Court Opinion

ID: 9388878
Source: CourtListenerOpinion
Date Created: 2023-04-21 21:02:57.930811+00
Date Added: 2024-06-11T17:18:23.522476
License: Public Domain

Filed 4/21/23
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION EIGHT

 MOHAMMAD BASITH,                      B316098

         Plaintiff and Respondent,     Los Angeles County
                                       Super. Ct. No. 21STCV01725
         v.

 LITHIA MOTORS, INC., et al.,

         Defendants and Appellants.

     APPEAL from an order of the Superior Court of
Los Angeles County, Michelle Williams Court, Judge. Reversed.
     Law Offices of Ramin R. Younessi, Ramin R. Younessi,
Samantha L. Ortiz, and Christopher S. Afgani for Plaintiff and
Appellant.
     Walsworth WFBM, Kellie S. Christianson for Defendants
and Respondents.
                     ____________________
      A twist of fate brings to us substantially the same Nissan
employment arbitration contract in two otherwise unrelated
cases. The other case we decide today is Fuentes v. Empire
Nissan, Inc. (April 21, 2023, B314490) __ Cal.App.5th __
(Fuentes).
      These two cases raise the same vital question in contract
law: what exactly is California’s test for unconscionability? More
precisely, when there is a very high degree of procedural
unconscionability, is there any meaningful content to the second
element of substantive unconscionability? In an online world
where contracts usually appear only in a take-it-or-leave-it
format and where there thus is much procedural
unconscionability, this question about substantive
unconscionability looms large.
      Our holding is that, unless we are to imperil the vast online
world of take-it-or-leave-it contracts, substantive
unconscionability must retain meaningful independent content.
For that reason, the contracts here and in Fuentes are valid and
enforceable, despite their procedural unconscionability.
      Mohammad Basith signed an online arbitration agreement
before starting work at a car dealership. He had to sign if he
wanted a job: the car dealership presented it as a take-it-or-
leave-it mandatory condition. Basith took the mandatory step,
signed the arbitration contract, and the dealership hired him.
The employment relationship turned out to be unsuccessful:
Basith sued the dealership for firing him. The dealership moved
to compel arbitration. The trial court ruled the arbitration
contract was unconscionable. This defense requires both

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procedural and substantive unconscionability. (OTO, L.L.C. v.
Kho (2019) 8 Cal.5th 111, 125 (Kho).) We reverse because Basith
suffered no substantive unconscionability, which is indispensable
to the unconscionability defense.
                                  I
       Basith applied to work as general manager for a car
dealership doing business as Nissan of Carson. The dealership’s
owner, Lithia Motors, Inc., ran a network of dealerships. Lithia’s
subsidiary LAD-Carson-N, LLC owned Nissan of Carson. Lithia
Motors Support Services, Inc., which had a branch office in
Missouri, provided centralized human resources and information
technology services for Lithia Motors. We call all defendants
Nissan for simplicity.
       Basith’s job application was online. On Nissan’s website,
Basith created a username and password on August 2, 2018.
Then on August 12, 2018, he electronically signed online forms
entitled “Agreements.” Basith started his new job on August 13,
2018. On November 30, 2018, Basith signed a paper version of
another document: a two-page “General Manager Compensation
Plan.” Nissan terminated Basith on October 14, 2020.
       Because font size and document appearance are issues in
these cases, we will describe the format and text of these
documents: “Agreements” on one hand, and “General Manager
Compensation Plan” on the other. We take them in reverse
order.
       We start with the “General Manager Compensation Plan”
of November 30, 2018. This document was always a traditional
paper document; Basith “wet” signed it in a paper format. Nissan
attached this document to its motion to compel arbitration. The

                                3
trial court treated this document as properly admitted, and there
is no dispute on that point.
       The font size on this paper document is very small;
moreover, our record copy is blurry as well. It looks like a poor
photocopy. We attach our record copy as appendix A.
       This “General Manager Compensation Plan” document,
under a heading of “ACKNOWLEDGEMENTS,” includes a
paragraph titled “California Only.” This paragraph is six lines
and states in part, “I and the Dealership understand and
voluntarily agree that any claims/disputes that I may have
regarding the terms of my own Compensation Program, my
employment, termination from employment (including claims of
discrimination and/or harassment), or any other association I
have with the Company that either of us might have against one
another will be resolved exclusively in accordance with binding
arbitration.” This agreement stated the arbitration would be
governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and
would be carried out in conformity with the California
Arbitration Act (Code Civ. Proc., § 1280 et seq.).
       Basith sometimes calls this the “short-form” arbitration
agreement.
       We now turn to the “Agreements” form of August 12, 2018.
       The format of “Agreements” differs in our record from the
format in which Nissan offered it and Basith viewed it.
       This online “Agreements” form was part of “iCIMS,”
Nissan’s internet recruitment and applicant tracking system.
The iCIMS system was interactive: it had a New Hire Portal that
contained an online orientation process. New employees signed
in to the website with their username and password and then
proceeded through various screens and tasks the system

