream amended the policy in 

March 2003, with an effective date of April 2003. The new policy 

was mailed to employees, including Rice, in or around April 2003. 

When Rice submitted his employment application in 2010, the 

April 2003 policy was still in effect.

Ronda Londen declared she was “involved in New Hire 

Orientation for more than twenty-five (25) years.” She does not 

state she was involved in the orientation sessions Rice attended. 

In March 2010, it was Gulfstream’s practice to hold a two-day 

orientation for new employees. Employees received training on 

company policies, including the dispute resolution policy, which 

was contained in a new employee orientation binder provided to 

participants. It was the custom and practice of the human 

resources facilitator to ask the new employees to read through 

the dispute resolution policy and then for the facilitator to lead 

an interactive session regarding the policy.

Londen further declared attendees at the orientation 

sessions were required to sign an acknowledgment that they had 

received training on certain topics. Rice signed an

acknowledgement that he had received training on nine broadly 

defined topics on the second day of orientation. One of the topics 

was “policy review.” As to that topic, the acknowledgement 

states: “POLICY REVIEW [¶] I acknowledge that I attended 

the Gulfstream training program for Policy Review and have been 

trained on locating up-to-date policies on the Gulfstream Intranet 

site.”

In opposition to the motion, Rice submitted his own 

declaration in which he stated he did not recall ever receiving the 

2002 or 2003 policies, either before or after he was rehired. At 

the time he was rehired, no Gulfstream representative told him 
5

that the 2003 version of the policy would apply to him. He did 

not receive a copy of the policy at the time of his application or 

thereafter. He never received any training on the policy or any

explanation of it.

Rice further declared he attended the two-day orientation 

meeting for new employees. Employees were given a high-level 

overview of company policies and practices, but the dispute 

resolution policy was not discussed. He was given a new hire 

orientation binder, but a copy of the dispute resolution policy was 

not included with the materials. The orientation sessions were 

not interactive, and the newly hired employees were not 

encouraged to ask and did not ask questions.

Gulfstream relies on the following language from its 2003 

policy in support of its argument that a valid contract was 

formed: “The submission of an application, acceptance of 

employment or the continuation of employment by an individual 

shall be deemed to be an acceptance of the [dispute resolution 

policy]. No signature shall be required for the Policy to be 

applicable.” This language was contained on page 3 of the 

11-page single-spaced document. Other relevant terms are 

discussed below. 

3. Conflicting Evidence as to Whether Rice Received

Notice of an Updated Policy in 2019

Gulfstream’s human resources representative Clifton 

declared a new version of the policy went into effect in January 

2019. He stated employees were notified the policy had been 

revised through a posting on the company’s intranet. Clifton 

attaches what appears to be an intranet posting dated 

December 21, 2018 stating, “Gulfstream’s Dispute Resolution 
6

policy has been updated. You can review all company policies on 

Inside Gulfstream under the Resources menu.”

Rice declared he never saw the purported notification. He 

was never told he should review the updated policy and never 

saw it on the intranet. He was never required to sign any 

acknowledgement that he had seen it and never agreed to the 

terms. He was away from work for the holidays on December 21, 

2018 when the updated policy was purportedly posted on the 

intranet.

As with the 2003 policy, the 2019 policy stated that 

continued employment would be deemed acceptance of the policy.

B. Key Terms of the Dispute Resolution Policies

1. 2003 Policy

a. Overview

The 2003 dispute resolution policy purports to apply to all 

employees except those covered by a collective bargaining 

agreement. The policy states it is a “structured dispute

resolution process that applies to Covered Claims and consists of 

four levels:” (1) human resources review; (2) management panel 

review; (3) mediation; and (4) arbitration.

In Level 1, “Human Resources meets informally with the 

Employee and the other parties involved and attempts to resolve

the Employee’s disputes.” If the employee is not satisfied with 

the resolution of the problem after the informal human resources 

review, the employee has 30 days to submit the claim to the 

management panel review, or the employee waives all right to 

pursue his or her covered claims.

In Level 2, the employee must meet with a management 

panel. If the employee is not satisfied with the result of that 
7

step, the employee must, “within 30 days of the date of the Final 

Determination of the Management Panel Review, submit the 

Covered Claim to Mediation (Level 3), or the Employee waives all 

rights to pursue his or her Covered Claims.”

In Level 3, the employee must participate in mediation 

with an outside mediator. If the parties do not reach a 

resolution, “the Employee must, within 30 days of the date of the 

Final Determination of the Mediation, submit the claim to 

Arbitration (Level 4)[,] or the Employee waives all rights to 

pursue his or her Covered Claims.”

Level 4 is arbitration. “The Arbitrator’s decision is the 

exclusive remedy for Covered Claims and is final and binding on 

the Company and Employee.”

“Employees must complete each level of the process before 

proceeding to the next level.” The company, by contrast, “may 

elect to bypass one or more steps prior to arbitration for disputes 

with applicants for employment, with former employees, or if the 

Company is the initiating party.”

Employees are required to submit covered claims to the 

dispute resolution process as set forth in the policy. The policy 

sets forth the “sole and exclusive forum and remedy for all 

Covered Claims. [¶] The Employee and Company agree and 

hereby waive any right to jury trial for any Covered Claim. The 

Employee further agrees that no Covered Claim may be brought 

as a class or collective action either under this Policy or in court 

and that he/she will not act as a class or collective action 

representative or participate as a member of a class of claimants 

with respect to any Covered Claim.”
8

b. Covered claims

The term “Covered Claims” is defined as follows: “Covered 

Claims are employment-related claims between an individual 

Employee and the Company [and related entities], and their 

respective individual managers and other present or former 

employees. Covered Claims involve a claim of a legal right, 

obligation or entitlement regarding or arising from the 

employment relationship.”

The policy lists eight categories of claims that are included 

in “Covered Claims.” Six of the categories are claims only an 

employee would bring against an employer, such as claims 

involving wrongful termination, employment discrimination and 

harassment, alleged violations of the Family and Medical Leave 

Acts, failure to provide workplace accommodations, and wage and 

hour violations. Two of the other listed categories are claims that 

would primarily be brought by employees but could also be 

brought by employers, including tort claims and claims of 

violation of public policy. The final category is for “Claims based 

on express or implied contracts,” which could include claims

brought by employers or employees.

