Court Opinion

ID: 9375135
Source: CourtListenerOpinion
Date Created: 2023-02-24 22:02:10.80641+00
Date Added: 2024-06-11T17:16:56.200621
License: Public Domain

Filed 2/24/23 Rodriguez v. Club CA2/3

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

 California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
 opinions not certified for publication or ordered published, except as specified by rule 8.1115(a). This
 opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a).

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                     DIVISION THREE

 YESSICA SHARLENE                                               B317622
 RODRIGUEZ,
                                                                Los Angeles County
      Plaintiff and Respondent,                                 Super. Ct. No.
                                                                21STCV25955
      v.

 JONATHAN CLUB et al.,

      Defendants and Appellants.

      APPEAL from an order of the Superior Court of Los
Angeles County, Barbara M. Scheper, Judge. Affirmed.
      Parker, Milliken, Clark, O’Hara & Samuelian, Edzyl G.
Magante, David S. McLeod, Kristina L. Hohne, Karl A. Schmidt,
and Joseph P. Wohrle for Defendants and Appellants.
      Valiant Law, Kamran Shahbi, and Aaron Bustos for
Plaintiff and Respondent.
                       INTRODUCTION

      Plaintiff Yessica Sharlene Rodriguez (plaintiff) sued her
former employer Jonathan Club (Club) and its human resources
director (Hiromi Oki) asserting a variety of employment-related
claims. Club and Oki petitioned to compel arbitration of her
claims, citing an arbitration provision found in the employee
handbook and an acknowledgment plaintiff signed at the outset
of her employment indicating that she agreed to be bound by the
arbitration provision. The trial court denied the petition, finding
that the arbitration agreement was unconscionable and therefore
unenforceable. We agree with the court’s conclusion and therefore
affirm.

       FACTS AND PROCEDURAL BACKGROUND

1.    Employment
      Club hired plaintiff as Assistant Director of Human
Resources on June 12, 2019. At the beginning of her employment,
Club provided plaintiff with an employee handbook. The
handbook was at least 47 pages in length and included a section
called “Employee Conduct.” That section laid out a four-step
employee complaint resolution system:
      “Complaint Resolution Procedure [¶] Jonathan Club
recognizes that employees may have questions or problems
regarding their work, working conditions, policies, procedures, or
other work-related issues. In order to actively encourage
employees to express their concerns and to seek resolution of
their questions, the Club has established a problem resolution
procedure for all employees. Jonathan Club is eager to have
employee problems resolved as quickly as possible and in a
considerate manner, free from any reprisals or recrimination for

                                2
using the procedure. The Club retains the right to modify the
following procedure in any way and under such circumstances as
it deems appropriate in its sole discretion. If you have a
complaint, you should take the following steps, as appropriate:
       “Step One [¶] If the issue cannot be resolved informally,
present the complaint to your immediate supervisor. If you do not
feel comfortable raising the issue with your supervisor you may
proceed to step two or three as appropriate. In cases of sexual
harassment in particular, you may proceed directly to step three.
       “Step Two [¶] If the issue cannot be, or is not resolved
through discussion with your supervisor, or if the nature of the
situation is such that you do not wish to discuss it with your
supervisor, you are encouraged to request a meeting with your
department head. In an effort to resolve the problem, the
department head will consider the facts and make appropriate
inquiries, and may review the matter with the Human Resources
Department.
       “Step Three [¶] If, after receiving your department head’s
decision, you are still not satisfied, you must present your
complaint to your Division Head before going to the Human
Resources Director, who will fully consider all relevant facts and
circumstances and issue a recommendation to the General
Manager whose decision is final and binding. [¶] Jonathan Club
does not tolerate any form of retaliation against employees
availing themselves of this procedure.
       “Step Four1 [¶] If the issue is still not resolved to your
satisfaction by the Human Resources Department, Jonathan
Club and you shall resolve, to the fullest extent permitted by law,

