Court Opinion

ID: 2656304
Source: CourtListenerOpinion
Date Created: 2014-03-11 20:28:04.82265+00
Date Added: 2024-06-11T12:36:26.861878
License: Public Domain

Filed 3/11/14
                        CERTIFIED FOR PUBLICATION

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                    DIVISION FOUR

MARTIN KEITH LANE, JR.,                        B245661

        Plaintiff and Respondent,              (Los Angeles County
                                               Super. Ct. No. BC482348)
        v.

FRANCIS CAPITAL MANAGEMENT
LLC,

        Defendant and Appellant.

        APPEAL from a judgment of the Superior Court of Los Angeles County,
Abraham Khan, Judge. Affirmed in part, reversed in part, and remanded with
instructions.
        Seyfarth Shaw, David D. Kadue, and Coby M. Turner for Defendant and
Appellant.
        Jeffer Mangels Butler & Mitchell, and Travis Gemoets for Plaintiff and
Respondent.
                       ________________________________
                                INTRODUCTION
      Francis Capital Management LLC (FCM) appeals from an order denying its
motion to compel a former employee, respondent Martin Keith Lane, Jr., to
arbitrate his employment claims against appellant. FCM contends the trial court
erred in determining (1) that Labor Code section 229 allowed Lane to maintain his
claims in superior court, and (2) that the arbitration agreement was
                1
unconscionable. For the reasons stated below, we conclude that section 229
applies to only one of Lane’s claims, and that the arbitration agreement was not
unconscionable. Accordingly, we affirm in part, reverse in part, and remand for
further proceedings.

                           PROCEDURAL HISTORY
      On April 5, 2012, Lane filed a complaint for damages against FCM, arising
from FCM’s purported failure to pay Lane a bonus, its unlawful labor practices,
and its termination of Lane’s employment. In the complaint, Lane alleged eight
causes of action: (1) wrongful termination in violation of public policy; (2) breach
of oral contract; (3) failure to pay wages; (4) unpaid overtime wages (§ 510);
(5) unpaid meal period wages (§§ 226.7, 512); (6) waiting time penalties (§§ 201,
202, 203); (7) itemized wage statement violations (§ 226); and (8) unfair
competition (Bus. & Prof. Code, § 17200 et seq.). Lane also alleged that he is a
resident of Los Angeles County, California; that FCM is a corporate entity
organized and existing under the laws of the State of California, with its principal
place of business in Los Angeles, California; and that the acts and omissions that
are the subject of the complaint occurred in the County of Los Angeles, California.
1
      All further statutory citations are to the Labor Code, unless otherwise stated.

                                          2
Lane further alleged that he was hired as an analyst in FCM’s Los Angeles office,
and was verbally promised a base annual salary of $150,000, participation in an
annual bonus program (with a minimum annual bonus of $100,000), and additional
benefits, including medical insurance, paid holidays, and vacation. After he was
not paid his bonus for a prior year’s work, Lane complained, and was subsequently
terminated.
      On May 21, 2012, FCM moved, pursuant to Code of Civil Procedure
sections 1281.1 et seq., for an order compelling arbitration of each of the causes of
action asserted in the complaint. In the motion, FCM alleged that the parties were
signatories to a valid, binding arbitration agreement that encompassed all of the
causes of action. FCM also sought a stay of the proceedings pending the
arbitration.
      FCM submitted a copy of the written arbitration agreement executed by the
parties in January 2008. In the two-page agreement, the parties agreed that “all
claims, disputes and controversies arising out of, relating to or in any way
associated with [Lane’s] employment by [FCM] or the termination of that
employment shall be submitted to final and binding arbitration,” except for
worker’s compensation claims and certain administrative claims before federal or
state administrative agencies. The parties further agreed to waive their rights to
trial on “any such arbitrable claims or disputes.” “Examples of such disputes or
claims which must be resolved through arbitration, rather than a court proceeding,
include, but are not limited to, wage, hour and benefit claims; contract claims;
personal injury claims; tort claims; claims for wrongful termination; defamation;
discrimination and harassment, including, without limitation, those claims brought
under Title VII of the Civil Rights Act, the Age Discrimination in Employment
Act, the American with Disabilities Act, the California Family Rights Act, the