The policy lists six categories of claims that are excluded 

from the policy. The excluded claims include “Claims involving 

patents or inventions.”

c. Time limitations 

“The Company encourages Employees to attempt to resolve 

matters informally with their supervisor. If a matter cannot be 

resolved, an Employee’s Covered Claim(s) should be filed with 

Human Resources under the prevailing Policy within 30 days 

after the dispute arises. This 30-day guideline shall not be 
9

applied by the Company to bar the submission of any Covered 

Claim to Human Resources Review (Level 1) within the 

applicable statute of limitations. [¶] After an Employee submits 

a Covered Claim at the initial filing at Level 1 for Human 

Resources Review, the Employee must (1) follow each step and 

cannot skip any level; and (2) file any request to proceed to any of 

the next levels within thirty (30) days after the date after Final 

Determination at the previous level. If an Employee does not file 

for the next step within the 30-day period, the Employee will 

waive his or her rights to pursue his or her covered claims.”

d. Arbitration procedures

The policy contains a procedure for the joint selection of a 

neutral arbitrator from independent dispute resolution providers 

such as the American Arbitration Association. The arbitrator 

must have a minimum of three years’ experience in the 

arbitration of employment law disputes or comparable 

experience. The parties have the right to present evidence, to 

request that the arbitrator subpoena witnesses or documents for 

the arbitration hearing, to present written briefs, and to hire a 

court reporter to report the hearing. The arbitrator must issue a 

written decision.

The arbitrator is required to apply the substantive law of 

the state in which the employee is, was, or sought to be 

predominantly employed. The arbitrator “may grant any remedy 

or relief that would have been available to an individual 

Employee had the claim been asserted in court for a Covered 

Claim.” “Each party shall pay its own experts’ and/or attorneys’

fees unless the Arbitrator awards reasonable experts’ and/or

attorneys’ fees to the Employee.”
10

e. Discovery limitations

The policy imposes strict limits on discovery in arbitration. 

Each party has the right to request the production of documents,

but the parties must obtain leave from the arbitrator to conduct 

any other discovery. Depositions, interrogatories, and requests 

for admission are allowed only by agreement of the parties or by 

order of the arbitrator. The policy requires the parties to disclose 

documents they intend to use and witnesses they intend to call

20 days before the hearing, which is after the close of discovery.

f. Interim relief

The policy contains an “Interim Relief” section stating: 

“For claims involving alleged breach of Employee’s noncompetition, non-solicitation, fiduciary, or confidentiality 

obligations, as well as claims involving trademarks, trade secrets, 

business know-how or intellectual property, either the Employee

or the Company may . . . apply to any court of competent 

jurisdiction and seek interim provisional, injunctive, or other 

equitable relief until the arbitration award is rendered or the 

Covered Claim is otherwise resolved.”

g. Confidentiality

The policy contains a confidentiality provision stating: “All 

aspects of the proceedings pursuant to this [dispute resolution

policy], including the hearing and recording of the proceeding, 

shall be confidential to the fullest extent permitted by law . . . 

except (i) to the extent both Parties agree otherwise, in writing; 

(ii) as may be appropriate in any subsequent proceeding between 

the parties[;] or (iii) as may otherwise be appropriate in response 

to a governmental agency or legal process.”
11

h. Modification

The policy allows the company to modify or terminate the 

policy upon 30 days’ written notice. The modification or 

termination is effective only as to claims submitted after the 

effective date of the modification or termination.

i. Severability

The severability provision states: “In the event that any 

portion of the [dispute resolution policy] is held to be in conflict 

with a mandatory provision of applicable law, the remainder of 

these . . . procedures shall not be affected to the extent permitted 

by law. For example, if a court holds some particular provision(s) 

of the [dispute resolution policy] to be in conflict with a 

mandatory provision of applicable law in that jurisdiction, such 

provision(s) will not be enforced in that jurisdiction, but the 

exclusivity of the [dispute resolution policy] and its arbitration as 

the sole and exclusive forum for all Covered Claims within its 

scope shall not be affected.”

2. 2019 Dispute Resolution Policy

The 2019 version of the policy appears to be nearly 

identical to the 2003 version except claims for sexual harassment 

are excluded from covered claims. The parties have not identified 

any differences in the 2019 policy that are material to this 

appeal. Because the 2003 version was in effect at the time Rice 

signed the employment application and because there are no 

material differences between the policies, we rely on the 2003 

version in this opinion. 
12

C. The Parties’ Arguments and the Trial Court’s Ruling

In the moving papers, Gulfstream argued Rice agreed to 

the dispute resolution policy, including its arbitration provision,

when he signed the employment application and when he 

continued to be employed after being provided with a copy at the 

new employee orientation and after being notified of the update 

in 2019. In opposition, Rice argued he had not agreed to 

arbitrate, but, even if he had, the dispute resolution policy was 

unconscionable. 

A hearing was held on October 5, 2021. The court 

expressed its preliminary views that Rice had agreed to be bound 

by the dispute resolution policy but that the agreement could not 

be enforced because it was procedurally and substantively 

unconscionable.1 The court took the matter under submission. 

Later that day, the court issued a minute order denying the 

petition, stating, “[T]he agreement to arbitrate, the Dispute 

Resolution Policy (DRP), is unconscionable.” The court did not 

address whether a valid arbitration agreement was formed but 

instead proceeded directly to the unconscionability analysis. The 

court found the agreement was procedurally unconscionable for 

three reasons: (1) the “DRP is a contract of adhesion”; (2) the 

“employment application, which incorporated the DRP by 

reference and purported to bind plaintiff to the DRP, did not 

explicitly state that plaintiff was agreeing to binding arbitration, 

1 Both parties characterize the court’s statements at the 

hearing as “findings.” The court did not rule on the motion at the 

hearing and thus made no findings. Instead, after expressing 

preliminary views, the court heard further argument from the 

parties and took the matter under submission. The court issued 

a written order later that day.
13

and only explicitly stated that plaintiff waived his right to a jury 

trial”; and (3) “Plaintiff was never provided a copy of the DRP.”

The trial court also found the following provisions of the 

policy were substantively unconscionable: (1) “[t]he PAGA 

waiver”; (2) “[t]he [d]iscovery restrictions”; (3) “[t]he one-sided 

employee compliance with the four-tiered DRP upon strict 

timelines, non-compliance of which resulted in waiver of 

plaintiff’s claims”; (4) the “[e]mployer’s unilateral ability to 

bypass the DRP upon 30 days’ notice”; (5) “[t]he [c]onfidentiality

provision”; and (6) “[t]he one-sided injunction provision only for 

actions likely to be brought by the employer.”

Gulfstream timely appealed.

DISCUSSION

A. Standard of Review

“There is no uniform standard of review for evaluating an 

order denying a [petition] to compel arbitration.” (Lopez v. 

Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311, 317 

[quotation marks omitted] (Lopez).) “[I]f the court’s denial rests 

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

employed.” (Ibid. [quotation marks omitted]; accord, Garcia v. 

KND Development 52, LLC (2020) 58 Cal.App.5th 736, 744 

(Garcia) [“We review de novo the legal conclusions underlying a 

trial court’s denial of a petition to compel arbitration.”].)

“If the court’s order is based on a decision of fact, then we 

adopt a substantial evidence standard.” (Lopez, supra,

39 Cal.App.5th at p. 317.) “This traditional standard of review is 

highly deferential. It has three pillars. First, we accept all 

evidence supporting the trial court’s order. Second, we 
14

completely disregard contrary evidence. Third, we draw all 

reasonable inferences to affirm the trial court. These three 

pillars support the lintel: We do not reweigh the evidence.” 

(Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 581.)

Contrary to Gulfstream’s argument, the substantial 

evidence standard applies “with due deference to the trial court’s 

resolution of factual conflicts[] regardless of whether the evidence 

is oral or documentary.” (Desert Outdoor Advertising v. Superior 

Court (2011) 196 Cal.App.4th 866, 868 fn. 1.) The fact “that the 

trial court’s findings were based on declarations and other 

written evidence does not lessen the deference due those 

findings.” (Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 

711 fn. 3; see also Shamblin v. Brattain (1988) 44 Cal.3d 474, 479 

[appellate court must “defer to the factual determinations made 

by the trial court when the evidence is in conflict,” even when the 

trial court’s ruling is based on declarations].)

B. The Trial Court Correctly Decided the Dispute Resolution 

Policy Is Unconscionable

‘“The party seeking to compel arbitration bears the burden 

of proving the existence of a valid arbitration agreement.”’ 

(Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128 

(Young).) Here, the trial court’s written order did not address 

contract formation, and the court made no findings as to whether 

a valid agreement to arbitrate was formed. We question whether 

Rice agreed to arbitrate because the employment application did 

not mention arbitration and because (as the trial court found 

based on substantial evidence) Rice was never provided with a 

copy of the dispute resolution policy containing the arbitration 
15

clause.

2 However, because we agree with the trial court that the 

dispute resolution policy is unconscionable and affirm on that 

basis, we do not need to reach the issue whether a valid contract 

was formed. We therefore assume without deciding that Rice 

agreed to arbitrate by signing the employment application 

referencing the dispute resolution policy.

If a valid agreement to arbitrate is formed, courts will 

enforce the agreement as with any other contract. (OTO, 

L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO); Mills v. Facility 

Solutions Group, Inc. (2022) 84 Cal.App.5th 1035, 1049 (Mills); 

Code Civ. Proc., § 1281; 9 U.S.C. § 2.) Generally applicable 

contract defenses such as unconscionability apply. (OTO, at 

p. 125; Pinnacle Museum Tower Assn. v. Pinnacle Market 

Development (US), LLC (2012) 55 Cal.4th 223, 246 (Pinnacle).)

“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.”’”

(OTO, supra, 8 Cal.5th at p. 125; accord, Sanchez v. Valencia 

Holding Co., LLC (2015) 61 Cal.4th 899, 910 (Sanchez).) “‘The 

procedural element addresses the circumstances of contract 

negotiation and formation, focusing on oppression or surprise due 

to unequal bargaining power. [Citations.] Substantive 

unconscionability pertains to the fairness of an agreement’s 

actual terms and to assessments of whether they are overly harsh 

2 We discuss the substantial evidence in support of the trial 

court’s finding in section B.1, infra. Because the finding is 

supported by substantial evidence, we accept it as true. 
16

or one-sided.’” (OTO, at p. 125; accord, Pinnacle, supra,

55 Cal.4th at p. 246.)

“Both procedural and substantive unconscionability must 

be shown for the defense to be established, but ‘they need not be 

present in the same degree.’ [Citation.] Instead, they are 

evaluated on “‘a sliding scale.’” [Citation.] ‘[T]he more 

substantively oppressive the contract term, the less evidence of 

procedural unconscionability is required to’ conclude that the 

term is unenforceable. [Citation.] Conversely, the more 

deceptive or coercive the bargaining tactics employed, the less 

substantive unfairness is required.” (OTO, supra, 8 Cal.5th at 

pp. 125-126; accord, Sanchez, supra, 61 Cal.4th at p. 910.) “‘The 

ultimate issue in every case is whether the terms of the contract 

are sufficiently unfair, in view of all relevant circumstances, that 

a court should withhold enforcement.’” (OTO, at p. 126; accord, 

Sanchez, at p. 912.)

“The burden of proving unconscionability rests upon the 

party asserting it.” (OTO, supra, 8 Cal.5th at p. 126; accord, 

Sanchez, supra, 61 Cal.4th at p. 911.) Whether an agreement is 

unconscionable is generally a question of law we review de novo.

(Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 

93, 102.) However, “to the extent the trial court relied on 

contested facts in making its determination, we review the court’s 

factual determinations for substantial evidence.” (Ibid.)

1. The Circumstances Surrounding the Formation of the 

Contract Involved a Heightened Degree of Procedural 

Unconscionability

“A procedural unconscionability analysis ‘begins with an 

inquiry into whether the contract is one of adhesion.’ [Citation.]
17

An adhesive contract is standardized, generally on a preprinted 

form, and offered by the party with superior bargaining power ‘on 

a take-it-or-leave-it basis.’ [Citations.] Arbitration contracts 

imposed as a condition of employment are typically adhesive.” 

(OTO, supra, 8 Cal.5th at p. 126.) Here, the agreement was

presented on a take-it-or-leave-it basis and was imposed as a 

condition of employment and was therefore adhesive.

Adhesion contracts in the employment context “typically 

contain some aspects of procedural unconscionability.” (Serpa v. 

California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 

704.) “[T]he 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 agreement.”

(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 

24 Cal.4th 83, 115 (Armendariz); accord, Little v. Auto Stiegler, 

Inc. (2003) 29 Cal.4th 1064, 1071.) Thus, adhesive employment 

contracts generally have at least a minimal degree of procedural 

unconscionability. (Swain v. LaserAway Medical Group, Inc. 

(2020) 57 Cal.App.5th 59, 68 [analyzing an adhesive contract in a

non-employment context].)

