Court Opinion

ID: 3048692
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:24:36.54098+00
Date Added: 2024-06-11T11:41:14.020562
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JACQUELIN DAVIS,                         
                 Plaintiff-Appellant,           No. 04-56039
                 v.
                                                 D.C. No.
                                               CV-04-01338-DT
O’MELVENY & MYERS, a California
Limited Liability Corporation,                    OPINION
               Defendant-Appellee.
                                         
        Appeal from the United States District Court
            for the Central District of California
       Dickran M. Tevrizian, District Judge, Presiding

                   Argued and Submitted
             March 7, 2006—Pasadena, California

                       Filed May 14, 2007

   Before: M. Margaret McKeown and Marsha S. Berzon,
    Circuit Judges, and Samuel P. King,* District Judge.

                     Opinion by Judge King

   *The Honorable Samuel P. King, Senior United States District Judge
for the District of Hawaii, Sitting by Designation.

                               5601
                DAVIS v. O’MELVENY & MYERS                5605

                         COUNSEL

Peter M. Hart, Los Angeles, California, for plaintiff-appellant
Jacquelin Davis.

Adam P. KohSweeney (argued), Scott H. Dunham & Anne E.
Garrett (on the briefs), O’Melveny & Myers LLP, Los Ange-
les, California, for defendant-appellee O’Melveny & Myers
LLP.

                         OPINION

KING, District Judge:

  Plaintiff Jacqueline Davis (Davis) appeals the district
court’s order dismissing her action and compelling arbitration
under 9 U.S.C. § 4 based upon an arbitration agreement with
her former employer, Defendant O’Melveny & Myers
(O’Melveny). On appeal, Davis challenges the enforceability
of the arbitration agreement, contending that it is unconscio-
5606               DAVIS v. O’MELVENY & MYERS
nable under California law. The merits of the underlying
claims in her complaint are not at issue here. Because the
arbitration agreement is unconscionable under California law,
we reverse and remand.

                          BACKGROUND

   On August 1, 2002, O’Melveny adopted and distributed to
its employees a new Dispute Resolution Program (DRP) that
culminated in final and binding arbitration of most
employment-related claims by and against its employees.1
O’Melveny distributed the DRP via interoffice mail and
posted it on an office intranet site. A cover memorandum
stated: “Please read the attached and direct any questions you
may have to a member of the Human Resources Department,
the Legal Personnel Department, the Associate Advisory
Committee or the Office of the Chair.” Davis, who had
worked as a paralegal at a Los Angeles, California, office of
O’Melveny since June 1, 1999, received the DRP but appar-
ently did nothing official to question the policy.

  By its terms, the DRP became effective three months later,
on November 1, 2002. It provides in bold, uppercase print:
“THIS DISPUTE RESOLUTION PROGRAM (THE “PRO-
GRAM”) APPLIES TO AND IS BINDING ON ALL
EMPLOYEES (INCLUDING ASSOCIATES) HIRED BY —
OR WHO CONTINUE TO WORK FOR — THE FIRM ON
OR AFTER NOVEMBER 1, 2002.” Davis worked at
O’Melveny until July 14, 2003.

   On February 27, 2004, Davis filed this lawsuit under the
  1
   The DRP was distributed “firm wide.” O’Melveny has offices outside
California and the United States; our review, however, is limited to Cali-
fornia law as applied to the agreement between California parties. See Cir-
cuit City Stores, Inc. v. Mantor, 335 F.3d 1101, 1105 n.9 (9th Cir. 2003)
(Mantor I) (applying California law because employee was employed in
California).
                DAVIS v. O’MELVENY & MYERS                    5607
Federal Fair Labor Standards Act (FLSA) and various other
state and federal labor statutes, alleging failure to pay over-
time for work during lunch time and rest periods and for other
work exceeding eight hours a day and 40 hours a week, as
well as denial of rest and meal periods. In addition to claims
under the FLSA, her nine-count complaint included claims for
violations of California Labor Code §§ 558, 2698 and 2699,
and for declaratory relief seeking a declaration that the DRP
is unconscionable and that O’Melveny’s enforcement of its
provisions and other allegedly illegal behavior constituted
unfair business practices under California’s Unfair Business
Practices Act. The complaint sought damages and injunctive
relief on an individual basis and for “all others similarly
harmed.”

  The DRP covers most employment-related claims, as fol-
lows:

       Except as otherwise provided in this Program,
    effective November 1, 2002, you and the Firm
    hereby consent to the resolution by private arbitra-
    tion of all claims or controversies, past, present or
    future . . . in any way arising out of, relating to, or
    associated with your employment with the Firm or
    the termination of your employment . . . that the
    Firm may have against you or that you may have
    against the Firm. . . . The Claims covered by this
    Program include, but are not limited to, claims for
    wages or other compensation due; . . . . and claims
    for violation of any federal, state or other govern-
    mental constitution, law, statute, ordinance, regula-
    tion or public policy. . . .

       Except as otherwise provided in the Program, nei-
    ther you nor the Firm will initiate or pursue any law-
    suit or administrative action (other than filing an
    administrative charge of discrimination with the
    Equal Employment Opportunity Commission, the
5608            DAVIS v. O’MELVENY & MYERS
    California Department of Fair Employment and
    Housing, the New York Human Rights Commission
    or any similar fair employment practices agency) in
    any way related to or arising from any Claim cov-
    ered by this Program.

   In addition to administrative charges of discrimination as
set forth above, the DRP also excluded certain other types of
claims from mandatory arbitration as follows:

       This Program does not apply to or cover claims
    for workers’ compensation benefits; claims for
    unemployment compensation benefits; claims by the
    Firm for injunctive relief and/or other equitable
    relief for violations of the attorney-client privilege or
    work product doctrine or the disclosure of other con-
    fidential information; or claims based upon an
    employee pension or benefit plan, the terms of which
    contain an arbitration or other nonjudicial dispute
    resolution procedure, in which case the provisions of
    that plan shall apply.

   It is undisputed that Davis’s FLSA and related claims
regarding overtime “arise out of,” or “relate to,” her employ-
ment for purposes of the scope of the DRP. The question here
is whether the DRP is enforceable, in whole or in part.

   Two other specific provisions of the DRP are also at issue
in this appeal: (1) a “notice provision” requiring notice and a
demand for mediation within one year from when the basis of
the claim is known or should have been known; and (2) a con-
fidentiality clause.

