Court Opinion

ID: 9393229
Source: CourtListenerOpinion
Date Created: 2023-05-09 18:02:16.609264+00
Date Added: 2024-06-11T17:18:51.712741
License: Public Domain

Filed 5/9/23 Rice v. Gulfstream Aerospace CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 opi ni ons
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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SEVEN

ROBERT RICE,                                               B316079

       Plaintiff and Respondent,                           (Los Angeles County
                                                            Super. Ct. No. 21LBCV00176)
         v.

GULFSTREAM AEROSPACE
CORPORATION,

       Defendant and Appellant.

      APPEAL from an order of the Superior Court of
Los Angeles County, Michael P. Vicencia, Judge. Affirmed.
      Gibson Dunn & Crutcher, Scott A. Edelman, Jesse A.
Cripps and Monica B. Paladini for Defendant and Appellant.
      Peretz & Associates, Yosef Peretz and Shane Howarter for
Plaintiff and Respondent.

                                 _______________________
      Robert Rice was laid off from his employment at
Gulfstream Aerospace Corporation (Gulfstream) on May 1, 2020.
He sued Gulfstream for wrongful termination, age
discrimination, retaliation, violation of wage and hour laws, and
various other employment-related claims.
      Gulfstream moved to compel arbitration, arguing Rice had
agreed to arbitration when he signed an employment application
stating applicants were bound by the company’s dispute
resolution policy. In opposition, Rice disputed that a valid
agreement to arbitrate was formed but argued that, even if he
had agreed to arbitrate, the agreement was unconscionable.
      The court denied the motion, concluding the agreement was
unconscionable. We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

A.     Evidence Regarding Contract Formation
       1.    Rice’s Employment Application
       Rice was hired by Gulfstream in April 1986 and was laid off
in May 2009. In February 2010, he submitted an employment
application and was rehired.
       In a box above Rice’s signature, the employment
application stated: “I agree to the exclusive resolution of all
claims arising out of or relating to my application for
employment, employment or termination of employment by the
Company by the procedures set forth in the Company’s Dispute
Resolution Policy. The claims covered by this agreement shall
include, but are not limited to, claims for wages, breach of any
express or implied promises, torts, and discrimination on any
basis, but shall not include claims for workers compensation,

                                2
unemployment or claims under any benefit or pension plans or
other agreements between the Company and me. I understand
that as a result of my and the Company’s mutual agreement to
resolve claims exclusively through the Company’s Dispute
Resolution Policy, I and the Company hereby waive any rights to
a jury trial.”
      It is undisputed that the company’s dispute resolution
policy was not attached to the application and that Rice was not
provided with a copy to review at the time he signed the
application. Gulfstream’s human resources representative
declared the policy was available to job applicants “by request.”

      2.     Conflicting Evidence as to Whether Rice Ever
             Received a Copy of the Dispute Resolution Policy
      The parties dispute whether Rice ever received a copy of
the dispute resolution policy, either before or after Rice signed
the application. Gulfstream contends that Rice had received a
copy six years earlier, when he had previously been employed by
the company, and that he received another copy in March 2010
during the new employee orientation. Rice does not recall ever
receiving a copy during his prior employment and denies he
received a copy at the new employee orientation.
      Gulfstream provided declarations of two human resources
representatives, Trevor Clifton and Ronda Londen. Clifton
declared Gulfstream implemented its dispute resolution policy in
July 2002 with an effective date of August 2002. Gulfstream
mailed a copy of the policy to its employees along with a letter
informing them they could opt out within 30 days of receiving it.
Gulfstream’s records show that the policy was mailed to Rice’s
home in 2002 and that Rice did not opt out.

