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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinio n has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRI CT

DIVISION SEVEN

ROBERT RICE ,
Plaintiff and Respondent ,

v.

GULFSTREAM AEROSPACE C O RPORATION , Defendant and Appellant

. B 3 16079
( Los Angeles County Super. Ct. No

. 21LBCV00176 )

APPEAL from a n order of the Superior Court of Los Angeles County, Michael P. Vicencia , Judge. Affirmed

. Gibson Dunn & Crutcher , Scott A. Edel man , 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 Aerospa ce Corpora ti on (Gulfstream) on May 1, 2020. He sued Gulfstream for wrongful termination, age discrimination , retaliation , violation of wage and hour laws, and various o ther employment

- related claims

. Gulfstream moved to compel arbitration , arguing Rice h ad agreed to arbitration when he signed an employmen t appl ication stating applicants were bound by the company ’ s dispute resolution policy

. In opposition, Rice dispute d that a valid agreement to arbitrate was formed but argued that , even if he had agreed to arbitra te , the agreement was unconscionable. The cou rt denied th e motion , concluding the agreement was unconscionable

. We affirm.

FA CT UAL AND PROCEDURAL BACKGRO UND

A. Evidence R egarding Contract Formatio n 1

. Rice ’

s E mployment A

pplic ation Rice was h ired by G ul fstream in April 1986 and was laid off in May 2009. In February 2010, h e submitted an employment application and was rehired

. In a box above Ri ce ’ s signature, the employment application st ated : “I agree t o the exc lusive resol ution of all cla ims arisin g out of or relating to my application for employment, employment or termination of employment by the Company by the procedures set forth in the Co mpany ’ s Dispute Resolution Policy. The clai ms covered by this agreemen t shall incl ude, but are not limited t o, claims for wages, breach of any express or implied promises, torts, and discrimination on any basis, but shall not include claims for worker s co mpensation,3

unemployment or claims under an y benefit or pensio n plans o r other agr eements between t he Company a nd me. I understand that as a result of my and the Company ’ s mutual agreement to resolve claims exclusively through the Company ’ s Dispute Resolu tion Policy, I and the Company hereby waive any rights to a ju ry trial. ” It is undisputed that t he company ’ s d ispute resolution policy was not attached to the application and that Rice was not provided with a copy to review at the time h e signed the
ap plication. Gulfstream ’ s human r esources represent a tive declared the policy was available to job appli cants “by re quest.”

2

. Conflicting E vidence as t o W hether Rice E ver R eceived a C opy of the D ispute R esolut ion P olicy The parties dispute whether Rice ever received a c opy of the di spute resol ution policy, either before or after Rice signed the applicatio n

. Gulfst re am contend s that Rice had received a
copy six years earlier, when he had previously been employ ed by the company , and t hat he received another copy in Mar ch 2010 during t he new empl oyee orientation. Rice does not recall ever receiving a copy d uring his pr ior employment and denies he received a copy at the new employee orientation. Gulf stream provided declara tions of two human resources
rep resentatives , Trevor Clifton and Ronda Londen

. Clifton declared Gulfstream implemented its dispute resolu tion polic y in July 2002 with an effective date of August 2002. Gulfs tream mailed a copy of the policy to its employees alon g with a letter informing them they could opt out within 30 days of receiving it. Gulfstream ’ s records show that the policy was ma iled to Ri ce ’ s home in 2002 a nd that Rice did not opt out.4 Clifton further d eclared Gulfstream amended t he policy in March 2003 , with an effective date of April 20 03

. T he new policy was mailed to employees, including Rice , in or around April 2003

. When Rice submi tt ed his employment application in 2010 , the Apri l 2003 policy was still in effect. Ron da Londen declared she was “involved in N ew H ire O rientation for more than twenty

- five (25) years

. ” She does not state she was involved in the orientation se ssions Ric e attended. In March 2 010, it was Gulfstream ’ s practice to hold a tw o
- day ori entation for new employees . Employees received training on company policies, including the dispute resolut ion policy , which was contained in a new employee orientation binder pr ov ided to participant s

. 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 facili tator to lead an interactive session regarding the policy. L ond e n furt he r decl ar ed attendees at the orientation sessions were required to sign an acknowledgment that they had received training on certain topics. Rice signed an acknowledg ement that he had received training on nine broadly def ined topics on the seco nd day of or i entatio n . 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 Gul fstream Intranet site .” In opposition to the motion , Rice submitted his own declaratio n in which he stated he did not recall ever receiving the 2002 or 2003 policies , either before or after he was rehired. At th e time he was rehired, no Gulfstr ea m represent ative tol d him5

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 th e policy or any explanation of it

. Ri ce furt her d ecla red he att ended the two

- day orientation meeting for new employees

. E mployees were given a high

- level overview of company policies and pr actices , but the dispute resolution policy was not discussed. H e was given a new hire orientation bind er , but a co py of the dispu te resolution policy was not included with the materials

. The orientation sessions were not interactive , and the newly hired e mployees were not encouraged to ask and did not ask questions. Gulfstream relies on the followi ng lan guage from i ts 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 shal l be deemed to be an acce ptance of the [disput e reso lution pol ic y ]

. No signat ure shall be required for the P olicy to be applicable.” This language was contained on page 3 of the 11

- page single

- spac ed document. Oth er relevant terms are discuss ed below.

3. Conflicting E v idence a s t o W hether Rice R eceive d N otice o f a n U

pdated P olicy in 2019 Gulfstream ’ s human resources representative Clifton declared a new version of the policy went into effect i n January 201 9. He stated emp loyees were notified the policy had be en revised through a posting on the compan y ’ s intran e t

. Clifton attaches what appears to be an intranet posting dated December 21, 2018 stating , “Gulfstream ’ s Dispu te Resol ution6

p olicy has been updated. Yo u can review all company policies o n Insid e Gulfstream under the Resources menu.” Rice dec lared he n e v er saw the purported notification . He was never told he should review the updated policy and n eve r saw it on the intranet. He was never re quired to sign any acknowledgement t hat he had seen it and never agreed to the
terms. He was away from work for t h e holidays on December 21, 2018 when the updated policy was purportedly posted on the intranet. As with the 2003 policy, the 20 19 policy stated that continued emp loym ent would be deemed acceptance of the policy.