To determine whether a heightened degree of procedural 

unconscionability existed, we consider “whether circumstances of 

the contract’s formation created such oppression or surprise that 

closer scrutiny of its overall fairness is required.” (OTO, supra, 

8 Cal.5th at p. 126.) “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. [quotation marks omitted].)
18

Here, the circumstances surrounding the contract’s 

formation involved a significant degree of surprise and 

oppression. Rice purportedly agreed to arbitrate by signing the 

application containing the following language: “I agree to the 

exclusive resolution of all claims arising out of or relating to . . . 

employment . . . by the procedures set forth in the Company’s 

Dispute Resolution Policy. . . . I understand that as a result of 

my and the Company’s mutual agreement to resolve claims 

exclusively through the Company’s Dispute Resolution Policy, I 

and the Company hereby waive any rights to a jury trial.”

The trial court found Rice “was never provided a copy of the 

[dispute resolution policy].” There was substantial evidence to 

support that finding. Gulfstream acknowledges Rice was not 

provided with a copy at the time he signed the application, and 

Rice declared he had never received a copy either before or after 

signing. Rice’s declaration constitutes substantial evidence to 

support the court’s finding that he never received the policy. 

Gulfstream devotes many pages of its briefs discussing the 

evidence in support of its position that Rice was provided with a 

copy of the policy while he was previously employed with the 

company and at the orientation after he was rehired, but that 

evidence is irrelevant because there is substantial evidence to 

support the trial court’s finding that he never received it. 

Further, the application did not explicitly state that Rice

agreed to binding arbitration or that he waived the right to have 

any disputes determined in a court of law. It referred only to an 

undefined “dispute resolution policy.” Although the application 

states the applicant waived the right to a jury, the applicant was 

not informed he or she waived all rights to a judicial forum. 

Gulfstream presents no evidence that this was explained to Rice 
19

at the time he signed the application. In his declaration, Rice 

stated the policy was never explained to him, either before or 

after he signed the application.

These facts demonstrate Rice’s agreement to arbitrate 

involved a high degree of surprise. Even the fact the dispute 

resolution policy required arbitration was “artfully hidden.” (See 

Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246

[discussing cases standing “for the proposition that courts will 

more closely scrutinize the substantive unconscionability of terms 

that were ‘artfully hidden’ by the simple expedient of 

incorporating them by reference rather than including them in or 

attaching them to the arbitration agreement”].) Further, the 

specific terms Rice contends are substantially unconscionable 

were hidden from him when he signed. (Ibid.; see also Ali v. 

Daylight Transport, LLC (2020) 59 Cal.App.5th 462, 476-477 

[element of surprise is shown when allegedly unconscionable 

terms are included in AAA arbitration rules that are incorporated 

by reference into an employee’s arbitration agreement but are not 

provided to the employee].)

These facts also support the conclusion that Rice was 

subjected to a higher degree of oppression than an employee is 

normally subjected to when agreeing to arbitration. In 

considering the degree of oppression, courts consider, among 

other things, whether the employee had a sufficient opportunity 

to review the arbitration agreement, whether the employer 

explained the terms of the agreement to the employee, and 

whether the circumstances as a whole indicate the employee 

understood the terms of the agreement before signing. (See, e.g., 

OTO, supra, 8 Cal.5th at pp. 126-129.) Here, Rice’s agreement to 

comply with the dispute resolution policy involved a higher-than-
20

average degree of oppression because Gulfstream did not provide 

Rice with a copy of the dispute resolution policy, did not use the 

word “arbitration” in the employment application, and did not 

explain to Rice that he was agreeing to arbitrate by signing the 

application. (See Carlson v. Home Team Pest Defense, Inc. (2015) 

239 Cal.App.4th 619, 634 [high degree of procedural 

unconscionability was present when employee was required to 

sign an agreement to be bound by a dispute resolution policy but 

employer would not provide a copy of the policy for her review].) 

Gulfstream argues at most only minimal procedural 

unconscionability was shown. Gulfstream asserts it does not 

matter that the application Rice signed did not mention 

arbitration, that the dispute resolution policy was incorporated 

by reference, and that Rice was not provided with a copy of the 

policy. Gulfstream cites cases for the proposition that a contract 

can be formed when an arbitration provision is incorporated by 

reference or when the document containing the arbitration clause 

is not provided to the employee, but those cases are not relevant 

to procedural unconscionability. Even if a contract may be 

formed under those circumstances, those factors add to the 

procedural unconscionability in the agreement’s formation. (See

OTO, supra, 8 Cal.5th at pp. 126-127.) The cases Gulfstream 

cites do not suggest otherwise.3

3 In Gulfstream’s discussion of procedural unconscionability 

on pages 29 to 44 of its opening brief, Gulfstream cited only a 

single case concerning procedural unconscionability; the rest 

concerned contract formation. The procedural unconscionability 

case Gulfstream cites, Sanchez v. Valencia Holding Co., LLC, 

supra, 61 Cal.4th 899 does not support its position. There, the 

court found there was some degree of procedural 

unconscionability in an adhesive vehicle sales agreement but the 
21

2. The Arbitration Agreement Is Substantively 

Unconscionable

Because we conclude the agreement to arbitrate involved a 

heightened degree of procedural unconscionability, we “closely 

scrutinize the substantive terms ‘to ensure they are not 

manifestly unfair or one-sided.’” (OTO, supra, 8 Cal.5th at 

p. 130; accord, Baltazar, supra, 62 Cal.4th at p. 1244.)

a. The limitations on discovery are unconscionable

A provision limiting discovery in an arbitration agreement 

in the employment context is substantively unconscionable if the 

discovery is not sufficient to allow employees to vindicate their 

statutory rights. As we explained in Mills, supra, 84 Cal.App.5th 

at page 1058: “Although parties may ‘agree to something less 

than the full panoply of discovery,’ employees ‘are at least 

entitled to discovery sufficient to adequately arbitrate their 

statutory claim, including access to essential documents and 

witnesses, as determined by the arbitrator(s). . . . ’ [Citations.] 

As the Supreme Court in Armendariz explained with respect to 

FEHA claims, ‘We agree that adequate discovery is indispensable 

for the vindication of FEHA claims.’ [Citation.] ‘In striking the 

appropriate balance between the desired simplicity of limited 

discovery and an employee’s statutory rights, courts assess the 

amount of default discovery permitted under the arbitration 

agreement, the standard for obtaining additional discovery, and 

unconscionability was not heightened by the consumer’s failure to 

read the agreement and the vendor’s failure to highlight the 

arbitration clause. (Id. at pp. 914-915.) Sanchez is entirely 

consistent with the conclusion Gulfstream subjected Rice to a 

heightened degree of procedural unconscionability here.
22

whether the plaintiffs have demonstrated that the discovery 

limitations will prevent them from adequately arbitrating their 

statutory claims.’ [Citations.] ‘The denial of adequate discovery 

in arbitration proceedings leads to the de facto frustration of the 

employee’s statutory rights.’” (Armendariz, supra, 24 Cal.4th 83

at pp. 1058-1059.)