                                          3
California Fair Employment and Housing Act, the Family and Medical Leave Act,
the Employment Retirement Income Securities Act of 1974 and any other
analogous state or federal statute or any other employment-related claim of any
kind.”
         The parties further agreed to “arbitrate all such disputes and controversies
according to the applicable employment dispute resolution rules of the American
Arbitration Association then current Employment Arbitration Rules and Mediation
Procedures. The arbitration proceedings will be held in Los Angeles, California or
such other mutually agreeable place as determined by Employee and Company.”
In addition, the parties agreed that “[t]he arbitrator shall have the authority to
award any damages or remedies authorized by law, including, without limitation,
costs and attorneys’ fees.” Finally, the parties agreed that the arbitration
agreement “shall be governed by the laws of the State of California.”
         Lane opposed the motion. Citing Hoover v. American Income Life
Insurance Company (2012) 206 Cal. App. 4th 1193 (Hoover), he contended that his
statutory Labor Code claims were not subject to arbitration. Lane also argued that
the arbitration agreement was procedurally unconscionable, as (1) it was a contract
of adhesion, and (2) he was not provided a copy of the AAA rules. Lane further
alleged that the agreement was substantively unconscionable, as (1) the agreement
contained no express right to discovery, and (2) the AAA rules were incorporated
by reference, requiring him to go to another source to access them.
         In its reply, FCM contended that Hoover was distinguishable, as there, the
arbitration agreement did not expressly encompass “wage, hour and benefit
claims.” In a footnote, FCM noted that Hoover was inapplicable where “federal
preemption applies and the [Federal Arbitration Act (FAA)] is triggered.” FCM

                                            4
suggested that the FAA was triggered in the instant case, as, “Mr. Lane was a
security analyst at a firm which manages capital investments.”
      FCM also argued that the arbitration agreement was not unconscionable, as
(1) the provisions in the agreement did not fall outside the reasonable expectations
of the weaker party, and (2) the provisions were not unduly oppressive or
unconscionable. FCM contended that the failure to attach the American
Arbitration Association (AAA) rules to the arbitration agreement did not render the
agreement procedurally unconscionable, as the AAA rules were expressly
referenced and incorporated without any changes adverse to the weaker party.
FCM further contended that the agreement was not “silent” as to discovery, as
discovery was provided for in the AAA rules.
      On August 6, 2012, the trial court denied FCM’s motion for an order
compelling arbitration. Citing section 229, the court found that absent FAA
preemption, an action for unpaid wages may be maintained without regard to the
existence of any private agreement to arbitrate. Relying on Hoover, the court
found that absent FAA preemption, statutory wage-and-hour claims were not
subject to arbitration. As to the existence of FAA preemption, the court noted that
“[r]eviewing courts have declined to consider the issue of FAA preemption where
the issue was not addressed or fully developed in the trial court.” Finally, the court
found the agreement procedurally and substantively unconscionable, but did not
specify in what manner the agreement was unconscionable.
      On December 11, 2012, FCM filed a timely notice of appeal from the order
denying its motion to compel arbitration.

                                            5
                                     DISCUSSION
       A.     Standard of Review
       Under Code of Civil Procedure section 1281.2, a party to an arbitration
agreement may petition the trial court to order the parties to the agreement to
arbitrate a dispute. The court shall order arbitration, unless it determines that the
right to compel arbitration has been waived by petitioner, that grounds exist for
rescission of the agreement, or that a party to the agreement is also a party to a
pending court action or special proceeding with a third party.
       The trial court may resolve motions to compel arbitration in summary
proceedings, in which “[t]he petitioner bears the burden of proving the existence of
a valid arbitration agreement by the preponderance of the evidence, and a party
opposing the petition bears the burden of proving by a preponderance of the
evidence any fact necessary to its defense. [Citation.] In these summary
proceedings, the trial court sits as a trier of fact, weighing all the affidavits,
declarations, and other documentary evidence, as well as oral testimony received at
the court’s discretion, to reach a final determination. [Citation.]” (Engalla v.
Permanente Medical Group, Inc. (1997) 15 Cal. 4th 951, 972.) “We will uphold
the trial court’s resolution of disputed facts if supported by substantial evidence.
[Citation.] Where, however, there is no disputed extrinsic evidence considered by
the trial court, we will review its arbitrability decision de novo.” (Nyulassy v.
Lockheed Martin Corp. (2004) 120 Cal. App. 4th 1267, 1277; Giuliano v. Inland
Empire Personnel, Inc. (2007) 149 Cal. App. 4th 1276, 1284 (Giuliano) [same].)