  The notice provision provides as follows:

       An employee must give written notice of any
    Claim to the Firm along with a demand for media-
    tion. This notice must be given within one (1) calen-
                DAVIS v. O’MELVENY & MYERS                     5609
    dar year from the time the condition or situation
    providing the basis for the Claim is known to the
    employee or with reasonable effort on the employ-
    ee’s part should have been known to him or her. The
    same rule applies to any Claim the Firm has against
    an employee . . . . Failure to give timely notice of
    a Claim along with a demand for mediation will
    waive the Claim and it will be lost forever. (Bold
    and underscore in original.)

The confidentiality clause provides as follows:

       Except as may be necessary to enter judgment
    upon the award or to the extent required by applica-
    ble law, all claims, defenses and proceedings
    (including, without limiting the generality of the
    foregoing, the existence of a controversy and the fact
    that there is a mediation or an arbitration proceeding)
    shall be treated in a confidential manner by the
    mediator, the Arbitrator, the parties and their coun-
    sel, each of their agents, and employees and all oth-
    ers acting on behalf of or in concert with them.
    Without limiting the generality of the foregoing, no
    one shall divulge to any third party or person not
    directly involved in the mediation or arbitration the
    content of the pleadings, papers, orders, hearings, tri-
    als, or awards in the arbitration, except as may be
    necessary to enter judgment upon the Arbitrator’s
    award as required by applicable law.

  After Davis filed suit, O’Melveny moved to dismiss the
action and to compel arbitration. The district court upheld the
DRP and granted O’Melveny’s motion. Davis filed a timely
appeal.

     JURISDICTION AND STANDARD OF REVIEW

   The Court has jurisdiction over this appeal under 9 U.S.C.
§ 16(a)(3). A district court’s order compelling arbitration is
5610             DAVIS v. O’MELVENY & MYERS
reviewed de novo. Circuit City Stores, Inc. v. Mantor, 417
F.3d 1060, 1063 (9th Cir. 2005) (Mantor II) (citation omit-
ted).

   Neither party questioned whether a court — as opposed to
an arbitrator — should decide whether the DRP is unconscio-
nable. The Ninth Circuit, sitting en banc and applying Buck-
eye Check Cashing, Inc., v. Cardegna, 546 U.S. 440, 126
S. Ct. 1204 (2006), recently addressed whether challenges to
an arbitration clause or agreement should be decided by a
court or an arbitrator. See Nagrampa v. MailCoups, Inc., 469
F.3d 1257 (9th Cir. 2006) (en banc). “When the crux of the
complaint is not the invalidity of the contract as a whole, but
rather the arbitration provision itself, then the federal courts
[as opposed to the arbitrator] must decide whether the arbitra-
tion provision is invalid and unenforceable under 9 U.S.C.
§ 2[.]” Id. at 1264. The arbitration agreement challenged in
this case is only part of the many conditions and terms of
Davis’s employment relationship with O’Melveny. Striking or
upholding the arbitration agreement or severing any of its
terms would not otherwise affect the legality of other condi-
tions of her employment. Under Nagrampa, then, the question
whether O’Melveny’s arbitration agreement is unconsciona-
ble is for a court to decide. See id.; cf. Alexander v. Anthony
Int’l, L.P., 341 F.3d 256, 264-65 (3d Cir. 2003) (exemplifying
that a court addresses the unconscionability of an arbitration
provision in a suit regarding employment disputes), cited with
approval in Nagrampa, 469 F.3d at 1271-72.

                        DISCUSSION

   [1] Under the Federal Arbitration Act (FAA), arbitration
agreements “shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revoca-
tion of any contract.” 9 U.S.C. § 2. Federal policy favors arbi-
tration. Gilmer v. Interstate/Johnson Lane Co., 500 U.S. 20,
25 (1991) (reasoning that the FAA “manifest[s] a ‘liberal fed-
eral policy favoring arbitration agreements.’ ”) (quoting
                   DAVIS v. O’MELVENY & MYERS               5611
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983)). Generally, “arbitration affects only the
choice of forum, not substantive rights.” EEOC v. Luce, For-
ward, Hamilton & Scripps, 345 F.3d 742, 750 (9th Cir. 2003)
(en banc). Of course, arbitration agreements are not always
valid. Rather, in assessing whether an arbitration agreement or
clause is enforceable, the Court “should apply ordinary state-
law principles that govern the formation of contracts.” Circuit
City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002)
(quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,
944 (1995)).

   [2] Under California law, a contractual clause is unenforce-
able if it is both procedurally and substantively unconsciona-
ble. See Armendariz v. Found. Health Psychcare Servs., Inc.,
6 P.3d 669, 690 (Cal. 2000); Nagrampa, 469 F.3d at 1280.
Courts apply a sliding scale: “the more substantively oppres-
sive the contract term, the less evidence of procedural uncons-
cionability is required to come to the conclusion that the term
is unenforceable, and vice versa.” Armendariz, 6 P.3d at 690.
Still, “both [must] be present in order for a court to exercise
its discretion to refuse to enforce a contract or clause under
the doctrine of unconscionability.” Id. (quoting Stirlen v.
Supercuts, Inc., 60 Cal. Rptr. 2d 138, 145 (Cal. Ct. App.
1997)). We address each prong in turn.

              1.    Procedural Unconscionability

   In assessing procedural unconscionability, the court “fo-
cuses on whether the contract was one of adhesion. Was it
‘imposed on employees as a condition of employment’? Was
there ‘an opportunity to negotiate’? . . . ‘[The test] focuses on
factors of oppression and surprise.’ ” Soltani v. W. & S. Life
Ins. Co., 258 F.3d 1038, 1042 (9th Cir. 2001) (citations omit-
ted).

  [3] The DRP was written by a sophisticated employer — a
national and international law firm, no less — but there are no
5612               DAVIS v. O’MELVENY & MYERS
factors of adhesion such as surprise or concealment. The DRP
was not hidden.2 The terms were not concealed in an
employee handbook. The binding nature of it was in bold and
uppercase text. Terms were not buried in fine print.
O’Melveny not only gave ample notice of the program and its
terms, but also made efforts to have employment lawyers and
human-resource personnel available to answer questions.
There is no evidence (although the case did not progress very
far) of undue pressure put on employees.

