Court Opinion

ID: 8407226
Source: CourtListenerOpinion
Date Created: 2022-11-01 19:01:55.093166+00
Date Added: 2024-06-11T16:47:25.074459
License: Public Domain

Filed 11/1/22
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                        DIVISION SEVEN

CHRIS MILLS,                          B313943

        Plaintiff and Respondent,     (Los Angeles County
                                      Super. Ct. No. 20STCV44879)
        v.

FACILITY SOLUTIONS GROUP,
INC.,

        Defendant and Appellant.

      APPEAL from an order of the Superior Court of Los
Angeles County, Amy D. Hogue, Judge. Affirmed.
      CDF Labor Law, Mark S. Spring and Lindsay A. Ayers for
Defendant and Appellant.
      Berenjie Law Firm, Shadie L. Berenji and David C. Hopper
for Plaintiff and Respondent.
                     _______________________
       In November 2020 Chris Mills filed a complaint against his
former employer, Facility Solutions Group, Inc. (FSG), for
disability discrimination and related causes of action under the
Fair Employment & Housing Act (FEHA; Gov. Code, § 12900 et
seq.) (Mills v. Facility Solutions Group, Inc. (Super. Ct. L.A.
County, 2020, No. 20STCV44744) (Mills I). The same month
Mills filed this class action against FSG for Labor Code
violations, which also included a claim under the Private
Attorneys General Act of 2004 (PAGA; Labor Code, § 2698 et
seq.).1 In February 2021 the trial court in Mills I (Judge Daniel
S. Murphy) granted FSG’s motion to compel arbitration, finding
the substantively unconscionable terms in the arbitration
agreement could be severed from the agreement. FSG then
moved to compel arbitration in this action under the same
arbitration agreement. The trial court in this action (Judge Amy
D. Hogue) denied FSG’s motion, finding unconscionability
permeated the arbitration agreement because it had a low to
moderate level of procedural unconscionability and at least six
substantively unconscionable terms, making severance infeasible.
       On appeal, FSG contends claim and issue preclusion
required the trial court in this action to enforce the arbitration
agreement. However, Judge Murphy’s order granting FSG’s
motion to compel arbitration is not final, so claim and issue
preclusion do not apply.
       FSG also argues the arbitration agreement is not
unconscionable, or in the alternative, the trial court abused its
discretion in not severing any unconscionable terms. Neither

1       Further undesignated statutory references are to the Labor
Code.

                                 2
contention has merit. We agree with the trial court the
arbitration agreement is permeated with unconscionability, and
the court cannot simply sever the offending provisions. Rather,
the court would need to rewrite the agreement, creating a new
agreement to which the parties never agreed. Moreover,
upholding this type of agreement with multiple unconscionable
terms would create an incentive for an employer to draft a one-
sided arbitration agreement in the hope employees would not
challenge the unlawful provisions, but if they do, the court would
simply modify the agreement to include the bilateral terms the
employer should have included in the first place. We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

A.    Mills’s Employment and the Arbitration Agreement
      Mills was employed by FSG as an apprentice electrician
from October 2, 2018 to August 27, 2019. FSG required new
employees to access, review, and electronically sign documents,
including an arbitration agreement. Mills reviewed FSG’s
onboarding documents using a cellphone application. On
October 5, 2018 Mills electronically signed a two-page, single-
spaced arbitration agreement in small print titled “Employee
Arbitration Agreement” (arbitration agreement).
      Under the arbitration agreement, Mills and FSG agreed “to
submit any and all such disputes” that arise “during or after
employment with FSG” to binding arbitration. Further, the
Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) “will govern
the interpretation, enforcement, and all judicial proceedings
under and/or with respect to the Arbitration Agreement.” The
agreement provided under “General Procedures” that the

                                3
American Arbitration Association’s Employment Arbitration
Rules and Mediation Procedures (AAA rules) would apply; the
hearing arbitrator would apply the substantive law and the law
of remedies of the state in which the claim arose; and the
arbitration decisions and awards would be “strictly confidential”
and not disclosed except as necessary for judicial enforcement.
       The arbitration agreement provided for limited discovery,
including the right to take depositions and designate expert
witnesses. Parties could obtain additional discovery pursuant to
an order by the arbitrator “upon a showing of substantial need.”
The agreement required a party to make a written demand for
arbitration within the applicable statute of limitations, and
specified that the limitations period would not be stayed by the
filing of a lawsuit. The agreement provided further that Mills
agreed to pursue his claims against FSG “solely on an individual
basis, and [to] waive any and all rights to proceed as a member of
a group or class against FSG.” The agreement required Mills to
pay a $250 filing fee, with FSG to bear the remaining
administrative fees and arbitrator compensation. However, any
fees for postponement of the arbitration must be paid by the
party causing the postponement. The agreement provided
further for an award of attorneys’ fees to the prevailing party, to
be determined pursuant to the definition of a prevailing party
under the Civil Rights Attorney’s Fees Awards Act of 1976
(42 U.S.C. § 1988). The agreement allowed either party to appeal
the arbitration award to a panel of three arbitrators, with the
fees and expenses to be paid by the appellant or shared if there is
a cross-appeal. If the arbitration panel remanded the matter for
a new hearing, the parties would share the additional costs of
arbitration. Finally, the agreement included a severability clause

                                4
that stated if any provision of the agreement is invalidated, “such
determination shall not affect the validity of the remainder of
this Agreement.” (Underlining omitted.)

B.     The FEHA Action (Mills I)
       On November 23, 2020 Mills filed a complaint in Mills I, in
which he alleged causes of action under FEHA for disability
discrimination; failure to engage in the interactive process;
failure to provide reasonable accommodations; retaliation; failure
to prevent discrimination and retaliation; wrongful termination
in violation of public policy; and failure to provide personnel and
payroll records. On February 8, 2021 Judge Murphy granted
FSG’s motion to compel arbitration, finding Mills “established a
low degree of procedural unconscionability” because the
arbitration agreement was a contract of adhesion. Further, some
of the provisions of the arbitration agreement were substantively
unconscionable, but they could be severed from the agreement.
Judge Murphy reasoned the waiver of representative claims was
not relevant to his analysis because Mills was “not pursuing a
PAGA claim in this action.”

C.     This Action Alleging Class and PAGA Claims
       On November 20, 2020 Mills filed a class action on behalf of
himself and other former and current employees against FSG
alleging violations of the Labor Code for (1) failure to pay
minimum wages; (2) failure to pay overtime wages; (3) unlawful
deduction of wages; (4) failure to pay vested vacation wages;
(5) failure to provide meal periods; (6) failure to reimburse
business expenses; (7) failure to timely pay wages; (8) failure to
maintain payroll records and provide accurate itemized wage

                                 5
statements; and (9) failure to provide one day’s rest out of seven.
Mills also alleged a cause of action for unfair competition in
violation of Business and Professions Code section 17200. In
addition, Mills asserted a cause of action under PAGA seeking
civil penalties for the alleged Labor Code violations.