                                3
       Clifton further declared Gulfstream amended the policy in
March 2003, with an effective date of April 2003. The new policy
was mailed to employees, including Rice, in or around April 2003.
When Rice submitted his employment application in 2010, the
April 2003 policy was still in effect.
       Ronda Londen declared she was “involved in New Hire
Orientation for more than twenty-five (25) years.” She does not
state she was involved in the orientation sessions Rice attended.
In March 2010, it was Gulfstream’s practice to hold a two-day
orientation for new employees. Employees received training on
company policies, including the dispute resolution policy, which
was contained in a new employee orientation binder provided to
participants. It was the custom and practice of the human
resources facilitator to ask the new employees to read through
the dispute resolution policy and then for the facilitator to lead
an interactive session regarding the policy.
       Londen further declared attendees at the orientation
sessions were required to sign an acknowledgment that they had
received training on certain topics. Rice signed an
acknowledgement that he had received training on nine broadly
defined topics on the second day of orientation. One of the topics
was “policy review.” As to that topic, the acknowledgement
states: “POLICY REVIEW [¶] I acknowledge that I attended
the Gulfstream training program for Policy Review and have been
trained on locating up-to-date policies on the Gulfstream Intranet
site.”
       In opposition to the motion, Rice submitted his own
declaration in which he stated he did not recall ever receiving the
2002 or 2003 policies, either before or after he was rehired. At
the time he was rehired, no Gulfstream representative told him

                                4
that the 2003 version of the policy would apply to him. He did
not receive a copy of the policy at the time of his application or
thereafter. He never received any training on the policy or any
explanation of it.
      Rice further declared he attended the two-day orientation
meeting for new employees. Employees were given a high-level
overview of company policies and practices, but the dispute
resolution policy was not discussed. He was given a new hire
orientation binder, but a copy of the dispute resolution policy was
not included with the materials. The orientation sessions were
not interactive, and the newly hired employees were not
encouraged to ask and did not ask questions.
      Gulfstream relies on the following language from its 2003
policy in support of its argument that a valid contract was
formed: “The submission of an application, acceptance of
employment or the continuation of employment by an individual
shall be deemed to be an acceptance of the [dispute resolution
policy]. No signature shall be required for the Policy to be
applicable.” This language was contained on page 3 of the
11-page single-spaced document. Other relevant terms are
discussed below.

      3.    Conflicting Evidence as to Whether Rice Received
            Notice of an Updated Policy in 2019
      Gulfstream’s human resources representative Clifton
declared a new version of the policy went into effect in January
2019. He stated employees were notified the policy had been
revised through a posting on the company’s intranet. Clifton
attaches what appears to be an intranet posting dated
December 21, 2018 stating, “Gulfstream’s Dispute Resolution

                                 5
policy has been updated. You can review all company policies on
Inside Gulfstream under the Resources menu.”
      Rice declared he never saw the purported notification. He
was never told he should review the updated policy and never
saw it on the intranet. He was never required to sign any
acknowledgement that he had seen it and never agreed to the
terms. He was away from work for the holidays on December 21,
2018 when the updated policy was purportedly posted on the
intranet.
      As with the 2003 policy, the 2019 policy stated that
continued employment would be deemed acceptance of the policy.

B.     Key Terms of the Dispute Resolution Policies
       1.    2003 Policy
             a.     Overview
       The 2003 dispute resolution policy purports to apply to all
employees except those covered by a collective bargaining
agreement. The policy states it is a “structured dispute
resolution process that applies to Covered Claims and consists of
four levels:” (1) human resources review; (2) management panel
review; (3) mediation; and (4) arbitration.
       In Level 1, “Human Resources meets informally with the
Employee and the other parties involved and attempts to resolve
the Employee’s disputes.” If the employee is not satisfied with
the resolution of the problem after the informal human resources
review, the employee has 30 days to submit the claim to the
management panel review, or the employee waives all right to
pursue his or her covered claims.
       In Level 2, the employee must meet with a management
panel. If the employee is not satisfied with the result of that