B

. Key Terms of t he Dispute Res olution Po l i cies 1. 2003 Policy

a. Overview The 2003 dispute resolution policy purpo rts to apply to all employees exce pt those covered by a collective bargaining agreement. Th e policy states it is a “structured dispute resolution process that applies to C overed C la i m s and consists of four levels : ” (1) human resources review ; (2) management panel review; (3) mediati on; and (4) arbitration. In Level 1, “Human Reso urces meets informally with the Employee and the other parties involved and attempts to resolve the Emplo y e e ’ s disputes.” If the employee i s not satisfied with the resolution of the problem after the informal human resources review, the employee has 30 da ys to submit the claim to the management pa nel review , or the employee waives all right to
purs ue his or h e r covered claims. In Level 2, the employee must meet with a ma n agement panel. If the e mployee is not satisfied with the result of that7

s tep, the employee must, “within 30 days of the date of the Final Determinati on of the Management Panel Revi ew, submit t he C overed C laim to M ediation (Level 3) , or the E mployee waive s all rights to pursue his or her C overed C laims.” In Lev el 3, the employee must participate in mediation with an outside mediator. If th e parties do not reach a resolution, “the E m ployee mus t , within 30 days of the date of the Final Det e rmin a t ion of the Mediation, submit the claim to A rbitration (Level 4) [,] or the E mployee waives all rights to
pursue his or her C overed C laims.” Level 4 is arbitration. “The Arbitrator ’ s decision is the exclu s i ve remedy for C overed C laims and is fina l and binding on the C ompany and E mployee.” “E mployees 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 pr ior to arbitr a t ion for disputes with a ppli cants for employment, with former employees, or if the C o m pany 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 f orth t he “ s o le and exclusive forum and remedy for all Covered Claims

. [¶ ] The Employee and Company agree and hereby waive any right to jury trial for any Cover ed Claim. The Employee further agrees that no Covered Claim may be brought as a class or colle ctive a cti o n either under this Policy or in court and that he/she wi ll not act as a class or collective action representative or participate as a member of a cla ss of claimants with respect to any Covered Claim.”8 b. Covered c laims The term “Covered Clai ms ” is defin e d as follows: “Covered C laims are employme nt

- related claims between an individual Employee and the Company [and related entities] , and t heir respective individual managers and other present or former employees. Covered Claims involve a c laim o f a legal r i ght, obligation or entitlement regar ding or arising from the employ ment relationship. ” The policy lists eight categories of claims that are included in “Covered Claims

. ” Six of the categ ories are claims only an employee woul d br ing against an employer, s u ch as claims involving wrongful termination, employmen t 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 a re claims t hat would primarily be brought b y employees but could also be brought by employers, including tort c laims and claims of violation of public policy. The final categ ory is for “ C laims based
on express or imp lied contracts,” which coul d include c l aims brough t by employers or employees

. The policy lists six categories of claims that are exclude d from the policy. The excluded claims include “ C laims involvin g patents or inventions.”

c

. T ime l imitations “The C ompany encourages E mpl oyees to attemp t to resolve matters in formally with their supervisor. If a matter cannot be resolved , an E mployee ’ s C overed C laim (s) should be filed with Human Reso urces under the prevailing P olicy with in 3 0 days after the dispute arises. This 30

- day guidelin e shall no t be9

applied by the C ompany to bar the submission of any C overed C laim to Human Resour ces Review (Level 1) within the applicable statute of limitation s. [¶] After an E mployee submits

a C over ed C laim at the initial filing at Level 1 for Human Re sources Re v i ew, the E mployee must (1) follow each step and cannot skip any level; and (2) file a ny request to proceed to any of the next levels within thirty (3 0) days after the date after F inal D et ermi nation at the previous level. If an E mp loyee does not file for t h e next step within the 30

- day period, the E mployee will waive his or her rights to p ursue his or her covered claims.”

d. Arbitrati on p rocedures The policy contains a pr oced ure for the joint selection of a
neutr al arbitrator from independent di spute reso l u tion providers such as the American Arbitration Association. The arbitrator must have a minimum of three years ’ experie nce in the arbitration of employment l aw d isputes or comparable experience. Th e p arties have the right to present evidence, to
reques t 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 . T he arbitrator must issue a written de cis ion. The arbitrator is required to apply t he substan t i ve law of the state in which the employ ee is, was , or sought to be predominantly employed. The arbitrat or “may grant any remedy or relief th at w ould have been available to an indivi dua l Employee had the claim been asserted in court for a Cover ed Claim.” “Each party shall pay its own experts ’ and/or attorneys ’ fees unless the Arbitrator awards re asonable experts ’ and /or attorneys ’ f

ee s to the Employee.”10 e

. Di scovery l imitations The policy imposes strict limits on discovery in arbitration. Each party has t he right to req uest the production of documents , but the parties must obtain lea ve from the arbitrator to conduct

an y ot her discovery. Depositions , interrogatories , and requests for admission are allowed only by agreement of the parties or by order o f t h e arbitrator. The policy requires the parties to disclose documents they inte nd to use and witnesses they intend to call 20 days before the hearing , which is after the close of discovery

.

f

. Interim r elief The policy contai ns an “Interim Relie f” section s ta ting: “For claims involving a lleged breach of Employee ’ s non
competition, non

- solic i tation, fiduciary , or confidentiality

o bligations, as well as claims involving trademarks, trade secret s, business know

- how or intellectu al pr operty, either the Employ e e

o r the Compan y may . . . apply to any court of competent jurisdiction and seek interim provisional, injunctive , or other equi table relief until the arbitration aw ard is rendered or the Cove red Claim is otherwise resolved.”

g

. Confidentiality T he policy c ontains a confidentiality provision stating: “All aspects of the proceedings pursuant to this [dispute resolutio n p olicy ], including the hearing and recording of the procee ding , shall be confidential to the ful lest extent permitted by law .

. . ex cept ( i ) to the extent both Parties agree otherwise, in writing; (ii) as may be appropriate in any subsequent proceed ing between the parties [;] or (iii) as may otherwise be appropri ate in response to a governmental agen cy or legal process.”11 h

. Modifica tion The p o l icy allows the company to modify or terminate the policy upon 30 days ’ written notice . The mod ification or termination is effective only as to claims submitte d after the effective date of the modi ficat ion or termi nation.

i

. Sever ability T he s everabilit y provision states: “ I n the event that any portion of the [dispute resolution polic y] is held to be in conflict with a mandatory provision of appli cable law , the remainder of thes e

. . . pro cedures shall not be affected to the extent permitted b y law

. Fo r example, if a court holds some particular provision(s) of the [dispute resolution policy] to be in conflict with a mandatory provision of applicab le law in t hat jurisdiction, suc h
prov ision (s) will not be enforced in that jurisdiction, but the exclusivit y of the [dispute resolution policy] and its arbitration as the sole and exclusive f orum for all C overed C laims within its scope shall not be affect ed.”