D.     FSG’s Motion To Compel Arbitration
       On April 16, 2021 FSG moved to compel arbitration of
Mills’s class and PAGA claims. FSG contended Mills consented
to the arbitration agreement; Mills’s individual claims were
subject to the arbitration agreement; the class claims must be
dismissed because of the class action waiver; and the arbitration
agreement satisfied the requirements set forth in Armendariz v.
Foundation Health Psychcare Services, Inc. (2000)
24 Cal.4th 83 (Armendariz). As to the PAGA waiver, FSG argued
the court should “sever the unenforceable part of the class waiver
‘of a group’” and stay the claim until completion of the
arbitration. FSG also argued claim preclusion barred relitigation
of the enforceability of the arbitration agreement.
       In opposition, Mills argued Judge Murphy’s order granting
FSG’s motion to compel arbitration in Mills I did not bar him
from litigating the arbitration agreement’s enforceability in this
action. Further, the arbitration agreement was procedurally and
substantively unconscionable, and the agreement’s
unconscionable terms could not be remedied through reformation
or severance. Mills also objected to a stay of the PAGA claim if
the trial court compelled arbitration of his individual claims.
       Following argument from the attorneys, on May 14, 2021
the trial court (Judge Hogue) denied FSG’s motion to compel
arbitration. The court took judicial notice of the order compelling

                                 6
arbitration in Mills I, but it concluded issue preclusion did not
bar litigation of the enforceability of the arbitration agreement
because Judge Murphy did not address whether the PAGA
waiver was substantively unconscionable. The court found low to
moderate procedural unconscionability, noting Mills was required
to sign the arbitration agreement as a condition of employment,
the font was small (page one contained over 60 lines of text), and
“[r]eading this text on a cell phone would be difficult.” The court
also found a high degree of substantive unconscionability, citing
six unconscionable provisions, including the arbitration fee,
postponement fee, appeal costs, attorneys’ fees, limited discovery,
bar on tolling of the statute of limitations, and PAGA waiver.
         The court found severance of these provisions was not
feasible, explaining, “[T]his [arbitration agreement] has too many
provisions that are troublesome for the court to grant arbitration,
notwithstanding, of course, the strong policy in favor of it. I
mean, this is not one I can sever, slice, and dice. . . . [J]ust for
example, the postponement fees—there’s nothing like that in
court. . . . And those [arbitration] companies regularly have huge
postponement fees because they’re trying to book the arbitrator’s
time, and it’s a problem for them if, suddenly, somebody has to
move a hearing date and they have an open calendar that,
otherwise, should have been filled. So they impose straight-up
fees for postponement. The court does not impose any fees for
postponement. Sure, I can impose sanctions if somebody abuses
the discovery process, but . . . I’d hate to tell you how many
continuances the court grants on a daily basis, and it’s free. And
. . . I think the substantial need requirement for discovery—that’s
very different than the Code of Civil Procedure. . . . [T]here’s just

                                 7
so many problematic provisions here that I can’t in good
conscience enforce the arbitration agreement.”
      FSG timely appealed.

                          DISCUSSION

A.      Claim and Issue Preclusion Do Not Apply
        “Claim preclusion prevents relitigation of entire causes of
action. [Citations.] Claim preclusion applies only when ‘a second
suit involves (1) the same cause of action (2) between the same
parties [or their privies] (3) after a final judgment on the merits
in the first suit.’” (Samara v. Matar (2018) 5 Cal.5th 322, 326-
327; accord, Grande v. Eisenhower Medical Center (2022)
13 Cal.5th 313, 323.) “Issue preclusion, by contrast, prevents
‘relitigation of previously decided issues,’ rather than causes of
action as a whole. [Citation.] It applies only ‘(1) after final
adjudication (2) of an identical issue (3) actually litigated and
necessarily decided in the first suit and (4) asserted against one
who was a party in the first suit or one in privity with that
party.’” (Samara, at p. 327; accord, Grande, at p. 323.) “Whether
claim or issue preclusion applies in a particular case is a question
of law.” (Parkford Owners for a Better Community v.
Windeshausen (2022) 81 Cal.App.5th 216, 225 (Parkford); accord,
Ayala v. Dawson (2017) 13 Cal.App.5th 1319, 1325.)
        FSG contends both claim preclusion and issue preclusion
bar Mills from relitigating the enforceability of the arbitration
agreement. FSG argues Judge Murphy’s order compelling
arbitration in Mills I adjudicated Mills’s right to bring his
employment claims in state court; Mills I and this action involve
the same parties; and the order in Mills I was a final adjudication

                                 8
on the merits. FSG’s contention lacks merit because Judge
Murphy’s order was not a final adjudication.
       “A judgment or adjudication is on the merits if the
substance of the claim or issue is tried and determined.”
(Parkford, supra, 81 Cal.App.5th at p. 227 [neither claim nor
issue preclusion applied where appeal in first action was
dismissed as moot]; Johnson v. City of Loma Linda (2000)
24 Cal.4th 61, 77 [trial court’s ruling based on laches was not a
judgment on the merits].) “‘A prior adjudication of an issue in
another action may be deemed “sufficiently firm” to be accorded
preclusive effect based on the following factors: (1) whether the
decision was not avowedly tentative; (2) whether the parties were
fully heard; (3) whether the court supported its decision with a
reasoned opinion; and (4) whether the decision was subject to an
appeal.’” (South Sutter, LLC v. LJ Sutter Partners, L.P. (2011)
193 Cal.App.4th 634, 663; accord, Border Business Park, Inc. v.
City of San Diego (2006) 142 Cal.App.4th 1538, 1565.)
       Judge Murphy’s order granting FSG’s motion to compel
arbitration is not a final adjudication on the merits because an
order compelling arbitration “‘is not appealable, but is reviewable
on appeal from a subsequent judgment on the award.’” (Nixon v.
AmeriHome Mortgage Co., LLC (2021) 67 Cal.App.5th 934, 943;
accord, Ashburn v. AIG Financial Advisors, Inc. (2015)
234 Cal.App.4th 79, 94; see Code Civ. Proc., §§ 1294, 1294.2.)2

2      Mills filed a notice of appeal in Mills I, and the appeal is
still pending. (Mills I, supra, B316303, app. pending.) On
October 5, 2022 we issued an order stating we would dismiss the
appeal unless Mills shows cause why the order compelling
arbitration was immediately appealable. We acknowledge the
trial court found issue preclusion did not apply because Judge

                                 9
B.    Governing Law on Unconscionability of Arbitration
      Agreements
      “An agreement to submit disputes to arbitration ‘is valid,
enforceable and irrevocable, save upon such grounds as exist for
the revocation of any contract.’ (Code Civ. Proc., § 1281; see
9 U.S.C. § 2.)” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111,
125 (OTO); accord, Alvarez v. Altamed Health Services Corp.
(2021) 60 Cal.App.5th 572, 580.) “‘“[G]enerally applicable
contract defenses, such as . . . unconscionability, may be applied
to invalidate arbitration agreements without contravening” the
FAA’ or California law.” (OTO, at p. 125; accord, Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC
(2012) 55 Cal.4th 223, 246 (Pinnacle).)
      “A contract is unconscionable if one of the parties lacked a
meaningful choice in deciding whether to agree and the contract
contains terms that are unreasonably favorable to the other
party. [Citation.] Under this standard, the unconscionability
doctrine ‘“has both a procedural and a substantive element.”’”
(OTO, supra, 8 Cal.5th at p. 125; accord, Sanchez v. Valencia
Holding Co., LLC (2015) 61 Cal.4th 899, 910 (Sanchez).) “‘The

Murphy did not decide whether the PAGA waiver rendered the
arbitration agreement unenforceable. However, “‘“a ruling or
decision, itself correct in law, will not be disturbed on appeal
merely because given for a wrong reason. If right upon any
theory of the law applicable to the case, it must be sustained
regardless of the considerations which may have moved the trial
court to its conclusion.”’” (People v. Turner (2020) 10 Cal.5th 786,
807; accord, People v. Brooks (2017) 3 Cal.5th 1, 39 [“Although
this analysis is different from ours, we have explained that ‘“we
review the ruling, not the court’s reasoning and, if the ruling was
correct on any ground, we affirm.”’”].)

                                10
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.’” (OTO, at p. 125; accord, Pinnacle, supra,
55 Cal.4th at p. 246.)
      “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.” (OTO, supra, 8 Cal.5th at
pp. 125-126; accord, Sanchez, supra, 61 Cal.4th at p. 910.) “‘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, at p. 126; accord,
Sanchez, at p. 912.)
      “The burden of proving unconscionability rests upon the
party asserting it.” (OTO, supra, 8 Cal.5th at p. 126; accord,
Sanchez, supra, 61 Cal.4th at p. 911.) “‘Where, as here, the
evidence is not in conflict, we review the trial court’s denial of
arbitration de novo.’” (OTO, at p. 126; accord, Pinnacle, supra,
55 Cal.4th at p. 236.)