       B.     By its Terms, the Arbitration Agreement Encompassed Lane’s Claims
       In the trial court, FCM showed the existence of a written agreement to
arbitrate all of the causes of action alleged in Lane’s agreement. Prior to Lane’s

                                            6
employment, the parties entered into a written agreement to arbitrate all
employment claims, including all “wage, hour and benefit claims,” “contract
claims,” and “claims for wrongful termination.” Under the plain language of the
arbitration agreement, all of Lane’s causes of action are subject to arbitration.
      The trial court, however, determined that grounds existed to rescind or void
the arbitration agreement. (See Armendariz v. Foundation Health Psychcare
Services, Inc. (2000) 24 Cal. 4th 83, 98, fn. 4 (Armendariz) [although the Code of
Civil Procedure uses “‘“revocation of a contract,”’” “‘rescission’” or “‘voiding’”
of an arbitration agreement is better terminology].) Specifically, the court
determined that (1) the statutory Labor Code claims could be maintained pursuant
to section 229 and Hoover, supra, 206 Cal. App. 4th 1193, and (2) the arbitration
agreement was unconscionable.

      C.     Only Lane’s Third Cause of Action Is Subject to Section 229
      Section 229 provides that “[a]ctions to enforce the provisions of this article
for the collection of due and unpaid wages claimed by an individual may be
maintained without regard to the existence of any private agreement to arbitrate,”
except as to an agreement to arbitrate in a collective bargaining agreement.
Section 229 is found in article 1 of Division 2, Part I, Chapter 1 of the Labor Code,
encompassing sections 200 through 244. Thus, if a cause of action seeks to collect
due and unpaid wages pursuant to sections 200 through 244, that action can be
maintained in court, despite an agreement to arbitrate.
      In reviewing the eight causes of action in the complaint, we conclude that
only the third falls under section 229. That cause of action seeks to collect unpaid
wages due Lane for his labor. FCM concedes that this cause of action falls within

                                           7
the purview of section 229, and that in the absence of preemption, it may be
maintained in superior court.
      The first, second, fourth and eighth causes of action, however, do not assert
claims under sections 200 through 244 of the Labor Code. As to the fifth cause of
action, styled “Failure To Pay Unpaid Meal and Rest Period Wages” under section
226.7, it is not, in fact, an action for the “collection of due and unpaid wages,” but
one for a failure to provide mandated meal or rest breaks. (See Kirby v. Immoos
Fire Protection, Inc. (2012) 53 Cal. 4th 1244, 1256-1257 (Kirby) [“[A] section
226.7 claim is not an action brought for nonpayment of wages; it is an action
                                                      2
brought for nonprovision of meal or rest breaks.”].) Similarly, as to the sixth and
seventh causes of action, they do not seek to collect due and unpaid wages; rather,
they are actions for “waiting time penalties” (sixth cause of action) and for failure
to provide itemized wage statements (seventh cause of action). Moreover, to the
extent those causes of action could be interpreted to seek “due and unpaid wages,”
they are duplicative of the third cause of action. In short, under section 229, Lane
can maintain only his third cause of action against FCM.
      Lane contends that under the holding in Hoover, the statutory Labor Code
claims set forth in his fourth, fifth, sixth, and seventh causes of action are not
arbitrable, because the arbitration agreement failed to specify the Labor Code
provisions at issue. Lane’s reliance on Hoover is misplaced.

2
       In the complaint, Lane also sought interest, costs and attorney fees under
sections 218.5 and 218.6. As those remedies are not “due and unpaid wages,” the
citation to those Labor Code sections does not bring the cause of action within the
scope of section 229. In addition, the Kirby court held that a plaintiff who prevails
on a section 226.7 claim is not entitled to attorney fees and costs under section
218.5. (Kirby, supra, 53 Cal.4th at p. 1259.)

                                           8
      In Hoover, the plaintiff worked as a sales agent for a life insurance company.
Before working as an agent, she executed an agent contract which was
incorporated into a collective bargaining agreement (CBA). The agent contract
specifically stated that an agent was an independent contractor, not an employee.
The agent contract had an arbitration clause, requiring the parties to arbitrate “all
disputes, claims, questions, and controversies of any kind or nature arising out of
or relating to” the agent contract. (Hoover, supra, 206 Cal.App.4th at p. 1199.)
The CBA also expressly disclaimed that agents were employees. It included a
grievance procedure, but no separate arbitration agreement. (Id. at pp. 1198-1199.)
      After the plaintiff was terminated, she asserted statutory labor claims against
the insurance company under sections 203, 1194 and 2802. (Hoover, supra,
206 Cal.App.4th at p. 1197.) The company moved for an order compelling
arbitration, but the trial court denied the motion. The appellate court affirmed,
holding that the company had waived its right to seek arbitration by its prejudicial
litigation tactics. (Id. at p. 1203.) The appellate court further determined that even
if the employer had not waived its right to seek arbitration, “state statutory wage
and hour claims are not subject to arbitration, whether the arbitration clause is
contained in the CBA or an individual agreement.” (Id. at pp. 1206, 1198.) In
reaching this determination, the appellate court first rejected the company’s federal
preemption argument, concluding that it had failed to meet its burden of proving
that the subject agreement involved interstate commerce. (Id. at p. 1208.) The
court then noted that the plaintiff’s claims were based on statutory rights that were
not subject to negotiation or waiver. (Ibid.) In order to waive the right to a judicial
forum for resolving these statutory rights, the court held that “there must be a clear
and unmistakable waiver of a judicial forum. [Citations.] In determining whether
there has been a sufficiently explicit waiver of a judicial forum, courts look to the