                                4
required. The interactive iCIMS system allowed Nissan to track
new employees’ progress and records.
       In our record on appeal, however, the documents from this
interactive web presence have been downloaded into the PDF
format. PDF stands for Portable Document Format, which is a
computer file format aiming to present documents in a manner
independent of application software, hardware, and operating
systems. (See Wikipedia, “PDF”,  [as of Apr. 14, 2023], archived at .)
        As Nissan presented this “Agreements” document and as
Basith signed, the document was visible online to Basith (and
other viewers) on whatever screen the viewer was using. The
font size and appearance thus would depend on a number of
factors: the screen or monitor size, the adjustable screen and
magnification settings, and so forth. Technology made the online
image adjustable. Viewers could use a bigger monitor or
keyboard strokes to magnify the size of the words.
       In short, the PDF in the appellate record shows the words
of the document but not how the words appeared to online
viewers.
       We also append a copy of this record document. (See
appendix B, post.)
       This “Agreements” document had two parts separated by a
line. The first part was called “At Will Employment Agreement”
and the second was the “Binding Arbitration Agreement.”
       The “At Will Employment Agreement” was this:
                “At Will Employment Agreement”
       “I agree as follows: My employment and compensation is
terminable at-will, is for no definite period, and my employment

                               5
and compensation may be terminated by the Company (employer)
at any time and for any reason whatsoever, with or without good
cause at the option of either the Company or myself.
Consequently, all terms and conditions of my employment may be
changed or withdrawn at Company’s unrestricted option at any
time, with or without good cause. No implied, oral, or written
agreements contrary to the express language of this agreement
are valid unless they are in writing and signed by the President
of the Company. No supervisor or representative of the
Company, other than the President, has any authority to make
any agreements contrary to the foregoing. This agreement is the
entire agreement between the Company and the employee
regarding the rights of the Company or employee to terminate
employment with or without good cause, and this agreement
takes the place of all prior and contemporaneous agreements,
representations, and understandings of the employee and the
Company.”
       Basith electronically signed this portion on August 12,
2018, at 11:28 p.m.
       The “Binding Arbitration Agreement” states:
                “Binding Arbitration Agreement”
       “I also acknowledge that the Company utilizes a system of
alternative dispute resolution which involves binding arbitration
to resolve all disputes which may arise out of the employment
context. Because of the mutual benefits (such as reduced expense
and increased efficiency) which private binding arbitration can
provide both the Company and myself, I and the Company both
agree that any claim, dispute, and/or controversy that either
party may have against one another (including, but not limited
to, any claims of discrimination and harassment, whether they be

                               6
based on the California Fair Employment and Housing Act, Title
VII of the Civil Rights Act of 1964, as amended, as well as all
other applicable state or federal laws or regulations) which would
otherwise require or allow resort to any court or other
governmental dispute resolution forum between myself and the
Company (or its owners, directors, officers, managers, employees,
agents, and parties affiliated with its employee benefit and
health plans) arising from, related to, or having any relationship
or connection whatsoever with my seeking employment with,
employment by, or other association with the Company, whether
based on tort, contract, statutory, or equitable law, or otherwise,
(with the sole exception of claims arising under the National
Labor Relations Act which are brought before the National Labor
Relations Board, claims for medical and disability benefits under
my state’s workers’ compensation laws, and Employment
Development Department claims) shall be submitted to and
determined exclusively by binding arbitration. In order to
provide for the efficient and timely adjudication of claims, the
arbitrator is prohibited from consolidating the claims of others
into one proceeding. This means that an arbitrator will hear only
my individual claims and does not have the authority to fashion a
proceeding as a class or collective action or to award relief to a
group of employees in one proceeding. Thus, the Company has
the right to defeat any attempt by me to file or join other
employees in a class, collective or joint action lawsuit or
arbitration (collectively ‘class claims’).
      “I further understand that I will not be disciplined,
discharged, or otherwise retaliated against for exercising my
rights under Section 7 of the National Labor Relations Act,
including but not limited to challenging the limitation on a class,