                                11
C.     The Arbitration Agreement Has Elements of Procedural
       Unconscionability
       “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.’” (OTO, supra,
8 Cal.5th at p. 126; accord, Baltazar v. Forever 21, Inc. (2016)
62 Cal.4th 1237, 1245.) If the “circumstances of the contract’s
formation created . . . oppression or surprise . . . closer scrutiny of
its overall fairness is required.” (OTO, at p. 126; Baltazar, at
pp. 1245-1246.) “‘“‘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.’”’” (OTO, at p. 126; accord, De La Torre v.
CashCall, Inc. (2018) 5 Cal.5th 966, 983.) “‘The circumstances
relevant to establishing oppression include, but are not limited to
(1) the amount of time the party is given to consider the proposed
contract; (2) the amount and type of pressure exerted on the
party to sign the proposed contract; (3) the length of the proposed
contract and the length and complexity of the challenged
provision; (4) the education and experience of the party; and
(5) whether the party’s review of the proposed contract was aided
by an attorney.’” (OTO, at pp. 126-127; accord, Nunez v. Cycad
Management LLC (2022) 77 Cal.App.5th 276, 284.) “[S]urprise”
occurs where the arbitration agreement is “written in an
extremely small font” with “‘visually impenetrable’” paragraphs
“filled with statutory references and legal jargon.” (OTO, at
p. 128.)
       It is undisputed the arbitration agreement is an adhesive
contract because it was imposed as a condition of employment.
(OTO, supra, 8 Cal.5th at p. 126 [“Arbitration contracts imposed

                                  12
as a condition of employment are typically adhesive.”];
Armendariz, supra, 24 Cal.4th at p. 115 [“[I]n the case of
preemployment arbitration contracts, the economic pressure
exerted by employers on all but the most sought-after employees
may be particularly acute, for the arbitration agreement stands
between the employee and necessary employment, and few
employees are in a position to refuse a job because of an
arbitration requirement.”].) FSG concedes the arbitration
agreement “was a form agreement presented as a condition of
employment,” but it argues “this fact alone presents only a fairly
low level of procedural unconscionability.” Although Mills was
given time to sign the arbitration agreement, the single-spaced,
two-page agreement was written in a small font, with over 60
lines of text on the first page alone. Further, Mills accessed the
agreement on his cell phone, which as the trial court noted, would
make it difficult to read the small print.3 Because the arbitration
agreement had elements of procedural unconscionability, we
“closely scrutinize the substantive terms ‘to ensure they are not
manifestly unfair or one-sided.’” (OTO, at p. 130; accord,
Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at p. 1244.)

3     FSG asserts Mills could have accessed the agreement on
his personal computer, pointing to the “Paycom” account
instructions emailed to employees. Although the agreement
would likely be easier to read on a computer than a mobile phone,
the record does not reflect whether Mills had access to a
computer to review the form. In any event, the agreement has
small print with many lines of text on each page.

                                13
D.       The Arbitration Agreement Is Substantively Unconscionable
         As the Armendariz court explained, based on “the basic
principle of nonwaivability of statutory civil rights in the
workplace,” there are “five minimum requirements for the lawful
arbitration of such rights pursuant to a mandatory employment
arbitration agreement. Such an arbitration agreement is lawful
if it ‘(1) provides for neutral arbitrators, (2) provides for more
than minimal discovery, (3) requires a written award,
(4) provides for all of the types of relief that would otherwise be
available in court, and (5) does not require employees to pay
either unreasonable costs or any arbitrators’ fees or expenses as a
condition of access to the arbitration forum. Thus, an employee
who is made to use arbitration as a condition of employment
“effectively may vindicate [his or her] statutory cause of action in
the arbitral forum.”’” (Armendariz, supra, 24 Cal.4th at p. 102,
italics omitted.) We agree with Mills that, as the trial court
found, the arbitration agreement has multiple provisions that fail
to meet this standard, rendering the agreement unconscionable.4

      1.       The arbitration agreement improperly required Mills
               to pay a filing fee and costs of postponement
         An employer-mandated arbitration agreement “is lawful if
it . . . does not require employees to pay either unreasonable costs
or any arbitrators’ fees or expenses as a condition of access to the
arbitration forum.” (Armendariz, supra, 24 Cal.4th at p. 102;
accord, Boghos v. Certain Underwriters at Lloyd’s of London

4      It is undisputed the arbitration agreement provides for a
neutral arbitrator, requires the hearing arbitrator to “provide
brief findings of fact and conclusions of law,” and incorporates the
AAA rules, which provide for a written award.

                                14
(2005) 36 Cal.4th 495, 506.) Further, the employer is obligated
“to pay all types of costs that are unique to arbitration.”
(Armendarez, at p. 113; accord, Little v. Auto Stiegler, Inc. (2003)
29 Cal.4th 1064, 1076 (Little).)
       Mills contends the arbitration agreement improperly
required him to pay an arbitration filing fee and the costs of
postponement of the arbitral proceedings if Mills requested the
postponement. These contentions have merit.
       Section 5 of the arbitration agreement provides, “There will
be both administrative fees and arbitrator compensation incurred
for any arbitration hearing. When I file and serve a demand, the
filing fee, included in the administrative fees, for the arbitration
hearing will be paid $250.00 by me and the remainder by FSG.
Arbitrator compensation and administrative fees are not subject
to re-allocation in the award, but any fees for postponements
shall be paid by the party causing the postponement.”
       As to the $250 filing fee, FSG argues a similar filing fee is
required to bring a superior court lawsuit. But under
sections 218.5, subdivision (a) (claim for nonpayment of wages),
1194, subdivision (a) (minimum wage claim), and 2802,
subdivisions (b) and (c) (unpaid business expenses), a prevailing
employee may recover his or her costs as a prevailing party.5 By

5     Section 218.5, subdivision (a), provides as to a lawsuit for
the nonpayment of wages that the prevailing party may recover
attorneys’ fees and costs, but “if the prevailing party in the court
action is not an employee, attorney’s fees and costs shall be
awarded pursuant to this section only if the court finds that the
employee brought the court action in bad faith.” Section 1194,
subdivision (a), provides that where an employer fails to pay the
minimum wage or legal overtime compensation, “the employee is

                                 15
contrast, section 5 of the arbitration agreement bars reallocation
of administrative costs (including the $250 filing fee) to FSG.
Because the fees provision barring reallocation creates unique
arbitration costs with respect to Mills’s Labor Code claims, it is
unconscionable. (See Armendariz, supra, 24 Cal.4th at p. 113;
Ontiveros v. DHL Express (USA), Inc. (2008)
164 Cal.App.4th 494, 510 & fn. 11 (Ontiveros) [provision
requiring employee to pay portion of filing fee and arbitration
costs “is unlawful and hence substantively unconscionable,”
regardless of whether the amount is small (lesser of one week’s
pay or 10 percent of amount at issue)]; but see De Leon v.
Pinnacle Property Management Services, LLC (2021)
72 Cal.App.5th 476, 491 (DeLeon) [cost provision limiting
employee’s arbitration costs and fees to $100 was not
unconscionable].)
       The postponement costs are unique to arbitration in that
the superior court limits the fees a party must pay for requesting
a continuance (now $20 or $60), and only requires the payment of
a fee for the filing of a pleading requesting or noticing the
continuance. (See Gov. Code, § 70617, subds. (a)(2) [$60 fee for
filing specified pleadings to continue trial date], (c)(1) [$20 fee for

entitled to recover in a civil action the unpaid balance of the full
amount of this minimum wage or overtime compensation,
including interest thereon, reasonable attorney’s fees, and costs
of suit.” Section 2802 provides as to an award for reimbursement
of necessary business expenditures that an employee may recover
as “‘necessary expenditures,’” “all reasonable costs, including, but
not limited to, attorney’s fees incurred by the employee enforcing
the rights granted by this section.” (§ 2802, subds. (b), (c).)