2. 2019 Dispute Re solut ion Policy The 2019 version of the policy appears to be nearly identi cal to the 2 003 version except claims for sexual harassment are exclude d from co vered claims

. The parties have not identified

an y differences in the 20 19 policy that are m aterial to this appeal. Because the 2003 version was in effect at the time Rice sig ned the em p l oyment application and because there are no material differences between the p olicies , we rely on t he 2003

v ersion in this opinion.12

C

. The Parties ’ Argum ents a nd the Trial Court ’ s Ruling In the moving papers, Gulfstream argued Rice agreed to the disput e resolution policy, including its arbitration provision , when he signed the emp loyment application and when he

co ntinued t o be employed after being provided with a co py at the new employee orientation and after being notified of the update in 20 19

. In op p o sition, Rice argued he had not agreed to arbitrate , but , even if he had , the dispu te resolution policy was unconscionable

. A hearing was held on October 5, 20 21. The court expressed its preliminary views that Rice had agreed to be bound by t he dispute r esolution policy but that the agreement could not be enforced because it was proce durally and substantively unconscionabl e. 1 The court took th e mat ter under submission

. Later that day, the court i ssued a minute order denying the petition , st ating , “ [T ] h e agreement to arbitrate, the Dispute Resolution Policy (DRP), is unco nscionable.” The court did not address whether a valid arbit ratio n agreement was formed but instead proceeded directly to the unconscionability analysis. The court found th e agreemen t was procedurally unconscionable for three reasons : (1) the “DRP is a contract of adhesion ” ; (2) t he

“ emplo yment a pplication , which incor porated the DRP by reference and purpor ted to bind plaintiff to the DRP, did not explicitly state that plai ntiff was a g reeing 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 an d thus mad e no findings. I nstead, 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 t hat plaintiff waived his right to a jur y tri al ” ; and (3) “Plaintiff was n ever provided a copy of the DRP.” T he trial court also found the following provisions of the policy were substan tively unc o n scionable : (1) “[t]he PAGA waiver ” ; (2) “[t]h e [d] iscovery restrictions ” ; (3) “[t]he one
- sided employee compliance wit h the four

- tiered DRP upon strict
t imelines, non

- compliance of which resulted in waiver of plaintiff ’ s claims ” ; (4) the “[e]m ployer ’ s u n i lateral ability to bypass the DRP upon 30 days ’ notice ” ; (5) “[t]he [c] onfidentiality provision ” ; and (6) “[t]he one

- si ded i njunction provision only for

a ctions likely to be brought by the employer.” Gulfstream timely appealed.

DISCUSSION

A. Standard o f Review “There is no un iform standard of review for evaluating an order denying a [petition] to compe l arbitration.” ( Lopez v. Bar tlett Care Center, LLC (2019) 39 Cal.App.5th 311, 317 [quotation marks omitted] ( Lopez ).) “[I]f th e court ’ s deni al rests

s o l ely on a decision of la w, then a de novo standard of review is employed.” (

Ibid. [quotation mar ks om itted]; accord, Garcia v. KND Development 52, LLC (2020) 58 Cal.App.5th 736, 744 ( Garcia ) [“We review de novo the legal conclusio ns underlying a trial co u r t ’ s denial of a petitio n to compel arbitration.”].) “If the c ourt ’ s order is based on a decisio n of fact, then we adopt a substant ial evidence standard.” ( Lopez, supra, 39 Cal.App.5th at p. 317.) “ This traditional standard of r eview is highl y deferent i a l. It has three pillars

. First, we accept all evidence suppo rting the trial court ’ s order. Se cond, we14

completely disregard contra ry evidence. Third, we draw all reasonable inferences to affirm the trial court. These three pillars support t he lintel: W e do not reweigh the ev idence. ” ( Schmidt v. Superior Court ( 2020) 44 Cal.App.5th 570, 581.) C ontra ry to Gulfstream ’ s argument, t he substantial evide nce standard applies “with due deference to the trial court ’ s resolution of f

actual conflicts [] regard l e s s of whether the evidenc e is oral or documentary.” ( Desert Ou tdoor Advertising v. Superior Cour t (20 11) 196 Cal.App.4th 866, 868 f n. 1.) The fact “that the trial court ’ s findings were based on declarations and other written evidence does not lessen th e d eference due those findi ngs.” ( Haraguchi v. Superior Court (2 008) 43 Cal.4th 706, 71 1 f n. 3; se e als o Shamblin v. Brattain (1988) 44 Cal.3d 474, 479 [appellate court must “defer to the factual determinations made by the trial court whe n the ev idence is i n conflict,” even when th e trial court ’ s ruling is based on dec larations].)

B. The Trial Court C orrec tly Decided t he Dispute Resol ution Policy I s Unconscionable

‘ “The party seeking to compel arbitration bears the burden of proving the existenc e of a va l i d arbitration agreement.” ’ ( Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128 ( Young ).) Here, the trial court ’ s writ ten order did not address contract formation , and the court made no findings as to whether a val id agreement to arb itrate wa s f ormed. We question wheth er Rice agreed to arbitrate because t he employment application did
not menti on arbitration and b ecause (as the trial court found based on substantial evidence) Rice was never provided with a copy of the dispute resoluti on policy c o ntaining the arbitration15

clause

. 2 However, because we a gr ee with the trial court that the dispu te re solution policy is unconscionable and affirm on that basis, we do not need to reach the issue whether a valid contract was formed . We therefor e assume w i t hout deciding that Rice agreed to arbitrate by signing t he employment application referencing th e dis pute resolution policy. If a valid agreement to arbitrate i s formed, courts will enforce the agreement as with any other contract. ( OTO, L.L. C. v. Kho ( 2 019) 8 Cal.5th 111, 125 ( OTO ); Mills v. Facility Solutio ns Group, Inc. (2022) 84 Cal.App.5th 103 5, 10 49 ( Mills) ; Code Civ. Proc., § 1281; 9 U.S.C. § 2.) Genera lly applicable contract defenses such as unconscionability apply. ( OTO, at
p. 125; Pinnacle M

u s eum Tower Assn. v. Pinnacle Market Development (US), LL C (2012) 55 Cal.4th 223, 246 ( Pinnacle ).) “A contract is unconscionable if one of the parties l acked a meaningful choice in deciding wh ether to agree and the contract contains terms that a re unreas o n a bly favorable to the other party. [Citation.] Under t hi s standard, the unconscionability doctr ine “ ‘ has both a procedural and a substantive element. ” ’ ” ( OTO, supra, 8 Cal.5th at p. 125; ac cord, Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 8 9 9 , 910 ( Sanchez ).) “ ‘ The procedural element addresses the c ircumstances of contract negotiation a nd fo rmation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairn ess of an a g reement ’ s actual terms and to assessments of whether the y are overly harsh

2 We disc uss the s ubstantial ev iden ce in suppor t of the tr ial court ’ s fin ding in section B .1, infra. Be cause the finding is supp orted by substantial evidence , we acc ept it as tru e.16

or one
- sided. ’ ” ( OTO , at p. 125; accord, Pinnacle, supra, 55 Cal. 4th at p. 246.) “Both procedural and substan tive unconscionability must be shown for the defense to be establis h e d , but ‘ they need not be present in the same degree. ’ [C it ation.] Instead, they are evaluated o n “ ‘ a sliding scale. ’ ” [Citation.] ‘ [T]he m ore substantively oppressive the contract term, the less evidence of procedural unconscionability is re quired to ’ c onclude that the term is unenforceable. [Citation.] Co nv ersely, the more deceptive or coercive the bargaining tactics employed, the less

su bstantive unfairness is required.” ( OTO, supra , 8 Cal.5th at pp. 125

- 126; accord, Sanchez, supra , 61 C al.4th at p

. 910.) “ ‘ The ultimate issue in every case is whether th e terms of the contract are sufficiently unfa ir, in view of all relevant circumstance s, that a court should withhold enforcement. ’ ” ( O TO, at p. 126; accord, Sanchez, at p. 912.) “The bur den of pr o v i ng unconscionability rests upon the party asserting it.” ( OTO, supra, 8 Cal.5th at p. 126; acco rd, S anchez, supra , 61 Cal.4th at p. 911.) Whether an agreement is unconscionable is generally a question of law we review de novo. ( Dough er t y v. Roseville H e ritage Partners (2020) 47 Cal.App. 5th 93, 102 .) However, “ to the extent the trial court relied on

con tested facts in mak ing its determ ination, we review the court ’ s factual determinations for substantial evidence. ” ( Ibid. )

