Opinion ID: 6107706
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Heading: State Law Principles of Arbitration and Unconscionability.

Text: Several state law legal principles must guide our analysis. First, as the majority acknowledges, California law strongly favors arbitration. (Maj. opn., ante , 251 Cal.Rptr.3d at p. 725, 447 P.3d at p. 689.) The clearest expression of this state policy appears in Code of Civil Procedure section 1281, which declares that [a] written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract. This section establishes the fundamental policy of California's arbitration scheme: that arbitration agreements will be enforced in accordance with their terms . ( Vandenberg v. Superior Court (1999) 21 Cal.4th 815 , 836, fn. 10, 88 Cal.Rptr.2d 366 , 982 P.2d 229 .) It creates a presumption in favor of arbitrability [citation] and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general. ( Engalla v. Permanente Medical Group , Inc. (1997) 15 Cal.4th 951 , 971-972, 64 Cal.Rptr.2d 843 , 938 P.2d 903 .) The majority, after briefly mentioning arbitration's favored status  under state law early in its opinion, essentially ignores this principle in its analysis and in its refusal to enforce the arbitration agreement here. Second, although the doctrine of unconscionability, as a generally applicable contract defense, may be applied to invalidate an arbitration agreement, as the majority notes, the doctrine's application in the arbitration context must rely on the same principles that govern all contracts, and [t]he degree of unfairness required for unconscionability must be as rigorous and demanding for arbitration clauses as for any other contract clause. (Maj. opn., ante , 251 Cal.Rptr.3d at p. 725, 447 P.3d at p. 689.) Third, under our generally applicable principles of unconscionability, [a] party cannot avoid a contractual obligation merely by complaining that the deal, in retrospect, was unfair or a bad bargain ( Sanchez v. Valencia Holding Co. , LLC (2015) 61 Cal.4th 899 , 911, 190 Cal.Rptr.3d 812 , 353 P.3d 741 ( Sanchez )) or by showing that the contract gives one side a greater benefit ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223 , 246, 145 Cal.Rptr.3d 514 , 282 P.3d 1217 ( Pinnacle )). Under state law, [n]ot all one-sided contract provisions are unconscionable ( Sanchez , at p. 911, 190 Cal.Rptr.3d 812 , 353 P.3d 741 ), and even the fact that the bargain is a very hard or unreasonable one is not generally sufficient per se to induce ... courts to interfere ( Boyce v. Fisk (1895) 110 Cal. 107 , 116, 42 P. 473 ). Instead, the party seeking to invalidate an arbitration agreement must show a substantial degree of unfairness beyond ' a simple old-fashioned bad bargain .'  ( Sonic-Calabasas A , Inc. v. Moreno (2013) 57 Cal.4th 1109 , 1160, 163 Cal.Rptr.3d 269 , 311 P.3d 184 , italics added ( Sonic II ).) The contract must be 'so one-sided as to shock the conscience '  ( Pinnacle , at p. 246, 145 Cal.Rptr.3d 514 , 282 P.3d 1217 ), or, as alternatively formulated,   ' overly harsh,' ' unduly oppressive,' [or] ' unreasonably favorable.'  ( Sanchez , at p. 911, 190 Cal.Rptr.3d 812 , 353 P.3d 741 .) Fourth, contracts of adhesion ... are indispensable facts of modern life and are generally enforced even though they contain a degree of procedural unconscionability. (  Gentry v. Superior Court (2007) 42 Cal.4th 443 , 469, 64 Cal.Rptr.3d 773 , 165 P.3d 556 ( Gentry ); see AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 , 346-347, 131 S.Ct. 1740 , 179 L.Ed.2d 742 ( Concepcion ) [the times in which consumer contracts were anything other than adhesive are long past].) [A] contract of adhesion is fully enforceable according to its terms unless it violates the reasonable expectations of the weaker or 'adhering' party or is unduly oppressive or 'unconscionable.'  ( Graham v. Scissor-Tail , Inc. (1981) 28 Cal.3d 807 , 819, 820, 171 Cal.Rptr. 604 , 623 P.2d 165 ( Graham ).) Fifth, the party seeking to avoid the contract must establish both procedural and substantive unconscionability, the former focusing on ' oppression ' or  ' surprise ' due to unequal bargaining power, the latter on ' overly harsh ' or ' one-sided ' results. ( Armendariz v. Foundation Health Psychcare Services , Inc. (2000) 24 Cal.4th 83 , 114, 99 Cal.Rptr.2d 745 , 6 P.3d 669 ( Armendariz ).) Although both must be present, we have stated that they need not be present in the same degree. 'Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.' [Citations.] In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa. ( Ibid. )