Court Opinion

ID: 3182591
Source: CourtListenerOpinion
Date Created: 2016-03-03 22:18:04.700464+00
Date Added: 2024-06-11T14:19:52.830379
License: Public Domain

Filed 3/3/16 Viamontes v. Adriana’s Insurance Services 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                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                DIVISION THREE

LISET VIAMONTES et al.,                                               B253407

         Plaintiffs and Respondents,                                  (Los Angeles County
                                                                      Super. Ct. No. BC502472)
         v.

ADRIANA’S INSURANCE SERVICES,
INC., et al.,

         Defendants and Appellants.

         APPEAL from an order of the Superior Court of Los Angeles County,
Elihu M. Berle, Judge. Reversed with directions.

         Michelman & Robinson, Mona Z. Hanna, W. Spencer Hammer, III and Robin
James for Defendants and Appellants.

         Matern Law Group, Matthew J. Matern and Rania S. Habib for Plaintiffs and
Respondents.

                                            _____________________
                                     INTRODUCTION
       Defendants Adriana’s Insurance Services, Inc. (Adriana’s) and Veronica’s
Insurance Services, Inc. (Veronica’s) appeal from an order denying their petitions to
arbitrate employment-related claims brought by their employees, Plaintiffs Aldo Alpizar
and Liset Viamontes, in the Superior Court. Defendants based their petitions on stand-
alone Agreements for Binding Arbitration (the Agreements) that both Plaintiffs
admittedly signed as a condition of their employment, and a separate Arbitration
Agreement section of Defendants’ Employee Handbook (the Handbook) that was
purportedly incorporated into the Agreements by reference. Plaintiffs opposed the
petitions on the principal grounds that there had been no meeting of the minds because
Plaintiffs never received a copy of the Handbook, and that the Agreements were
unconscionable because they required only Plaintiffs, but not Defendants, to arbitrate
their employment-related disputes. The trial court found Defendants’ evidence
insufficient to establish that Plaintiffs had received the Handbook in connection with
signing the Agreements and, on that basis, concluded the Agreements, standing alone,
were unconscionable. The court denied Defendants’ petitions to compel arbitration
accordingly.
       On appeal, Defendants contend the trial court’s finding that Plaintiffs had not
received the Handbook was an insufficient basis for denying their petitions to arbitrate.
Defendants also argue the trial court abused its discretion by denying their request for a
continuance to submit additional evidence proving Plaintiffs had in fact received the
Handbook. While we agree with Defendants that the signed Agreements were sufficient
to establish Plaintiffs agreed to arbitrate their employment-related claims, we disagree
with their contention that the trial court’s finding was insufficient to support its
unconscionability ruling. Nevertheless, to the extent it was the trial court, at the hearing,
that first linked unconscionability to the absence of evidence establishing Plaintiffs
received the Handbook, we conclude it was an abuse of discretion to deny Defendants’
request for a brief continuance to submit additional evidence on this pivotal factual issue.
Accordingly, we will reverse the order and direct the trial court to allow Defendants to

                                               2
submit the additional evidence. Plaintiffs shall have an opportunity to respond to the new
evidence before the court rules on the petitions.
                    FACTS AND PROCEDURAL BACKGROUND
       Defendants Adriana’s and Veronica’s are companies licensed to sell auto
insurance policies in California and Texas. Alpizar is a former employee of Adriana’s.
Viamontes is a former employee of Veronica’s. Plaintiffs allege Adriana’s and
Veronica’s are affiliated entities, and the individual defendants—the founders and chief
executive officers of Adriana’s and Veronica’s—are the companies’ alter egos.
       Plaintiffs filed a putative class action complaint against Defendants in the superior
court, wherein they allege Defendants committed various wage and hour violations
prohibited under the Labor Code. The complaint asserts causes of action for (1) failure to
provide required meal periods; (2) failure to provide required rest periods; (3) failure to
pay overtime wages; (4) failure to pay minimum wages; (5) failure to pay all wages due
to discharged and quitting employees; (6) failure to maintain required records; (7) failure
to furnish accurate itemized statements; (8) injunctive relief under the Unfair
Competition Law, Business and Professions Code section 17200 et seq. (UCL); and
(9) penalties under the Labor Code Private Attorney General Act, Labor Code section
2698 et seq. (PAGA).
       In response to the complaint, Defendants filed substantively identical petitions to
compel arbitration of each Plaintiff’s individual claims. Defendants supported the
petitions with declarations from each company’s director of human resources. Both
declarations state in substantive part:

                                              3
          “Attached hereto as Exhibits ‘A’ and ‘B’ are true and correct copies of
          the Agreement for Binding Arbitration signed by [Aldo Alpizar/Liset
          Viamontes] and Arbitration Agreement section of the Employee
          Handbook that is referenced in the Agreement for Binding Arbitration
          signed by [Aldo Alpizar/Liset Viamontes]. . . . In my capacity as the
          [human resources director] at [Adriana’s/Veronica’s], I witnessed and
          accepted Plaintiff [Aldo Alpizar’s/Liset Viamontes’] signature on the
          Agreement for Binding Arbitration. My signature appears on the
          document.”
      The Agreement for Binding Arbitration signed by Alpizar, and attached as Exhibit
A to the declaration by Adriana’s human resources director, provides:
          I KNOWINGLY AND VOLUNTARILY AGREE TO SUBMIT AND
          SETTLE ANY DISPUTE, CONTROVERSY OR CLAIM ARISING
          OUT OF OR RELATING TO MY EMPLOYMENT RELATIONSHIP
          WITH ADRIANA’S TO ARBITRATION AS DESCRIBED IN THE
          ‘ARBITRATION AGREEMENT’ SECTION OF THIS HANDBOOK.
          I AGREE THAT THE ARBITRATION OF SUCH ISSUES,
          INCLUDING THE DETERMINATION OF ANY AMOUNT OF
          DAMAGES SUFFERED, SHALL BE FINAL AND BINDING UPON
          ME AND ADRIANA’S TO THE MAXIMUM EXTENT PERMITTED
          BY LAW. I REALIZE BY AGREEING TO ARBITRATION, I WILL
          HAVE WAIVED MY RIGHT TO TRIAL BY JURY. THIS POLICY
          CANNOT CHANGE EXCEPT BY WRITTEN AGREEMENT
          BETWEEN ADRIANA’S AND ME.

                                            4
       The Agreement signed by Viamontes, and attached as Exhibit A to the declaration
of Veronica’s human resources director, is identical to the foregoing, except in that
references to “ADRIANA’S” refer to “VERONICA’S”; the first sentence of the clause
contains the apparent typographical error—“I KNOWINGLY AND VOLUNTARY [sic]
AGREE”; and the last sentence contains two more typographical errors—“I REALIZE
BY AGREEING TO ARBITRATION, I WILL HAVE WIVED [sic] MY RIGH [sic] TO
TRIAL BY JURY; . . . .”1
       The Arbitration Agreement section to the Employee Handbook, attached as
Exhibit B to both declarations, purports to explain what arbitration is and why binding
arbitration is preferable to a lawsuit in Veronica’s and Adriana’s view. Additionally, the
Handbook describes the procedures that will govern the arbitration. These procedures
include, inter alia, (1) “[t]he arbitrations shall be conducted by a retired Judge, or such
other persons as agreed to, jointly selected by the parties”; (2) “[b]oth parties shall have
all rights of discovery and remedies as he or she would in a civil action in California”;
(3) “the determination of any amount of damages suffered, shall be final and binding
upon the employee and [Adriana’s/Veronica’s] to the maximum extent permitted by
law”; (4) “[t]he employee and [Adriana’s/Veronica’s] shall each initially bear their own
costs and attorney’s fees,” “[t]he arbitrator shall award attorneys’ fees and costs to the
prevailing party as per the law and causes of action adjudicated” and

1
        In view of these typographical errors, Viamontes contends there could have been
no meeting of the minds with respect to the Agreement for Binding Arbitration she
signed. We disagree. To begin, the clause in which these errors appear is neither a
material term of the agreement, nor one that Defendants’ petition to compel sought to
enforce. Rather, the clause simply gives notice of the effect of Viamontes’ plain
agreement to arbitrate her employment-related claims. In any event, when read in
context, there can be only one construction given to these words—that they mean to give
notice that by agreeing to arbitrate, Viamontes will have “waived” her “right” to trial by
jury. Insofar as California law requires the court to give a reasonable construction to an
arbitration agreement so as to uphold arbitration where the parties plainly intended it to
encompass the subject claims, such obvious typographical errors clearly cannot be the
basis for invalidating an agreement to arbitrate. (See Pacific Inv. Co. v. Townsend (1976)
58 Cal.App.3d 1, 9 (Pacific Investment).)