                                6
step, the employee must, “within 30 days of the date of the Final
Determination of the Management Panel Review, submit the
Covered Claim to Mediation (Level 3), or the Employee waives all
rights to pursue his or her Covered Claims.”
       In Level 3, the employee must participate in mediation
with an outside mediator. If the parties do not reach a
resolution, “the Employee must, within 30 days of the date of the
Final Determination of the Mediation, submit the claim to
Arbitration (Level 4)[,] or the Employee waives all rights to
pursue his or her Covered Claims.”
       Level 4 is arbitration. “The Arbitrator’s decision is the
exclusive remedy for Covered Claims and is final and binding on
the Company and Employee.”
       “Employees must complete each level of the process before
proceeding to the next level.” The company, by contrast, “may
elect to bypass one or more steps prior to arbitration for disputes
with applicants for employment, with former employees, or if the
Company is the initiating party.”
       Employees are required to submit covered claims to the
dispute resolution process as set forth in the policy. The policy
sets forth the “sole and exclusive forum and remedy for all
Covered Claims. [¶] The Employee and Company agree and
hereby waive any right to jury trial for any Covered Claim. The
Employee further agrees that no Covered Claim may be brought
as a class or collective action either under this Policy or in court
and that he/she will not act as a class or collective action
representative or participate as a member of a class of claimants
with respect to any Covered Claim.”

                                 7
             b.     Covered claims
       The term “Covered Claims” is defined as follows: “Covered
Claims are employment-related claims between an individual
Employee and the Company [and related entities], and their
respective individual managers and other present or former
employees. Covered Claims involve a claim of a legal right,
obligation or entitlement regarding or arising from the
employment relationship.”
       The policy lists eight categories of claims that are included
in “Covered Claims.” Six of the categories are claims only an
employee would bring against an employer, such as claims
involving wrongful termination, employment discrimination and
harassment, alleged violations of the Family and Medical Leave
Acts, failure to provide workplace accommodations, and wage and
hour violations. Two of the other listed categories are claims that
would primarily be brought by employees but could also be
brought by employers, including tort claims and claims of
violation of public policy. The final category is for “Claims based
on express or implied contracts,” which could include claims
brought by employers or employees.
       The policy lists six categories of claims that are excluded
from the policy. The excluded claims include “Claims involving
patents or inventions.”

             c.    Time limitations
       “The Company encourages Employees to attempt to resolve
matters informally with their supervisor. If a matter cannot be
resolved, an Employee’s Covered Claim(s) should be filed with
Human Resources under the prevailing Policy within 30 days
after the dispute arises. This 30-day guideline shall not be

                                 8
applied by the Company to bar the submission of any Covered
Claim to Human Resources Review (Level 1) within the
applicable statute of limitations. [¶] After an Employee submits
a Covered Claim at the initial filing at Level 1 for Human
Resources Review, the Employee must (1) follow each step and
cannot skip any level; and (2) file any request to proceed to any of
the next levels within thirty (30) days after the date after Final
Determination at the previous level. If an Employee does not file
for the next step within the 30-day period, the Employee will
waive his or her rights to pursue his or her covered claims.”

             d.     Arbitration procedures
       The policy contains a procedure for the joint selection of a
neutral arbitrator from independent dispute resolution providers
such as the American Arbitration Association. The arbitrator
must have a minimum of three years’ experience in the
arbitration of employment law disputes or comparable
experience. The parties have the right to present evidence, to
request that the arbitrator subpoena witnesses or documents for
the arbitration hearing, to present written briefs, and to hire a
court reporter to report the hearing. The arbitrator must issue a
written decision.
       The arbitrator is required to apply the substantive law of
the state in which the employee is, was, or sought to be
predominantly employed. The arbitrator “may grant any remedy
or relief that would have been available to an individual
Employee had the claim been asserted in court for a Covered
Claim.” “Each party shall pay its own experts’ and/or attorneys’
fees unless the Arbitrator awards reasonable experts’ and/or
attorneys’ fees to the Employee.”

                                 9
             e.    Discovery limitations
      The policy imposes strict limits on discovery in arbitration.
Each party has the right to request the production of documents,
but the parties must obtain leave from the arbitrator to conduct
any other discovery. Depositions, interrogatories, and requests
for admission are allowed only by agreement of the parties or by
order of the arbitrator. The policy requires the parties to disclose
documents they intend to use and witnesses they intend to call
20 days before the hearing, which is after the close of discovery.

             f.    Interim relief
      The policy contains an “Interim Relief” section stating:
“For claims involving alleged breach of Employee’s non-
competition, non-solicitation, fiduciary, or confidentiality
obligations, as well as claims involving trademarks, trade secrets,
business know-how or intellectual property, either the Employee
or the Company may . . . apply to any court of competent
jurisdiction and seek interim provisional, injunctive, or other
equitable relief until the arbitration award is rendered or the
Covered Claim is otherwise resolved.”

              g.     Confidentiality
        The policy contains a confidentiality provision stating: “All
aspects of the proceedings pursuant to this [dispute resolution
policy], including the hearing and recording of the proceeding,
shall be confidential to the fullest extent permitted by law . . .
except (i) to the extent both Parties agree otherwise, in writing;
(ii) as may be appropriate in any subsequent proceeding between
the parties[;] or (iii) as may otherwise be appropriate in response
to a governmental agency or legal process.”