                                           9
generality of the arbitration clause; the explicit incorporation of statutory
requirements; and inclusion of specific statutes, identified by name or citation.
[Citation.]” (Ibid.) The court then determined that the general language of the
arbitration clause in the agent contract did not evidence a sufficiently explicit
waiver of the plaintiff’s statutory employment claims. According to the court,
“[e]ven if the parties could resolve statutory rights violations through arbitration,
there is no provision in the agent contract or the CBA where Hoover agreed to do
so. Even if the issues of minimum wage, reimbursement, and earned wages could
be construed as subjects of the two contracts, Hoover still had not agreed to
arbitrate her statutory labor claims.” (Id. at p. 1208).
      The instant case is readily distinguishable from Hoover. Here, the
arbitration agreement not only expressly included “all claims, disputes and
controversies arising out of, relating to or in any way associated with [Lane’s]
employment by [FCM]”; it further specified that these arbitrable claims or disputes
included, but were not limited to, “wage, hour and benefit claims” and “any other
analogous state or federal statute or any other employment-related claim of any
kind.” This language clearly evidences an intent by the parties to arbitrate Lane’s
statutory Labor Code claims.
      Moreover, the language in Hoover cited by Lane is overly broad. In support
of the assertion that “state statutory wage and hour claims are not subject to
arbitration” in an individual agreement, Hoover cites section 229. (Hoover, supra,
206 Cal.App.4th at pp. 1206, 1207.) As discussed above, the plain language of
section 229 is limited to actions for the collection of due and unpaid wages brought
under sections 200 through 244; section 229 does not apply to all statutory wage
and hour claims.

                                          10
        In addition, Hoover’s broad presumption against the arbitration of statutory
labor claims conflicts with Armendariz. There, the California Supreme Court held
that, under the California Arbitration Act, an arbitration agreement could
encompass all statutory employment claims not expressly prohibited by the
Legislature. (Armendariz, supra, 24 Cal.4th at p. 98.) As an example, the court
noted that employment claims brought under the Fair Employment and Housing
Act (FEHA) could be arbitrated, because the Legislature did not prohibit the
arbitration of FEHA claims. (Ibid.)
        Likewise, the fact that a claim is based on a nonnegotiable or unwaivable
right does not preclude arbitration of that claim. As Armendariz made clear, “‘[b]y
agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights
afforded by the statute; it only submits to their resolution in an arbitral, rather than
a judicial forum.’” (Armendariz, supra, 24 Cal.4th at pp. 98-99, citing Mitsubishi
Motors v. Soler Chrysler-Plymouth (1985) 473 U.S. 614, 628.) Thus, even
statutory claims based on nonnegotiable or unwaivable rights may be subject to
arbitration agreements, provided that arbitration allows the plaintiff to fully
vindicate his or her statutory cause of action in the arbitral forum. (Id. at pp. 100-
102.)
        Finally, Lane’s assertion that an arbitration agreement must specifically
name the Labor Code provisions in order to bring those statutory labor claims
within the scope of the arbitration agreement has no support in California law.
Rather, the only requirement is that the language of the contract clearly evidence
an intent by the parties to arbitrate the statutory labor claims. Hoover itself states
only the unremarkable observation that an explicit reference to a statute in an
arbitration agreement shows a clear intent to arbitrate claims arising from that
statute. An explicit reference to a statute, however, is not required for a California

                                           11
court to find that statutory claims are within the scope of the arbitration agreement.
For example, in Spellman v. Securities Annuities & Ins. Services, Inc. (1992)
8 Cal. App. 4th 452 (Spellman), the appellate court held that an agreement to
arbitrate “‘any dispute, claim, or controversy arising out of or in connection with
the business of any member of the Association . . . [or] between or among
members . . . and others” was sufficient to encompass an employee’s racial
                                                                                  3
discrimination claim brought under the FEHA. (Id. at p. 463, italics omitted.)
Here, the language in the arbitration agreement is much more specific than that in
Spellman. It expressly identifies as subject to arbitration “wage, hour and benefit
claims,” cites numerous California employment statutes, and includes the phrase
“any other analogous state or federal statute or any other employment-related claim
of any kind.” In short, FCM’s statutory Labor Code claims are subject to
arbitration, except for the third cause of action which, absent preemption, may be
maintained pursuant to section 229.