                                              5
“[Adriana’s/Veronica’s] shall pay for the arbitrator’s fees”; and (5) “[t]he arbitrator shall
issue a written decision explaining the reasons for the decision.”
       Finally, the Handbook elaborates on which claims are subject to the Agreement
for Binding Arbitration. It states in relevant part: “[I]f work-related complaints and
concerns are unable to be informally resolved, then any dispute, controversy or claim
arising out of or related to the employment relationship, . . . to the extent the law provides
such claims may be arbitrated, shall at the request of either the employee or
[Adriana’s/Veronica’s] be submitted to and settled by binding arbitration. . . . Such
arbitration shall include any claims you have against [Adriana’s/Veronica’s] officers,
mangers, supervisors, agents, directors or owners.”
       Plaintiffs opposed the petitions to arbitrate. In their supporting declarations, each
Plaintiff admitted to having signed an Agreement for Binding Arbitration, but both
disavowed any knowledge of the terms contained in the Handbook. Without admitting
that he received the Handbook, Alpizar testified that he “did not receive any training as to
the arbitration policies of Defendants” and that he “was offered no explanation as to the
contents of the Employee Handbook, about the dispute resolution policies, and/or the
arbitration provision specifically.” For her part, Viamontes testified that on the day she
signed the Agreement for Binding Arbitration she “asked for but did not receive a copy
of the Employee Handbook.” She, like Alpizar, also said she “was offered no
explanation as to the contents of the Employee Handbook, about the dispute resolution
policies, and/or the arbitration provision specifically.” Both Plaintiffs testified they were
“required to sign” the Agreement for Binding Arbitration as “a condition of
employment,” despite having no idea what the agreement meant. Based on these
declarations, Plaintiffs argued there had been no meeting of the minds concerning the
arbitration of their employment related claims. Alternatively, they argued the purported
agreements were unconscionable and should be invalidated as such.

                                              6
       The trial court held a full hearing on Defendants’ petitions. Though it did not
issue a tentative ruling, the court made clear during the hearing that it was especially
troubled by Viamontes’ testimony that she never received the Handbook. Defendants
conceded this testimony might be evidence of procedural unconscionability, but they
argued it was irrelevant to whether Viamontes had entered a binding agreement to
arbitrate. The court disagreed, responding that evidence about whether Viamontes
received the Handbook “goes to whether there was an agreement” because the Handbook
purported to define “the terms that Ms. Viamontes agreed to.” When pressed on the
issue, Defendants’ counsel acknowledged that the declarations submitted in support of
the petitions did not establish that Viamontes received the Handbook. Counsel
nevertheless advised the court that Defendants had evidence, signed by Plaintiffs, to
prove this fact, and he requested leave to provide that evidence “today” if the court
considered it dispositive. The court did not respond to counsel’s request, but asked if
there was “[a]nything else Defendant wishes to argue?”
       When Defendants’ counsel moved on to the substantive unconscionability issue,
the court again voiced its concern about the lack of evidence establishing that Viamontes
received the Handbook, raising for the first time questions about whether Defendants
could establish a mutual agreement to arbitrate without proving that Plaintiffs received
the Handbook. “[I]n terms of substantive unconscionability,” the court stressed, “[i]f
there is no Handbook . . . [t]here is no discussion about mutuality.” Defendants’ counsel
responded again that Viamontes “did sign off on the Handbook and that we have that
evidence and we can submit that evidence, so to the extent that we need to do that, we
respectfully request we be allowed to submit that signature page, if that is material to the
court’s decision. We can have that submitted promptly.” Again, the court did not
address the request, but instead asked if there was “[a]nything else.”
       Defendants closed by noting that Alpizar had not testified, like Viamontes, that he
did not receive a copy of the Handbook. Unmoved, the court responded that Alpizar’s
declaration “[d]oesn’t say he received a copy and Defendant -- does not say that

                                              7
Defendant gave him a copy.” With that, the parties indicated they had nothing further
and the court proceeded to deliver its decision.
       The trial court denied the petitions to compel arbitration. Focusing on the lack of
evidence to prove Plaintiffs received copies of the Handbook, the court concluded that
there had “not [been] a meeting of the minds as to what kind of arbitration agreements the
parties entered into and that the language that the Plaintiffs signed off on [i.e., the
Agreement for Binding Arbitration] [was] unconscionable.” With respect to the
formation of a binding agreement, the court explained that “the terms of the arbitration
agreement [were] contained in a Handbook,” Viamontes had testified “under oath, that
she did not receive the Handbook,” and the evidence, therefore, was “only one way; that
she did not receive the terms of the arbitration agreement.” Under these circumstances,
the court reasoned, “it cannot be said that [there was a] meeting of the minds as to what
the terms of an arbitration agreement would be, or that there was, in fact, a complete
agreement as to arbitration.” The court likewise determined “[t]he same thing could be
said” with regard to Alpizar, insofar as “Defendant[s] [had] not presented any evidence
that Mr. Alpizar was presented with a Handbook which contained the terms of the
arbitration agreement.”
       Turning to unconscionability, the court found the evidence that Defendants
presented the Agreements for Binding Arbitration on a “take-it-or-leave-it basis”
established procedural unconscionability. As for substantive unconscionability, the court
focused on the lack of mutuality in the Agreements. The court observed that “the clause
that has been presented by the Defendants indicates that the Plaintiffs agreed to arbitrate
their disputes with no competent agreement by the Defendant[s] to arbitrate their
disputes.” The court concluded this lack of mutuality, coupled with the absence of other
terms ostensibly provided by the Handbook, established substantive unconscionability,
and, when combined with the procedural unconscionability finding, compelled denial of
Defendants’ petitions arbitrate.