1   We will refer to Step Four as the arbitration provision.

                                      3
any and all claims or controversies between us (or between you
and any present or former officer, director, agent, or employee of
Jonathan Club) relating in any manner to your employment or
the termination of your employment shall be resolved [sic] by
final and binding arbitration pursuant to the FAA, except to the
extent that you elect to pursue such claim exclusively in the
Small Claims Division of the Los Angeles Superior Court and
limit your claim to its then jurisdictional amount, currently
$10,000. Except as specifically provided herein, any arbitration
proceeding shall be conducted in accordance with California Code
of Civil Procedure §1280, et seq.
       “Claims subject to arbitration shall include contract claims,
tort claims, and common law claims, as well as claims based on
any federal, state, or local law, statute or regulation (including
but not limited to any claims arising under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act,
the Americans with Disabilities Act, and the California Fair
Employment and Housing Act. Claims arising under the
Employee Retirement Income Security Act (“ERISA”), or
administrative claims of any kind demanding administrative
remedies or benefits filed with any federal or state governmental
agency including the National Labor Relations Board (“NLRB”),
the Equal Opportunities Commission (“EEOC”), Department of
Labor (DOL), Department of Labor Standards Enforcement
(“DSLE”), Fair Employment and Housing Administration
(“FEHA”), federal or state Occupational Health and Safety
Administration (“OSHA”), the Workers’ Compensation Appeals
Board, the Employment Development Department or other
regulatory agencies are not covered by this Agreement. However,
any right to litigate a Claim arising from the determination of

                                 4
any Administrative Agency is subject to mediation and
arbitration under the terms of this Agreement. In addition,
requests for temporary restraining orders and/or preliminary
injunctions in the California Superior Court by either Jonathan
Club or you, where such temporary equitable relief would
otherwise be authorized by law, are allowed pursuant to CCP
Sec. 1281.8. However, any trial on the merits of the underlying
action relating to any such temporary restraining order or
preliminary injunction shall occur in front of and will be decided
by an Arbitrator as set forth in this Policy. Either you or
Jonathan Club may also bring an action in any court of
competent jurisdiction to compel arbitration of a matter covered
by this Policy and to enforce an arbitration award. Labor Code
Sec. 229 subjects are excluded from this Policy, unless the
enforcement of that statute is prohibited by federal or state law.
       “Under this Policy you agree that all claims you may make
shall be adjudicated under the terms of this Agreement, and you
specifically waive your right to act as a representative for any
class or participate as a member in any class or collective action
filed in connection with claims covered by this Agreement,
irrespective of whether the class action is filed in state or federal
court. Any arbitrator selected to arbitrate claims under the terms
of this Agreement has no authority to consolidate or join claims of
other employees or preside over any form of class action.
       “Arbitration is a process in which a dispute is presented to
a neutral third party, the arbitrator, for a final and binding
written reasoned decision. The arbitrator makes this decision
after both sides present their evidence and arguments at the
arbitration hearing. There is no jury and there is only a limited
form of judicial review. If you win, you can be awarded anything

                                 5
you might seek through a court of law. The neutral party runs
the proceeding, which is held privately.
       “Though arbitration is much less formal than a court trial,
it is an orderly proceeding, governed by rules of procedure and
legal standards of conduct.
       “The aggrieved party must give written notice of any claim
subject to arbitration under this Policy to the other no later than
the expiration of the statute of limitations that the laws of the
State of California prescribe for such claim.
       “The parties shall mutually select a neutral arbitrator who
has at least ten (10) years of experience with respect to deciding
disputes between employers and employees under California law.
In the event the parties are unable to mutually agree upon an
arbitrator, the parties shall select an arbitrator as provided for by
the AAA rules governing employment disputes, or some
comparable service providing neutral arbitrators, such as ADR
Services, Inc. or ARC. The arbitration shall be conducted
consistent with the rules of the American Arbitration Association
(“AAA”), as set forth in the AAA National Rules For The
Resolution of Employment Disputes, or its successors rules, as in
effect on the date of the claim, to the extent they are not
inconsistent with any provision of this Agreement, in which event
the provisions of this Agreement shall govern. (A current copy of
these rules is available on the AAA website at Employment
Arbitration Rules & Mediation Procedures or from the Human
Resources department.) The parties shall be entitled to discovery
as provided by the aforesaid AAA rules. At least thirty (30) days
before the arbitration hearing, the parties will exchange lists of
witnesses, including any experts, and copies of all exhibits
intended to be used at the arbitration. Either party may request