1. The Circumstances Surroundi n g the Formation of the Contract Involved a Heightened Degre e of Procedural Unconscionability

“ A p rocedu ral unconscionabili ty analysis ‘ begins with an inquiry into whether the contract is one of adhesion

. ’ [Citation.]17

An adhesive contract is st andardize d , generally on a preprinted form, and offered by the party wi th superior bargaining power ‘ on

a ta ke

- it

- or
- leave

- it basis. ’ [Citation s. ] Arbitration contracts imposed as a condition of employment are typically adhesive .” ( OTO, supra, 8 Cal.5th at p. 12 6

. ) Here, the agreement was presented on a take

- it

- or
- leave

- i t basis and was imposed as a conditio n of e mployment an d was therefore adhesive. Adhesion contracts in the employment context “ typically contain some aspects of procedural unconscionab ility. ” ( S e rpa v. California Sur ety Investigations, Inc. (2013) 215 Ca l.App.4th 695, 704. ) “[T] he economic press ure exerted by employers on all but the most sought

- after employees may be particularly acute, for the arbitration agreement stands between th e employe e a nd necessary employment, a nd few employees are in a posit io n to refuse a job because of an arbit ration agreement

. ” ( Armendariz v. Foundation Health Psychcare Services, Inc. ( 2000) 24 Cal.4th 83, 115 (

Armendariz

) ; accord, Little v. Auto Stiegle r, Inc. ( 2 0 0 3) 29 Cal.4th 1064, 1071 .) Thus, a dhesive employment contr acts g enerally have at least a minima l degr ee of procedural

un conscionability

. ( Swain v. LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 68 [analyzing an adhesive contract in a

non
- empl o y m ent context ]

. ) To determine whether a heightened degree of proce dural unconscionability existed , we c onsider “ whether c ircumstances of the contract ’ s formation created such oppression or surprise that closer scrutiny of its overall fairness is required

. ” ( OTO, supra , 8 C al.5th at p. 126.) “ Oppression occurs where a contract involves lack of negoti ation 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 f ormation involved a signif icant degree of su rpris e and oppression

. Rice purportedly agreed to arbitrate by signing the application containing the following language: “I agree to the exclusi ve resolu t i o n of all claims arising out of or relating to

. . . em ployment

. . . by the proc edures set forth i n the Company ’ s Dispute Resolution Policy.

. . . I understand that as a result of my and the Company ’ s mutual agreement to resolve claims exclusi vely thro u g h the Company ’ s Dispute Resolution Policy, I and the Co mpany hereby waive any rig hts to a jury tria l.” The trial court found Rice “was never provided a copy of the [dispute resolution policy]

. ” T here was substantial evidence to support that fi nding

. G u l f stream acknowledges Rice was not provided with a cop y at th e time he sign ed th e application , and Rice declared he had never received a copy either before or after signing. R ice ’ s declaration constitutes substantial evidence to support the cour t ’ s findi n g that he never received the policy

. Gulfstream devote s many pages of its brief s discussing the evidence in support of its position that Rice was provided with a copy of the p olicy while he was previously employed with the company and at the ori entation a f t er he was rehi red , but that evidence is irrelevant be cause t here is subst antia l evidence to support the trial court ’ s finding that he never received it

. Further, t he ap plication did not explicitly state that Rice agreed to binding arbitratio n or that h e waived the right to have any disputes determined in a court of law

. It refer red 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 waive d a ll rights to a judicial forum. Gulfstream presents n o evidenc e that this was explained to Rice19

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 applicati o n

. These facts demonstrate Rice ’ s a gr eement to arbit rate involved a high degree of surprise. Even the fact the dispute resolution policy required arbitration was “artfully hidden .” (See Ba ltazar v. Forever 21, Inc. (2016) 62 Cal. 4th 1237, 1246 [ discuss i n g cases sta nding “ for the p rop ositi on that cou rts wi ll more closely scrutinize the substantive unconscionability of terms that were ‘ artfully hidden ’ by the simple expedient of incorporati ng them by reference rather than including them in or
att aching th e m to the arbitration agreeme nt ”]

. ) Further, th e spec ific terms Rice contends are substantially unconscionable were hidden from him when he signed. ( I bid. ; see also Ali v. Dayligh t Transport, LLC ( 2020) 59 Cal.App.5th 462, 476

- 477 [element of su rprise is s h own when allegedl y unconsc ionable terms are i nclude d in AAA arbitration rules that are incorporated by reference into an employee ’ s arbitration agreement but are not provided to the employe e ].) These facts also support the conclusion that Rice was subj e c t ed to a higher d egree of o ppressi on than an e mploye e 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 revi ew the ar b i t ration agreement , whether the emp loyer explai ned th e 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. 1 2 6

- 129.) Here , Ric e ’ s agreem ent to comply with the di spute 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 “arbitrat ion” in t h e employment applic ation , an d did n ot explain t o 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 pre sent when e m ployee was requir ed to sig n an ag reement to b e boun d 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. Gulfstre am assert s i t does not matter that the applic ation Rice s igned did not mention arbitration, that the dispute resolution policy was incorporated by reference, and t hat Rice was not provided with a copy of the policy. Gulfstream cites cases for the proposit ion th at a c ontract can be formed when an arbitr ation pro vision is incorporated by reference or when the document containing the arbitration clause is not provided to th e employee , but those cases are not relevant to procedural unconscionability

. Even if a contrac t m ay be formed under those circumstances , those factors add to the procedu ral 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 Gulfstrea m’s discus sion of procedura l unconscionability on pages 29 to 44 o f its opening brief, Gulfstream c ited only a si ng le case concern ing procedural unc onscionability; the rest concerned con tract formation. The procedural unconscionability

case Gulfstream cit e s , Sanchez v. Valencia Hol ding Co., LLC
, supra, 61 Ca l.4th 899 do es not support its position. There, t he court fo und there was s ome degree o f proc edural unconscionability in an adhesiv e vehicle sales agreement but the21 2. The Arbitration Agreemen t I s Su bstantively Unconscionable B ec ause we c onclude the agreement to arbitrate involved a heightened degree of procedural unconscionability , we “closel y scrutinize the subst antive terms ‘ to ensure the y are not manifestly unfair or one

- sided. ’ ” ( OTO, sup r a , 8 C al.5th at
p. 130; accord, Balt azar, sup ra , 62 Cal.4th at p. 1244.)

a. The l imitations on d iscovery a re u nconscionable A provision limiting disc overy in an arbitratio n agreement in the employme nt context is substantively unconscionable if the disc o v e ry i s not sufficient to allow employees to vindicate their statutory rights. As we explained in Mills , supra, 84 Cal.App.5th at p age 1058 : “