                                 7
collective, or joint action. I understand and agree that nothing in
this agreement shall be construed so as to preclude me from filing
any administrative charge with, or from participating in any
investigation of a charge conducted by, any government agency
such as the Department of Fair Employment and Housing and/or
the Equal Employment Opportunity Commission; however, after
I exhaust such administrative process/investigation, I understand
and agree that I must pursue any such claims through this
binding arbitration procedure. I acknowledge that the
Company’s business and the nature of my employment in that
business affect interstate commerce. I agree that the arbitration
and this Agreement shall be controlled by the Federal Arbitration
Act, in conformity with the procedures of my state’s arbitration
laws and procedures (or if my state does not have applicable
arbitration laws, the California Arbitration Act (Cal Code Civ.
Proc. sec 1280 et seq., including section 1283.05 and all of the
Act’s other mandatory and permissive rights to discovery)).
However, in addition to requirements imposed by law, any
arbitrator herein shall be a retired state court Judge from my
state and shall be subject to disqualification on the same grounds
as would apply to a judge of such court. To the extent applicable
in civil actions in my state’s courts, the following shall apply and
be observed: all rules of pleading (including the right of
demurrer), all rules of evidence, all rights to resolution of the
dispute by means of motions for summary judgment, judgment on
the pleadings, and motions for directed verdict.
       “Resolution of the dispute shall be based solely upon the
law governing the claims and defenses pleaded, and the
arbitrator may not invoke any basis (including, but not limited to,
notions of ‘just cause’) other than such controlling law. The

                                 8
arbitrator shall have the immunity of a judicial officer from civil
liability when acting in the capacity of an arbitrator, which
immunity supplements any other existing immunity. Likewise,
all communications during or in connection with the arbitration
proceedings are privileged in accordance with my state[’]s laws
regarding privileged judicial proceedings. The arbitrator may
extend the times for the giving of notices and setting of hearings.
Awards shall include the arbitrator’s written reasoned opinion.
       “The arbitrator’s fees and costs unique to arbitration shall
be borne by the Company. Each party shall bear their own
attorney fees and costs, unless a statutory cause of action allows
the prevailing party to recover attorney fees or costs. The
arbitrator, and not any federal, state, or local court or agency,
shall have exclusive authority to resolve any dispute relating to
the interpretation, applicability, enforceability, or formation of
this Agreement, including without limitation any claim that this
Agreement is void or voidable.
       “Both the Company and I agree that any arbitration
proceeding must move forward under the Federal Arbitration Act
(9 U.S.C. §§ 3-4) even though the claims may also involve or
relate to parties who are not parties to the arbitration agreement
and/or claims that are not subject to arbitration: thus, the court
may not refuse to enforce this arbitration agreement and may not
stay the arbitration proceeding despite the provisions [of] the
applicable law of my state, including, without limitation,
California Code of Civil Procedure § 1281.2(c).
       “Should any term or provision, or portion thereof, be
declared void or unenforceable, it shall be severed and the
remainder of this agreement shall be enforced.

                                 9
       “I UNDERSTAND BY AGREEING TO THIS BINDING
ARBITRATION PROVISION, BOTH I AND THE COMPANY
GIVE UP OUR RIGHTS TO TRIAL BY JURY.
       “By acknowledging below, you have agreed that you
have read and understood the above disclosure.”
       Basith signed this provision electronically.
       Three features of this arbitration agreement bear
emphasis.
       First, to some extent this contract seems to be a common
form, at least for some car dealerships. Its language is
substantially similar to the agreement not only in Fuentes, but
also to the agreements in Kho, supra, 8 Cal.5th at page 119 and
Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 665–
673 (Davis). All these cases involved car dealerships. As here,
the employer in Fuentes was a Nissan dealership. Kho and Davis
involved Toyota dealers. (Kho, at p. 118; Davis, at p. 665.)
       Second, all four agreements containing the arbitration
clauses extended for more than a page of print. (Kho, supra, 8
Cal.5th at p. 119; Davis, supra, 41 Cal.App.5th at pp. 666–667.)
       Third, the font size and functional readability of the
contracts here did not seem to trouble Basith. Two relevant
declarations comprise our record facts on this point. We
summarize both.
       The employer’s declaration was by Director of Recruiting
Christine Collinet, who works for Nissan in Missouri. Collinet
reported Basith used Nissan’s online site to create a username
and password on August 2, 2018. Ten days later, on August 12,
2018, at about 11:28 p.m., Basith electronically signed the online
materials, including the arbitration agreement.