The only discovery requests that are allowed as a matter of

right under the dispute resolution policy are requests for

production. Depositions are allowed only by agreement of the 

parties or by order of the arbitrator. The parties are similarly not 

allowed to propound interrogatories or requests for admission 

except by order of the arbitrator. While the policy does require 

the parties to disclose the witnesses and documents they intend 

to rely on at the hearing, the disclosure does not have to be made 

until after the close of discovery.

In Mills, we concluded that similar limitations on discovery 

were substantively unconscionable because the discovery was not 

sufficient to allow the plaintiff to arbitrate his statutory claims. 

(Mills, supra, 84 Cal.App.5th at pp. 1059-1060.) There, the 

arbitration agreement allowed each party to take depositions,

designate expert witnesses, and subpoena witnesses, but did not 

expressly allow for document requests, requests for admission, or 

interrogatories. Instead, such discovery could be had “‘only 

where the hearing arbitrator so orders, upon a showing of 

substantial need.’” (Id. at p. 1059.) We concluded that the 

provision allowing the arbitrator to order additional discovery 

upon a showing of substantial need was an “‘inadequate safety 

valve’” to ensure sufficient discovery would be allowed to 

vindicate the plaintiff’s statutory rights. (Id. at p. 1060 
23

[explaining and following Fitz v. NCR Corp. (2004) 

118 Cal.App.4th 702, 718-719].)

Here, the provision prohibiting depositions except upon 

agreement of the parties or order of the arbitrator is especially 

onerous. Although the provision is facially neutral, it unfairly 

favors Gulfstream. (See De Leon v. Pinnacle Property 

Management Services, LLC (2021) 72 Cal.App.5th 476, 487

(De Leon).) “‘Employment disputes are factually complex, and 

their outcomes ‘are often determined by the testimony of multiple 

percipient witnesses . . . .’ [Citation.] Seemingly neutral 

limitations on discovery in employment disputes may be 

nonmutual in effect.’” (Id. at pp. 487-488.) Gulfstream is likely 

to employ and have access to many of the relevant witnesses and 

thus would not need to take their depositions. The inability of 

Rice to depose such witnesses would “unfairly prevent [Rice] from 

vindicating statutory claims.” (See Nunez v. Cycad Management

LLC (2022) 77 Cal.App.5th 276, 285 (Nunez); see also Kinney v. 

United Healthcare Services, Inc. (1999) 70 Cal.App.4th 1322, 

1332 [because an employer “is presumably in possession of the 

vast majority of evidence that would be relevant to employmentrelated claims against it, the limitations on discovery, although 

equally applicable to both parties, work to curtail the employee’s 

ability to substantiate any claim”].)

Courts have concluded provisions limiting depositions were 

substantively unconscionable when they allowed for more 

depositions than are allowed here. (Nunez, supra, 77 Cal.App.5th

at p. 285 [arbitration provision in employment contract limiting 

discovery to three depositions and 30 discovery responses is 

substantively unconscionable]; De Leon, supra, 72 Cal.App.5th at 

pp. 487-488 [provision limiting parties to 20 interrogatories and 
24

three depositions was substantively unconscionable]; Davis v. 

Kozak (2020) 53 Cal.App.5th 897, 911 [provision allowing parties 

to take two depositions but allowing for no written discovery was

substantively unconscionable].) We agree with the trial court 

that the limitations on discovery are substantively 

unconscionable.

Gulfstream attempts to distinguish cases finding discovery 

limitations unconscionable by arguing that, in the agreements in 

those cases, the arbitrator could order additional discovery only 

on a showing of “compelling need.” Gulfstream misreads the 

applicable cases. In Mills, for example, the discovery provision 

we found unconscionable allowed the arbitrator to order 

additional discovery on a showing of “‘substantial need.’” (Mills, 

supra, 84 Cal.App.5th at p. 1059; see also Davis v. Kozak, supra,

53 Cal.App.5th at p. 912 [finding discovery limitation 

unconscionable even though arbitrator could order additional 

discovery on a finding of “‘sufficient cause’”].) 

Here, as Gulfstream notes, the dispute resolution policy 

does not articulate the standard the arbitrator is to apply in 

deciding whether to allow additional discovery. But that does not 

lessen the substantive unconscionability. An arbitrator could 

conclude he or she has unfettered discretion to deny a request or 

could require a party to show “substantial need” or “sufficient 

cause” for the discovery. There is no reason to believe an 

arbitrator would apply a less onerous standard. 

Contrary to Gulfstream’s argument, the conclusion that the 

discovery limitations are substantively unconscionable is not 

inconsistent with the United States Supreme Court’s holdings in 

Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 32

(Gilmer) and AT&T Mobility LLC v. Concepcion (2011) 563 
25

U.S. 333 (Concepcion). In Gilmer, the issue was whether a claim

for age discrimination under federal law could be subject to 

compulsory arbitration pursuant to an arbitration agreement in a 

securities registration application. The appellant raised a “host 

of challenges to the adequacy of arbitration procedures,” 

including that discovery in arbitration would be more limited 

than in federal court. The court stated that even though 

discovery in arbitration might not be as extensive as in the 

federal courts, “there has been no showing in this case that the 

NYSE discovery provisions, which allow for document production, 

information requests, depositions, and subpoenas . . . will prove 

insufficient to allow ADEA claimants such as Gilmer a fair 

opportunity to present their claims.” (Gilmer, at pp. 30-31.) 

Here, by contrast, the discovery provision does not allow for any 

depositions or interrogatories as a matter of right.

In Concepcion, the court held that although section 2 of the 

Federal Arbitration Act “preserves generally applicable contract 

defenses, nothing in [section 2] suggests an intent to preserve 

state-law rules that stand as an obstacle to the accomplishment 

of the FAA’s objectives.” (Concepcion, supra, 563 U.S. at p. 343.) 

The court stated, “An obvious illustration of this point would be a 

case finding unconscionable . . . arbitration agreements that fail 

to provide for judicially monitored discovery.” (Id. at pp. 341-342 

[italics added].) That illustration does not apply here. 

Concepcion did not hold a court could never find an agreement 

was unconscionable because of limitations on discovery.