                                 6
such remedies and damages that are allowed by California law.
The parties shall be entitled to submit briefs to the arbitrator
within 30 days of the close of the hearing. The Arbitrator shall
issue a written arbitration decision that explains the reasons for
the award, including the essential findings and conclusions on
which the award is based so as to ensure meaningful judicial
review of the decision. The Los Angeles Superior Court shall have
jurisdiction to review the final award for errors of law and shall
have the power to review any award of punitive damages to the
same extent as such damages are reviewable on appeal from a
court judgment.
       “The procedural law of the FAA shall govern the
enforcement and application of this Agreement. The substantive
laws of the State of California shall be used by the arbitrator to
determine the respective rights and obligations of the parties and
in ruling on procedural and substantive issues raised in the
arbitration itself. Jonathan Club shall pay the reasonable fees of
the arbitrator and the expenses associated with the arbitration,
to the extent that such fees and expenses exceed the amount you
would have incurred had you initiated the claim(s) in the state or
federal court having jurisdiction over the claim(s). You will pay to
the arbitration service the filing fees you would have paid had
you initiated the claims(s) in state or federal court. Each party
will pay their own attorney’s fees and expenses associated with
the arbitration unless a party prevails on a statutory claim and
the statute provides that the prevailing party is entitled to
payment of his or her attorneys’ fees. In that case, the arbitrator
may award reasonable attorneys’ fees and costs to the prevailing
party as provided by law. Except as otherwise provided herein,
neither party shall initiate or prosecute any lawsuit in any way

                                 7
related to any arbitrable claim, including without limitation any
claim as to the making, existence, validity, or enforceability of the
agreement to arbitrate. All arbitration hearings shall be
conducted in Los Angeles, California. Nothing herein precludes
you from filing an administrative charge before any agency that
has jurisdiction over an arbitrable claim.
       “You are not required to hire a lawyer to participate in
arbitration and no party may use a non-party lawyer in a Small
Claims Court action. While the Club has access to legal advice
through its outside lawyers, the Club will participate in
arbitration without a lawyer, if you choose not to use a lawyer in
the arbitration and notify the Club in advance of your decision.
       “The Club remains of the view that only in extreme matters
will arbitration or a Small Claims Court action be necessary.
However, if you decide to commence a Small Claims Court
Action, the Human Resources Department will provide you with
either a Small Claims Court Complaint form or a Demand for
Arbitration form.”
       As a condition of her employment, plaintiff was required to
sign an acknowledgment in which she confirmed that she had
received a copy of Club’s employee handbook. As pertinent here,
the acknowledgment included the following provisions:
       “I acknowledge that I have received a copy of Jonathan
Club’s Employee Handbook. I understand that I am responsible
for knowing and adhering to the policies set forth in the
Handbook during my employment with Jonathan Club.
       “The policies contained in the Handbook are not intended
to create any contractual rights or obligations, and Jonathan
Club reserves the right to amend, interpret, modify, or withdraw
any portion of this Handbook at any time.

                                 8
       “I understand and agree that my relationship with
Jonathan Club is at will, which means that my employment is for
no definite period and may be terminated by me or by Jonathan
Club at any time and for any reason with or without cause or
advance notice. I also understand that Jonathan Club may
demote, discipline, transfer, or reassign me or alter the terms of
my employment at any time at its discretion, with or without
cause or advance notice.
       “I understand that the Club has established a system of
binding arbitration for the resolution of problems that is
described in the handbook under the Dispute Resolution section.
I further understand that, as a condition of employment and
continued employment, I agree to submit any complaints or
disputes to the problem resolution and arbitration process
therein described. If not earlier resolved, I agree to abide by and
accept the final decision of the arbitrator with respect to any and
all events that relate[ ] to or arise out of my employment or the
termination of my employment. I further understand that
arbitration represents an alternative to a jury trial and that this
constitutes a waiver of my right to a jury trial.”
       Club apparently terminated plaintiff’s employment on or
about February 3, 2020.
2.      Complaint
     In July 2021, plaintiff obtained a right to sue letter from
the Department of Fair Employment and Housing. She
subsequently filed a complaint against Club and Club’s Director
of Human Resources Hiromi2 Oki. The complaint asserts a broad

