Opinion ID: 2600052
Heading Depth: 3
Heading Rank: 2

Heading: The Restriction of Administrative Remedies

Text: As noted, the second question posed by plaintiff's petition for review is whether language in a mandatory employment arbitration agreement restricting an employee from seeking administrative remedies for violations of FEHA is lawful. As will be recalled, the arbitration agreement between plaintiff and defendant contained language stating that it was the intention of the parties to the agreement to avoid the inconvenience, cost, and risk that accompany formal administrative or judicial proceedings. (Italics added.) He contends that this language must be interpreted as precluding plaintiff from seeking administrative remedies, and that such a provision is contrary to public policy. This provision, plaintiff contends, combined with the shortened statute of limitations noted above, renders the arbitration agreement unconscionable. Plaintiff therefore argues that we should not only uphold the trial court's vacatur of the arbitration award, but that we should invalidate the entire arbitration agreement and order the case to proceed in court. (9) As recounted, although plaintiff resisted defendant's petition to compel arbitration, he did so on the grounds that defendant had waived the right to compel arbitration, and had failed to present the arbitration agreement in an understandable form. He did not raise the issue of unconscionability based on preclusion of administrative remedies. We therefore conclude that plaintiff has forfeited this issue. (See Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 328-329 [27 Cal.Rptr.3d 10] [party to arbitration agreement is generally obliged to raise unconscionability issues in court at the time she initially resists arbitration]; see also Moncharsh, supra, 3 Cal.4th at pp. 30-31 [a party contending the entire arbitration agreement is unlawful generally must raise the issue at the outset in the trial court].) We also conclude that the claim fails on the merits. First, we read the above quoted language as merely precatory, i.e., as a statement of purpose, that does not in itself operate to preclude plaintiff from pursuing any administrative remedy. Second, even if the agreement were understood to preclude formal administrative . . . proceedings, it would not be unlawful in all possible applications. It is true that the United States Supreme Court has recognized in EEOC v. Waffle House, Inc. (2002) 534 U.S. 279 [151 L.Ed.2d 755, 122 S.Ct. 754] that an arbitration agreement between an employer and an employee is not effective to bar the Equal Employment Opportunity Commission from prosecuting statutory antidiscrimination violations. And we have stated in Armendariz, supra, 24 Cal.4th at page 99, footnote 6, anticipating Waffle House : Nothing in this opinion . . . should be interpreted as implying that an arbitration agreement can restrict an employee's resort to the Department of Fair Employment and Housing, the administrative agency charged with prosecuting complaints made under the FEHA, or that the department would be prevented from carrying out its statutory functions by an arbitration agreement to which it is not a party. But as the United States Supreme Court recently recognized in Preston v. Ferrer (2008) 552 U.S. 346 [169 L.Ed.2d 917, 128 S.Ct. 978], an arbitration agreement could, under federal law, validly limit the resort of an employee to an administrative agency that acts as an adjudicator, rather than as a prosecutor, of employment claims, such as the Labor Commissioner in this state. ( Id. at p. 359.) Even assuming an arbitration clause purporting to override the statutory jurisdiction of an administrative adjudicator would violate California law, state law would be preempted when applied to an arbitration agreement covered by the Federal Arbitration Act. (552 U.S. at p. 360.) (10) When an arbitration provision is ambiguous, we will interpret that provision, if reasonable, in a manner that renders it lawful, both because of our public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution, and because of the general principle that we interpret a contractual provision in a manner that renders it enforceable rather than void. ( Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1473 [92 Cal.Rptr.3d 153]; see also Civ. Code, § 3541 [[a]n interpretation which gives effect [to an agreement] is preferred to one which makes void]; Civ. Code, § 1643 [if possible without violating the parties' unambiguous intent, a contract is interpreted so as to make it lawful, operative, definite, reasonable, and capable of being carried into effect].) In the present case, we construe the language of the arbitration agreement, stating that the parties to the agreement intend to avoid the inconvenience, cost, and risk that accompany formal administrative or judicial proceedings, as stating an intention to lawfully preclude or restrict the parties to the arbitration agreement from submitting their claims for adjudication to an administrative entity such as the Labor Commissioner, at least to the extent set forth by the United States Supreme Court in Preston . We therefore conclude that the inclusion of a provision limiting resort to an administrative forum does not render the arbitration agreement unconscionable or unenforceable. [5] Finally, the Court of Appeal noted that defendant advanced certain procedural arguments as to why the trial court improperly granted plaintiff's petition to vacate the award, and deemed these moot in light of its determination that the trial court had erred in vacating the award. These issues pertain to the timeliness and sufficiency of plaintiff's opposition to Pearson's petition to confirm the arbitration award, and whether these alleged defects undermined the validity of the trial court's order vacating the arbitration award. We now remand the case to the Court of Appeal to have it decide these issues.