Gulfstream cites Caley v. Gulfstream Aerospace Corp. (11th 

Cir. 2005) 428 F.3d 1359, in which the Eleventh Circuit 

concluded Gulfstream’s dispute resolution policy was not 

unconscionable under Georgia law. We decline to follow Caley
26

because, among other reasons, the standard for unconscionability 

under Georgia law is different from the standard here. (Caley, at 

p. 1378 [agreement is unconscionable under Georgia law only if

the agreement is one that “‘no sane man not acting under a 

delusion would make and that no honest man would take 

advantage of’”].)

b. The deadlines an employee must comply with in 

the four-level review process are unconscionable 

Arbitration provisions that shorten the applicable statutes 

of limitations for statutory employment claims are substantively 

unconscionable. (See, e.g., De Leon, supra, 72 Cal.App.5th at 

p. 487; Ali v. Daylight Transport, LLC (2020) 59 Cal.App.5th 462, 

478; Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th

227, 254; Samaniego v. Empire Today, LLC (2012)

205 Cal.App.4th 1138, 1147; Martinez v. Master Protection Corp.

(2004) 118 Cal.App.4th 107, 117.) Here, the policy requires an 

employee who submits a dispute for informal resolution to 

Human Resources to initiate the next level in the process within 

30 days after the termination of that and each subsequent step,

or the employee will waive the claim. These strict deadlines will 

likely have the effect of shortening the statute of limitations in 

many cases and thus are unconscionable.

Under the policy, “[t]he Company encourages Employees to 

attempt to resolve matters informally with their supervisor.” If 

the employee is unable to resolve the matter informally, the 

employee may bring the matter to Human Resources for a 

“Level 1” review. In Level 1, “Human Resources will informally 

meet with the Employee, his or her supervisor, and other parties 

involved in the dispute to ascertain the circumstances and to try 
27

to resolve the matter informally and by agreement of the persons 

involved.”

The policy provides the matter “should” be submitted to 

Human Resources “within 30 days after the dispute arises,” but

this initial deadline is not mandatory. The policy states: “This 

30-day guideline shall not be applied by the Company to bar the 

submission of any Covered Claim to Human Resources Review 

(Level 1) within the applicable statute of limitations.”

Once the matter is submitted to Human Resources, 

however, the employee must comply with a series of strict 30-day 

deadlines to initiate the next level, or the employee waives the 

claims. As the policy explains: “After an Employee submits a 

Covered Claim at the initial filing at Level 1 for Human 

Resources Review, the Employee must (1) follow each step and 

cannot skip any level; and (2) file any request to proceed to any of 

the next levels within thirty (30) days after the date after Final 

Determination at the previous level. If an Employee does not file 

for the next step within the 30-day period, the Employee will 

waive his or her rights to pursue his or her covered claims.” 

These deadlines are reiterated several times throughout the 

policy.

Here, among other claims, Rice asserts claims for violations 

of FEHA and the Labor Code, which have a three-year statute of 

limitations, and violations of the Unfair Competition Law, which 

has a four-year statute of limitations. Under the policy, if Rice 

had been unable to resolve these disputes with his supervisor and 

escalated the matters to Human Resources within the period 

suggested by the policy, Rice would then have been bound by the 

interim 30-day deadlines, which likely would have the effect of 

dramatically reducing the statute of limitations period. This 
28

reduction in the statute of limitations period is substantively 

unconscionable.

Carlson v. Home Team Pest Defense, Inc., supra, 

239 Cal.App.4th at page 636 is on point. The dispute resolution 

policy in that case, as here, required employees to submit 

disputes to the company for an attempt at informal resolution 

before an arbitration could be initiated. If informal resolution 

was not successful, the employee had to file a demand for 

arbitration within 90 days after filing the initial request for 

dispute resolution. “The practical effect of this last provision is

that, while [the employee] may present her claims to [the

employer] well within the otherwise applicable legal statutes of 

limitations, the addition of a 90-day time limitation to demand 

arbitration acts to limit the time that would be available 

otherwise for filing a complaint in superior court.” (Ibid.) The 

court concluded the provision was substantively unconscionable. 

The same reasoning applies here. 

Indeed, an employee subjected to this policy could be forced 

to initiate arbitration before the claim had even accrued. The 

facts of Romano v. Rockwell International, Inc. (1996) 14 Cal.4th 

479 (Romano) are illustrative. There, the employer informed the 

employee he would be terminated in two years, when he reached 

a certain level of seniority. (Id. at p. 484.) The employee 

contended the decision was the result of age discrimination and 

retaliation under FEHA. After the employee was actually 

discharged, the employee filed suit, and the employer claimed the 

suit was barred by the statute of limitations. The issue was 

whether the cause of action accrued for statute of limitations 

purposes on the date he was notified he would be discharged or 

the actual date of discharge.
29

The court held the statute of limitations ran from date of 

discharge, not from the date the employee had been informed

discharge was inevitable. The court concluded that “a holding 

that the statute of limitations on a claim under FEHA runs from 

the time of notification of termination would promote premature 

and potentially destructive claims” and “would reduce sharply 

any chance of conciliation between employer and employee.” 

(Romano, supra, 14 Cal.4th at p. 494.)

Under the dispute resolution policy here, an employee in 

the position of the Romano plaintiff who was informed of a 

discharge decision and who sought to pursue an informal 

resolution by submitting the dispute to Human Resources would 

then be required to comply with strict 30-day deadlines to 

continue through the process, culminating in the initiation of 

arbitration. The employee could be required to initiate 

arbitration before the cause of action had even accrued.

The substantive unconscionability of the deadlines in the 

tiered resolution process is heightened because they apply only to 

employees and not to the company. While employees “must 

complete each level of the process before proceeding to the next 

level[,] [t]he Company may elect to bypass one or more steps prior 

to arbitration for disputes with applicants for employment, with 

former employees, or if the Company is the initiating party.” 

“Mutuality is the ‘“paramount consideration”’ in assessing 

substantive conscionability.” (Gostev v. Skillz Platform, Inc. 

(2023) 88 Cal.App.5th 1035, 1056.) Where, as here, a provision 

unilaterally favors the employer and the employer has presented 

no evidence showing a legitimate reason for the disparate 

treatment, the provision must be closely scrutinized to determine 

if it is unconscionable. (Id. at p. 1057.) 
30

c. The confidentiality provision is unconscionable 

The dispute resolution policy contains a confidentiality

clause providing: “All aspects of the proceedings pursuant to this

[dispute resolution policy], including the hearing and recording of 

the proceeding, shall be confidential to the fullest extent 

permitted by law.” The trial court found the confidentiality 

provision unconscionable. We agree. 

In Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 

1066-1077 (Ramos), the court found a confidentiality provision in

an arbitration agreement substantively unconscionable because it 

impaired the employee’s ability to gather evidence in support of 

her claim. The provision required the employee to keep “all 

aspects” of the arbitration proceedings confidential. The court 

found the provision effectively prohibited an employee from 

contacting witnesses or conducting informal discovery, including 

by interviewing other employees. Such limitation “would not 

only increase [the employee’s] costs unnecessarily by requiring 

her to conduct depositions rather than informal interviews, it 

also defeats the purpose of using arbitration as a simpler, more 

time-effective forum for resolving disputes. In addition, requiring 

discrimination cases be kept secret unreasonably favors the 

employer to the detriment of employees seeking to vindicate 

unwaivable statutory rights and may discourage potential 

plaintiffs from filing discrimination cases.” (Id. at p. 1066.) For 

those reasons, the court found the provision to be unconscionable. 

(Ibid.; see also Baxter v. Genworth North America Corp. (2017) 

16 Cal.App.5th 713, 725-726 [provision in employment 

arbitration agreement prohibiting employees and their attorneys 

from communicating with other employees about the aggrieved 

employee’s claim was substantively unconscionable because 
31

“without the ability to conduct such an informal investigation, an 

employee will be hampered in his or her ability to effectively

tailor the limited discovery allowed under the arbitration 

agreement”].)

The provision here is more expansive than the one at issue 

in Ramos, supra, 28 Cal.App.5th 1042 since it covers all aspects 

of the dispute resolution process, including Level 1, in which 

Human Resources meets informally with the employee, his or her 

supervisor, and other parties involved in the dispute. Requiring 

an employee to keep all attempts at dispute resolution 

confidential—including informal discussions with Human

Resources—would substantially impair an employee’s ability to 

investigate and develop evidence in support of his or her claim. 

The restriction would preclude an employee, for example, from 

talking to his or her colleagues about assertions made by the 

employee’s supervisor in the Level 1 meetings to determine the 

veracity of the statements. It would hamper an employee’s 

ability to determine whether his or her colleagues support the 

employee’s version of events or to gather evidence showing a 

pattern of discrimination. The secrecy would also make it less 

likely potential witnesses would learn about a plaintiff’s dispute 

and come forward with relevant evidence.

The confidentiality provision would be especially harmful 

here, where the agreement does not allow for any depositions or 

interrogatories in the arbitration proceeding without an order 

from the arbitrator. Taken together, the restrictions could 

substantially impair the employee’s ability to conduct both formal 

and informal discovery. For the reasons stated in Ramos, we 

uphold the trial court’s finding that the confidentiality provision 

is unconscionable.
32

Gulfstream argues the confidentiality provision is not 

unconscionable because it requires confidentiality only to the 

extent “permitted by law.” The inclusion of such language does 

not significantly reduce the unconscionability of the provision 

because a layperson without legal training would not know the 

provision could not be enforced. (See OTO, supra, 8 Cal.5th at 

pp. 128-129 [discussing such language in the context of 

procedural unconscionability].)

Gulfstream also argues the confidentiality provision is akin 

to the ones upheld in Sanchez v. Carmax Auto Superstores 

California, LLC (2014) 224 Cal.App.4th 398 (Carmax) and 

Woodside Homes of California, Inc. v. Superior Court (2003) 

107 Cal.App.4th 723 (Woodside). Gulfstream’s position lacks 

merit. The confidentiality provision in Woodside required the 

parties to keep the transcript of the judicial reference hearing 

confidential. (Woodside, at pp. 731-732.) This is substantially 

narrower than a provision requiring a claimant to keep “all

aspects” of dispute resolution attempts confidential, from Level 1 

informal discussions with the human resources department 

forward. 

Further, as Ramos stated, Carmax did not address the 

argument “that a confidentiality clause like the one at issue in 

this case would impair [an employee’s] ability to engage in 

informal discovery in pursuit of her litigation claims” and is thus 

not authority on that point. (Ramos, supra, 28 Cal.App.5th at 

p. 1066 [distinguishing Carmax, supra, 224 Cal.App.4th 398].)

In its reply brief, Gulfstream suggests the confidentiality 

provision applies only to the arbitration hearing and the 

recording of the proceeding. That argument is inconsistent with 

the express language of the provision and the structure of dispute 
33

resolution policy. The provision again states: “All aspects of the 

proceedings pursuant to the [dispute resolution policy], including 

the hearing and recording of the proceeding, shall be confidential 

to the fullest extent permitted by law.” Levels 1 through 3 are

“proceedings pursuant to the [dispute resolution policy].” 

Further, if Gulfstream intended for this provision to apply only to 

the arbitration proceeding in Level 4, Gulfstream could have 

included it in the terms that apply solely to Level 4. Instead, it is 

included among the general provisions that apply to all levels.

d. The PAGA waiver is unconscionable

The policy provides: “[N]o Covered Claim may be brought 

as a class or collective action either under this Policy or in court.”

Further, the employee represents “that he/she will not act as a 

class or collective action representative . . . with respect to any 

Covered Claim.” The parties agree this provision, if enforced, 

would preclude Rice from bringing a PAGA claim in a 

representative capacity on behalf of other aggrieved employees.

This provision is substantively unconscionable. PAGA 

waivers are “contrary to public policy and unenforceable as a 

matter of state law.” (Iskanian v. CLS Transportation 

Los Angeles, LLC (2014) 59 Cal.4th 348, 384.) Gulfstream 

inexplicably argues that Viking River Cruises v. Moriana (2022) 

__ U.S. __, 142 S.Ct. 1906 overruled Iskanian on this point. 

Gulfstream is wrong. The Supreme Court expressly held the 

FAA does not preempt Iskanian’s holding that PAGA waivers are 

unenforceable. (Viking River Cruises, at pp. 1924-1925 [“Under 

Iskanian, [the PAGA waiver] was invalid if construed as a 

wholesale waiver of PAGA claims. And under our holding, that 

aspect of Iskanian is not preempted by the FAA.”]; see also id. at 
34

p. 1921 [“Nothing in the FAA establishes a categorical rule 

mandating enforcement of waivers of standing to assert claims on 

behalf of absent principals”]; Galarsa v. Dolgen California, LLC 

(2023) 88 Cal.App.5th 639, 649-650 [analyzing Viking River 

Cruises and concluding “the rule precluding the waiver of the 

right to bring a representative action under PAGA is an aspect of 

Iskanian that is not preempted by federal law and remains good 

law”].)