                                               8
       Defendants responded to the court’s oral ruling by once more requesting leave to
submit additional evidence proving Plaintiffs received the Handbook. Without offering a
reason, the court replied, “Request is denied.”
       Defendants filed a timely notice of appeal from the order denying their petitions to
compel arbitration.
                                      DISCUSSION
       1.     The Stand Alone Agreement for Binding Arbitration Establishes Only that
              Plaintiffs Agreed to Arbitrate Their Employment Disputes; The Lack of
              Mutuality Renders the Agreement Substantively Unconscionable
       “Under ‘both federal and state law, the threshold question presented by a petition
to compel arbitration is whether there is an agreement to arbitrate.’ ” (Cruise v. Kroger
Co. (2015) 233 Cal.App.4th 390, 396 (Cruise), italics omitted.) As with any other
contract, the existence of an agreement to arbitrate requires the mutual consent of the
parties to the purported agreement. (HM DG, Inc. v. Amini (2013) 219 Cal.App.4th 1100,
1109.) Where mutual consent is established, the general rule in California is that
“ ‘ “arbitration should be upheld unless it can be said with assurance that an arbitration
clause is not susceptible to an interpretation covering the asserted dispute.” ’ ” (Cruise,
at p. 397.)
       While general contract formation principles and the scope of the arbitration
agreement will usually answer the threshold question, courts are regularly called upon to
address the agreement’s enforceability under the rubric of unconscionability, particularly
where arbitration is imposed as a condition of employment. (See Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113-114 (Armendariz);
Doctor’s Assocs. v. Casarotto (1996) 517 U.S. 681, 687.) As our Supreme Court
explained in Armendariz, “ ‘unconscionability has both a “procedural” and a
“substantive” element,’ the former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to
unequal bargaining power, the latter on ‘ “overly harsh” ’ or ‘ “one-sided” ’ results.”
(Armendariz, at p. 114.) Both procedural and substantive unconscionability must be
present to render a contract unenforceable, though they need not be present in the same

                                              9
degree. (Ibid.) Rather, courts invoke a sliding scale under which the more evidence of
procedural unconscionability is present, the less substantively oppressive the contract
terms need be to conclude the agreement is unenforceable, and vice versa. (Ibid.) Thus,
for instance, where an employer presents a mandatory arbitration provision to a
prospective employee on a take-it-or-leave-it basis, courts have found the agreement
unconscionable where it requires only the employee, but not the employer, to arbitrate his
or her employment-related claims. (See, e.g., Nyulassy v. Lockheed Martin Corp. (2004)
120 Cal.App.4th 1267, 1282 (Nyulassy); O’Hare v. Municipal Resource Consultants
(2003) 107 Cal.App.4th 267, 274; see also Armendariz, at p. 120 [“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”].)
       “The determination of arbitrability is a legal question subject to de novo review.”
(Nyulassy, supra, 120 Cal.App.4th at p. 1277.) Likewise, where no extrinsic or disputed
evidence is presented to a trial court, we review questions of enforceability and
unconscionability de novo. (O’Hare, supra, 107 Cal.App.4th at p. 273.) Where facts are
disputed, we will uphold the trial court’s resolution of such facts if supported by
substantial evidence. (Nyulassy, at p. 1277.)
       The trial court found that Plaintiffs assented to their respective Agreements for
Binding Arbitration, which both Plaintiffs signed, but that they did not agree to the
additional terms contained in the Handbook. Based on this finding, the court identified
two independent grounds for denying Defendants’ petitions to arbitrate. First, the court
concluded the Agreements were insufficient to establish a “meeting of the minds as to
what kind of arbitration agreement the parties entered into,” citing the fact that the
Agreements did not set forth certain mandatory procedural terms, but instead stated these
terms were contained in the Handbook. Second, the court concluded the Agreements
were unconscionable and thus unenforceable. In that regard, the court determined the
Agreements were procedurally unconscionable because Defendants presented them on a

