Opinion ID: 6107706
Heading Depth: 1
Heading Rank: 3

Heading: The Majority's Sliding Scale.

Text: At this point, I note my first concern about the majority's analysis: its assertion that a relatively low degree of substantive unconscionability may suffice to render an arbitration agreement unenforceable if the level of procedural unconscionability is substantial. (Maj. opn., ante , 251 Cal.Rptr.3d at p. 729, 447 P.3d at p. 693.) To begin with, it is unclear what the majority means by relatively low ( ibid. ), and the majority sheds no light on this question. The majority's unadorned and unexplained assertion inevitably poses - but does not answer - the following questions: Low relative[ ] to what, and how low is enough? Nor do our precedents support or give meaning to the majority's statement. The only decision from this court the majority cites for its assertion is Armendariz . (Maj. opn., ante , 251 Cal.Rptr.3d at pp. 729-730, 447 P.3d at p. 693.) However, the majority notably precedes this citation with a see signal, which is the signal we use to introduce decisions that provide only weaker support for a given proposition, i.e., decisions that, as here relevant, only indirectly support the text or contain supporting dicta. (Cal. Style Manual (4th ed. 2000) § 1:4, p. 9.) Clearly, then, the majority itself does not believe that Armendariz provides more than indirect and weak support for its view. To the extent Armendariz bears on the issue, it states, as noted above, that the  'sliding scale'  used in connection with procedural and substantive unconscionability  'disregards the regularity of the procedural process of the contract formation ... 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. ( Armendariz , supra , 24 Cal.4th at p. 114, 99 Cal.Rptr.2d 745 , 6 P.3d 669 .) As is obvious, the main point of this passage is that where the degree of substantive unconscionability is high - i.e., the contract terms are extremely harsh or unreasonable - evidence of procedural unconscionability becomes  less important, i.e., a court may  'disregard[ ] the regularity of the procedural process of the contract formation'  and find the contract unconscionable based solely on the high level of substantive unfairness. ( Ibid . ) This court's use of the phrase vice versa at the end of the second sentence ( ibid. ) means only that evidence of procedural unfairness becomes more important to a finding of unconscionability as the degree of substantive unfairness decreases. That is not the same as saying that a relatively low degree of substantive unconscionability may suffice where the degree of procedural unconscionability  is substantial. (Maj. opn., ante , 251 Cal.Rptr.3d at p. 729, 447 P.3d at p. 693.) Notably, the majority cites not a single case in which we have applied Armendariz in the manner the majority now suggests. Indeed, the very concept of a relatively low degree of substantive unconscionability (maj. opn., ante , 251 Cal.Rptr.3d at p. 729, 447 P.3d at p. 693) is inconsistent with our prior pronouncements that a court may not invalidate one-sided contract provisions upon a mere showing that the deal, in retrospect, was unfair or a bad bargain ( Sanchez , supra , 61 Cal.4th at p. 911, 190 Cal.Rptr.3d 812 , 353 P.3d 741 ) or gives one side a greater benefit ( Pinnacle , supra , 55 Cal.4th at p. 246, 145 Cal.Rptr.3d 514 , 282 P.3d 1217 ); that the contract must be 'so one-sided as to shock the conscience '  ( Id. at p. 246, 145 Cal.Rptr.3d 514 , 282 P.3d 1217 ), or  ' overly harsh,' ' unduly oppressive,' [or] ' unreasonably favorable'  ( Sanchez , at p. 911, 190 Cal.Rptr.3d 812 , 353 P.3d 741 ); and that the party alleging unconscionability must establish a substantial degree of unfairness beyond ' a simple old-fashioned bad bargain '  ( Sonic II , 57 Cal.4th at p. 1160, 163 Cal.Rptr.3d 269 , 311 P.3d 184 , italics added). The majority's assertion that a relatively low degree of substantive unconscionability may suffice (maj. opn., ante , 251 Cal.Rptr.3d at p. 729, 447 P.3d at p. 693) simply cannot be squared with these principles, and the majority does not even attempt to do so. For its assertion, the majority more directly relies on two Court of Appeal decisions (maj. opn., ante , 251 Cal.Rptr.3d at p. 730, 447 P.3d at pp. 693-694), but neither is persuasive. In the first - Carmona v. Lincoln Millennium Car Wash , Inc. (2014) 226 Cal.App.4th 74 , 85, 171 Cal.Rptr.3d 42 - the Court of Appeal stated: In light of the high degree of procedural unconscionability, even a low degree of substantive unconscionability could render the arbitration agreement unconscionable. But the court cited no authority of any kind to support this bare assertion. ( Ibid. ) And the statement was dictum