An illegal waiver of statutory rights is substantively 

unconscionable. (See, e.g., Lange v. Monster Energy Co. (2020) 

46 Cal.App.5th 436, 448-449 [punitive damages waiver is 

substantively unconscionable].) While a PAGA waiver alone is 

not enough to render the entire arbitration agreement 

unconscionable because it could easily be severed, the fact an 

agreement contains multiple unconscionable terms is relevant to 

whether the arbitration agreement is permeated with an 

unlawful purpose. (See Armendariz, supra, 24 Cal.4th at 

p. 124.)4

e. Other provisions

The trial court concluded two other provisions were 

substantively unconscionable: the “one-sided injunction provision 

only for actions likely to be brought by the employer” and the 

“[e]mployer’s unilateral ability to bypass the DPR upon 30 days’

4 The fact the agreement contained this unconscionable term 

is relevant regardless of whether Rice asserts a representative 

PAGA claim or only one in his individual capacity. Whether an 

arbitration agreement is unconscionable is measured at the time 

the contract is made. (See, e.g., Armendariz, supra, 24 Cal.4th at 

p. 122.)
35

notice.” Because we conclude the provisions already discussed 

demonstrate the agreement is permeated with unconscionability, 

we do not reach the issue whether the interim relief and 

modification provisions were also unconscionable. 

C. The Trial Court Did Not Abuse Its Discretion in Declining 

to Sever the Unconscionable Arbitration Provisions

Civil Code section 1670.5, subdivision (a), provides: “If the 

court as a matter of law finds the contract or any clause of the 

contract to have been unconscionable at the time it was made the 

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

remainder of the contract without the unconscionable clause, or it 

may so limit the application of any unconscionable clause as to 

avoid any unconscionable result.” 

“The Supreme Court has interpreted this provision to mean 

that if a trial court concludes that an arbitration agreement 

contains unconscionable terms, it then ‘must determine whether 

these terms should be severed, or whether instead the arbitration 

agreement as a whole should be invalidated.’” (Lange v. Monster 

Energy Co., supra, 46 Cal.App.5th at pp. 452-453). “[T]he strong 

legislative and judicial preference is to sever the offending term 

and enforce the balance of the agreement: Although ‘the statute 

appears to give a trial court some discretion as to whether to 

sever or restrict the unconscionable provision or whether to 

refuse to enforce the entire agreement[,] . . . it also appears to 

contemplate the latter course only when an agreement is 

“permeated” by unconscionability.’” (Roman v. Superior Court

(2009) 172 Cal.App.4th 1462, 1477-1478, quoting Armendariz, 

supra, 24 Cal.4th at p. 122.) We review the trial court’s decision 
36

not to sever unconscionable terms for an abuse of discretion. 

(Mills, supra, 84 Cal.App.5th at p. 1065.)

Here, the unconscionability permeates the agreement. The 

court could not simply sever the offending terms but would have 

to rewrite the agreement, which the court may not do. (See, e.g., 

Mills, supra, 84 Cal.App.5th at p. 1066 [“Where ‘a court is unable 

to cure this unconscionability through severance or restriction 

and is not permitted to cure it through reformation and 

augmentation, it must void the entire agreement”].) At the very 

least, the discovery provisions and the provisions requiring the 

employee but not the employer to go through all levels of the 

dispute resolution process would have to be rewritten. (Id. at 

pp. 1066-1067; see also De Leon, supra, 72 Cal.App.5th at p. 493 

[declining to sever unlawful statute of limitations and discovery 

provisions of the arbitration agreement, explaining if “‘“the court 

would have to, in effect, reform the contract, not through 

severance or restriction, but by augmenting it with additional 

terms,” the court must void the entire agreement’”].) 

Further, the fact there are multiple unconscionable 

provisions supports the conclusion that unconscionability 

permeates the agreement. “[M]ultiple defects indicate a systemic 

effort to impose arbitration on an employee not simply as an 

alternative to litigation, but as an inferior forum that works to 

the employer’s advantage.” (Armendariz, supra, 24 Cal.4th at 

p. 124; see also Mills, supra, 84 Cal.App.5th at p. 1066.)

Accordingly, we conclude the court did not abuse its 

discretion by denying the motion instead of severing the 

unconscionable provisions. 

Gulfstream asserts the trial court did not consider 

severance because it did not address it in its written order. 
37

Gulfstream’s inference is not supported by the record. The 

parties thoroughly briefed whether any unconscionable provision 

could be severed, and the issue was touched on at the hearing.

Moreover, Gulfstream has forfeited any objection on this 

basis. Gulfstream had the right to request a statement of 

decision under Code of Civil Procedure section 1291, which 

states, “A statement of decision shall be made by the court, if 

requested pursuant to Section 632, whenever an order or 

judgment . . . is made that is appealable under this title [i.e., the 

California Arbitration Act].” Gulfstream did not request a 

statement of decision, and thus the trial court was not required to 

provide one. (See Acquire II, Ltd. v. Colton Real Estate Group

(2013) 213 Cal.App.4th 959, 970 (Acquire II, Ltd.).)

“A party’s failure to request a statement of decision when 

one is available has two consequences. First, the party waives 

any objection to the trial court’s failure to make all findings 

necessary to support its decision. Second, the appellate court 

applies the doctrine of implied findings and presumes the trial 

court made all necessary findings supported by substantial 

evidence.” (Acquire II, Ltd., supra, 213 Cal.App.4th at p. 970

[applying these principles in an appeal from an order denying a

motion to compel arbitration].)

Accordingly, we presume the trial court found the 

agreement was permeated with substantive unconscionability. 

Further, because the court could not sever the discovery provision 

without rewriting the contract, the only way the trial court could 

validly exercise its discretion was to decline to enforce the 

agreement. Thus, regardless whether the court actually 

exercised its discretion, we affirm. 
38

D. Rice’s Request for Sanctions Is Denied

Rice asserts the appeal was frivolous and requests attorney

fees under Code of Civil Procedure section 907. We deny the 

request. An appeal is frivolous “only when it is prosecuted for an 

improper motive—to harass the respondent or delay the effect of 

an adverse judgment—or when it indisputably has no merit—

when any reasonable attorney would agree that the appeal is 

totally and completely without merit.” (In re Marriage of 

Flaherty (1982) 31 Cal.3d 637, 650.) Gulfstream’s appeal does 

not meet that standard. Gulfstream cites several trial court 

decisions enforcing the dispute resolution policy under California 

law and an Eleventh Circuit case (Caley, supra, 428 F.3d 1359)

enforcing it under Georgia law. That is enough to show the 

appeal is not frivolous.

DISPOSITION

The order is affirmed. Rice is to recover his costs on 

appeal.

ESCALANTE, J.

*

We concur:

PERLUSS, P. J. FEUER, J.

* Judge of the Los Angeles County Superior Court, assigned

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

California Constitution.