                                  16
filing specified pleadings to continue hearing or case
management conference, unless court required continuance].)
Further, as discussed, a prevailing employee may recover costs
incurred, which would include the costs of seeking a continuance.
Thus, the provision requiring the employee to pay the costs of a
postponement is substantively unconscionable. (See Little, supra,
29 Cal.4th at p. 1076; Armendariz, supra, 24 Cal.4th at p. 102.)
       In its reply brief, FSG argues that requiring a party to pay
the costs of postponement of the proceeding is not unique to
arbitration because courts have the authority to sanction a party
for discovery abuses under Code of Civil Procedure
section 2023.030, including for delays. However, in contrast to
discovery sanctions, the arbitration agreement requires payment
of the costs of postponement by the party requesting the
continuance regardless of whether the party was at fault for the
delay.

      2.    The arbitration agreement unreasonably required
            Mills to pay the costs of an appeal and potential
            second hearing
      The arbitration agreement allows either party to appeal the
arbitration award to a panel of three arbitrators, with the
appellant paying the costs of the arbitrators and the parties
sharing the cost of a second hearing. Specifically, the arbitration
agreement provides in subdivision 7.c, “The fees and expenses of
the appellate arbitrators shall be shared if both an appeal and a
cross-appeal are served. If only an appeal is served, the fees and
expenses of the appellate arbitrators shall be paid by the
appellant party (or parties).” The agreement provides further in
subdivision 7.h that in the event of a remand following an appeal,

                                17
“the fees and expenses of the new hearing arbitrator shall be
shared equally by the parties to the rehearing, unless otherwise
agreed or ordered.” Mills contends these provisions are
additional indicia that the arbitration agreement is substantively
unconscionable. Mills is again correct.
       As the Supreme Court explained in Sanchez, supra,
61 Cal.4th at page 920 in the context of a consumer arbitration,
“[T]he arbitration agreement did not have to provide for an
appeal. But having done so, the agreement may not structure the
appeal process so that it unreasonably favors one party, just as
the agreement may not authorize only one party and not the
other to take an appeal.” The appeal provisions in the arbitration
agreement would deter an employee from appealing an
arbitration award (or filing a cross-appeal) by requiring the
employee to pay the fees and expenses of three arbitrators, the
most expensive form of an appeal, and upon a successful result,
the employee would need to share the costs of a second hearing.
Further, even upon a successful appeal by the employer, the
employee would be required to share the costs of the second
hearing.
       FSG argues the arbitration agreement’s appeal provisions
are bilateral in that they affect FSG and Mills equally. But FSG
would have greater resources to pay the appellate and remand
costs, thus encouraging an appeal by FSG but discouraging one
by Mills. (See Alvarez v. Altamed Health Services Corp., supra,
60 Cal.App.5th at p. 593 [trial court could have reasonably found
“appellate arbitral review provision benefits the employer in
employee-employer arbitrations because the employer could
unilaterally add costs and time to the arbitration proceeding by
seeking this review and thereby maximize the employer’s status

                               18
as the better resourced party”]; Swain v. LaserAway Medical
Group, Inc. (2020) 57 Cal.App.5th 59, 74 [three-arbitrator panel
provision requiring “the most expensive kind of arbitration” was
substantively unconscionable because “[t]he cost of such an
arbitration panel would not only deter [the patient] from seeking
relief, it would effectively prohibit it”].)
       Here, if Mills were to prevail in the arbitration, FSG could
unilaterally add costs and delay by appealing the arbitration
award, potentially forcing Mills to pay the costs of a second
hearing (although FSG would have to pay the costs of its appeal).
If Mills were to lose in the arbitration, he would unlikely appeal
the arbitration award because he must pay the fees and expenses
of three arbitrators, and if successful on appeal, he must share
the costs of a second hearing. As Mills averred in his declaration,
he could not afford to pay the fees and costs that would be
charged by three arbitrators, which he asserts typically range for
each arbitrator from $3,200 to $10,000 per day. These provisions
are substantively unconscionable because in practice they
unreasonably favor FSG.

      3.     The arbitration agreement’s attorneys’ fees provisions
             are substantively unconscionable
      “[A]n arbitration agreement may not limit statutorily
imposed remedies such as punitive damages and attorney fees.”
(Armendariz, supra, 24 Cal.4th at p. 103.) Further, an
arbitration agreement “cannot generally require the employee to
bear any type of expense that the employee would not be required
to bear if he or she were free to bring the action in court.” (Id. at
pp. 110-111; accord, Patterson v. Superior Court (2021)
70 Cal.App.5th 473, 488 (Patterson).) We agree with Mills that

                                 19
the arbitration agreement is substantively unconscionable
because it allows FSG to recover attorneys’ fees and costs that
would not otherwise be recoverable in the trial court.
       Section 6.b of the arbitration agreement provides the
arbitrator “shall assess attorney’s fees against a party upon a
showing that such party’s claim, defense, or position is frivolous,
or unreasonable, or factually groundless.” This provision is
inconsistent with section 218.5, subdivision (a), which provides as
to a lawsuit for the nonpayment of wages that the prevailing
party may recover its attorneys’ fees and costs, but “if the
prevailing party in the court action is not an employee, attorney’s
fees and costs shall be awarded pursuant to this section only if
the court finds that the employee brought the court action in bad
faith.” (See Dane Elec Corp., USA v. Bodokh (2019)
35 Cal.App.5th 761, 773 [explaining as to section 218.5,
subdivision (a), that “[c]ourts have uniformly recognized that
such unilateral fee-shifting statutes ‘reflect a considered
legislative judgment that prevailing defendants should not
receive fees’”]; USS-Posco Industries v. Case (2016)
244 Cal.App.4th 197, 216 [2014 amendment to section 218.5
changed the law from a “‘two way’ fee shifting statute that
awarded fees to the winner, whether employee or employer,” to a
provision that only awards fees to the employer where the
employee brought the action in bad faith].) Moreover, as
discussed, section 1194, subdivision (a) (minimum wage claims)
and section 2802, subdivisions (b) and (c) (reimbursement of

                                20
business expenses), only provide for recovery of attorneys’ fees by
the prevailing employee, not the employer.6
       Section 6.b is therefore substantively unconscionable
because it forces Mills to pay FSG’s attorneys’ fees and costs in
situations where Mills’s claims are found to be “factually
groundless” but not brought in bad faith, contrary to section
218.5, subdivision (a), which would otherwise apply in the trial
court, and contrary to the prevailing employee provisions in
sections 1194 and 2802. (See Ajamian v. CantorCO2e, L.P. (2012)
203 Cal.App.4th 771, 800 [arbitration provision requiring
employee to pay attorneys’ fees to prevailing defendants was
unconscionable because it “imposes on [the employee] the
obligation to pay [the employer’s] attorney fees where she would
have no such obligation under at least one of her California
statutory claims”]; Wherry v. Award, Inc. (2011) 192 Cal.App.4th
1242, 1249 [arbitration provision entitling prevailing party to
attorneys’ fees “without any limitation for a frivolous action or

6      As the Supreme Court explained in Kirby v. Immoos Fire
Protection, Inc. (2012) 53 Cal.4th 1244, 1251, “section 1194 is a
one-way fee-shifting statute, authorizing an award of attorney's
fees only to employees who prevail on their minimum wage or
overtime claims.” (Accord, Cruz v. Fusion Buffet, Inc. (2020)
57 Cal.App.5th 221, 240 [“‘Because section 1194 provides only for
a successful plaintiff to recover attorney fees and costs, it is a
one-way fee-shifting statute [that] preclude[es] an employer from
collecting fees and costs even if the employer prevails on a
minimum wage or overtime claim.’”].) Section 2802 similarly
only authorizes an award of attorneys’ fees to the employee.