                                             10
take-or-leave-it-basis, and substantively unconscionable because the Agreements required
only Plaintiffs, but not Defendants, to submit claims to arbitration.
       Defendants contend the trial court’s finding does not support its ruling. They
argue the signed Agreements establish Plaintiffs agreed to arbitrate their claims, even if
Plaintiffs did not agree to the procedural terms contained in the Handbook. As for
unconscionability, Defendants argue the court should have considered the Handbook in
assessing whether Defendants also agreed to submit their claims to arbitration,
notwithstanding the finding that Plaintiffs did not receive the Handbook. While we agree
that the signed Agreements, standing alone, were sufficient to establish the existence of
an agreement to arbitrate, we disagree with Defendants concerning the unconscionability
analysis.
       Our resolution of both issues is largely compelled by this court’s holding in
Cruise. In that case, like this one, the defendant employer moved to compel arbitration
pursuant to an arbitration clause that purported to incorporate by reference a separate
arbitration policy. (Cruise, supra, 233 Cal.App.4th at p. 392.) The clause stated, in
pertinent part, “ ‘MANDATORY FINAL & BINDING ARBITRATION: I acknowledge and
understand that the Company has a Dispute Resolution Program that includes a
Mediation & Binding Arbitration Policy (the “Policy”) applicable to all employees and
applicants for employment . . . . I acknowledge, understand and agree that the Policy is
incorporated into this [document] by this reference as though it is set forth in full, . . . the
Policy applies to any employment-related disputes that exist or arise between Employees
and the Company’ ” (Id. at p. 396, underscoring omitted, some italics added.) The trial
court denied the employer’s motion, ruling the employer failed to prove the existence of
an arbitration agreement because its proffered evidence was insufficient to establish that
the arbitration policy attached to its moving papers existed at the time the plaintiff read
and signed the document containing the arbitration clause. (Id. at p. 392.) This court
reversed.

                                              11
       The Cruise court concluded the arbitration clause, standing alone, was sufficient to
establish the parties agreed to arbitrate their employment-related claims. (Cruise, supra,
233 Cal.App.4th at p. 392.) Because the arbitration clause clearly stated that all
employment-related claims were subject to mandatory arbitration, the court concluded
there was “no question” that the parties agreed to arbitrate such disputes. (Id. at p. 397.)
The “only impact” of the employer’s inability to establish the contents of the arbitration
policy, this court explained, was that the employer had “failed to establish that the parties
agreed to govern their arbitration by procedures different from those prescribed in the
[California Arbitration Act],” Code of Civil Procedure section 1280 et seq. (Cruise, at
p. 399.) Thus, “[w]hile the parties’ agreement to arbitrate [was] enforceable, the
employer’s inability to establish the contents of its Arbitration Policy preclude[d] the
employer from enforcing the provisions of said policy.” (Id. at p. 400.) Under these
circumstances, statutory law dictated that the arbitration proceeding be conducted in
accordance with the procedures set forth in the California Arbitration Act and applicable
case law. (Ibid.; see, e.g., Code Civ. Proc., §§ 1281.6, 1282, 1282.2 [generally providing
that unless the parties agree otherwise, the conduct of an arbitration proceeding is
controlled by the California Arbitration Act].)
       Under Cruise, Defendants are correct that the trial court’s finding regarding the
Handbook did not support its conclusion that there was no meeting of the minds
concerning the agreement to arbitrate. Insofar as Plaintiffs signed the Agreements for
Binding Arbitration, which stated “I knowingly and voluntarily agree to submit and settle
any dispute, controversy or claim arising out of or relating to my employment
relationship with [Adriana’s/Veronica’s] to arbitration” (capitalization omitted), there is
no question that they agreed to arbitrate their employment-related claims. (See Cruise,
supra, 233 Cal.App.4th at p. 397.) Thus, if we were exclusively concerned with whether
Plaintiffs agreed to arbitrate, we would hold, consistent with Cruise, that the only impact
of Defendants’ failure to establish Plaintiffs received the Handbook is to require the
arbitration to be conducted in accordance with the California Arbitration Act. (See id. at

                                             12
p. 400.) However, the trial court’s unconscionability ruling adds another layer to our
analysis.
       The trial court concluded the Agreements for Binding Arbitration were
substantively unconscionable because they required only the undersigned Plaintiffs to
“submit and settle any dispute, controversy or claim arising out of or relating to my
employment relationship . . . to arbitration.” 2 Citing Cruise, Defendants principally
contend the trial court should have considered the contents of the Handbook in
determining whether the Agreements were substantive unconscionability.3 Insofar as the
Handbook states that “any dispute, controversy or claim arising out of or related to the
employment relationship, . . . shall at the request of either the employee or
[Adriana’s/Veronica’s] be submitted to and settled by binding arbitration” (italics
added), Defendants argue the requisite mutuality is present.