   [4] Nevertheless, in a very real sense the DRP was “take it
or leave it.” The DRP’s terms took effect three months after
they were announced regardless of whether an employee liked
them or not. An employee’s option was to leave and work
somewhere else. True, for current employees like Davis, three
months might have been sufficient time to consider whether
the DRP was reason to leave O’Melveny. In that sense, there
could have been a meaningful opportunity to “opt out” —
although to opt out of the entire employment relationship, not
to retain the relationship but preserve a judicial forum.

   In Adams, the Ninth Circuit, applying Armendariz (the con-
trolling California Supreme Court case), found an arbitration
agreement procedurally unconscionable because it was a
“take it or leave it” proposition. 279 F.3d at 893. Adams rea-
soned that “[t]he agreement is a prerequisite to employment,
and job applicants are not permitted to modify the agree-
ment’s terms — they must take the contract or leave it.” Id.
The Ninth Circuit found an agreement in Ferguson v. Coun-
trywide Credit Industries, Inc., 298 F.3d 778, 783 (9th Cir.
2002), procedurally unconscionable for the same reason. Cali-
fornia courts continue to apply the rationale from Armendariz
to find such arbitration contracts procedurally unconsciona-
ble. See, e.g., Martinez v. Master Prot. Corp., 12 Cal. Rptr.
2
    Whether the employees understood the terms and whether specific pro-
visions “shock the conscience” — and in that sense would “surprise” an
employee — are different questions, analyzed under the substantive prong.
                 DAVIS v. O’MELVENY & MYERS                 5613
3d 663, 669 (Cal. Ct. App. 2004) (“An arbitration agreement
that is an essential part of a ‘take it or leave it’ employment
condition, without more, is procedurally unconscionable.”)
(citations omitted).

   Conversely, if an employee has a meaningful opportunity
to opt out of the arbitration provision when signing the agree-
ment and still preserve his or her job, then it is not procedur-
ally unconscionable. See, e.g., Circuit City Stores, Inc. v.
Najd, 294 F.3d 1104, 1108 (9th Cir. 2002) (upholding agree-
ment); Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198,
1200 (9th Cir. 2002) (same). Compare Mantor I, 335 F.3d at
1106-07 (finding procedural unconscionability even if
employee had been given an “opt out” form, because of undue
pressure not to sign the “opt out” form, rendering the opportu-
nity not meaningful).

   O’Melveny concedes that its employees were not given an
option to “opt out” and preserve a judicial forum. (It does note
that employees were invited to ask questions about the DRP,
but there is nothing to indicate that the terms were negotiable
for employees such as Davis.) But, O’Melveny argues — and
the district court agreed — that the three months of notice
nevertheless satisfies the concern of oppression behind this
factor. It relies on a “marketplace alternatives” theory used in
cases outside the employment context. See Dean Witter Reyn-
olds, Inc. v. Superior Court, 259 Cal. Rptr. 789 (Cal. Ct. App.
1989). In this regard, Dean Witter stated:

    any claim of ‘oppression’ may be defeated if the
    complaining party had reasonably available alterna-
    tive sources of supply from which to obtain the
    desired goods or services free of the terms claimed
    to be unconscionable. If ‘oppression’ refers to the
    ‘absence of meaningful choice,’ then the existence of
    a ‘meaningful choice’ to do business elsewhere must
    tend to defeat any claim of oppression.
5614            DAVIS v. O’MELVENY & MYERS
Id. at 795.

   Dean Witter addressed mandatory arbitration in a financial
services contract. The court reasoned that if the consumer did
not like the mandatory arbitration provision in an investment
account contract, the consumer could get an account at
another company. Id. at 798. The district court here accepted
O’Melveny’s argument extending Dean Witter by analogy to
the employment context. The rationale is that if Davis did not
want to work at O’Melveny (which was free to change most
of the terms of her employment with reasonable notice) she
had a “meaningful choice” — as in Dean Witter — to “do
business elsewhere” by working somewhere else.

   [5] It is impossible, however, to square such reasoning with
explicit language from Ingle v. Circuit City Stores, Inc., 328
F.3d 1165, 1172 (9th Cir. 2003) (Ingle I) and Ferguson, 298
F.3d at 784, specifically rejecting the argument that a “take it
or leave it” arbitration provision was procedurally saved by
providing employees time to consider the change. In Ingle I,,
the Ninth Circuit struck a Circuit City arbitration agreement
as both procedurally and substantively unconscionable. 328
F.3d at 1172-73. As with O’Melveny’s DRP, the employee
Ingle did not have an opportunity to opt out by preserving a
judicial forum. Id. at 1172. Circuit City argued that the agree-
ment was enforceable because Ingle had time to consider the
arbitration terms, but chose to accept the employment any-
way. The Ingle I court rejected Circuit City’s argument.

   [6] O’Melveny attempts to distinguish Ingle I in this regard
because Davis had three months — not three days — to con-
sider the arbitration agreement. The distinction, however, is
not helpful because even if the opportunity to walk away was
“meaningful,” the DRP was still a “take it or leave it” propo-
sition. More importantly, Ingle I reasoned that ‘[t]he amount
of time [the employee] had to consider the contract is irrele-
vant.” Id. (emphasis added). Ingle I addressed the availability
of alternative employment by “follow[ing] the reasoning in
                DAVIS v. O’MELVENY & MYERS                 5615
Szetela v. Discover Bank, 97 Cal. App. 4th 1094, 118 Cal.
Rptr. 2d 862 (2002), in which the California Court of Appeal
held that the availability of other options does not bear on
whether a contract is procedurally unconscionable.” Ingle I,
328 F.3d at 1172 (citing Szetela, 118 Cal. Rptr. 2d at 867)
(emphasis added); see also Ferguson, 298 F.3d at 784
(“[W]hether the plaintiff had an opportunity to decline the
defendant’s contract and instead enter into a contract with
another party that does not include the offending terms is not
the relevant test for procedural unconscionability.”) (empha-
sis added) (citing Szetela, 118 Cal. Rptr. 2d at 867); Fitz v.
NCR Corp., 13 Cal. Rptr. 3d 88, 102 (Cal. Ct. App. 2004)
(finding arbitration contract procedurally unconscionable
because employee did not have a meaningful choice to reject
a new arbitration agreement imposed with one month’s
notice: “Few employees are in a position to forfeit a job and
the benefits they have accrued for more than a decade solely
to avoid the arbitration terms that are forced upon them by
their employer.”).