                                21
one brought in bad faith” under FEHA was unlawful under
Armendariz].)7
       FSG contends that notwithstanding section 6.b, the
arbitrator was required to award attorneys’ fees consistent with
sections 218.5, 1194, and 2802 because section 3.b of the
arbitration agreement (under “General Provisions”) provided that
“[t]he hearing arbitrator shall apply the substantive law (and the
laws of remedies, if applicable), in the state in which the claim
arose, or federal law, or both, depending on the claims asserted.”
We agree with the reasoning of Carbajal v. CWPSC, Inc. (2016)
245 Cal.App.4th 227, 251 (Carbajal), which rejected a similar
argument. The arbitration agreement in Carbajal required the
parties to bear their own attorneys’ fees, although the employee
would have been entitled to recover her attorneys’ fees in court as
a prevailing party on many of her statutory wage claims.8 (Id. at

7      Under FEHA, “a successful plaintiff is entitled to recover
his or her reasonable attorney fees. A prevailing defendant,
however, may not be awarded attorney fees or costs ‘unless the
court finds the action was frivolous, unreasonable, or groundless
when brought, or the plaintiff continued to litigate after it clearly
became so.’” (Patterson, supra, 70 Cal.App.5th at p. 477; see Gov.
Code, § 12965, subd. (c)(6).)
8     The Carbajal court explained, “The Agreement’s arbitration
provision also is substantively unconscionable because it requires
the parties to bear their own attorney fees, but many of
Carbajal’s statutory wage claims would entitle her to recover her
attorney fees if she prevails. (See Labor Code §§ 218.5, subd. (a)
[attorney fees recoverable in successful action for nonpayment of
wages], . . . 1194, subd. (a) [attorney fees recoverable in
successful action for minimum and overtime wages], 2802
[attorney fees recoverable in successful indemnity action for

                                 22
p. 250.) The Carbajal court concluded the attorneys’ fees
provision was substantively unconscionable despite the provision
in the arbitration agreement authorizing the arbitrators “to
award all types of relief that would otherwise be available to the
parties in a court proceeding under State or Federal law.’” (Id. at
p. 251.) The court reasoned, “The arbitration provision’s plain
language requires the parties to be responsible for their own
attorney fees without any exceptions. Nothing in the provision’s
language suggests the parties intended to limit or qualify this
provision by also granting the arbitrators broad authority to
award all types of relief authorized by law. ‘[W]hen there are
conflicting clauses the more specific clause controls the more
general.’” (Ibid.) Here too, the specific attorneys’ fees provision
allowing FSG to recover its attorneys’ fees and costs as the
prevailing party regardless of whether Mills brought his claims
in bad faith (or awarding any fees and costs to FSG on Mills’s
claims under sections 1194 and 2802) would control over the
more general choice of law provision in the agreement.
       FSG’s reliance on Rule 39(d) of the AAA rules is similarly
misplaced. Rule 39(d) provides, “The arbitrator may grant any
remedy or relief that would have been available to the parties
had the matter been heard in court including awards of
attorney’s fees and costs, in accordance with applicable law.”

reimburse of business expenses].) At a minimum, Carbajal would
be entitled to recover her attorney fees if she prevailed on her
first cause of action for unpaid wages, fourth cause of action for
illegal deductions from wages, fifth cause of action for failure to
provide accurate itemized wage statements, and sixth cause of
action for failure to compensate for business expenses.”
(Carbajal, supra, 245 Cal.App.4th at pp. 250-251.)

                                23
Although Rule 39(d) would authorize the arbitrator to limit an
award of attorneys’ fees and costs to FSG consistent with
sections 218.5, 1194, and 2802, it does not require the arbitrator
to do so. And, similar to section 3.b’s incorporation of state
substantive law and law of remedies, the more specific attorneys’
fees provision controls.
        Section 6.c of the arbitration agreement’s attorneys’ fees
provision is likewise substantively unconscionable because it
imposed on Mills the attorneys’ fees and costs incurred by FSG in
moving to compel arbitration notwithstanding the requirement
under section 218.5, subdivision (a), that a prevailing employer
show bad faith, and the one-way fee-shifting provisions of
sections 1194 and 2802, which award attorneys’ fees and costs
only to prevailing employees. Section 6.c provides that if any
party brings a claim outside of the arbitration process, “the
responding party shall be entitled to dismissal of such action, and
the recovery of all costs and attorney’s fees and losses related to
such action.” In Patterson, supra, 70 Cal.App.5th at page 489, we
found unenforceable under Armendariz a similar fee-shifting
clause, which required the party opposing arbitration to pay the
attorneys’ fees, costs, and expenses of the party that successfully
moved to compel arbitration. We explained that “[p]ermitting
[the employer] to recover its attorney fees for a successful motion
to compel arbitration in a pending FEHA lawsuit without a
showing the plaintiff’s insistence on a judicial forum to determine
his or her claims was objectively groundless . . . denies the
plaintiff the rights guaranteed by [FEHA] with a corresponding
chill on access to the courts for any employee or former employee
who has an arguably meritorious argument that the
. . . arbitration agreement is unenforceable.” (Patterson, at p. 489

                                24
accord, Ramirez v. Charter Communications, Inc. (2022)
75 Cal.App.5th 365, 378, review granted June 1, 2022, S273802.)9

      4.     The arbitration agreement does not provide for
             adequate discovery
       Although parties may “agree to something less than the full
panoply of discovery,” employees “are at least entitled to
discovery sufficient to adequately arbitrate their statutory claim,
including access to essential documents and witnesses, as
determined by the arbitrator(s) . . . .” (Armendariz, supra,
24 Cal.4th at pp. 105-106; accord, De Leon, supra, 72 Cal.App.5th
at p. 487.) As the Armendariz court explained with respect to
FEHA claims, “We agree that adequate discovery is
indispensable for the vindication of FEHA claims.” (Amendariz,
at p. 104.) “In striking the appropriate balance between the
desired simplicity of limited discovery and an employee’s
statutory rights, courts assess the amount of default discovery

9     In Patterson, supra, 70 Cal.App.5th at page 490, we
construed the arbitration agreement’s prevailing party fee
provision “to impliedly incorporate the FEHA asymmetric rule for
awarding attorney fees and costs” in light of the strong public
policy favoring arbitration. (But see Ramirez v. Charter
Communications, Inc., supra, 75 Cal.App.5th at p. 382, review
granted [disagreeing with Patterson that attorneys’ fees provision
“can be saved by impliedly incorporating the FEHA asymmetrical
attorney fee standard into its unambiguous language”].) Unlike
Patterson, in which the arbitration agreement contained only one
unenforceable provision, as discussed below, the trial court here
did not abuse its discretion in declining to sever or reform the
arbitration agreement to address multiple substantively
unconscionable provisions.