Al though parties may ‘ agree to s omething less than the full panoply of discovery , ’ employees ‘ are at l east enti t l e d to discovery sufficient to adequately arb itrate their statutory claim, including access to essential documents and witnesses, as determined b y the arbitrator(s)

. . . . ’ [C itations.] As the Supreme Court in Armendari z explained with respect to FEH A c la ims, ‘ We agree that adequate disco very is indispensable for the vindication of FEHA claims

. ’ [Citation.] ‘ In striking the
appr opriate balance between the desired s implicity of limited discov ery and an employee ’ s stat u tory rights, courts asses s the

a mou nt of default discovery permitted un der the arbitration agreement, the standard for obtaining additional discovery, and

unconscionability was not heig htened by the consumer’s failure to read the agreement and the vendor’s failure to highlight the arbitration c lause. (

Id

. at pp. 914

- 91 5.) Sanchez is en tirely consistent with the conclusion Gulfstream subjected Rice to a heightened degree of procedural u nconsc ionability here.22

whether th e plaintiffs have demonstrated that t he discovery limitations wi ll prevent them from adequ a tely arbitrating their
st atutory cl ai ms

. ’ [Citation s .] ‘ The denial of adequate discovery in arbitration proceedings leads to the de facto frustration of the emplo yee ’ s statutory rights

. ’ ” ( Armendari z

, supra, 24 Cal.4 th 83 at pp. 1058

- 1059. ) The only disco very req uests that are allowed as a matter of right under t he dispute resolution policy are reques ts for production

. Depositions are allowed only by agreement of the parties or by order of the arbitrator. The parties are simila rly not allowed to pr opound interrogatories or req uests for ad mission

ex cept by order of the arbitrator

. While the policy do es require the parties to disclose the witnesses and documents they intend to rely on at t he hearing, the disclosure does not have to b e made until afte r the clos e of discovery. In Mills , w e co ncluded that simi lar limitations on discovery were substantively un conscionable because the discovery was not sufficient to allow the pl aintiff to arbitrate his statutory claims

. ( Mills, supra, 84 Cal.App.5t h at pp

. 1059

- 1060.) There, the arb itration a gr eement allowed ea ch party to take depositions, designate expert witnesses, and subpoena witnesses, but d id not expressly allow for docum ent requests, requests for admission , or inter rogatories. Instead, such discov ery could be had “ ‘ only where the heari ng arbitr ator so or ders, upon a showing of subst antial need. ’ ” (

Id. at p. 1059.) We conclude d that the provision allowing the arbitrator t o order additional discovery upon a showing o f substantial need was an “ ‘ inad equate safety valve ’ ” to ensu re s uffici en t disco very would be allowed to vindicate the plaintiff ’ s statutory rights. (

Id. at p

. 10 6023

[explaining and following Fitz v. NCR Cor p. (2004) 118 Cal.App. 4th 702, 718

- 719 ]

. ) Here, th e provision prohibiting dep osit ions except upon agreement of the p arti es or ord er of the arbitrator is especially

oner ous

. Although the provision is facially neutral , it unfairly favors Gulfstream. (See De Leon v. Pinnacle Property Management Services, L LC (2021) 72 Cal.App.5th 47 6, 4 87 ( De Leon ) .) “ ‘ Employment disputes a re factua lly comple x, and their outcomes ‘ are of ten determined by the testimony of multiple percipient witnesses

. . . . ’ [Citation.] Seemingly neutral limitations on discovery in empl oyment disputes may be

nonm utua l in effect. ’ ” ( Id. at pp. 4 87

- 488.) Gu lfstrea m is likel y to employ and have access t o 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] fro m

v indicating statutory c laims.” ( See Nun ez v. Cyca d Managem ent LLC (2022) 77 Cal.App. 5th 276, 285 ( Nunez ) ; see also Kinney v. United Healthcare Serv ices, Inc. (1999) 70 Ca l.App.4th 1322, 1332 [ b ecause an employer “is presumably in possession of the vast maj o rity of evidence that woul d be relevan t to emplo yment

rel ated claims against it, the li mitations on discovery, although equally applicable to both parties, work to curt ail the employee ’ s ability to substantiate any claim ”]

. ) Cour ts have concluded provisio n s limiting deposition s were substantiv el y uncons cionable when the y allowed for more dep ositions than are allowed here. ( Nunez , supra, 77 Cal.App.5th at p. 285 [a rbitration provision in employment contract limiting discovery to t hree depositions and 30 di s covery responses is substant ively unco ns cionable ]; De Leo n, supra , 72 Cal.App.5th at
pp

. 487

- 488 [ provision limiting parties to 20 interrogatories and24

th re e depositions was substantively unconscionable ] ; Davis v. Kozak (2020) 53 Cal.App.5th 897, 911 [prov i sion allowing parties to tak e two depo si tions bu t allowin g for no written discovery was substantively unconscionable] .) We agree with the trial court that the limit ations on discovery are s ubstantively unconscionable. Gulfstream attempts to distinguish c a ses finding discovery limita tions unco ns cionable by argui ng that, in the agreements in those cases, the arbitrator could order additional discovery only on a showing o f “compelling need.” Gulfstream misreads the applicable cases. I n Mills , for example, the d iscovery provision we fo und uncons ci onable a llowed th e arbitrator to order addition al discovery on a showing of “ ‘ substantial need. ’ ” ( Mills,
supra, 84 Cal.App.5t h at p. 1059; see also Davis v. Kozak, supra, 53 Cal.App.5th at p. 912 [finding discover y lim itation unconscionable e ven though a rbitrato r could o rder additional discovery on a finding of “ ‘ sufficient cause ’ ”].) Here, as Gulfstream notes, the dispute reso lution policy does not articulate the standard the arbitrator is t o apply in deciding wh ether to allow additional dis covery. B ut that do es not le ssen the substantive unconscio nability. An arbitrator could conclude he or she ha s unfettered discretion to deny a request or could require a party to show “substantial need” or “sufficient cause” for t he discovery. There is no reason to belie ve an arbit rator would apply a less oner ou s standard. Contrary to Gulfstream ’ s argument, the conclusion that the discovery limitations are subst antively unconscionabl e is not inconsistent with the U nited Stat es Supreme C ourt ’ s holdings i n Gilmer v

. Interstat e/Johnso n Lane Corp. (1991) 500 U.S. 20 , 32 ( Gilmer ) and AT&T Mobility LLC v. Concep cion (2011) 56325

U.S. 33 3 ( Concepcion ) . In Gilmer , the issue was whether a claim for age discrimination under federal law co uld be subject to compulsor y arbitrat io n pursuant to an arbitration agreement in a

secu rities registration application. The appella nt raised a “host of challenges to the adequacy of arbitration procedures,” incl uding that discovery in arbitration would be more limited than in feder al court

. T he court s tated t hat even though discovery in ar bitration might not be as extensive as in the fede ral courts, “t here has been no showing in this case that the NYSE discovery provisions , which allow for document prod uc tion, information requests, depositio ns , and subp oenas .