2   The complaint erroneously names “Horimi” Oki.

                                   9
range of causes of action: disability discrimination (Gov. Code,
§ 12900 et seq. (FEHA)), failure to engage in the interactive
process (FEHA), failure to provide reasonable accommodation
(FEHA), disparate treatment (FEHA), retaliation (FEHA),
retaliation (Lab. Code, § 1102.5), failure to prevent
discrimination, harassment and retaliation (FEHA), wrongful
termination in violation of public policy, intentional infliction of
emotional distress, negligent infliction of emotional distress,
waiting time penalties (Lab. Code, § 201 et seq.), and negligent
retention and supervision. Plaintiff sought damages in excess of
$2 million and, inter alia, restitution, civil penalties, punitive
damages, litigation costs, and attorney’s fees.
3.    Petition to Compel Arbitration
      3.1.   Petition
      In response to plaintiff’s complaint, Club3 petitioned to
compel arbitration. Club asserted that plaintiff had received a
copy of its employee handbook, the handbook contained an
arbitration provision, and plaintiff signed an acknowledgment
stating she had received the employee handbook. The signed
acknowledgment specifically referenced, in underlined text, the
arbitration provision in the employee handbook and stated that
by signing the acknowledgment, the employee was agreeing to be
bound by the arbitration provision and the arbitration result.
Plaintiff also continued her employment after receiving the
handbook and signing the acknowledgment. Accordingly, Club
argued, plaintiff had agreed to arbitrate the claims set forth in

3Oki was represented by Club’s counsel and moved jointly with Club to
compel arbitration.

                                 10
her complaint. Plaintiff, however, had refused Club’s request to
arbitrate her claims.
      Club asserted that the Federal Arbitration Act (FAA)
applied to the dispute because Club provided services related to
interstate commerce. Further, Club argued that the arbitration
provision and the acknowledgment were valid under the FAA and
required plaintiff to submit her claims to arbitration. Citing Code
of Civil Procedure section 1281.2, Club asked the court to submit
the controversy to arbitration and stay all court proceedings.
      3.2.   Opposition
      Plaintiff opposed the petition on a variety of grounds. First,
plaintiff argued that the signed acknowledgment contained a
provision stating that the handbook did not create any
contractual rights or obligations and therefore no contractual
agreement to arbitrate existed. Second, she asserted no
agreement to arbitrate existed because the arbitration provision
was not conspicuous, was hidden in a section titled “Employee
Conduct,” and she had no notice that the employee handbook
contained an arbitration provision. Third, plaintiff claimed that
because the Club reserved the right to change its policies at any
time, any agreement to arbitrate was illusory and therefore
unenforceable. Fourth, plaintiff contended she had no notice that
she had waived her right to a jury trial and, in the absence of
informed consent, no agreement to arbitrate was created. Fifth,
and finally, plaintiff urged that the arbitration provision was
unenforceable because it was unconscionable. Procedurally, the
provision was unconscionable because it was a contract of
adhesion and was the result of surprise, due to the confusing
language of the acknowledgment and the failure to call the
arbitration provision to the reader’s attention in the employee

                                 11
handbook. Further, plaintiff claimed, the arbitration provision
was substantively unconscionable because it limited plaintiff’s
available remedies and required plaintiff to utilize a one-sided
internal dispute resolution procedure.
      3.3.   Reply
      In reply, Club defended the validity of the arbitration
provision mainly by refuting plaintiff’s claims of
unconscionability.
4.    Ruling and Appeal
       The court heard argument on the petition to compel
arbitration on December 9, 2021. The court adopted its tentative
ruling as its final ruling by minute order of the same date.
       As an initial matter, the court found that a valid agreement
to arbitrate (i.e., the handbook’s arbitration provision and the
signed acknowledgment agreeing to be bound by that provision)
existed and that the FAA applied to that agreement. The court
also found that the agreement was valid under California law
relating to agreements to arbitrate claims brought under the Fair
Employment and Housing Act (Gov. Code, § 12900 et seq.)
(FEHA).4 The court concluded, however, that the arbitration
agreement was unconscionable and therefore unenforceable.
       As to procedural unconscionability, the court noted that the
arbitration agreement was a contract of adhesion and that

4 Our Supreme Court has held that any agreement to arbitrate FEHA
claims must not limit statutory damages, must allow for discovery,
must be in writing and allow for judicial review, and must provide that
the employer pays the costs of arbitration. (Armendariz v. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 101–113
(Armendariz).)

                                  12
plaintiff was required to agree to it as a condition of employment.
In addition, the court agreed with plaintiff’s contention that the
arbitration agreement resulted from surprise because the
acknowledgment referencing the arbitration provision directed
plaintiff to a nonexistent section of the employee handbook titled
“dispute resolution,” whereas the arbitration provision was
actually found in a section titled “employee conduct.” Accordingly,
the court found a high degree of procedural unconscionability
existed.
       The court also found that substantive unconscionability
was present. Specifically, the court found that the arbitration
agreement was one-sided because “[t]he Agreement only seems to
address claims that Plaintiff might bring and does not address
any claims that [Club] may have arising out of the employment
relationship.” In addition, citing Nyulassy v. Lockheed Martin
Corp. (2004) 120 Cal.App.4th 1267 (Nyulassy), the court noted
that under Club’s employer-controlled complaint resolution
procedure, an employee was required to present any complaint to
a supervisor or department head before pursuing arbitration.
That procedure, the court noted, would give Club a “free peek” at
an employee’s case and result in an unfair advantage to Club at
any arbitration.
       In light of its unconscionability findings, the court denied
Club’s petition to compel arbitration. This timely appeal followed.