   [7] In Nagrampa, the Ninth Circuit reiterated these princi-
ples of California law and specifically rejected the argument
that the availability of other employment can defeat a claim
of procedural unconscionability when an employee is faced
with a “take it or leave it” condition of employment.
Nagrampa, 469 F.3d at 1283 (“The California Court of
Appeal has rejected the notion that the availability in the mar-
ketplace of substitute employment, goods, or services alone
can defeat a claim of procedural unconscionability.”) (empha-
sis in original) (citations omitted). Nagrampa also distin-
guished Dean Witter by reasoning that the investor in that
case was a sophisticated investor-attorney with specialized
knowledge of financial institutions and financial service con-
tracts. Id. In contrast, where — as is the case with Davis as
a paralegal in an international law firm — the employee is
facing an employer with “overwhelming bargaining power”
that “drafted the contract, and presented it to [Davis] on a
take-it-or-leave-it basis,” the clause is procedurally uncon-
5616              DAVIS v. O’MELVENY & MYERS
scionable. Id. at 1284; see also Morris v. Redwood Empire
Bancorp, 27 Cal. Rptr. 3d 797, 807 (Cal. Ct. App. 2005) (dis-
tinguishing Dean Witter and reasoning that “not every oppor-
tunity to seek an alternative source of supply is ‘realistic.’
Courts have recognized a variety of situations where adhesion
contracts are oppressive, despite the availability of alterna-
tives. For example, . . . few employees are in a position to
refuse a job because of an arbitration agreement in an employ-
ment contract.”) (citations and internal quotation marks omit-
ted); Jones v. Humanscale Corp., 29 Cal. Rptr. 3d 881, 892
(Cal. Ct. App. 2005) (“Defendant prepared and submitted the
agreement containing the arbitration clause to plaintiff and
required him to sign it as a condition of his continued employ-
ment, thus rendering the agreement a contract of adhesion.”)
(citations omitted).

  [8] In short, the DRP is procedurally unconscionable.

             2.    Substantive Unconscionability

   Even if the DRP is procedurally unconscionable, we must
also address whether the agreement is (or specific provisions
of it are) substantively unconscionable before rendering it (or
any of its terms) unenforceable. Armendariz, 6 P.3d at 690;
Nagrampa, 469 F.3d at 1280-81 (reiterating that procedural
unconscionability is to be analyzed in proportion to evidence
of substantive unconscionability).

   [9] “Substantive unconscionability relates to the effect of
the contract or provision. A ‘lack of mutuality’ is relevant in
analyzing this prong. The term focuses on the terms of the
agreement and whether those terms are so one-sided as to
shock the conscience.” Soltani, 258 F.3d at 1043 (internal
quotation marks and citations omitted) (emphasis in original).
“A determination of substantive unconscionability . . .
involves whether the terms of the contract are unduly harsh or
oppressive.” Adams, 279 F.3d at 893 (citation omitted).
                   DAVIS v. O’MELVENY & MYERS                        5617
   We proceed to examine individually the four provisions of
the DRP that Davis challenges as substantively unconsciona-
ble or otherwise void. We then consider whether the provi-
sions we conclude are void may be severed from the rest of
the DRP or whether, instead, the DRP is unenforceable in its
entirety.

  a.    The “Notice Provision.”

   Davis challenges the DRP’s notice provision. It allows one
year within which to give notice from when any claim is
“known to the employee or with reasonable effort . . . should
have been known to him or her.” Davis contends that this
notice provision is a substantively-unconscionable shortened
statute of limitations and that it deprives her of potential
application of a “continuing violation” theory.

   [10] The challenged provision covers more than merely
“notice”; it also requires a demand for mediation within a year
(“Failure to give timely notice of a Claim along with a
demand for mediation will waive the Claim and it will be
lost forever”) (bold and underscore in original). Under the
DRP, then, mediation is a mandatory prerequisite to arbitration.3
The one-year notice provision thus functions as a statute of
limitations. Because mediation precedes the arbitration, the
“notice provision” requires the whole claim to be filed within
a year. One cannot, for example, give written “notice” within
a year, but otherwise file a claim later under a longer statute
of limitations.4 In short, if the claim is not filed within a year
of when it should have been discovered, it is lost.
  3
    The DRP actually contemplates two other prior steps, although they are
not mandatory: (1) “Open Door” which is an optional meeting with a
supervisor and should be presented within 30 days of when the claim is
known, and (2) “Human Resources Department” which is a formal claim
made with the human resources department and contemplates an investi-
gation and written response.
  4
    For example, there is a three-year limitation period for a willful FLSA
violation, and two years otherwise. 29 U.S.C. § 255(a).
5618            DAVIS v. O’MELVENY & MYERS
  [11] We have previously held that forcing employees to
comply with a strict one-year limitation period for
employment-related statutory claims is oppressive in a man-
datory arbitration context. O’Melveny’s “notice” provision is
similar to the limitations provision in Ingle I, which read:

    [a claim] shall be submitted not later than one year
    after the date on which the [Employee] knew, or
    through reasonable diligence should have known, of
    the facts giving rise to the [Employee’s] claim(s).
    The failure of an [Employee] to initiate an arbitration
    within the one-year time limit shall constitute a
    waiver with respect to that dispute relative to that
    [Employee].
328 F.3d at 1175. We struck down that provision as substan-
tively unconscionable. Id.; see also Mantor I, 335 F.3d at
1107 (adopting Ingle I’s statute-of-limitations holding). Like-
wise, in Adams we invalidated “a strict one year statute of
limitation” against bringing employment-related statutory
claims as substantively unconscionable. 279 F.3d at 894. Cali-
fornia courts have also struck arbitration provisions because
of a shortened limitations period. See Martinez, 12 Cal. Rptr.
3d at 671-72 (finding an arbitration agreement with a six-
month limitation period substantively unconscionable because
the shortened period is “insufficient to protect its employees’
right to vindicate their statutory rights”). The fact that
O’Melveny is also bound to litigate employment-related statu-
tory claims within the one-year period is of no consequence,
as these are types of claims likely only to be brought by
employees. See Ingle I, 328 F.3d at 1173-74 (“The only
claims realistically affected by an arbitration agreement
between an employer and an employee are those claims
employees bring against their employer.); Martinez, 12 Cal.
Rptr. 3d at 670.