2
      Defendants do not dispute that the evidence supported the court’s procedural
unconscionability ruling.
3
        At oral argument, Defendants asserted the language in the stand alone Agreements
was sufficiently mutual to be enforced without the Handbook, citing Roman v. Superior
Court (2009) 172 Cal.App.4th 1462 as purportedly analogous authority. The language in
Roman stated in pertinent part: “ ‘I further agree, in the event that I am hired by the
company, that all disputes that cannot be resolved by informal internal resolution which
might arise out of my employment with the company, whether during or after that
employment, will be submitted to binding arbitration.’ ” (Id. at p. 1467, fn. omitted.)
Focusing on the “ ‘all disputes . . . will be submitted to binding arbitration’ ” language,
the Roman court found the clause broad enough to encompass both the employee’s and
the employer’s employment-related claims, particularly “given the public policy favoring
arbitration.” (Id. at pp. 1471, 1473, italics added.) In contrast to the broad “ ‘will be
submitted’ ” language in Roman, here, the clause narrowly states that “I”—i.e., the
undersigned employee—“knowingly and voluntarily agree to submit and settle any
dispute, controversy or claim arising out of or relating to my employment relationship
with [Adriana’s/Veronica’s] to arbitration.” (Capitalization omitted, italics added.)
Unlike the language in Roman, this I-agree-to-submit language is specific to the
undersigned employee and does not admit of a reasonable interpretation under which it
could also apply to the employer’s claims.

                                             13
       Defendants misread Cruise. In support of their contention that the trial court
should have considered the Handbook’s contents in analyzing unconscionability,
Defendants claim the Cruise court “did not consider the separate Arbitration Policy when
deciding the binding effect of the arbitration agreement . . . but did consider the
Arbitration Policy when deciding the enforceability of a specific procedure enumerated
therein.” The Cruise court did no such thing. The pertinent holding in Cruise is just the
opposite—“the employer’s inability to establish the contents of its Arbitration Policy
precludes the employer from enforcing the provisions of said policy.” (Cruise, supra,
233 Cal.App.4th at p. 400, italics added.) With regard to unconscionability, this court
explained in Cruise that the plaintiff’s unconscionability arguments had no merit, because
the arbitration would be governed by California statutory and case law—not the separate
arbitration policy. (Ibid.)
       More to the point, the plaintiff in Cruise raised a similar substantive
unconscionability challenge based on a purported lack of mutuality, and this court
rejected that challenge based on language in the arbitration agreement that was decidedly
different than the language with which the trial court took issue in this case. The
language in Cruise stated in pertinent part: “ ‘the Company likewise agrees to mandatory
final and binding arbitration of any Covered Disputes, whether initiated or participated in
by me or by the Company, in accordance with the Policy. . . .’ ” (Cruise, supra,
233 Cal.App.4th at p. 397.) In contrast, the operative language in the Agreements
contains a unilateral pledge by the undersigned employee that “I knowingly and
voluntarily agree to submit and settle any dispute, controversy or claim arising out of or
relating to my employment relationship . . . to arbitration.” (Capitalization omitted.)
Unlike the pertinent language in Cruise, this language simply is not susceptible of an
interpretation that requires Defendants to submit their claims against their employees to
arbitration.

                                             14
       Thus, while the trial court erred in concluding the signed Agreements were
insufficient to establish Plaintiffs agreed to arbitrate their claims, the court was correct in
ruling that the Agreements, standing alone, were too one-sided to be enforced as a
condition of Plaintiffs’ employment. That said, we agree with Defendants that the
language in the Handbook—stating, any employment-related dispute “shall at the request
of either the employee or [Adriana’s/Veronica’s] be submitted to and settled by binding
arbitration” (italics added)—cures this lack of mutuality. The trial court refused to
consider the Handbook because it found Defendants failed to establish Plaintiffs received
the document. Inasmuch as this finding proved dispositive, it raises the difficult question
of whether the court erred by denying Defendants’ request for a brief continuance to
submit additional evidence to prove Plaintiffs received the Handbook. We turn to that
question now.
       2.     The Trial Court Abused Its Discretion When It Denied Defendants’ Request
              for a Continuance to Submit Potentially Dispositive Evidence Concerning
              Plaintiffs’ Receipt of the Handbook
       The principles that control our review of the court’s ruling denying Defendants’
request for a continuance are well settled. The trial court has the “inherent power . . . to
exercise its discretion and control over all proceedings relating to the litigation before it.”
(Johnson v. Banducci (1963) 212 Cal.App.2d 254, 260.) This discretionary power
includes the authority to take evidence necessary for a decision (ibid.), and to continue a
hearing, unless such postponement is prohibited by law (Curtis v. Underwood (1894) 101
Cal. 661, 669). Thus, in ruling on a motion, the trial court may allow tardy evidence,
provided doing so will not result in undue prejudice to opposing parties. (Alvak
Enterprises v. Phillips (1959) 167 Cal.App.2d 69, 74-75.) It may also continue the
hearing, or deny a continuance, so long as its decision “is based on a reasoned judgment
and complies with legal principles and policies appropriate to the case before the court.”
(Forthmann v. Boyer (2002) 97 Cal.App.4th 977, 984.)