                         DISCUSSION

      Club contends the court erred in finding that the
arbitration agreement is unconscionable. We disagree.

                                13
1.    Standard of Review
       The applicable standard of review is well established.
“ ‘ “[W]e review the arbitration agreement de novo to determine
whether it is legally enforceable, applying general principles of
California contract law.” ’ [Citation.] Thus, unconscionability is a
question of law we review de novo. [Citation.] To the extent the
trial court’s determination on the issue turned on the resolution
of contested facts, we … review the court’s factual determinations
for substantial evidence. [Citation.]” (Carmona v. Lincoln
Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 82; accord,
OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO) [noting
generally applicable contract defenses, such as unconscionability,
may be applied to invalidate arbitration agreements without
running afoul of the FAA or California law]; Swain v. LaserAway
Medical Group, Inc. (2020) 57 Cal.App.5th 59, 65–66 (Swain).) In
keeping with the strong public policy in favor of arbitration, any
doubts regarding the validity of an arbitration agreement are
resolved in favor of arbitration. (Coast Plaza Doctors Hospital v.
Blue Cross of California (2000) 83 Cal.App.4th 677, 686; and see
Armendariz, supra, 24 Cal.4th at pp. 83, 97–98, abrogated in part
by AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 340
[noting strong public policy in favor of arbitration under both
federal and California law].)
2.    The Arbitration Agreement Is Unconscionable
      Club challenges both the procedural and substantive
unconscionability findings by the court. We address these issues
in turn.

                                14
      2.1.   General Legal Principles
       “The general principles of unconscionability are well
established. … [T]he unconscionability doctrine ‘ “has both a
procedural and a substantive element.” ’ [Citation.] ‘The
procedural element addresses the circumstances of contract
negotiation and formation, focusing on oppression or surprise due
to unequal bargaining power. [Citations.] Substantive
unconscionability pertains to the fairness of an agreement’s
actual terms and to assessments of whether they are overly harsh
or one-sided.’ [Citation.] [¶] Both procedural and substantive
unconscionability must be shown for the defense to be
established, but ‘they need not be present in the same degree.’
[Citation.] Instead, they are evaluated on ‘ “a sliding scale.” ’
[Citation.] ‘[T]he more substantively oppressive the contract
term, the less evidence of procedural unconscionability is
required to’ conclude that the term is unenforceable. [Citation.]
Conversely, the more deceptive or coercive the bargaining tactics
employed, the less substantive unfairness is required
[citations] … ‘The ultimate issue in every case is whether the
terms of the contract are sufficiently unfair, in view of all
relevant circumstances, that a court should withhold
enforcement.’ ” (OTO, supra, 8 Cal.5th at pp. 125–126; Swain,
supra, 57 Cal.App.5th at p. 67; see also Civ. Code, § 1670.5,
subd. (a) [“If the court as a matter of law finds [a] contract or any
clause of the contract to have been unconscionable 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.”].)

                                 15
      2.2.   Procedural Unconscionability
       Our Supreme Court has often explained that “[a]
procedural unconscionability analysis ‘begins with an inquiry
into whether the contract is one of adhesion.’ (Armendariz, supra,
24 Cal.4th at p. 113.) An adhesive contract is standardized,
generally on a preprinted form, and offered by the party with
superior bargaining power ‘on a take-it-or-leave-it basis.’
(Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245
(Baltazar); see Armendariz, at p. 113.) Arbitration contracts
imposed as a condition of employment are typically adhesive (see
Armendariz, at pp. 114–115; Serpa v. California Surety
Investigations, Inc. (2013) 215 Cal.App.4th 695, 704[.])” (OTO,
supra, 8 Cal.5th at p. 126.) The agreement here is no exception
and Club does not contend otherwise. Both the employee
handbook and the acknowledgment were preprinted and
prepared by Club. And plaintiff was told she was required to sign
the acknowledgment form as a condition of her employment—a
classic “take it or leave it” situation.
       Given that the agreement to arbitrate is adhesive, we must
consider “whether circumstances of the contract’s formation
created such oppression or surprise that closer scrutiny of its
overall fairness is required. [Citations.]” (OTO, supra, 8 Cal.5th
at p. 126.) Oppression means that a contract “ ‘ “lack[s] …
negotiation and meaningful choice” ’ ” whereas surprise occurs
when the arbitration “ ‘ “is hidden within a prolix printed
form.” ’ ” (Pinnacle, supra, 55 Cal.4th at p. 247; OTO, at p. 126.)
       The court found that the agreement to arbitrate resulted
from surprise mainly because the acknowledgment states that
the employee agrees to be bound by the “system of binding
arbitration for the resolution of problems that is described in the