  In holding substantively unconscionable provisions short-
ening the time to bring employment-related statutory claims,
                 DAVIS v. O’MELVENY & MYERS                    5619
we have been particularly concerned about barring a “continu-
ing violations” theory by employees. Such a theory can be
used, for example, when an employer has a “systematic policy
of discrimination” consisting of related acts that began prior
to period within the statute of limitations. See, e.g., Richards
v. CH2M Hill, Inc., 29 P.3d 175, 183 (Cal. 2001) (discussing
various continuing violation theories). On this point, Ingle I
reasoned:

    [A] ‘strict one year statute of limitations on arbitrat-
    ing claims . . . would deprive [employees] of the
    benefit of the continuing violation doctrine available
    in FEHA suits.’ . . . . While [the employer] insulates
    itself from potential damages, an employee foregoes
    the possibility of relief under the continuing viola-
    tions doctrine. Therefore, because the benefit of this
    provision flows only to [the employer], we conclude
    that the statute of limitations provision is substan-
    tively unconscionable.
328 F.3d at 1175 (quoting Adams, 279 F.3d at 894-95) (cita-
tion omitted). Likewise, the provision imposed by O’Melveny
functions to bar a “continuing violations” theory because it
specifically bars any claims not brought within a year of when
they were first known (or should have been known). Absent
equitable tolling (and it is uncertain whether an arbitrator
would allow tolling), such “continuing violations” would be
barred by the DRP, because neither notice nor a demand for
mediation would have been filed within a year of “the time
the condition or situation providing the basis for the Claim is
known to the employee or with reasonable effort on the
employee’s part should have been known to him or her.”

  O’Melveny relies on Soltani, in which the Ninth Circuit
expressly found a shortened six-month limitation provision
not substantively unconscionable under California law. 258
F.3d at 1044-45. Soltani cited a host of California cases and
authority from other jurisdictions finding that, as a general
5620               DAVIS v. O’MELVENY & MYERS
matter, a shortened six-month limitation period is not unrea-
sonable. O’Melveny argues that if six-months is reasonable,
then the year given in the DRP must also be reasonable (and
thus not substantively unconscionable). Soltani, however, is
distinguishable.

   Soltani addressed a different type of limitations provision.
There, the employment contract required any suit relating to
employment to be filed within six-months after the employee
left the employer. Id. at 1041. The time to file did not depend
upon when the employee knew of the claim, or otherwise
when it arose. A three-year-old claim could still be filed, as
long as it was also filed within six-months from when the
employee stopped working (and as long as it was not other-
wise barred by the relevant statute of limitations). This type
of provision does not raise the concerns about nullifying the
“continuing violations” theory, as the employee would during
that six-month period still be able to take full advantage of the
ability to reach back to the start of the violation.

  [12] Under Ingle I, Adams, and Mantor I (and the subse-
quent California appeals court decision in Martinez), the
DRP’s one-year universal limitation period is substantively
unconscionable when it forces an employee to arbitrate
employment-related statutory claims.

  b.     Confidentiality Provision.

  Next, Davis challenges the confidentiality provision. She
argues that it is overly broad and therefore substantively
unconscionable under Ting v. AT&T, 319 F.3d 1126 (9th Cir.
2003).

  In Ting, the Ninth Circuit found a confidentiality clause in
an arbitration agreement substantively unconscionable, rea-
soning as follows.

       [C]onfidentiality provisions usually favor companies
       over individuals. In Cole [v. Burns Int’l Sec. Servs.],
                DAVIS v. O’MELVENY & MYERS                    5621
    105 F.3d 1465 [(D.C. Cir. 1997)], the D.C. Circuit
    recognized that because companies continually arbi-
    trate the same claims, the arbitration process tends to
    favor the company. Id. at 1476. Yet because of plain-
    tiffs’ lawyers and arbitration appointing agencies
    like the [American Arbitration Association], who
    can scrutinize arbitration awards and accumulate a
    body of knowledge on a particular company, the
    court discounted the likelihood of any harm occur-
    ring from the “repeat player” effect. We conclude,
    however, that if the company succeeds in imposing
    a gag order, plaintiffs are unable to mitigate the
    advantages inherent in being a repeat player. This is
    particularly harmful here, because the contract at
    issue affects seven million Californians.

Ting, 319 F.3d at 1151-52.

   True, Davis’s suit does not allege the kind of repeatable
claim that could be made by millions of potential claimants as
in Ting, but O’Melveny does have hundreds if not thousands
of employees who conceivably could bring claims. In any
event, Ting’s concern was not limited strictly to potential
claims by millions of “repeat players.” Rather, the logic of
Ting in this regard is that even facially mutual confidentiality
provisions can effectively lack mutuality and therefore be
unconscionable. The opinion goes on to reason

    Thus, [the employer] has placed itself in a far supe-
    rior legal posture by ensuring that none of its poten-
    tial opponents have access to precedent while, at the
    same time, [the employer] accumulates a wealth of
    knowledge on how to negotiate the terms of its own
    unilaterally crafted contract. Further, the unavaila-
    bility of arbitral decisions may prevent potential
    plaintiffs from obtaining the information needed to
    build a case of intentional misconduct or unlawful
    discrimination against [the employer].
5622                 DAVIS v. O’MELVENY & MYERS
Id. at 1152.

   [13] Here, the DRP’s confidentiality clause as written
unconscionably favors O’Melveny. The clause precludes even
mention to anyone “not directly involved in the mediation or
arbitration” of “the content of the pleadings, papers, orders,
hearings, trials, or awards in the arbitration” or even “the exis-
tence of a controversy and the fact that there is a mediation
or an arbitration proceeding.” Such restrictions would prevent
an employee from contacting other employees to assist in liti-
gating (or arbitrating) an employee’s case. An inability to
mention even the existence of a claim to current or former
O’Melveny employees would handicap if not stifle an
employee’s ability to investigate and engage in discovery.
The restrictions would also place O’Melveny “in a far supe-
rior legal posture” by preventing plaintiffs from accessing
precedent while allowing O’Melveny to learn how to negoti-
ate and litigate its contracts in the future. Id. Strict confidenti-
ality of all “pleadings, papers, orders, hearings, trials, or
awards in the arbitration” could also prevent others from
building cases. See id. (“the unavailability of arbitral deci-
sions may prevent potential plaintiffs from obtaining the
information needed to build a case of intentional misconduct
or unlawful discrimination”). It might even chill enforcement
of Cal. Labor Code § 232.5, which forbids employers from
keeping employees from disclosing certain “working condi-
tions” and from retaliating against employees who do so.5
  5
   The section provides in part:
      § 232.5. Working conditions; prohibition of sanctions against
      employee disclosure
      No employer may do any of the following:
      (a) Require, as a condition of employment, that an employee
      refrain from disclosing information about the employer’s work-
      ing conditions.
      (b) Require an employee to sign a waiver or other document
      that purports to deny the employee the right to disclose informa-
      tion about the employer’s working conditions.
                 DAVIS v. O’MELVENY & MYERS                    5623
   O’Melveny responds by arguing that the DRP allows par-
ties to divulge information to those “directly involved” and
would therefore allow fact investigation. O’Melveny also
indicates that, despite the language, the confidentiality clause
would not otherwise bar depositions and discovery in a confi-
dential setting. It also relies upon a “savings clause” at the
beginning of the provision (“Except as may be necessary to
enter judgment upon the award or to the extent required by
applicable law”) as indicating that if there’s something wrong
with any of the confidentiality clause’s terms, then the
improper provision would be subordinated “to the extent
required by applicable law” — i.e., ignored.