                                              15
          “ ‘ “The discretion of a trial judge is not a whimsical, uncontrolled power, but a
legal discretion, which is subject to the limitations of legal principles governing the
subject of its action, and to reversal on appeal where no reasonable basis for the action is
shown.” ’ ” (Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 695-696.) In other
words, judicial discretion must be measured against the governing law, and it must be
exercised in such a manner as to best effectuate the purposes of such law. (Horsford v.
Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 393-394
(Horsford).) “Action that transgresses the confines of the applicable principles of law is
outside the scope of discretion and we call such action an ‘abuse’ of discretion.” (City of
Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1297.)
          As discussed, the trial court based its unconscionability ruling entirely upon its
predicate finding that Plaintiffs had not received the Handbook. At the hearing on the
petitions, after all briefs had been filed, Defendants’ counsel represented that Defendants
had evidence to prove that Plaintiffs had in fact received the Handbook, but Defendants
had failed to submit that evidence with their moving papers. Notwithstanding
Defendants’ admitted oversight, counsel requested a brief continuance to file the
evidence “today.” The trial court denied the request without stating a reason for its
ruling.
          The trial court has discretion to refuse a continuance where good cause is lacking.
(See County of San Bernardino v. Doria Mining & Engineering Corp. (1977)
72 Cal.App.3d 776, 781.) “However, ‘[t]he trial judge must exercise his discretion with
due regard to all interests involved, and the refusal of a continuance which has the
practical effect of denying the applicant a fair hearing is reversible error. [Citations.]’ ”
(In re Marriage of Hoffmeister (1984) 161 Cal.App.3d 1163, 1169.) Thus, good cause
for a continuance exists when a new argument is raised after the time prescribed for
briefing has passed and the responding party requires a postponement to enable it to meet
the new issue. (See id. at pp. 1169-1170.)

                                                16
       Critically, in the instant case, it was the trial court, at the hearing on the petitions,
that first connected the substantive unconscionability issue with Defendants’ failure to
present direct evidence proving that Plaintiffs received the Handbook. Though Plaintiffs
had suggested in their declarations that they did not receive the Handbook, their
opposition briefs cited this evidence only to argue that there had been no meeting of the
minds concerning the procedural terms contained in the Handbook. Plaintiffs’ opposition
briefs did not address the clause in the Handbook requiring any employment-related
dispute to be submitted to binding arbitration “at the request of either the employee or
[Adriana’s/Veronica’s],” nor did they argue the clause should not be considered in
connection with the substantive unconscionability analysis, even though the Agreements
purported to incorporate the Handbook by reference. Rather, it was the trial court that
first linked the mutuality issue to the factual question about whether Plaintiffs received
the Handbook to challenge Defendants’ contention that Plaintiffs had failed to establish
substantive unconscionability. Because the trial court raised this issue for the first time at
the hearing on the petitions, we conclude there was good cause to grant a brief
continuance to enable Defendants to meet the issue with supplemental evidence directly
addressing the court’s novel concern.
       Our conclusion is bolstered by policy considerations that favor resolving questions
of arbitrability on their merits. As a general policy matter, our Supreme Court has
cautioned against mechanically applying procedural rules in specific cases at the expense
of achieving substantial justice. Thus, in Elkins v. Superior Court (2007) 41 Cal.4th
1337, the high court observed that “ ‘ “[r]igid rule following is not always consistent with
a court’s function to see that justice is done. Cognizant of the strong policy favoring the
disposition of cases on their merits [citations], judges usually consider whether to
exercise their discretion . . . and frequently consider documents which have been
untimely filed.” ’ ” (Id. at p. 1364.) In that regard, the Elkins court added that, “in the
absence of a demonstrated history of litigation abuse, ‘[a]n order based upon a curable
procedural defect . . . , which effectively results in a judgment against a party, is an abuse
of discretion.’ ” (Ibid.)