      D.     FCM Did Not Demonstrate FAA Preemption of Section 229.
      Seeking to avoid application of section 229 to Lane’s third cause of action,
FCM contends that in the instant case, section 229 was preempted by the FAA.

3
       A federal court examining the same arbitration language reached the
opposite conclusion from the Spellman court’s. (See Prudential Ins. Co. of
America v. Lai (9th Cir. 1994) 42 F.3d 1299 (Lai).) In Lai, the Ninth Circuit held
that a plaintiff could not be compelled to arbitrate her sexual discrimination case
under the arbitration agreement because it did not “describe the types of disputes
that were to be subject to arbitration” or “even refer to employment disputes.” (Id.
at p. 1305.) Lai, however, is contrary to California contract law. (Brookwood v.
Bank of America (1996) 45 Cal. App. 4th 1667, 1673 [rejecting Lai and determining
arbitration clause applied to plaintiff’s causes of action].) It is also distinguishable
from the instant case in which the arbitration clause, by its terms, clearly
encompassed Lane’s claims.

                                           12
(See Perry v. Thomas (1987) 482 U.S. 483, 492 [where FAA applies, it preempts
section 229].) In the trial court, FCM’s only mention of FAA preemption came in
a footnote, and the court’s rejection of the argument was predicated on FCM’s
failure to develop a factual record in support of preemption. Assuming the
argument was preserved for appeal, we agree that FCM neither sought to nor
succeeded in presenting facts sufficient to support a finding of FAA preemption.
      A party seeking to enforce an arbitration agreement has the burden of
showing FAA preemption. (Woolls v. Superior Court (2005) 127 Cal. App. 4th 197,
211 (Woolls).) For example, a petitioner seeking an order to compel arbitration
must show that the subject matter of the agreement involves interstate commerce.
(Ibid.; Giuliano, supra, 149 Cal.App.4th at p. 1286 [same].) Thus, in Giuliano, the
employer supported its motion to compel arbitration with the declaration of its
executive vice-president and chief legal officer that: “(1) [Employer] engages in
interstate commerce by acquiring, developing, and selling residential and
commercial properties in both California and Arizona, and by shipping supplies
from other states to California and Arizona; and (2) [employee] actively assisted
[employer]’s multistate activities by negotiating loans with a bank that is
headquartered outside of California.” (Giuliano, supra, 149 Cal.App.4th at
p. 1283.) The complaint also alleged that the employer was engaged in “‘business
throughout Arizona and California,’” and the employee admitted that he
“‘attend[ed] meetings, site visits and grand opening ribbon cuttings’” in other
states. On this record, this court found the interstate nature of the employment
undisputed. (Id. at p. 1287.) Here, in contrast, the complaint alleged that Lane is a
California resident and FCM a California corporate entity, doing business and with
its principal place of business in California. Lane never admitted to being engaged
in interstate commerce, and FCM produced no declaration about the nature of its

                                         13
business or the scope of Lane’s employment. FCM’s bare assertion that “Mr. Lane
was a security analyst at a firm which manages capital investments” is insufficient
to support a finding that Lane’s employment involved interstate commerce.
      The instant case more closely resembles Woolls. There, the petitioner
sought to enforce an arbitration agreement that failed to comply with the disclosure
requirements mandated in Business and Professions Code section 7191. (Woolls,
supra, 127 Cal.App.4th at p. 200.) He argued that the statutory provision was
preempted by the FAA, but submitted no declarations to show the transaction at
issue involved interstate commerce. (Id. at p. 213). The court found the petitioner
had failed to present a factual record establishing preemption. (Ibid.) Similarly,
here, although FCM raised FAA preemption in a footnote, it submitted no
declarations or other evidence to establish the facts necessary to show the
employment relationship involved interstate commerce.
      FCM’s reliance on Thorup v. Dean Witter Reynolds, Inc. (1986)
180 Cal. App. 3d 228 is misplaced. There, the appellate court found it “indisputable
that an employment contract involving an account executive of a brokerage firm is
a contract ‘involving commerce’ and is subject to the Act.” (Id. at p. 233.) Here,
there is no evidence from which this court could determine whether Lane is an
“account executive” or similar employee, or whether FCM is a “brokerage firm”
similar to Dean Witter. In short, FCM has not met its burden to show federal
preemption.