   But such concessions depend upon overly generous read-
ings of the confidentiality clause. We must deal with the
terms as written. See Armendariz, 6 P.3d at 697 (“[an employ-
er’s concession] does not change the fact that the arbitration
agreement as written is unconscionable and contrary to public
policy. . . . No existing rule of contract law permits a party to
resuscitate a legally defective contract merely by offering to
change it.”) (citation and internal quotation marks omitted).
As written, the terms are too broad and implicate Ting’s con-
cerns.

   [14] This does not mean that confidentiality provisions in
an arbitration agreement are per se unconscionable under Cal-
ifornia law. See Mercuro v. Superior Court, 116 Cal. Rptr. 2d
671, 679 (Cal. Ct. App. 2002) (“While [the California]
Supreme Court has taken notice of the ‘repeat player effect,’
the court has never declared this factor renders the arbitration
agreement unconscionable per se.”) (citations omitted). The
concern is not with confidentiality itself but, rather, with the
scope of the language of the DRP. Cf. Zuver v. Airtouch

   (c) Discharge, formally discipline, or otherwise discriminate
   against an employee who discloses information about the
   employer’s working conditions.
5624                DAVIS v. O’MELVENY & MYERS
Commc’ns, Inc., 103 P.3d 753, 765 (Wash. 2004) (En Banc)
(“[A]lthough courts have accepted confidentiality provisions
in many agreements, it does not necessarily follow that this
confidentiality provision is conscionable.”) (emphasis in origi-
nal).6 The parties to any particular arbitration, especially in an
employment dispute, can always agree to limit availability of
sensitive employee information (e.g., social security numbers
or other personal identifier information) or other issue-
specific matters, if necessary. Confidentiality by itself is not
substantively unconscionable; the DRP’s confidentiality
clause, however, is written too broadly.

  c.   O’Melveny’s Exemption                   for      Attorney-client
       Privilege Disputes.

   Davis also challenges the DRP’s non-mutual provision
exempting O’Melveny from arbitration for “claims by the
Firm for injunctive and/or other equitable relief for violations
of the attorney-client privilege or work product doctrine or the
disclosure of other confidential information.”

   [15] California law allows an employer to preserve a judi-
cial remedy for itself if justified based upon a “legitimate
commercial need” or “business reality.” Armendariz, 6 P.3d
at 691 (“[A] contract can provide a ‘margin of safety’ that
provides the party with superior bargaining strength a type of
extra protection for which it has a legitimate commercial need
without being unconscionable”) (quoting Stirlen, 60 Cal. Rptr.
2d at 148); see also Fitz, 13 Cal. Rptr. 3d at 103 (“a contract-
ing party with superior bargaining strength may provide ‘extra
protection’ for itself within the terms of the arbitration agree-
ment if ‘business realities’ create a special need for the advan-
tage. The ‘business realities’ creating the special need, must
be explained in the terms of the contract or factually estab-
lished.”) (citing Armendariz, 6 P.3d at 769-70).
  6
   California and Washington law incorporate similar principles in ana-
lyzing the unconscionability of arbitration agreements. See Al-Safin v. Cir-
cuit City Stores, Inc., 394 F.3d 1254, 1261 & n.6 (9th Cir. 2005).
                 DAVIS v. O’MELVENY & MYERS                 5625
   O’Melveny justifies this clause by pointing out that it has
not only contractual but ethical obligations to clients to pro-
tect against violations of the attorney-client privilege and
work-product doctrine and otherwise to protect confidential
client information. See, e.g., Cal. Bus. & Prof. Code § 6068(e)
(“It is the duty of an attorney to . . . maintain inviolate the
confidence, and at every peril to himself or herself to preserve
the secrets, or his or her client.”); In re Jordan, 500 P.2d 873,
878-79 (Cal. 1972). Situations are foreseeable where
O’Melveny might need a quick court order or injunction to
prohibit a current or former employee from releasing privi-
leged information. Where many employees of a law firm
might have access to privileged information, a narrow excep-
tion to arbitration for judicially-mandated injunctive relief to
protect against violations of the attorney-client privilege or
work product doctrine or the disclosure of other such confi-
dential information could constitute a legitimate “business
reality.”

   Initially, California law provides that certain “public
injunctions” are incompatible with arbitration (and that such
a holding is consistent with the FAA). Actions seeking such
injunctions cannot be subject to arbitration even under a valid
arbitration clause. See Broughton v. Cigna Healthplans of
Cal., 988 P.2d 67, 76-80 (Cal. 1999) (holding that a claim for
public injunctive relief under the CLRA is not arbitrable,
although damage claims under the CLRA are arbitrable); Cruz
v. PacifiCare Health Sys., Inc., 66 P.3d 1157, 1164-65 (Cal.
2003) (extending Broughton to claims for public injunctive
relief under California’s unfair competition law, Business and
Professions Code § 17200 et seq.); Zavala v. Scott Brothers
Dairy, Inc., 49 Cal. Rptr. 3d 503, 510 (Cal. Ct. App. 2006)
(“Certainly, plaintiffs’ injunctive relief claim under the unfair
business practices act (Bus. & Prof. Code, § 17200) is not
arbitrable.”).

   [16] Protections against violations of the attorney client
privilege and work-product doctrine are primarily for the ben-
5626             DAVIS v. O’MELVENY & MYERS
efit of clients, and in that sense are “in the public interest.”
See Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)
(observing that the purpose of the attorney-client privilege “is
to encourage full and frank communication between attorneys
and their clients and thereby promote broader public interests
in the observance of law and administration of justice”); see
also In re Jordan, 500 P.2d at 879 (“[P]rotection of [client]
confidences and secrets is not a rule of mere professional con-
duct, but instead involves public policies of paramount impor-
tance which are reflected in numerous statutes.”).