                                 10
             h.     Modification
       The policy allows the company to modify or terminate the
policy upon 30 days’ written notice. The modification or
termination is effective only as to claims submitted after the
effective date of the modification or termination.

              i.    Severability
       The severability provision states: “In the event that any
portion of the [dispute resolution policy] is held to be in conflict
with a mandatory provision of applicable law, the remainder of
these . . . procedures shall not be affected to the extent permitted
by law. For example, if a court holds some particular provision(s)
of the [dispute resolution policy] to be in conflict with a
mandatory provision of applicable law in that jurisdiction, such
provision(s) will not be enforced in that jurisdiction, but the
exclusivity of the [dispute resolution policy] and its arbitration as
the sole and exclusive forum for all Covered Claims within its
scope shall not be affected.”

      2.     2019 Dispute Resolution Policy
      The 2019 version of the policy appears to be nearly
identical to the 2003 version except claims for sexual harassment
are excluded from covered claims. The parties have not identified
any differences in the 2019 policy that are material to this
appeal. Because the 2003 version was in effect at the time Rice
signed the employment application and because there are no
material differences between the policies, we rely on the 2003
version in this opinion.

                                 11
C.     The Parties’ Arguments and the Trial Court’s Ruling
       In the moving papers, Gulfstream argued Rice agreed to
the dispute resolution policy, including its arbitration provision,
when he signed the employment application and when he
continued to be employed after being provided with a copy at the
new employee orientation and after being notified of the update
in 2019. In opposition, Rice argued he had not agreed to
arbitrate, but, even if he had, the dispute resolution policy was
unconscionable.
       A hearing was held on October 5, 2021. The court
expressed its preliminary views that Rice had agreed to be bound
by the dispute resolution policy but that the agreement could not
be enforced because it was procedurally and substantively
unconscionable.1 The court took the matter under submission.
       Later that day, the court issued a minute order denying the
petition, stating, “[T]he agreement to arbitrate, the Dispute
Resolution Policy (DRP), is unconscionable.” The court did not
address whether a valid arbitration agreement was formed but
instead proceeded directly to the unconscionability analysis. The
court found the agreement was procedurally unconscionable for
three reasons: (1) the “DRP is a contract of adhesion”; (2) the
“employment application, which incorporated the DRP by
reference and purported to bind plaintiff to the DRP, did not
explicitly state that plaintiff was agreeing to binding arbitration,

1     Both parties characterize the court’s statements at the
hearing as “findings.” The court did not rule on the motion at the
hearing and thus made no findings. Instead, after expressing
preliminary views, the court heard further argument from the
parties and took the matter under submission. The court issued
a written order later that day.

                                12
and only explicitly stated that plaintiff waived his right to a jury
trial”; and (3) “Plaintiff was never provided a copy of the DRP.”
       The trial court also found the following provisions of the
policy were substantively unconscionable: (1) “[t]he PAGA
waiver”; (2) “[t]he [d]iscovery restrictions”; (3) “[t]he one-sided
employee compliance with the four-tiered DRP upon strict
timelines, non-compliance of which resulted in waiver of
plaintiff’s claims”; (4) the “[e]mployer’s unilateral ability to
bypass the DRP upon 30 days’ notice”; (5) “[t]he [c]onfidentiality
provision”; and (6) “[t]he one-sided injunction provision only for
actions likely to be brought by the employer.”
       Gulfstream timely appealed.