      E.      The Arbitration Agreement Was Not Unconscionable
      As an alternative basis for its order, the trial court determined that the
arbitration agreement was unconscionable, and, thus void. The court cited
numerous and conflicting cases on unconscionability, but did not specify in what

                                          14
manner the arbitration agreement was unconscionable. Based on the briefing
below and on appeal, we discern the following grounds that purport to render the
agreement unconscionable. First, the agreement was procedurally unconscionable
because it was a contract of adhesion. Second, the agreement was procedurally
unconscionable because a copy of the arbitration rules was not attached. Third, the
agreement was substantively unconscionable because it incorporated arbitration
rules, thus requiring the parties to consult another source to obtain them. Finally,
the agreement was substantively unconscionable because it contained no express
provision for discovery rights.
      In considering these grounds for unconscionability, we draw upon the
following principles enunciated by the California Supreme Court: “The party
resisting arbitration bears the burden of proving unconscionability. [Citations.]
Both procedural unconscionability and substantive unconscionability must be
shown, but ‘they need not be present in the same degree’ and are evaluated on ‘“a
sliding scale.”’ (Armendariz, supra, 24 Cal.4th at p. 114.) ‘[T]he more
substantively oppressive the contract term, the less evidence of procedural
unconscionability is required to come to the conclusion that the term is
unenforceable, and vice versa.’ [Citation.]” (Pinnacle Museum Tower Assn. v.
Pinnacle Market Development (US), LLC (2012) 55 Cal. 4th 223, 247 (Pinnacle).)

             1.    Procedural Unconscionability
      “[P]rocedural unconscionability requires oppression or surprise.
‘“Oppression occurs where a contract involves lack of negotiation and meaningful
choice, surprise where the allegedly unconscionable provision is hidden within a
prolix printed form.”’” (Pinnacle, supra, 55 Cal.4th at p. 247, quoting Morris v.
Redwood Empire Bancorp (2005) 128 Cal. App. 4th 1305, 1317.) Lane asserted

                                         15
below and argues on appeal that the arbitration agreement was a contract of
adhesion. The trial court made no finding on this issue. However, assuming the
agreement was one of adhesion, courts have consistently held that that fact alone is
insufficient to invalidate an arbitration agreement: “Rather, an adhesion contract
remains fully enforceable unless . . . the provision falls outside the reasonable
expectations of the weaker party” or it is unconscionable. (Fittante v. Palm
Springs Motors, Inc. (2003) 105 Cal. App. 4th 708, 722.) Here, the arbitration
agreement is just two pages and contains no terms “hidden” in the form. Based on
its plain language, including its express reference to “wage, hour and benefit
claims,” its application to Lane’s claims is clearly within the reasonable
expectations of the parties.
      The trial court apparently found procedural unconscionability based on
FCM’s failure to attach a copy of the “applicable employment dispute resolution
rules of the [AAA’s] then current Employment Arbitration Rules and Mediation
Procedures” to the arbitration agreement. The court cited Trivedi v. Curexo
Technology Corp. (2010) 189 Cal. App. 4th 387, 393 (Trivedi) for the proposition
that the failure to provide a copy of the arbitration rules supported a finding of
procedural unconscionability. (See also Sparks v. Vista Del Mar Child & Family
Services (2012) 207 Cal. App. 4th 1511, 1523 [following Trivedi but also finding
arbitration agreement procedurally unconscionable as a contract of adhesion];
Zullo v. Superior Court (2011) 197 Cal. App. 4th 477, 485-486 (Zullo) [aside from
arbitration agreement being a contract of adhesion, failure to attach arbitration
rules added “a bit to the procedural unconscionability”].) We agree that the failure
to attach the arbitration rules could be a factor in support of a finding of procedural
unconscionability, but disagree that the failure, by itself, is sufficient to sustain a
finding of procedural unconscionability. (See Peng v. First Republic Bank (2013)