   [17] But, as recently explained in Nagrampa, California
law also indicates that protecting against breaches of confi-
dentiality alone does not constitute a sufficient justification.
In Nagrampa, the en banc court rejected a clause that allowed
a franchisor to file a lawsuit seeking injunctive relief to pro-
tect proprietary information. 469 F.3d at 1286. Nagrampa
relied upon O’Hare v. Municipal Resource Consultants, 132
Cal. Rptr. 2d 116 (Cal. Ct. App. 2003), which “rejected the
employer’s contention that it had a legitimate business justifi-
cation in the ‘highly confidential and proprietary nature’ of its
auditing and consulting work for allowing it, but not the
employee, to seek injunctive relief in court.” 469 F.3d at 1286
(citing O’Hare, 132 Cal. Rptr. 2d at 124). Rather, “to consti-
tute a reasonable business justification, the justification must
be something other that the employer’s desire to maximize its
advantage based upon the perceived superiority of the judicial
forum.” Id. (citations and internal quotation marks omitted).
Nagrampa explained that “California courts routinely have
rejected [protecting proprietary information] as a legitimate
basis for allowing only one party to an agreement access to
the courts for provisional relief.” Id. at 1287 (citations omit-
ted).

   [18] It may be that a provision allowing a law firm immedi-
ate access to a court for a limited purpose of seeking injunc-
tive relief to protect confidential attorney-client information
could constitute a legitimate business justification because
                      DAVIS v. O’MELVENY & MYERS                        5627
such relief would fit into an unarbitrable category of “public
injunction” — a proposition of California state law which, as
far as this panel can determine, has not been addressed in a
published California opinion and which we need not decide
here.7 Even assuming such an injunction were not arbitrable,
however, the DRP’s provisions are not so limited. Here, the
DRP also allows O’Melveny to seek “other equitable relief”
for not only violations of the attorney-client privilege or work
product doctrine, but also for “the disclosure of other confi-
dential information.” That is, even accepting O’Melveny’s
proffered justification, the DRP’s clause is still too broad. Its
plain language would allow O’Melveny to go to court to
obtain any “equitable relief” for the disclosure of any “confi-
dential information.” As written, then, the DRP’s non-mutual
exception allowing it a judicial remedy to protect confidential
information, as written, is “one-sided and thus substantively
unconscionable.” Nagrampa, 469 F.3d at 1287.

                 3.    Availability of Statutory Rights

   Davis challenges as void against public policy the DRP’s
prohibition against most administrative actions. The chal-
lenged clause states:

       neither you nor the Firm will initiate or pursue any
       lawsuit or administrative action (other than filing an
       administrative charge of discrimination with the
       Equal Employment Opportunity Commission, the
       California Department of Fair Employment and
  7
    To the extent such a “public injunction” would be exempt from arbitra-
tion, it might be allowable in a lawsuit under Cal Civ. Proc. Code
§ 1281.8(b), without the need to exclude it from an arbitration agreement.
Section 1281.8(b) provides:
      A party to an arbitration agreement may file in . . . court . . . an
      application for a provisional remedy in connection with an arbi-
      trable controversy, but only upon the ground that the award to
      which the applicant may be entitled may be rendered ineffectual
      without provisional relief.
5628             DAVIS v. O’MELVENY & MYERS
    Housing, the New York Human Rights Commission
    or any similar fair employment practices agency) in
    any way related to or arising from any Claim cov-
    ered by this Program. (Emphasis added.)

   Arbitration is favored as a matter of policy regardless of
whether it is in lieu of a judicial or administrative forum. See
Gilmer, 500 U.S. at 28-29 (noting securities law claims can
be arbitrated even though the SEC is involved in the enforce-
ment of those laws); Southland Corp. v. Keating, 465 U.S. 1,
13 (1984) (“[T]he purpose of the [FAA] was to assure those
who desired arbitration and whose contracts related to inter-
state commerce that their expectations would not be under-
mined by federal judges, or . . . by state courts or
legislatures.”) (quoting Metro Indus. Painting Corp. v. Termi-
nal Constr. Corp., 287 F.2d 382, 387 (2d Cir. 1961) (Lum-
bard, C.J., concurring) (omission in original)). “Assuming an
adequate arbitral forum . . . ‘by agreeing to arbitrate a statu-
tory claim, a party does not forego the substantive rights
afforded by the statute; it only submits to their resolution in
an arbitral, rather than a judicial, forum.’ ” Armendariz, 6
P.3d at 679 (quoting Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)) (square
brackets omitted).

   Nevertheless, an arbitration agreement may not function so
as to require employees to waive potential recovery for sub-
stantive statutory rights in an arbitral forum, especially for
statutory rights established “for a public reason” — such as
those under The Age Discrimination in Employment Act
(ADEA) and the California Fair Employment and Housing
Act (FEHA). Gilmer, 500 U.S. at 28; Armendariz, 6 P.3d at
680-81. That is, although such rights are arbitrable, an arbitra-
tion forum must allow for the pursuit of the legal rights and
remedies provided by such statutes. Armendariz, 6 P.3d at 681
(citing Cole, 105 F.3d at 1481-82). In this context, employ-
ment rights under the FLSA and California’s Labor Code are
“public rights” analogous to rights under the ADEA and
                 DAVIS v. O’MELVENY & MYERS                   5629
FEHA. See, e.g., Albertson’s, Inc. v. United Food & Commer-
cial Workers Union, 157 F.3d 758, 761 (9th Cir. 1998).

   As explained earlier, California law provides that certain
“public injunctions” are incompatible with arbitration. See
Broughton, 988 P.2d at 76-80 (holding that a claim for public
injunctive relief under California’s Consumer Legal Remedies
Act (CLRA) is not arbitrable, although damages claims under
the CLRA are arbitrable); Cruz, 66 P.3d at 1164-65 (extend-
ing Broughton to claims for public injunctive relief under Cal-
ifornia’s unfair competition law, Business and Professions
Code § 17200 et seq.); Zavala, 49 Cal. Rptr. 3d at 510. It fol-
lows that the DRP may not prohibit — i.e., require arbitration
of — judicial actions seeking such public injunctive relief.
Here, at least two counts of Davis’s complaint seek, among
other things, such public injunctive relief under California’s
Labor Code and Unfair Business Practices Act. To that extent,
at minimum, the DRP is unenforceable.