. . will prove insufficient to allow ADEA claimants such as Gilmer a f air opportunity to present their claims.” ( Gilmer, at p p. 30

- 31 .) Here, by contrast, the discovery provision does not allow f or any depositions or interro gatories a s a matter o f right

. In Concepcion, the court held that although section 2 of the Federal Arbitration Act “ preserves generally applicable contract defenses, nothing in [section 2] sugg ests an intent to preserve state

- la w rules that stand as an ob stacle to th e accompli shment of the FAA ’ s objectives. ” ( Con cepcion, supra , 563 U.S. at p. 3 4 3.) The court stated , “

A n obvious illustration of this point would be a case finding uncon scionable . . . arbitration agreements that f ail to provide for judicial ly monitor ed discovery .” ( I d

. 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. Gulf s tream cites Caley v. Gulfst r eam Aerosp ac e Corp. (11 th Cir. 2005) 428 F.3d 1359 , in which the Eleventh Circuit conclu ded Gulfstream ’ s dispute resolution policy was not unconscionable under Georgia law. We decline to follow Caley26

because, among othe r reaso ns, the standard for unc onsci onability

un der Georgia law is different from the standard he re. ( Caley, at p. 1378 [ agreement is unconscionable unde r Georgia law only if the agreement is one that “ ‘ no sane man not acting under a delusion would make a nd that no hone st man would take adv antage of

’ ” ]

. )

b. Th e d eadlin es a n e mployee m ust c omply w ith in the f our
- l evel r eview p rocess a re u nconscionable Arbi tration provisions that shorten the applicable statutes of limitations for statutory employment claim s are s ubstant ively

unconsc ionable. ( See, e.g ., De Leon, supra, 7 2 Cal.App. 5th at
p. 487; Ali v. Daylight Transport, LLC (2020) 59 Cal.App.5th 462, 478 ; Pinela v. Neiman Marcus Group, In c. (201 5) 238 Cal.App.4th 2 27, 254; Samaniego v. Empire Today
, LLC (2012) 20 5 Cal.App.4th 1138, 1147 ; Mar tinez v. M as ter Prote ction Cor

p. (2004) 118 Cal.App.4th 107, 117

. ) Here , the policy requires an employee who submits a dispu te for informal resolution to Human Res ources to initiate the next level in the process within 30 days after the terminati on of tha t and each s ubsequent step , or the employee will waive the cl aim. These strict deadlines will likel y have the effect of shortening t he statute of limitations in
many cases and thus are unconscionable. Under the policy, “[t] he C ompany encourages Employees to attempt t o resolve matters informally with their superviso r .” If the employee is unable to reso lve the matter informally , the employee may bring the matter to Human Res ources for a “Level 1” review. In Lev el 1 , “Human Reso urces will informally meet wi th the Emp lo yee, his or her su pervisor, and other parties involved in the dispute to ascertain the circumstances and to try27

to resolve the matter informally and by agreement of the pe rsons i nvolved.” The policy provides the mat ter “ should ” be submitted to Hum an Reso ur ces “within 30 day s after the dispute arises , ” but this in itial deadline is not mandatory. The policy states: “ T his 30

- day guideline shall not b e applied by the Company to bar the submission of any Covered Claim t o Human Resources R eview (Lev el 1) with in the applicable st atute of limitations.” Once the matter is submitted to Human Resources , however, the employe e must comply with a series of strict 30

- day d eadlines to in itiate t he next level , or the employee waives t he claims . As the policy e xplains: “ A fter an Employee s ubmits a Covere d Claim at the initial filing at Level 1 for Human Resources Review, the E mployee must (1) follow each step and cannot skip any level; and (2) fil e any request to proceed to any of
t he next levels within thirty (30) days af ter the date after Final Determin ation at the previous level. If an Employee does not file for the next step within the 30

- day pe r iod, the Employee will wai ve his or her rights t o pursue his or her covered claims.” These deadlines are reitera ted severa l times thro ughout t he policy. Here, among other claims, Rice asserts claims for violations of FEHA and the Labor Code , w hich have a three

- year sta tute of limitations, a nd violations of the Unfair Competitio n Law, whi ch has a four

- year statute of limitatio ns

. Under the polic y , if Rice had been unable to resolve these disputes with his supervisor and escalated the matters t o Human Resources within th e period suggested by the policy , Rice would then have be en bound by t he interim 30

- day deadlines, which like ly would h ave the ef fect of dramatically reducing the statute of limitations period. This28

reduction in the statute of l i mitations period is substa ntively unconscionable

. Carlson v. Home Team Pest Defense, I nc. , supra , 239 Cal.App.4th at p age 636 is on poi nt . The di spute res olution policy in that case , as here, required employees to submit disputes to the company for an atte mpt at informal resolution before an arbitratio n could be initiated . If informal res olution

wa s not successful , the employe e had to f il e a d emand for

a rb itration within 90 days after filing the initial r equest for d ispute r esolution

. “ The practical e ffec t of this last provision is that, while [the em ployee] may present her claims to [the employer] well within the otherwise ap plicable l eg al s tatutes of lim itations, the addition of a 90

- day time limitation to demand arbitration acts to limit the time th at w ould be available otherwise for filing a compla int in superior court. ” ( I bi d. ) T he
court conc luded the provision was subst antively u nc onscionable

. The same reasoning applies here. Indeed, an employee subj ected to this policy could be forced to initiate arbitration before the cla im had even accrued. The facts of Romano v. Rockwell Inte rnat ional
, Inc. (1996) 14 Cal.4th 479 ( Romano ) ar e illustrative

. The re, t he employer informed the employee he would be te rminated in two years, when he reached a certain level of seniority

. ( Id. at p. 484.) The empl oyee contended the decision was the re sult of ag e discrimination a nd retaliat ion under FE HA. After the emp loyee was actually discharged, the employee filed suit , and the employer claimed the suit was barred by the statute of limitations. Th e issue was whe ther the cause of action accrued for statute of limitations
purposes on the date he wa s notified he would be discharged or the actual date of discharge.29 The cour t held the statute of limitations ran from date of di scharge, not from the date the employee ha d been informed disch arge was inevita ble

. The court concluded that “ a holdi ng that th e statute of limitat ions on a claim under FEHA runs from the time of n otification of termination would promote premature and pot entially destructive claims ” and “ would re duce sharply any chan ce of conciliati on between employer and employee .” ( Ro mano, supr a, 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 dec ision and who s ought to pursue an informal resolutio n by submi tting the dispute to Human Re sources wo ul d then be required to comply with strict 30

- day deadlines to conti nue through the process, culminating in the initiation of

ar bitration. The employee co uld be required to initiate arbi tration before the c ause of ac tion had even accrued

. The su bstanti ve un conscionability of the deadlines in the tiered resolution process is heightened because they apply only to employees and not t o the company