                                16
handbook under the Dispute Resolution section.” As the court
noted, the handbook does not contain a section titled “dispute
resolution,” and the arbitration provision is instead found in a
section titled “employee conduct” under the heading “complaint
resolution procedure.” The arbitration provision is found on pages
28 to 30 of a handbook that is at least 47 pages in length.
      Although the acknowledgment is not a model of clarity, it
does highlight, in underlined text, the critical aspects of
arbitration: it is binding, and it delegates the resolution of
complaints to an arbitrator rather than a jury. Specifically, the
following text, which was included in the single-page
acknowledgment and was underlined, explains the agreement the
employee was making by signing the acknowledgment: “I further
understand that, as a condition of employment and continued
employment, I agree to submit any complaints or disputes to the
problem resolution and arbitration process therein described. If
not earlier resolved, I agree to abide by and accept the final
decision of the arbitrator with respect to any and all events that
relate[ ] to or arise out of my employment or the termination of
my employment. I further understand that arbitration represents
an alternative to a jury trial and that this constitutes a waiver of
my right to a jury trial.” In sum, the acknowledgment standing
alone advised plaintiff that by signing it, she agreed to arbitrate
all employment-related claims.
      Plaintiff relies on Bruni v. Didion (2008) 160 Cal.App.4th
1272 (Bruni), to support the court’s finding that a “high degree of
procedural unconscionability” exists due to surprise. Bruni is one
of numerous cases holding that a visually undistinguished
arbitration provision buried in a mountain of paperwork may
support a finding of surprise. (Id. at p. 1293; Knight, et al., Cal.

                                17
Practice Guide: Alternative Dispute Resolution (The Rutter
Group 2022) ¶ 5:150.5c.) But Bruni is distinguishable with
respect to the scale of the surprise. There, homebuyers signed a
voluminous set of documents in connection with a home
purchase. (Bruni at p. 1282.) They were told not to review the
documents at the time of signing and were not given time to do
so. (Ibid.) The arbitration provision at issue was contained on one
page of a 30-page booklet in which the text was single-spaced and
in 10-point type. The provision was not visually distinguished
(such as by the use of boldface or italics) and the booklet itself
was buried within a voluminous stack of documents relating to
the home purchase. And the homebuyers were not even asked to
acknowledge receipt of the booklet. (Id. at p. 1293.) The only
document the homebuyers signed—an application—did state that
the booklet contained an arbitration provision, but it did not
disclose the scope or effect of the provision. (Ibid.)
       Here, by contrast, plaintiff was given the employee
handbook and asked to acknowledge the receipt of the book and
to agree to binding arbitration. The acknowledgment was only
one page, and the arbitration-related text was visually
distinguished with underlining. The acknowledgment also
disclosed the material consequences of binding arbitration.
Further, and unlike Bruni, there is no indication that either the
handbook or the acknowledgment was buried in a stack of other
documents or that plaintiff was told not to read the handbook.
       In sum, we agree with the court’s conclusion that
procedural unconscionability is present, but it is not the “high
degree of procedural unconscionability” found to exist by the trial
court. But “ ‘a finding of procedural unconscionability does not
mean that a contract will not be enforced, but rather that courts