   [19] More importantly, however, the DRP’s all-inclusive
bar to administrative actions (even given the listed exceptions
for EEOC and California Department of Fair Housing
(“DFEH”) complaints) is contrary to U.S. Supreme Court and
California Supreme Court precedent. O’Melveny recognizes
that an exemption for EEOC and similar state-level adminis-
trative claims is necessary. See Gilmer, 500 U.S. at 28 (“An
individual ADEA claimant subject to an arbitration agreement
will still be free to file a charge with the EEOC, even though
the claimant is not able to institute a private judicial action.”);
Armendariz, 6 P.3d at 679 n.6 (“Nothing in this opinion, how-
ever, 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.
. . .”) (citing Gilmer, 500 U.S. at 28). Presumably, the DRP
specifically excludes such administrative complaints because
of these cases. O’Melveny also acknowledges that the clause
does not bar the EEOC or a similar state agency from seeking
5630             DAVIS v. O’MELVENY & MYERS
relief (in court) that is not individual-specific, such as a class
action. The clause also could not bar an EEOC-instituted judi-
cial action that might also seek victim-specific relief. See
EEOC v. Waffle House, Inc., 534 U.S. 279, 295-96 (2002).
Therefore, under Gilmer and Armendariz, a clause that barred
or required arbitration of administrative claims to the EEOC
would be void as against public policy.

   The exception (i.e., preclusion from arbitration) for admin-
istrative complaints to the EEOC and California DFEH was
premised on the agencies’ public purpose for the relief and
their independent authority to vindicate public rights. Gilmer,
500 U.S. at 27; Waffle House, 534 U.S. at 291-92, 294-96.
Indeed, the EEOC’s enforcement scheme relies upon individ-
ual complaints. “Consequently, courts have observed that an
individual may not contract away her right to file a charge
with the EEOC[.]” EEOC v. Frank’s Nursery & Crafts, Inc.,
177 F.3d 448, 456 (6th Cir. 1999) (citations omitted); cf. Waf-
fle House, 534 U.S. at 296 n.11 (“We have generally been
reluctant to approve rules that may jeopardize the EEOC’s
ability to investigate and select cases from a broad sample of
claims.”).

   So it is with the Department of Labor and FLSA complaints
— such complaints may not be waived with an arbitration
clause because the statutory scheme is premised on an
employee’s willingness to come forward, in support of the
public good. See Mitchell v. Robert De Mario Jewelry, Inc.,
361 U.S. 288, 292 (1960) (“Congress did not seek to secure
compliance with prescribed standards [under the FLSA]
through continuing detailed federal supervision or inspection
of payrolls. Rather it chose to rely on information and com-
plaints received from employees seeking to vindicate rights
claimed to have been denied. Plainly, effective enforcement
could thus only be expected if employees felt free to approach
officials with their grievances.”); Lambert v. Ackerley, 180
F.3d 997, 1003-04 (9th Cir. 1999) (en banc) (explaining the
importance of the FLSA’s scheme of individual complaints by
                DAVIS v. O’MELVENY & MYERS                5631
employees); Painting & Drywall Work Pres. Fund, Inc. v.
Dep’t of Hous. & Urban Dev., 936 F.2d 1300, 1301 (D.C. Cir.
1991) (“Both the Department of Labor and the Department of
Housing and Urban Development . . . enforce compliance
with these [wage] laws. In doing so, they often rely on com-
plaints from workers and unions.”).

   [20] Even if the DRP does not preclude the Department of
Labor or California Labor Commissioner from instituting
independent actions, the DRP precludes any individual com-
plaint or notification by an employee to such agencies. By not
allowing employees to file or to initiate such administrative
charges, the DRP is contrary to the same public policies relied
upon in Gilmer and Armendariz. It follows that the same
exception should apply. Therefore, the DRP’s prohibition of
administrative claims is void.

                       4.   Severability

   That the arbitration agreement contains these flawed provi-
sions does not necessarily mean that the entire DRP is sub-
stantively unconscionable. Rather, it might be possible to
sever the one-year limitations provision (even though the
DRP itself does not have a severability clause). See Cal. Civ.
Code § 1670.5(a) (“If the court as a matter of law finds the
contract or any clause of the contract to have been unconscio-
nable at the time it was made the court may refuse to enforce
the contract, or it may enforce the remainder of the contract
without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
unconscionable result.”). The question is whether the offend-
ing clause or clauses are merely “collateral” to the main pur-
pose of the arbitration agreement, or whether the DRP is
“permeated” by unconscionability. Armendariz, 6 P.3d at 696.

   Most of the terms in the DRP are expressly mutual. Unlike
the agreements struck down in Ingle I and Adams,
O’Melveny’s DRP applies almost equally to claims both by
5632             DAVIS v. O’MELVENY & MYERS
and against O’Melveny. The DRP requires arbitration of
claims “that the Firm may have against you or that you may
have against the Firm.” Under the DRP’s terms, arbitration is
required not only for claims by an employee (claims such as
failure to pay overtime), but also for claims an employer
might bring against an employee (such as theft, embezzle-
ment, gross negligence, or destruction of property).

   [21] Nevertheless, the DRP is procedurally unconscionable
and contains four substantively unconscionable or void terms:
(1) the “notice” provision, (2) the overly-broad confidentiality
provision, (3) an overly-broad “business justification” provi-
sion, and (4) the limitation on initiation of administrative
actions. These provisions cannot be stricken or excised with-
out gutting the agreement. Despite a “liberal federal policy
favoring arbitration agreements,” Moses H. Cone Memorial
Hospital, 460 U.S. at 24, a court cannot rewrite the arbitration
agreement for the parties. Given the scope of procedural and
substantive unconscionability, the DRP is unenforceable.
Armendariz, 6 P.3d at 697 (“multiple defects indicate a sys-
tematic effort to impose arbitration on an employee not sim-
ply as an alternative to litigation, but as an inferior forum that
works to the employer’s advantage. . . . Because a court is
unable to cure this unconscionability through severance or
restriction, and is not permitted to cure it through reformation
and augmentation, it must void the entire agreement.”).

                        CONCLUSION

   [22] The arbitration agreement is unconscionable under
California law. We reverse and remand for proceedings not
inconsistent with this opinion.