. While emplo yees “must
comp lete each level o f the process before proceedin g to the next level[,] [t]he Company ma y elect to bypass on e or more steps prior to arbitration for dispute s with applicants for employment , with former employees, or if the Company is the initi ating party.” “Mutua lity is the ‘ “ param ount consideration ” ’ i n assessing substantive consc ionability .” ( Gostev v. Skill z Platform, Inc. (2023) 88 Cal.App. 5th 1035, 1056 .) Where , as here , a provision unilaterally fa vors the employer and the e mployer has pre sented no evidence showing a legitima te reason for the disp arate treatment, the provisio n must be cl osely scrutinized to determine if it is unconscionable. ( Id. at p. 1057.)30 c. The c onfidentiality p ro vision is u nconscionable The dispute resolution pol icy contains a confidential i ty clau se prov iding : “All aspe cts of the proceedings pursuan t to this [ dispute resolution policy] , including the hearing and recording of the pr oceeding, shall be confidential t o the full est extent permitted by law

. ” The trial court found the confide ntiality provision unconscionable. We agree. In Ramos v. Super ior Court ( 2018) 28 Cal.App. 5 th 1042, 1 066

- 1077 (

Ramos ), the court found a confidential ity provision in an arbitration agreement s ubstantivel y unconscionable because it impair ed the employe e ’ s ability to gather evidence in sup port of her claim

. The provis ion requi re d the employee to keep “ all aspects ” of the arbitration proceeding s confidential. The court found the provision effecti vely prohi bited an employee from contacting wit nesses or conducting informal discovery, includi ng by interviewing other emplo yees

. Su ch limitation “ woul d not onl y increase [the employee ’ s ] costs unnecessarily by requiring her t o conduct depositions rathe r than inf ormal interviews, it also defeats the purpose of using arbitration as a simpler, mor e time

- effective forum for resol ving disp ut es. In addi tion, requiring discrimination cases be kept secret unreasonably favors the emplo yer to the detriment of emp loyees see king to vindicate unwaivable statutor y rights and may discourage potential plaintif fs from filing discrimination ca ses. ” ( I d

. at p. 106 6. ) Fo r those reasons , the court found the provision to be unconscionable. ( Ibid. ; see also Baxter v. Genworth North A merica Corp. (2017) 16 Cal.App.5th 71 3, 725

- 726 [provision in employment arbitratio n agreement prohibiting employee s and the ir a ttorneys from c ommunicating wi th other employees about the aggrieved employee ’ s clai m was substantively unconsc ionable because31

“ without the ability to conduct such a n informal investigation, an employee will be hampered in his or her ability t o effecti ve ly tailor the lim ited discovery allowed under the arbitration agreement”].) The provis ion here is more expansive than the one at i ssue in Ramos , supra, 28 Cal.App.5th 1042 since it covers all aspects of the disput e resolution process, including Level 1 , in w hich Human Reso urces meets informally with the employee, his or her supervisor, and other parties involved in t he dispute. Requ iring an employee to keep all attempt s at dispute resolution confidential

— including informal discussions with H uman Resource s

— would substantial ly impair an emp loyee ’ s ability to investigate and develop eviden ce in support of his or her claim

. The restrict ion would preclude an employee, for e xample, from talking to his or her colleagues about assertions m ade by the
emp loyee ’ s s up ervisor in the Le vel 1 meetings t o determine the veracity of the statements

. It w ould hamper an employee ’ s

a bility to determine w hether his or her colleagues support the employee ’ s version of events or to gather evidence showing a pattern of di scrimi nat io n

. The secrecy w ould also make it less likely potential witnesses would learn abo ut a plaintiff ’ s dispute

an d come forward with r elevant evidence. The confidentiality provision would be especially harmful here, w here t he agreement does not allo w for any d epositions or int errogatories in the arbitration proceeding without an order from the arbitrator . Taken toge ther, the restriction s could substantially impair the empl oyee ’ s ability to conduct both formal and info rm al discovery. For the reasons stated i n Ramos , we uphold the trial court ’ s finding that the confidentiality provision is un conscionable.32 Gulfstream ar gues the confidential ity provision is not unconscionable b ecause it requires confidentiality only to th e extent “permitted by law.” Th e inclusi on of such language does not significantly reduce the unconscionability of the provis ion becau se a layperson wit hout legal training w ould not know the provision could not be enforced

. ( See OTO, supra
, 8 Cal. 5th at
pp. 128

- 129 [discussing such lan guage in th e context of
proc edural unconscionability ]

. ) Gulfstream also argues the confidenti ality provision is akin to the ones upheld in Sa nchez v. Carmax Auto Superstores Cali fornia, LLC (2014) 224 Cal.App.4th 39 8 ( Carma x ) and Woodside Homes of Califor nia, Inc. v . Superior Court (2003) 107 Cal.App.4th 723 ( Woodside ). Gulf stream ’ s position lacks

mer it. The confidential ity provision in Woodside required th e parties to keep the transcript of t he judicial reference hearing confidential. ( Woodside, at p p

. 731

- 732

. ) This is substant ially narrower than a provision requiring a c laimant to keep “a ll aspect s” of dispute resolut ion attempts confidential , from Level 1 informal discussions with the h uman resources department forwar d. Further, as Ramos stated, C armax did n ot address the

ar gument “t hat a confidentiality clause li ke th e one at issue in this case would impair [an emp loyee ’ s] ability to engage in informa l discovery in pursuit of her liti gation claims ” and i s thus
not a uthority on that point. ( Ramos, supra, 2 8 Cal.App.5th at
p. 1066 [distinguishing Carmax , supra , 224 Cal. App.4th 398 ] .) In its repl y brief

, Gulfstream s uggests the confidentiality provision applies only to the arbitrat ion hearing and the recording of t he proceeding

. That argument is in consisten t with the express language of the provision and t he structure of dispute33

res ol ution policy. The provision again states: “All aspects of t he proceedings pursuant to the [disp ute resolution policy] , including the h earing and r ecording of the proc eeding, s ha ll be confidentia l to the fullest extent permitted by law .” Levels 1 through 3 are “pr oceedings pursuant to the [dispute reso lution policy] .” Further, if Gulfstream intended for this provision to apply only to
t he arbitration pr oceeding in Lev el 4, Gul fs tream could have included it in the terms that apply solely to Level 4. Instead, it is included among the g ene ral provisions that apply to all levels.

d

. The PAGA w aiver i s u nconscionable The policy provides : “ [N] o Covered Clai m may be brough t as a cl as s or collective a ction either under this Policy or in court

. ” Further, t he employee repres ents “ that he/she will not act as a class or collective action representative . . . with respect to any Covered Claim.” T he parties agree this prov ision, if enf or ce d, would preclude Rice from bringing a PAGA claim in a representative capacity o n behalf of other aggrieved employee s. This provision is substantively unconscionable. PAGA waivers are “contrary to public policy a nd unenforceable as a

ma tter of state l aw .” ( Iskanian v. CL S Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 384.) Gulfstream inexplicably ar gues that Viking River Cruises v. Moriana (2022) __ U.S. __, 142 S.Ct. 1906 overruled Iskanian on this poi nt. Gulfstream is wrong. The S upreme Co ur t expressly held the FAA does not preempt Iskanian ’ s holding that PAGA waivers a re unenforceable. ( Viking River Cru ises, at p p. 1924