                                25
permitted under the arbitration agreement, the standard for
obtaining additional discovery, and whether the plaintiffs have
demonstrated that the discovery limitations will prevent them
from adequately arbitrating their statutory claims.” (Davis v.
Kozak (2020) 53 Cal.App.5th 897, 910-911 (Davis); accord, De
Leon, at p. 487.) “The denial of adequate discovery in arbitration
proceedings leads to the de facto frustration of the employee’s
statutory rights.” (Armendariz, at p. 104; accord, Dougherty v.
Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 106.)
       The arbitration agreement allows each party to take
depositions, designate expert witnesses, and subpoena witnesses,
but it does not expressly allow for document requests, requests
for admission, or interrogatories. Instead, “[a]dditional discovery
may be had only where the hearing arbitrator so orders, upon a
showing of substantial need.” We agree with Mills the discovery
provision is substantively unconscionable.
       Ontiveros, supra, 164 Cal.App.4th at pages 511 to 514 is on
point. There, the Court of Appeal found substantively
unconscionable an employment arbitration agreement that
allowed each party to take only one deposition in addition to
expert depositions and document requests, with the right to
additional discovery by order of the arbitrator “‘upon a showing of
substantial need.’” (Id. at pp. 511, 514.) The court explained,
after noting the employee’s attorney stated at least 15 to 20
depositions would be necessary given the complexity of the case,
“[T]he permitted amount of discovery is so low while the burden
for showing a need for more discovery is so high that plaintiff’s
ability to prove her claims would be unlawfully thwarted by the
discovery provision in the agreement.” (Id. at p. 513; see Davis,
supra, 53 Cal.App.5th at p. 914 [“‘Seemingly neutral limitations

                                26
on discovery in employment disputes may be nonmutual in effect.
“‘This is because the employer already has in its possession many
of the documents relevant to an employment discrimination case
as well as having in its employ many of the relevant
witnesses.’”’”].) As in Ontiveros, the arbitration agreement’s
limits on written discovery seriously disadvantage the employee
because FSG would have possession of most relevant documents.
       FSG contends the arbitration agreement provides for
adequate discovery because Rule 9 of the AAA rules supplements
the agreement’s discovery provision by providing, “The arbitrator
shall have 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.” FSG relies on our decision in Roman v. Superior
Court (2009) 172 Cal.App.4th 1462, 1476, which concluded the
AAA discovery rule provided adequate discovery because it
expressly authorized the arbitrator to order depositions and
written discovery “‘as the arbitrator considers necessary to a full
and fair exploration of the issues in dispute, consistent with the
expedited nature of arbitration.’” However, in Roman, discovery
was governed only by the AAA discovery provision incorporated
into the arbitration agreement. Here, the arbitration agreement
contains a specific provision limiting discovery, which would
govern the parties’ dispute.
       FSG’s arbitration agreement is more analogous to the one
in Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 718-719 (Fitz).
There, the arbitration agreement incorporated the AAA rules but
limited discovery to the taking of two depositions and depositions
of expert witnesses expected to testify, with no additional

                                27
discovery “unless the arbitrator finds a compelling need to allow
it.” (Id. at p. 716.) The Court of Appeal observed the employer
“chose to modify the AAA’s rules of discovery to its advantage”
because the employer had in its possession many of the
documents relevant to the plaintiff’s employment discrimination
case, and it employed many of the relevant witnesses. (Id. at
p. 718.) The court reasoned the provision granting the arbitrator
discretion to allow additional discovery was “an inadequate safety
valve” because given the limited discovery allowed under the
agreement, an employee would be “unlikely to be able to
demonstrate to the arbitrator a compelling need for more
discovery.”10 (Id. at pp. 717-718.) Mills similarly “will not have
access to written documents or the benefit of initial
interrogatories when requesting additional information to
vindicate [his] statutory claim.” (Id., at p. 717.)
       We conclude the arbitration agreement’s discovery
provision is substantively unconscionable because it does not
provide for sufficient discovery for Mills to arbitrate his statutory
claims. (Armendariz, supra, 24 Cal.4th at p. 106; see Nunez v.
Cycad Management LLC, supra, 77 Cal.App.5th at p. 285
[provision limiting “discovery to ‘three depositions and an

10    The Fitz court rejected the employer’s argument that
Rule 1 of the AAA rules ensured there would be adequate
discovery by its provision that “[i]f a party establishes that an
adverse material inconsistency exists between the arbitration
agreement and [these] rules, the arbitrator shall apply [these]
rules.” (Fitz, supra, 118 Cal.App.4th at p. 719.) The court
explained the adverse “material inconsistency” language in Rule
1 “cannot make the AAA discovery provisions trump the limits on
discovery that [the employer] deliberately established” in the
arbitration agreement. (Id., at p. 720.)

                                 28
aggregate of thirty (30) discovery requests of any kind, including
sub-parts’” was unconscionable because it prevented employee
“from vindicating statutory claims”].)

      5.      The arbitration agreement improperly bars tolling of
              the statute of limitations
       Section 1 of the arbitration agreement provides that a party
asserting one or more claims must make a written demand for
arbitration within the applicable statute of limitations. However,
section 1 provides further, “Neither filing nor serving a lawsuit
stops the applicable statute of limitations from continuing to
run.” (Boldface omitted.) The arbitration agreement’s tolling bar
directly conflicts with Code of Civil Procedure section 1281.12,
which states that where an arbitration agreement requires a
demand for arbitration be made within a specified time, the filing
of a civil action by the party within that time “shall toll the
applicable time limitations contained in the arbitration
agreement with respect to that controversy.” Thus, under Code
of Civil Procedure section 1281.12, if a plaintiff files a civil action
within the applicable limitations period, but the statute of
limitations runs prior to the trial court granting a motion to
compel arbitration, the plaintiff’s claim would be preserved. By
contrast, under the arbitration agreement, the claim would be
barred.
       The appellate courts have found arbitration provisions
shortening the limitations period for causes of action alleging
violations of the Labor Code are substantively unconscionable.
(See, e.g., De Leon, supra, 72 Cal.App.5th at p. 487 [arbitration
provision shortening limitations period for wage-and-hour claims
to one year was unconscionable]; Pinela v. Neiman Marcus

                                  29
Group, Inc., supra, 238 Cal.App.4th at p. 256 [same]; Samaniego
v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1147
[arbitration provision shortening limitations period for wage-and-
hour claims to six months was unconscionable].) FSG’s argument
that Mills was not harmed by the tolling bar because the statute
of limitations on his claims has not yet run is not persuasive
because the enforceability of the arbitration agreement is
measured as of the date the parties entered into the agreement.
(See Civ. Code, § 1670.5, subd. (a) [court considers whether
agreement was unconscionable “at the time it was made”];
Armendariz, supra, 24 Cal.4th at p. 114 [quoting Civ. Code,
§ 1670.5]; Martinez v. Master Protection Corp. (2004)
118 Cal.App.4th 107, 116 [“‘The critical juncture for determining
whether a contract is unconscionable is the moment when it is
entered into by both parties—not whether it is unconscionable in
light of subsequent events.’”].)
       FSG acknowledges there is a conflict between the tolling
bar in the arbitration agreement and Code of Civil Procedure
section 1281.12, but it contends section 1281.12 governs because
the agreement provides in its “General Procedures” (section 3.b)
that the arbitrator must apply the substantive law of the state in
which the claim arose, and under section 8, the FAA “will govern
the interpretation, enforcement, and all judicial proceedings
under and/or with respect to the Arbitration Agreement.” (Italics
omitted.) FSG provides no authority for its contention the
reference to state law in the general procedures section would
take precedence over the specific provision barring tolling of the
statute of limitations. Nor does FSG explain why application of
the FAA would ensure that Code of Civil Procedure
section 1281.12’s tolling provision would apply. We agree with

                               30
Mills the arbitration provision barring the tolling of the
limitations period is substantively unconscionable.

      6.     The waiver of Mills’s representative PAGA claim is
             invalid under California law
       Section 9 of the arbitration agreement provides under the
heading, “No Class Actions,” “I agree that I will pursue any claim
or cause of action against FSG solely on an individual basis, and
waive any and all rights to proceed as a member of a group or
class against FSG.” (Boldface omitted.) It is undisputed that
California’s prohibition on class action waivers is preempted by
the FAA. (See AT&T Mobility LLC v. Concepcion (2011) 563 U.S.
333, 351; Iskanian v. CLS Transportation Los Angeles, LLC
(2014) 59 Cal.4th 348, 359-360 (Iskanian), overruled in part by
Viking River Cruises, Inc. v. Moriana (2022) 595 U.S. ___ [142
S.Ct. 1906] (Viking River).) FSG contends California’s bar
against waivers of the right to bring representative PAGA actions
is likewise preempted under the FAA. It is not.
       PAGA authorizes “‘an “aggrieved employee” [to] bring a
civil action personally and on behalf of other current or former
employees to recover civil penalties for Labor Code violations.
(Lab. Code, § 2699, subd. (a).)’” (Iskanian, supra, 59 Cal.4th at
p. 380.) Under the statute, 75 percent of the civil penalties are
distributed to the Labor and Workforce Development Agency,
with the remaining 25 percent to the “aggrieved employees.”
(Ibid; see § 2699, subd. (i).) The Iskanian court held PAGA
waivers, like class action waivers, are “contrary to public policy
and unenforceable as a matter of state law.” (Iskanian, at
p. 384.) However, unlike class action waivers, the court
concluded the FAA does not preempt California law invalidating