                                           16
219 Cal. App. 4th 1462, 1472 [“failure to attach the AAA rules, standing alone, is
insufficient grounds to support a finding of procedural unconscionability”].)
      The failure to attach a copy of arbitration rules could be a factor supporting a
finding of procedural unconscionability where the failure would result in surprise
to the party opposing arbitration. All of the cases relied upon by Trivedi can be
analyzed under this principle. For example, in Gutierrez v. Autowest, Inc. (2003)
114 Cal. App. 4th 77, the arbitration clause was on the back of the leasing
agreement, printed in eight-point typeface, and included with numerous other
provisions. (Id. at p. 84.) The consumer was never informed of the arbitration
clause, never required to initial the clause, and never offered an opportunity to
negotiate over its inclusion in the lease or to agree upon its specific terms. (Id. at
p. 89.) On those facts, the court was not required to -- and did not -- rely upon the
failure to attach a copy of the arbitration rules to find the arbitration clause
procedurally unconscionable. (Ibid.)
      Similarly, in Patterson v. ITT Consumer Financial Corp. (1993)
14 Cal. App. 4th 1659, although the appellate court noted that the plaintiff
borrowers were not given a copy of the arbitration rules, the court never relied on
that fact to find procedural unconscionability. Rather, the court found the
arbitration clause procedurally unconscionable because (1) it was contained in a
contract of adhesion, (2) the arbitration rules were unclear as to the location of the
arbitration, (3) it was outside the reasonable expectations of California consumers
that arbitration would take place in Minnesota, and (4) the likely result of the
procedures set forth in the arbitration rules was to deny California consumers a
“participatory hearing.” (Id. at pp. 1665-1666.)
      The ambiguity of the arbitration agreement and possible surprising adverse
results were also the issues in Harper v. Ultimo (2003) 113 Cal. App. 4th 1402.

                                           17
There, the arbitration agreement provided that arbitration would be in accordance
with “Uniform Rules for Better Business Bureau Arbitration,” but did not specify
“whether an arbitration would be conducted under the Better Business Bureau rules
as of the time of contracting, or at the time of arbitration.” (Id. at p. 1407.) Thus,
the court noted, “even a customer who takes the trouble to check the Better
Business Bureau arbitration rules before signing the contract may be in for a
preliminary legal battle in the event that Better Business Bureau arbitration rules
were to become substantively less favorable in the interim.” (Id. at p. 1407.) The
court further found (1) that the arbitration agreement precluded tort damages and
punitive damages, and (2) that the failure to attach the arbitration rules allowed the
defendant to “artfully” hide the inability of a consumer to receive full relief,
resulting in a “nasty shock” to the consumer. (Id. at p. 1406.)
      Similarly, in Fitz v. NCR Corp. (2004) 118 Cal. App. 4th 702 (Fitz), the
arbitration provision in the employment agreement allowed a different and separate
written policy to limit the discovery permitted under AAA rules, yet the employer
did not disclose that policy to its employees. (Id. at pp. 721-723.) In addition, the
appellate court found not only that the arbitration agreement was a contract of
adhesion, but that there was a “high degree of oppressiveness.” (Id. at p. 722.) As
Fitz and the preceding cases show, the failure to attach the arbitration rules was of
“minor significance to [the courts’] analysis” of procedural unconscionability.
(Bigler v. Harker School (2013) 213 Cal. App. 4th 727, 737 [finding no procedural
unconscionability despite failure to provide a copy of AAA rules].)
      Here, we conclude the failure to attach a copy of the AAA rules did not
render the agreement procedurally unconscionable. There could be no surprise, as
the arbitration rules referenced in the agreement were easily accessible to the
parties -- the AAA rules are available on the Internet. (See Boghos v. Certain

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Underwriters at Lloyd’s of London (2005) 36 Cal. 4th 495, 505, fn. 6 [full, up-to-
date text of AAA rules is available on AAA’s Internet site]). In addition, Lane -- a
formerly well-paid professional analyst -- does not appear to lack the means or
capacity to locate and retrieve a copy of the referenced rules. Finally, the
arbitration agreement at issue clearly specified a particular set of AAA rules, and it
did not modify those rules in any manner. In the absence of oppression or surprise,
we decline to find the failure to attach a copy of the AAA rules rendered the
agreement procedurally unconscionable. (Cf. Dotson v. Amgen, Inc. (2010)
181 Cal. App. 4th 975, 981 [“Dotson is not an uneducated, low-wage employee
without the ability to understand that he was agreeing to arbitration. He was the
opposite -- a highly educated attorney, who knowingly entered into a contract
containing an arbitration provision in exchange for a generous compensation and
benefits package. In such circumstances, the courts have found a minimum degree
of procedural unconscionability.”].)