- 1925 [“Under Iskanian , [the PAGA waiver] was invalid if construed as a wholesal e waiver of PAGA cl aims. A nd un der our h ol ding, that aspect of Iskanian is not preempted by the FAA

. ” ]; see also id. at34

p. 192 1 [“Nothing in the FAA e stablishe s a categorical rule mandating enforcement of waivers of standing to assert claims on behalf of absent principals ”]; Galar sa v. Dolgen Ca li fornia, LLC (2023 ) 88 Cal.App.5th 639, 649

- 650 [analyzing Viking River Cruises a nd concluding “the rule pre cluding th e waiver of the right to bring a representative action under PAGA is an aspect of Iskanian that is not preempted by federa l law and remai ns good law ” ]. ) An illegal waiver of statutory rights is substantively unconsciona ble. (See, e.g., Lange v. Monster En ergy Co

. (2020) 46 Cal.App.5th 436, 448

- 449 [punitive damages waiver is substantively unconscion able].) While a PAG A wai ver alo ne is not e nough to render t he entire arbitration agreement unconscionable because it could easily be severed, the fac t an agree ment contains multiple unconscionable terms is relevant to whether the arbitration agreement is permeated with an

un lawful purpo se. (See A rmendariz, supra, 24 Cal.4th at
p. 124.) 4

e

. Other p rovisions The trial court c oncluded two other provisio ns were

su bstantively unconscionable : the “one

- sided injunction provision only for actions likely to be b rought by the em plo yer” and the “[e]mploy er ’ s unilateral abil ity to bypass the DPR upon 30 days ’

4 The fac t the agreement contained this unconsci onable term is relevant regardless of whether R ic e asserts a rep resentative PAG A c laim or only one in his individual cap acity. Whether an arbitration agreement is unconscionable is measu red at the time the contract is m ade. (See, e.g., Armendariz, supra, 24 Cal.4th at p. 122

. )35

notice

. ” Beca use we conclude the provisi ons alread y discussed demonstrate the agreement is permeated with unconscionability, we do not reach the issue whether the interim relief and modifica tion prov is ions were also unc onscionable.

C

. The Trial Court Did Not Abuse Its Discretion in Declining
t o Sever th e Unconscionable Arbitration Provisions Civil Code s ection 1670.5, subdivision ( a), provides : “If the
court as a matter of law finds the co ntract or a ny clause of the

c ontract to have been unconscionable at the time it w as made the court may refus e to enf o rce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any uncon sc ionable clause as to avoid any unconscionable result.” “The Supreme C ourt has interpreted this p rovision to mean that if a trial court concludes that an arbitration agreement contains unconscionable terms, it the n ‘ must determine whether these terms sho ul d be severed, or w hether 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 preferen ce is to sever the offending ter m and enf or ce the balance of the agreement: Although ‘ the statute appears to giv e a trial court some discre tion as to w hether to sever or restrict the unconscionable provision or whether to refuse to enforce the entire agre ement[,]

. . . it also appears t o contemp la te the latter cour se only when an agreement is

“ permeated ” by unconsci onability. ’ ” ( Roman v. Sup erior Co urt (2 009) 172 Cal.App.4th 1462, 1477

- 1478, quoting A rmendariz,
supra, 24 Cal.4th at p. 122 .) We review the trial court ’ s decision36

not to s ever unco ns cionable terms for an abuse of discretion. ( Mills, supra , 84 Cal.App. 5th at p. 1065 .) Here, the unconsci onability permeates the agreement. The court could n ot simply sever the offending terms but would have
to r ewrite the agreement, which the court may n ot do. ( See, e.g. , Mills, supra, 84 Cal.App.5th at p. 106 6 [“ Where ‘ a court is unable
to cur e th is uncon scionability through severance or restriction and is not permitted to cure it through reformation and
augmen tation, it must void the entire agreement ” ] .) At the ve ry le ast, the discovery provisions and the provis ions r equiring the employee but not the emp loyer to go through all levels of the d ispute resolution process would have to be re written. ( Id. at
p p

. 10 66

- 1067 ; see also De Leon, su pra , 72 Cal. Ap p.5th at p. 493 [d eclining to sever unlawful statute of limita tions and discovery provisi ons of the arbit ration agreement, explaining if “ ‘ “the court would have to, in effect, reform the contract, not through

seve rance or restriction, but by aug menting i t with additional
te rms , ” the court must void the entire agreeme nt’”]

. ) Further, the fact there are multip le unconscionable provisions supports the conclusion that unconscionability permeates the agreement. “[M]u ltiple defects indicate a system i c effort to impose arbitratio n on an employee not simply as an alternativ e to l itigation, but as an inferior forum t hat works to the employer ’ s advantage.” ( Armendariz, supra, 24 Cal.4th at
p

. 124; see also Mills, supra, 8 4 Cal. App.5th at p. 1066.) Accord ingly, we c onclude the court did not abuse its discretion by denying the motion instead of severing the unconscionab le provisions. Gulfstream asserts the trial court did not consider severance because it did not address i t in its written order

.37

Gulf stre am ’ s infe re nce is not s upport ed 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 objec tion on this basis. Gulfs tream h ad the ri gh t to request a s ta tement of decision under Code of Civil Procedure s ection 1291, which
states , “ A stateme nt of decision shall be made by the court, if requested pursuant to S ection 632, whenever an order or ju dgment

. . . is made that is appea la ble under t his 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 G ro up (2013) 213 Cal.App.4th 959 , 970 ( Acquire II

, Ltd .)

. )

“ A p a rty ’ s failure to request a statement of decision w hen one is available has two conseque nces. First, the party waives any objection to the trial court ’ s failure to make all findings
necessary to support its decision. Second, t h e appellat e court
ap plies t h e doctrine of implied findings and presumes the tr ial 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 ord e r denying a motion to comp e l arbitration]

. ) Accordingly, w e presume the trial court found the agreement was permea ted with substantive unconscionability

. Further, because the court could not seve r the discovery provisi on without rewriting the contract , t h e only wa y the trial court could validly exercise its discretion was to decli ne to enforce the agreement. Thus, r egardless whether the court actually exercised its discretion, we affirm

.38

D

. Rice ’

s Request f

or Sanctio ns Is Denied Rice asserts the appeal was frivo lo us and requests attorney fees under Code of Civil Procedure sect ion 907 . We deny the request. A n app eal is frivolous “only when it is prosecuted for an improper motive

— to harass the re spondent or delay the effect of an adverse judgment

— or wh en it indis pu ta bly has no m e rit

— 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 me et that standard. Gulfstream cites s e ver al tri al court decision s enforcing the d ispute resolut ion policy under C al ifornia law and an Eleven th Circuit case ( Caley, sup ra, 428 F.3d 1359 ) enforcing it under Ge orgia l aw . That is enough to show the appeal is not fr i volous.

DISPOSITION

The order is affir m e d. Rice is to r ecover his costs on appeal.

E SCALA NT E , J

. * We co ncur:

PERLUSS , P. J

. FEUE R, J.

* J udge of the Los A nge le s County Supe ri or Co urt, assigned by the Chief Justice p ursuan t to arti cle VI, sec tion 6 of the Ca lifornia Constitution

.