                                 31
PAGA waivers because PAGA claims are brought by the
aggrieved employee as a “statutorily designated proxy” for the
Labor and Workforce Development Agency, not on the employee’s
own behalf to resolve a private dispute. (Id. at p. 388.)
Therefore, “California’s public policy prohibiting waiver of PAGA
claims, whose sole purpose is to vindicate the Labor and
Workforce Development Agency’s interest in enforcing the Labor
Code, does not interfere with the FAA’s goal of promoting
arbitration as a forum for private dispute resolution.” (Id. at
pp. 388-389.)
       FSG contends in its reply brief that the United States
Supreme Court’s recent decision in Viking River, supra, 142 S.Ct.
1906 overruled Iskanian, requiring dismissal of Mills’s
representative PAGA claim. FSG fundamentally misreads the
scope of Viking River. Iskanian’s holding that waivers of PAGA
claims are unenforceable as against public policy remains good
law following Viking River.
       In Viking River, the United States Supreme Court granted
certiorari to decide whether Iskanian’s holding invalidating
PAGA waivers as a matter of public policy was preempted by the
FAA. In deciding this question, the court distinguished between
“‘individual’” PAGA claims, “which are premised on Labor Code
violations actually sustained by the plaintiff,” and
“‘representative’” PAGA claims “arising out of events involving
other employees.” (Viking River, supra, 142 S.Ct. at pp. 1916-
1917.) The court held the FAA preempted Iskanian’s
“indivisibility rule,” which precluded division of a PAGA action
into individual and representative PAGA claims, because it
effectively prevented the parties from agreeing to arbitrate an
employee’s individual claims based on violations suffered by the

                               32
employee. (Viking River, at pp. 1924-1925.) Because Iskanian
prevented division of a PAGA claim into individual and
representative claims, the court reasoned the Iskanian holding
forced the employer either to arbitrate the individual and
representative PAGA claims together, or to give up the right to
arbitrate the individual claim. (Viking River, at p. 1924.)
       The Viking River court explained, “We hold that the FAA
preempts the rule of Iskanian insofar as it precludes division of
PAGA actions into individual and non-individual claims through
an agreement to arbitrate. This holding compels reversal in this
case. The agreement between [Viking and its employee Angie
Moriana] purported to waive ‘representative’ PAGA claims.
Under Iskanian, this provision was invalid if construed as a
wholesale waiver of PAGA claims. And under our holding, that
aspect of Iskanian is not preempted by the FAA, so the
agreement remains invalid insofar as it is interpreted in that
manner. But the severability clause in the agreement provides
that if the waiver provision is invalid in some respect, any
‘portion’ of the waiver that remains valid must still be ‘enforced
in arbitration.’ Based on this clause, Viking was entitled to
enforce the agreement insofar as it mandated arbitration of
Moriana’s individual PAGA claim.” (Viking River, supra,
142 S.Ct. at pp. 1924-1925.)
       Applying Viking River to this case, Mills’s individual PAGA
claim was arbitrable because it did not fall within the arbitration
agreement’s waiver of the employee’s right “to proceed as a
member of a group or class against FSG.” However, the
arbitration agreement’s waiver of Mills’s representative PAGA
claim remains unenforceable under Iskanian as against public
policy. The trial court did not err in finding the representative

                                33
claim waiver, as applied to Mills’s representative PAGA claim, is
invalid and unenforceable.11
       FSG in its reply brief argues that under Viking River, even
assuming the waiver of Mills’s representative PAGA claim was
invalid, the claim should be dismissed for lack of standing. FSG
is correct that the majority opinion in Viking River concludes in
dicta that although PAGA waivers are unenforceable under
California law, the employee on remand would no longer have
standing to assert those claims because his or her individual
PAGA claim would be subject to arbitration. (Viking River,
supra, 142 S.Ct. at p. 1925.) As the court explained, “Under
PAGA’s standing requirement, a plaintiff can maintain non-
individual PAGA claims in an action only by virtue of also
maintaining an individual claim in that action. See [Lab. Code,
§ 2699, subds. (a), (c)]. When an employee’s own dispute is pared
away from a PAGA action, the employee is no different from a

11    At least one appellate court has found a PAGA waiver in an
arbitration agreement is substantively unconscionable. (See
Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 496,
503-504 [affirming trial court order denying motion to compel
arbitration because PAGA waiver in employment agreement was
unenforceable and substantively unconscionable but remanding
to determine if the offending provision could be severed]; but see
Poublon v. C.H. Robinson Company (9th Cir. 2017) 846 F.3d
1251, 1264 [“the unenforceability of the waiver of a PAGA
representative action does not make this provision substantively
unconscionable”].) We need not resolve whether the PAGA
waiver is substantively unconscionable (or simply invalid as
against public policy) because regardless of whether the PAGA
waiver is unconscionable, the trial court would have needed to
sever the provision to make the arbitration agreement
enforceable.

                                34
member of the general public, and PAGA does not allow such
persons to maintain suit. [Citation.] . . . As a result, Moriana
lacks statutory standing to continue to maintain her non-
individual claims in court, and the correct course is to dismiss her
remaining claims.” (Viking River, at p. 1925.)
      Although this reading of California law would require
dismissal of Mills’s representative PAGA claim for lack of
standing, as Justice Sonia Sotomayor suggested in her
concurrence, whether an employee has standing to bring a
representative PAGA claim in state court once the employee’s
individual PAGA claim is sent to arbitration is a question for the
California courts to resolve. Justice Sotomayor observed, “[I]f
this Court’s understanding of state law is wrong, California
courts, in an appropriate case, will have the last word.” (Viking
River, supra, 142 S.Ct. at p. 1925 [conc. opn. of Sotomayor, J.].)
We need not decide whether Mills would have had standing to
pursue his representative PAGA claim in the trial court had his
individual PAGA claim been ordered to arbitration because the
only question before us is whether the arbitration agreement’s
waiver of Mills’s representative PAGA claim was valid. Under
Viking River and Iskanian, it was not.12

12     Mills has forfeited his argument on appeal that the
arbitration agreement’s confidentiality provision (requiring the
arbitration award be kept confidential except as necessary for
judicial enforcement) is unlawful by not asserting this argument
in his opposition to the motion to compel arbitration. (Pittman v.
Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009, 1026 [an
argument “‘“‘may be forfeited in criminal as well as civil cases by
the failure to make timely assertion of the right before a tribunal
having jurisdiction to determine it’”’”]; Professional Collection

                                35
E.    The Trial Court Did Not Abuse Its Discretion in Declining
      To Sever the Unconscionable Arbitration Terms
      Civil Code section 1670.5, subdivision (a), provides, “If the
court as a matter of law finds the 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.” As the Supreme Court
observed in Armendariz, supra, 24 Cal.4th at page 122, “the
statute appears to give a trial court some discretion as to whether
to sever or restrict the unconscionable provision or whether to
refuse to enforce the entire agreement. But it also appears to
contemplate the latter course only when an agreement is
‘permeated’ by unconscionability.”
      The Armendariz court elaborated, “If the central purpose of
the contract is tainted with illegality, then the contract as a
whole cannot be enforced. If the illegality is collateral to the
main purpose of the contract, and the illegal provision can be
extirpated from the contract by means of severance or restriction,
then such severance and restriction are appropriate.”
(Armendariz, supra, 24 Cal.4th at p. 124.) “The overarching
inquiry is whether ‘“the interests of justice . . . would be
furthered”’ by severance. [Citation.] Moreover, courts must have
the capacity to cure the unlawful contract through severance or
restriction of the offending clause, which . . . is not invariably the

Consultants v. Lauron (2017) 8 Cal.App.5th 958, 972 [“‘“[I]t is
fundamental that a reviewing court will ordinarily not consider
claims made for the first time on appeal which could have been
but were not presented to the trial court.”’”].)