                               10
       Collinet appended a printout of Basith’s agreement to her
declaration.
       Basith agreed he electronically signed the document
Collinet attached to her declaration.
       Basith did not state he had trouble reading these
documents. Nor did Basith explain how he viewed Nissan’s
online materials: whether he used a large monitor that would
magnify the contents of the display; whether he used keyboard
screen magnification to increase the size of screen images that
seemed small; whether he printed out screen images he wanted
to examine in a hard copy; whether he took a long or a short time
to study the material; and so forth. Basith omitted all this
information, which only he would know.
       After Nissan terminated Basith, he sued Nissan on
employment claims. Nissan moved to compel arbitration. The
trial court denied the motion, ruling the arbitration agreement
was unconscionable. Nissan appealed.
                                  II
       This arbitration agreement was valid because it contained
no substantive unconscionability.
       The governing law in this case is the same as in the
Fuentes case. We incorporate that recitation here, as well as our
statement of how these two cases differ from Kho and Davis. (See
Fuentes, supra, ___ Cal.App.5th ___ [pp. 7-10, 12, & 19-22].)
       We note at the outset that this case poses no issue of small
or unreadable font. It is a striking coincidence that, not only do
we encounter substantially similar form contracts in two
simultaneous and otherwise unrelated cases, but also that font
size should be a dominating issue in one case—Fuentes—and
entirely absent as an issue in Basith’s case. The difference stems

                                11
from the media: in Fuentes, the contract was printed only on
paper, and was printed in a largely unreadable way, whereas
Basith’s main contract was online.
      We now examine Basith’s argument about substantive
unconscionability, which is fundamentally incorrect. Basith
maintains the contract’s wording is so convoluted that
uncounseled lay people would not understand whether the
agreement meant they were waiving rights. Basith cites this
particular sentence and italicizes five words that we italicize as
well: “I and the company both agree that any claim, dispute,
and/or controversy . . . including, but not limited to, any claims . .
. based on the California Fair Employment and Housing Act,
Title VII of the Civil Rights Act of 1964 . . . which would
otherwise require or allow resort to any court or other
governmental dispute resolution forum . . . shall be submitted to
and determined exclusively by binding arbitration.”
      Basith argues this language implies to lay people that it
bars filing a charge with the Department of Fair Employment
and Housing or the Equal Employment Opportunity Commission.
      Basith’s argument fails on two counts. As Basith himself
notes, there is clear language to the contrary: “I understand and
agree that nothing in this agreement shall be construed so as to
preclude me from filing any administrative charge with, or from
participating in any investigation of a charge conducted by, any
government agency such as the Department of Fair Employment
and Housing and/or the Equal Employment Opportunity
Commission.”
      This sentence, which we quoted above, is reasonably clear:
I may file a charge with the Department of Fair Employment and

                                 12
Housing and/or the Equal Employment Opportunity
Commission. It is comprehensible.
       More fundamentally, arguments about prolix legalese go to
procedural and not substantive unconscionability. Here we
incorporate our exposition of this point from Fuentes.
       To recite the point briefly, a complaint about prolix legalese
is the same type of objection as a complaint about font size. If the
substance of a contract is fair, how the contract is expressed
cannot change that. Font size, format style, or verbal
obscurantism does not affect the fairness of the final allocation of
rights and duties. This contention does not address, and cannot
establish, substantive unfairness. To rule otherwise would drain
the element of substantive unconscionability of meaningfully
independent content and effectively would turn the
unconscionability doctrine into a one-element test of vast and
unsettling sweep.
       Basith also makes a second argument that suffers the same
shortcoming. He claims the short-form agreement—the one in
the “General Manager Compensation Plan”—failed to clarify in
plain English that Basith was not waiving his statutory right to
file a charge with the Equal Employment Opportunity
Commission or the Fair Employment and Housing
Administration. This attack on wording rather than on
substance again misses the mark.
       Moreover, the long-form contract made this point clear.
When different contracts relate to the same matter between the
same parties, we interpret them together, meaning we aim to
make the parts into a consistent and sensible whole. (Civ. Code,
§ 1642.) We do so with awareness that federal and California law
strongly favor arbitration. (9 U.S.C. § 2; Kho, supra, 8 Cal.5th at

                                 13
p. 125.) We search for a lawful and reasonable interpretation.
(Civ. Code, § 1643.) The lawful and reasonable interpretation is
that the longer contract filled in the gaps of the shorter one.
Basith’s second argument is incorrect.
      The unconscionability defense requires a party to establish
both procedural and substantive unconscionability. (Kho, supra,
8 Cal.5th at p. 125.) Because there is no substantive
unconscionability, Basith’s attack on this contract fails. The trial
court erred by denying Nissan’s motion to compel arbitration.
                          DISPOSITION
      We reverse and direct the trial court to enter an order
granting the motion to compel arbitration. We award costs to the
appellants.

                                           WILEY, J.
I concur:

            HARUTUNIAN, J.*

*     Judge of the San Diego Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution

                                 14
STRATTON, P.J., Dissenting.
     I dissent for the reasons expressed in my dissent in Fuentes
v. Empire Nissan, Inc. et al., Case No. B314490.

                                         STRATTON, P. J.

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APPENDIX A

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APPENDIX B

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