                                18
will scrutinize the substantive terms of the contract to ensure
they are not manifestly unfair or one-sided.’ [Citation.]”
(Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899,
915.) We continue our analysis on that point.
      2.3.   Substantive Unconscionability
       Substantive unconscionability examines the fairness of a
contract’s terms. This analysis “ ‘ensures that contracts,
particularly contracts of adhesion, do not impose terms that have
been variously described as “ ‘ “overly harsh” ’ ” (Stirlen v.
Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532), “ ‘unduly
oppressive’ ” (Perdue v. Crocker National Bank (1985) 38 Cal.3d
913, 925), “ ‘so one-sided as to “shock the conscience” ’
(Pinnacle[, supra,] 55 Cal.4th [at p.] 246), or “unfairly one-sided”
(Little [v. Auto Stiegler, Inc. (2003)] 29 Cal.4th [1064,] 1071). All
of these formulations point to the central idea that the
unconscionability doctrine is concerned not with ‘a simple old-
fashioned bad bargain’ [citation], but with terms that are
“unreasonably favorable to the more powerful party.” ’ (Sonic[-
Calabasas A, Inc. v. Moreno (2013)] 57 Cal.4th 1109[, 1145].)
Unconscionable terms ‘ “impair the integrity of the bargaining
process or otherwise contravene the public interest or public
policy” ’ or attempt to impermissibly alter fundamental legal
duties. (Ibid.) They may include fine-print terms, unreasonably
or unexpectedly harsh terms regarding price or other central
aspects of the transaction, and terms that undermine the
nondrafting party’s reasonable expectations. (Ibid.; see Sanchez,
supra, 61 Cal.4th at p. 911.)” (OTO, supra, 8 Cal.5th at pp. 129–
130.)
       The court found that the arbitration agreement was
substantively unconscionable for two reasons. First, the court

                                 19
concluded that the arbitration agreement “only seems to address
claims that Plaintiff might bring and does not address any claims
that [Club] may have arising out of the employment
relationship.” We agree. As our high court recognized in
Armendariz, “an arbitration agreement imposed in an adhesive
context lacks basic fairness and mutuality if it requires one
contracting party, but not the other, to arbitrate all claims
arising out of the same transaction or occurrence or series of
transactions or occurrences.” (Armendariz, supra, 24 Cal.4th at p.
120.)
       The court relied on Nyulassy, supra, 120 Cal.App.4th 1267
a case in which a predispute arbitration clause contained in the
employment agreement provided, “ ‘If I object to or disagree with
any Lockheed Martin personnel decision relating to or affecting
the terms and conditions of my Lockheed Martin employment ...,
I agree I shall seek to resolve my objection or disagreement
through discussions within successive levels of my supervisory
chain of command, until the objection or disagreement is resolved
or I have had the opportunity to discuss the matter with the Vice
President, Human Resources, or such other senior management
official responsible for human resources matters within the
Lockheed Martin business unit to which I am assigned. I
understand and agree that if the dispute or controversy is not
resolved to my satisfaction by means of such discussion(s), my
sole and exclusive remedy and avenue of redress is through
arbitration proceedings conducted in accordance with the
employment dispute resolution rules of the American Arbitration
Association. ... I understand that by agreeing to arbitration of any
and all such disputes and controversies ... I hereby knowingly,
willingly and advisedly waive any and all rights to pursue

                                20
judicial proceedings or actions and remedies which I might
otherwise have been entitled to pursue, or which might otherwise
have been available to me, in the absence of the waiver
established by this sentence. ...’ ” (Id. at p. 1273, fn. 4,
capitalization omitted.) The agreement also required the
employee to file a demand within 180 days of the employer’s
termination decision and provided the failure to satisfy the
limitations period resulted in a waiver of the employee’s claims.
(Ibid.)
       The Court of Appeal determined the agreement was
unilateral and contained other substantively unconscionable
elements. (Nyulassy, supra, 120 Cal.App.4th at pp. 1282–1283.)
Specifically, the arbitration provision in Nyulassy was triggered
only by the employee’s “objection or disagreement” with a
personnel decision relating to or affecting his or her employment.
By its terms, it applied only to the employee’s claims and not to
the employer’s.
       Here, like Nyulassy, the context and language of the
arbitration provision indicate that it only applies to complaints
by the employee against Club. The arbitration provision is found,
for example, in the section of the employee handbook titled
“employee conduct.” And the introductory paragraph of the
subsection titled “complaint resolution procedure,” for example,
provides context for the four-step process that follows. That
paragraph states that “employees may have questions or
problems regarding their work, working conditions, policies,
procedures, or other work-related issues” and indicates that the
complaint resolution procedure is designed “to actively encourage
employees to express their concerns and to seek resolution of their
questions.” It also states that Club “is eager to have employee