             2.    Substantive Unconscionability
      “Substantive unconscionability pertains to the fairness of an agreement’s
actual terms and to assessments of whether they are overly harsh or one-sided.
[Citations.] A contract term is not substantively unconscionable when it merely
gives one side a greater benefit; rather, the term must be ‘so one-sided as to “shock
the conscience.”’” (Pinnacle, supra, 55 Cal.4th at p. 246, quoting 24 Hour
Fitness, Inc. v. Superior Court (1998) 66 Cal. App. 4th 1199, 1213.)
      The trial court apparently found the contract substantively unconscionable
because it incorporated by reference the AAA rules. We disagree. Like any other
contract, an arbitration agreement may incorporate other documents by reference.
(Wolschlager v. Fidelity National Title Ins. Co. (2003) 111 Cal. App. 4th 784, 790.)

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For example, in Tutti Mangia Grill, Inc. v. American Textile Maintenance Co.
(2011) 197 Cal. App. 4th 733, this court affirmed the confirmation of an award
following arbitration pursuant to an agreement that incorporated “the rules of the
American Arbitration Association.” (Id. at p. 736.) An arbitration agreement
could, of course, impermissibly incorporate rules that are themselves substantively
unconscionable, but we decline to hold that the act of incorporation alone is
sufficient to sustain a finding of substantive unconscionability.
      The trial court also appeared to find the arbitration agreement was
substantively unconscionable because the agreement contained no express
provision for discovery. We disagree. The agreement incorporated the rules of the
AAA, which give the arbitrator the authority “‘to order such discovery, by way of
deposition, interrogatory, document production, or otherwise, as the arbitrator
considers necessary to a full and fair exploration of the issues in dispute, consistent
with the expedited nature of arbitration.’” (Roman v. Superior Court (2009)
172 Cal. App. 4th 1462, 1475 (Roman).) As to discovery sufficient to vindicate
unwaivable statutory rights, in Armendariz, the California Supreme Court
concluded that by agreeing to arbitrate statutory claims, the employer impliedly
agreed to all discovery necessary to adequately arbitrate the claims. (Armendariz,
supra, 24 Cal.4th at pp. 105-106.) The Roman court determined that “[t]here
appears to be no meaningful difference between the scope of discovery approved
in Armendariz and that authorized by the AAA employment dispute rules.”
(Roman, supra, 172 Cal.App.4th at p. 1476.) Thus, whether implied or in fact, the
discovery permitted by the expressly referenced AAA rules satisfied the
requirements of Armendariz for arbitration of statutory claims. In short, the lack of
an express provision for discovery did not render the arbitration agreement
substantively unconscionable. (See Sanchez v. Western Pizza Enterprises, Inc.

                                          20
(2009) 172 Cal. App. 4th 154, 177 [“[A]bsence of express provisions requiring a
written arbitration award and allowing discovery does not render the arbitration
agreement unconscionable. Rather, those terms are implied as a matter of law as
part of the agreement.”].) Aside from the issues discussed, Lane does not argue
that there are any overly harsh or one-sided provisions in the arbitration agreement.
Thus, we discern no basis to support a finding of substantive unconscionability.
Because the arbitration agreement was not unconscionable, the trial court erred in
denying FCM’s motion to compel arbitration as to all but the third cause of action.
      As FCM moved for an order compelling arbitration under Code of Civil
Procedure section 1281.2 and for a stay of proceedings pending arbitration under
Code of Civil Procedure section 1281.4, we shall remand for the trial court to issue
an order compelling arbitration on Lane’s first, second, fourth, fifth, sixth, seventh
and eighth causes of action, and to issue an order staying the proceedings on the
third cause of action. (See Code Civ. Proc., §§ 1281.2 [“court shall order the
petitioner and the respondent to arbitrate the controversy if it determines that an
agreement to arbitrate the controversy exists”]; 1281.4 [“If an application has been
made . . . for an order to arbitrate a controversy which is an issue involved in an
action or proceeding pending before a court of this State . . . , the court in which
such action or proceeding is pending shall, upon motion of a party to such action or
proceeding, stay the action or proceeding until the application for an order to
arbitrate is determined and, if arbitration of such controversy is ordered, until an
arbitration is had in accordance with the order to arbitrate or until such earlier time
as the court specifies.”].)

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                                  DISPOSITION
      The judgment is affirmed in part and reversed in part; the matter is remanded
for further proceedings in light of this opinion. Each party shall bear its own costs
on appeal.

             CERTIFIED FOR PUBLICATION.

                                                     MANELLA, J.

We concur:

EPSTEIN, P. J.

WILLHITE, J.

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