because, in the very next sentence, the court stated that [t]he degree of substantive unconscionability here was not particularly low. ( Ibid ., italics added.) In the second decision the majority cites - A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473 , 487, 186 Cal.Rptr. 114 ( A & M Produce ) - the Court of Appeal stated that the enforceability of a clause containing an unreasonable risk reallocation[ ] ... is tied to the procedural aspects of unconscionability [citation] such that the greater the unfair surprise or inequality of bargaining power, the less  unreasonable the risk reallocation  which will be tolerated. But in making this statement, the court cited no supporting decision from either California or any other jurisdiction; indeed, it acknowledged that regarding the importance of both procedural and substantive unconscionability, there was little California precedent directly on point. ( Ibid. ) Moreover, like the statement in Carmona , the statement in A & M was dictum, because the court never subsequently applied it in analyzing the unconscionability issue. In any event, read carefully, the statement says no more than did Armendariz , i.e., that evidence of procedural unfairness becomes more important to a finding of unconscionability as the degree of substantive unfairness decreases. Again, that is not the same as saying that a relatively low degree of substantive unconscionability may suffice where the degree of procedural unconscionability is substantial. (Maj. opn., ante , 251 Cal.Rptr.3d at p. 729, 447 P.3d at p. 693.) Thus, neither A & M nor Carmona constitutes reasoned or persuasive support for the majority's view, and no published California decision has actually applied either that or a similar view to the facts of a case. This is an important issue, because the majority's new rule will significantly impact the enforceability of virtually all mandatory, predispute arbitration agreements in the employment context. This court has observed that the economic pressure employers exert on all but the most sought-after employees to sign such mandatory arbitration contracts may be particularly acute, because the contract stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement. (  Armendariz , supra , 24 Cal.4th at p. 115, 99 Cal.Rptr.2d 745 , 6 P.3d 669 ; see Baltazar v. Forever 21 , Inc. (2016) 62 Cal.4th 1237 , 1245, 200 Cal.Rptr.3d 7 , 367 P.3d 6 ( Baltazar ); Sanchez , supra , 61 Cal.4th at p. 919, 190 Cal.Rptr.3d 812 , 353 P.3d 741 ; Sonic II , supra , 57 Cal.4th at p. 1134, 163 Cal.Rptr.3d 269 , 311 P.3d 184 ; Sonic-Calabasas A , Inc. v. Moreno (2011) 51 Cal.4th 659 , 685, 121 Cal.Rptr.3d 58 , 247 P.3d 130 ( Sonic I ); Little v. Auto Stiegler , Inc. (2003) 29 Cal.4th 1064 , 1071, 130 Cal.Rptr.2d 892 , 63 P.3d 979 ( Little ).) Given this observation, in the typical case of an employee who cannot afford to refuse or lose a job because of an arbitration requirement, even were the other procedural circumstances the majority discusses supported by the record and recognized as significant by our case law - considerations I address below - those circumstances would not make the degree of procedural unconscionability here higher in any analytically or legally relevant sense. Supporting this view is the fact that the majority in Sonic I found a significant element of procedural unconscionability ( Sonic I , supra , 51 Cal.4th at p. 686, 121 Cal.Rptr.3d 58 , 247 P.3d 130 ) based solely on the ground that the agreement was one of adhesion and imposed as a condition of employment ( id . at p. 685, fn. 10, 121 Cal.Rptr.3d 58 , 247 P.3d 130 ). For this reason, the majority's assurance that an identical arbitration provision might pass muster under less coercive circumstances (maj. opn., ante , 251 Cal.Rptr.3d at p. 735, 447 P.3d at p. 697) rings hollow. Because of the economic pressures faced by  prospective and existing employees, the majority's finding of unconscionability will surely be the rule in the vast majority of cases in the employment context, regardless of the other circumstances the majority cites. In other words, with few exceptions, as to employees presented with a sign or you're unemployed choice, the ability to read, reflect, and understand the agreement does not make the situation  less coercive in any meaningful sense. (Maj. opn., ante , 251 Cal.Rptr.3d at pp. 733-734, 447 P.3d at p. 696.) More broadly, because it would not be difficult for a court to find a relatively low degree of substantive unfairness in an adhesion contract (maj. opn., ante , 251 Cal.Rptr.3d at p. 729, 447 P.3d at p. 693), the majority's new rule casts significant doubt on the enforceability of many contractual terms in the employment context, not just arbitration provisions.