                                               17
       The record in this short-lived case reveals no demonstrated history of litigation
abuse. On the contrary, as Defendants have explained, their oversight in bringing the
omitted evidence to the court’s attention stemmed in part from the fact that Plaintiffs had
not argued that their supposed non-receipt of the Handbook rendered the Agreements
unconscionable. Consistent with this explanation, the record shows it was the court that
first linked unconscionability with Plaintiffs’ claim that they had not received the
Handbook, at which point Defendants promptly requested a brief continuance to present
evidence on the issue. While we are sympathetic to the court’s apparent reluctance to
delay resolution of the petitions after they had been fully briefed, we nevertheless
conclude the court’s ruling unreasonably elevated procedural considerations over the
ends the procedural rules are meant to achieve.
       Rules of procedure and calendar management are required for a purpose: to
promote the just resolution of cases on their merits. (Hernandez v. Superior Court (2004)
115 Cal.App.4th 1242, 1246.) “Accordingly, decisions about whether to grant a
continuance . . . ‘must be made in an atmosphere of substantial justice. When the two
policies collide head-on, the strong public policy favoring disposition on the merits
outweighs the competing policy favoring judicial efficiency.’ ” (Ibid.) That is the case
here. Defendants’ counsel represented that direct evidence proving Plaintiffs received the
Handbook could be submitted that very day. Thus, while the trial court was
understandably troubled by Defendants’ oversight, the cost in regard to timely resolution
of the petitions would nevertheless have been minimal. More importantly, allowing the
evidence to be presented would have greatly advanced the ultimate end of resolving the
petitions on their merits. Given the dispositive finding that resulted from the absence of
such evidence, the ends of substantial justice compelled a brief continuance to allow
Defendants to proffer what counsel represented to be highly relevant evidence on this
critical factual issue.

                                             18
       The balance in this case tilts even further in favor of allowing a continuance
because the request arose in connection with petitions to enforce Agreements for Binding
Arbitration that Plaintiffs admittedly signed. Under California law, “[a]rbitration is
highly favored as a method for settling disputes,” and courts must “indulge every
intendment to give effect to such proceedings.” (Pacific Investment, supra,
58 Cal.App.3d at p. 9; Cruise, supra, 233 Cal.App.4th at p. 397.) In ruling on
Defendants’ request for a continuance, the trial court was obliged by this context to
exercise its discretion in such a manner as to best effectuate the purposes of such law.
(Horsford, supra, 132 Cal.App.4th at p. 394.) The ruling here, even when viewed
through the lens of Defendants’ failure to present the subject evidence with their moving
papers, cannot be reconciled with the governing law favoring enforcement of legitimate
agreements to arbitrate. The court should have allowed the continuance to ensure that its
assessment of the enforceability of the parties’ agreements to arbitrate was based on all
relevant evidence.
       Finally, the usual elements of prejudice that typically attend the denial of a
continuance simply are not present here. This is not a case where a party has made an
unexpected request to continue an impending dispositive motion or trial date under
circumstances that could thwart months of an opponent’s preparation or further delay
resolution of a long pending dispute. No, this case stands at its very inception and the
petitions to compel arbitration represent Defendants’ initial response to the lawsuit.
Indeed, the very purpose of the petitions was to determine whether the Superior Court
was the proper forum for adjudicating Plaintiffs’ claims in the first instance. Of course,
the length of the continuance would need to allow sufficient time for Plaintiffs to prepare
a response to the new evidence. (See Jay v. Mahaffey (2013) 218 Cal.App.4th 1522,
1537-1538.) But with that due process protection in place, we see no rational basis to
find any meaningful prejudice to Plaintiffs from allowing a brief pause in the proceedings
to resolve this important foundational issue on a complete record.

                                             19
         The trial court abused its discretion when it denied Defendants’ request for a brief
continuance to submit evidence concerning Plaintiffs’ receipt of the Handbook. To the
extent the record demonstrates a different result is probable if this evidence is credited,
this was reversible error.4 (See Pannu v. Land Rover North America, Inc. (2011)
191 Cal.App.4th 1298, 1317.)
                                       DISPOSITION
         The order is reversed and the trial court is directed to allow Defendants to submit
additional evidence concerning Plaintiffs’ purported receipt of the Handbook. Plaintiff
shall have an opportunity to respond to the evidence before the court rules on the
petitions to compel arbitration. In the interest of justice, the parties shall bear their own
costs.
         NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                   JONES, J.*
We concur:

                       ALDRICH, Acting P. J.

                       LAVIN, J.

4
        We express no opinion as to the credibility of the evidence Defendants will
submit. We likewise express no opinion as to whether Plaintiffs’ responsive evidence
may be sufficient to support a finding that they did not receive the Handbook
notwithstanding Defendants’ new evidence. These are factual issues to be resolved by
the trial court on remand.
*
        Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

                                              20