                                21
problems resolved as quickly as possible and in a considerate
manner, free from any reprisals or recrimination for using the
procedure,” again indicating that the process relates to concerns
expressed by employees, rather than Club. The closing sentence
affirms the application of the process: “If you [i.e., the employee]
have a complaint, you should take the following steps, as
appropriate … .” (Italics added.) In sum, like the agreement in
Nyulassy, the first paragraph of the arbitration provision makes
plain that the conflict resolution procedure expressly relates to
complaints by employees and it is therefore substantively
unconscionable. (Armendariz, supra, 24 Cal.4th at p. 119 [holding
arbitration provision that requires only the weaker party to
arbitrate is substantively unconscionable].)
      Club points to some general language contained in the
arbitration provision to the effect that the provision relates to
“any and all claims or controversies” between the employee and
Club. Of course, context is important. The arbitration provision
states at the outset: “Step Four [¶] If the issue is still not resolved
to your satisfaction by the Human Resources Department,
Jonathan Club and you shall resolve, to the fullest extent
permitted by law, any and all claims or controversies between us
(or between you and any present or former officer, director, agent,
or employee of Jonathan Club) relating in any manner to your
employment or the termination of your employment shall be
resolved [sic] by final and binding arbitration pursuant to the
FAA, except to the extent that you elect to pursue such claim
exclusively in the Small Claims Division of the Los Angeles
Superior Court and limit your claim to its then jurisdictional
amount, currently $10,000.” In other words, by its terms the
arbitration provision applies to an employee complaint that has

                                  22
already moved through the first three steps of the conflict
resolution process and has not been resolved to the employee’s
satisfaction. The last portion of the sentence also plainly applies
only to employee complaints, as it states “except to the extent
that you [i.e., the employee] elect to pursue such claim … .”
(Italics added.)
        Club also cites language authorizing both the employee and
Club to seek a restraining order or preliminary injunction as
evidence that the arbitration provision is meant to apply to its
claims against an employee as well as an employee’s claims
against it. But the cited language immediately follows a lengthy
list of the sorts of claims covered by the arbitration provision. As
Club notes, this list is prefaced by broad language indicating it is
for purposes of example. Nevertheless, each claim listed would
only be brought by an employee against an employer, e.g., claims
under state and federal law relating to discrimination on the
basis of age or disability.
        We see additional unconscionability in the judicial review
provision which benefits Club but not the employee. The
arbitration provision provides for limited review of the
arbitrator’s decision, as is the norm, but allows for a full judicial
review of an award of punitive damages—something that would
almost certainly benefit only Club. This provision contributes to
the arbitration provision’s one-sidedness.
        Club cites two cases in support of its contention that the
arbitration provision is bilateral and therefore not substantively
unconscionable, Roman v. Superior Court (2009) 172 Cal.App.4th
1462 and Nguyen v. Applied Medical Resources Corp. (2016) 4
Cal.App.5th 232. These cases are not on point, as they relate to
arbitration provisions that used the language “I agree”

                                 23
throughout the text and the Court of Appeals’ determinations
that such language did not necessarily render an arbitration
provision unilateral. (Roman, at p. 1473 [rejecting argument that
the language “I agree” in an arbitration agreement, standing
alone, rendered the agreement unilateral]; Nguyen, at p. 252
[declining to find that “ ‘the mere inclusion of the words “I agree”
by one party in an otherwise mutual arbitration provision
destroys the bilateral nature of the agreement’ ”].) We do not
ground our analysis in such language here, however.
      The trial court found the arbitration provision
unconscionable for a second reason. Specifically, the court noted
that under the conflict resolution procedure, Club’s “employees
must present their claims to a supervisor or department head
before they may present their claim for arbitration.” The court
determined that “ ‘[g]iven the unilateral nature of the arbitration
agreement, requiring plaintiff to submit to an employer-
controlled dispute mechanism, (i.e., one without a neutral
mediator) suggests that defendant would receive a “free peek” at
plaintiff’s case, thereby obtaining an advantage if and when
plaintiff were to later demand arbitration.’ ” (See Nyulassy,
supra, 120 Cal.App.4th at pp. 1282–1283.)
      On the record before us, the court’s reasoning is
inapplicable. Plaintiff did not use the conflict resolution
procedure before filing her complaint in this action and Club has
not demanded that she do so now. Club has received no
advantage here and therefore we need not consider whether, in
the abstract, Club’s policy is substantively unconscionable on
that basis as well.

                                 24
                           DISPOSITION

      The order denying the petition to compel arbitration is
affirmed. Plaintiff shall recover her costs on appeal.

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                           LAVIN, J.
WE CONCUR:

      EDMON, P. J.

      NGUYEN, J.*

* Judge of the Los Angeles Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.

                                   25