                                 36
case.” (Ibid.) We review for an abuse of discretion the trial
court’s decision not to sever the unconscionable provisions. (Ibid.;
Lange v. Monster Energy Company (2020) 46 Cal.App.5th 436,
453; De Leon, supra, 72 Cal.App.5th at p. 492.)
       In Armendariz, there were two unlawful provisions in the
arbitration agreement—a limitation on an employee’s recoverable
damages and a unilateral arbitration clause requiring an
employee to arbitrate wrongful termination claims, but not
requiring an employer to arbitrate its claims against the
employee. (Armendariz, supra, 24 Cal.4th at pp. 124-125.) The
Supreme Court held in light of “the multiple unlawful provisions,
the trial court did not abuse its discretion in concluding that the
arbitration agreement is permeated by an unlawful purpose.”
(Id. at p. 124.) The court explained that where an arbitration
agreement has more than one unlawful provision, “multiple
defects indicate a systematic effort to impose arbitration on an
employee not simply as an alternative to litigation, but as an
inferior forum that works to the employer’s advantage.” (Ibid.)
Further, the lack of mutuality in the agreement could not be
remedied by merely severing a provision, but rather, the court
would need to reform the agreement by augmenting it with
additional terms. (Id. at pp. 124-125.) Where “a court is unable
to cure this unconscionability through severance or restriction
and is not permitted to cure it through reformation and
augmentation, it must void the entire agreement.” (Id. at p. 125;
see De Leon, supra, 72 Cal.App.5th at pp. 492-493 [declining to
sever unlawful statute of limitations and discovery provisions of
arbitration agreement, explaining if “‘“the court would have to, in
effect, reform the contract, not through severance or restriction,
but by augmenting it with additional terms,” the court must void

                                37
the entire agreement’”]; Pinela v. Neiman Marcus Group, Inc.,
supra, 238 Cal.App.4th at p. 256 [explaining in denying motion to
compel arbitration of wage and hour lawsuit that “the
unconscionability we have found permeates the NMG Arbitration
Agreement to such a degree that severance would amount to
rewriting the parties’ contract, something we cannot do”]; Wherry
v. Award, Inc., supra, 192 Cal.App.4th at p. 1250 [declining to
sever unlawful attorneys’ fees and costs provisions of arbitration
agreement in FEHA action, explaining that “when the agreement
is rife with unconscionability, as here, the overriding policy
requires that the arbitration be rejected”].)
       By contrast, in Little, supra, 29 Cal.4th at page 1075, the
Supreme Court concluded severance of an unconscionable term in
an employment agreement was appropriate where there was only
one unlawful provision, and “the offending provision [could] be
severed and the rest of the arbitration agreement left intact.”
The provision at issue authorized a party to appeal only awards
exceeding $50,000. (Id. at p. 1073.) As the court explained, the
$50,000 threshold “inordinately benefits defendants” because the
employer would be more likely to appeal a substantial award, but
an employee would be more likely to appeal an award of no
damages. (Ibid.)
       FSG contends that even if there are six unlawful provisions
in the arbitration agreement, this did not support voiding the
agreement because the unlawful provisions could be severed from
those that are valid.13 However, not all of the unlawful

13    FSG also asserts it did not act in bad faith in that it
incorporated the AAA rules into the agreement to ensure that it
was lawful. Although the arbitration agreement incorporated the

                               38
provisions could be severed. Moreover, the trial court did not
abuse its discretion in finding the inclusion of multiple unlawful
terms permeated the agreement with unconscionability.
       FSG is correct that some of the offending provisions could
have been severed. For example, the trial court could have
severed the sentence in paragraph 1 barring tolling of the statute
of limitations. Similarly, as to the $250 filing fee, the court could
have removed the reference to payment by the employee of a
filing fee or the bar to reallocation of the fee. The provision
requiring a party to pay for the costs of a postponement it caused
also could be severed. Likewise, the waiver of PAGA
representative claims could be deleted.
       However, multiple other provisions would need to be
rewritten. The discovery provision would need to be
substantially revised to allow for written discovery. The court
could not simply delete the requirement that a party show
substantial need for additional discovery, nor could it reform the
contract to specify allowable amounts of written discovery to save
the agreement.14 The attorneys’ fees provision would likewise

AAA rules, the agreement contains more specific provisions (for
example, as to limited discovery, attorneys’ fees, and costs) that
conflict with the AAA rules. As discussed, the specific provisions
take precedence over the general AAA rules. Further, at the time
Mills signed the agreement, case law was clear that these specific
provisions were unenforceable. Had FSG wanted to ensure the
arbitration agreement was enforceable, it should not have
included the invalid provisions.
14    FSG does not explain how the offending provisions could be
severed or modified without the trial court rewriting the
arbitration agreement. Arguably the court could have deleted the

                                 39
need to be modified to be consistent with California law on the
recovery of attorneys’ fees and costs for Labor Code claims. With
respect to the costs of an appeal and a potential rehearing,
section 7 would need to be reformed to remove the requirement
that Mills pay the fees and expenses of the three-arbitrator
appellate panel and share the costs of a potential second
arbitration. In light of this significant rewriting of the two-page
arbitration agreement and multiple substantively unconscionable
provisions, the trial court did not abuse its discretion in declining
to sever the unconscionable terms.
      FSG argues, citing to the Ninth Circuit’s decision in
Poublon v. C.H. Robinson Company (9th Cir. 2017) 846 F.3d
1251, 1273, that California does not have a “per se” rule that an
arbitration agreement is permeated with unconscionability if
more than one provision in an arbitration agreement is
unconscionable. We agree with that proposition, but in denying
the motion, the trial court did not cite to a “per se” rule of
unconscionability. Instead, the court properly recounted the
numerous specific provisions that would need to be severed (or
reformed) to make the agreement enforceable. Moreover, where,
as here, an arbitration agreement has numerous unconscionable
provisions, those provisions taint the agreement with illegality
such that even if each unlawful provision could be surgically
removed from the agreement, the one-sided agreement is not

discovery provision entirely, substituting the AAA rules for the
one-sided discovery provision in the arbitration agreement, but
that in turn would have modified the other discovery allowed, for
example, the unlimited depositions afforded under the arbitration
agreement.

                                 40
enforceable. (See Armendariz, supra, 24 Cal.4th at p. 124.) To
enforce the agreement would incentivize employers to impose
multiple unlawful arbitration provisions on employees, who
would likely forego bringing suit for fear they would be forced to
bear the costs and burdens of the one-sided arbitration
agreement. If an employee had the resources to bring suit in
court and challenge enforcement of the arbitration agreement,
the employer could still compel arbitration if the trial court was
willing to sever the offending provisions.
      Although California law favors arbitration as an efficient
means of resolving disputes, the courts have an obligation “‘to
ensure that private arbitration systems resolve disputes not only
with speed and economy but also with fairness.’” (Armendariz,
supra, 24 Cal.4th at p. 115.) Given the unfairness that
permeates FSG’s one-sided arbitration agreement, the trial court
did not abuse its discretion in declining to sever the substantively
unconscionable terms.

                         DISPOSITION

      The order denying the motion to compel arbitration is
affirmed. Mills shall recover his costs on appeal.

                                           FEUER, J.
      We concur:

            PERLUSS, P. J.                 SEGAL, J.

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