                          DISCUSSION

A.     Standard of Review
       “There is no uniform standard of review for evaluating an
order denying a [petition] to compel arbitration.” (Lopez v.
Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311, 317
[quotation marks omitted] (Lopez).) “[I]f the court’s denial rests
solely on a decision of law, then a de novo standard of review is
employed.” (Ibid. [quotation marks omitted]; accord, Garcia v.
KND Development 52, LLC (2020) 58 Cal.App.5th 736, 744
(Garcia) [“We review de novo the legal conclusions underlying a
trial court’s denial of a petition to compel arbitration.”].)
       “If the court’s order is based on a decision of fact, then we
adopt a substantial evidence standard.” (Lopez, supra,
39 Cal.App.5th at p. 317.) “This traditional standard of review is
highly deferential. It has three pillars. First, we accept all
evidence supporting the trial court’s order. Second, we

                                 13
completely disregard contrary evidence. Third, we draw all
reasonable inferences to affirm the trial court. These three
pillars support the lintel: We do not reweigh the evidence.”
(Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 581.)
       Contrary to Gulfstream’s argument, the substantial
evidence standard applies “with due deference to the trial court’s
resolution of factual conflicts[] regardless of whether the evidence
is oral or documentary.” (Desert Outdoor Advertising v. Superior
Court (2011) 196 Cal.App.4th 866, 868 fn. 1.) The fact “that the
trial court’s findings were based on declarations and other
written evidence does not lessen the deference due those
findings.” (Haraguchi v. Superior Court (2008) 43 Cal.4th 706,
711 fn. 3; see also Shamblin v. Brattain (1988) 44 Cal.3d 474, 479
[appellate court must “defer to the factual determinations made
by the trial court when the evidence is in conflict,” even when the
trial court’s ruling is based on declarations].)

B.    The Trial Court Correctly Decided the Dispute Resolution
      Policy Is Unconscionable
      ‘“The party seeking to compel arbitration bears the burden
of proving the existence of a valid arbitration agreement.”’
(Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128
(Young).) Here, the trial court’s written order did not address
contract formation, and the court made no findings as to whether
a valid agreement to arbitrate was formed. We question whether
Rice agreed to arbitrate because the employment application did
not mention arbitration and because (as the trial court found
based on substantial evidence) Rice was never provided with a
copy of the dispute resolution policy containing the arbitration

                                14
clause.2 However, because we agree with the trial court that the
dispute resolution policy is unconscionable and affirm on that
basis, we do not need to reach the issue whether a valid contract
was formed. We therefore assume without deciding that Rice
agreed to arbitrate by signing the employment application
referencing the dispute resolution policy.
       If a valid agreement to arbitrate is formed, courts will
enforce the agreement as with any other contract. (OTO,
L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO); Mills v. Facility
Solutions Group, Inc. (2022) 84 Cal.App.5th 1035, 1049 (Mills);
Code Civ. Proc., § 1281; 9 U.S.C. § 2.) Generally applicable
contract defenses such as unconscionability apply. (OTO, at
p. 125; 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
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

2      We discuss the substantial evidence in support of the trial
court’s finding in section B.1, infra. Because the finding is
supported by substantial evidence, we accept it as true.

                                15
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.) Whether an agreement is
unconscionable is generally a question of law we review de novo.
(Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th
93, 102.) However, “to the extent the trial court relied on
contested facts in making its determination, we review the court’s
factual determinations for substantial evidence.” (Ibid.)

      1.    The Circumstances Surrounding the Formation of the
            Contract Involved a Heightened Degree of Procedural
            Unconscionability
      “A procedural unconscionability analysis ‘begins with an
inquiry into whether the contract is one of adhesion.’ [Citation.]

                                16
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.’ [Citations.] Arbitration contracts
imposed as a condition of employment are typically adhesive.”
(OTO, supra, 8 Cal.5th at p. 126.) Here, the agreement was
presented on a take-it-or-leave-it basis and was imposed as a
condition of employment and was therefore adhesive.
       Adhesion contracts in the employment context “typically
contain some aspects of procedural unconscionability.” (Serpa v.
California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695,
704.) “[T]he 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 agreement.”
(Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
24 Cal.4th 83, 115 (Armendariz); accord, Little v. Auto Stiegler,
Inc. (2003) 29 Cal.4th 1064, 1071.) Thus, adhesive employment
contracts generally have at least a minimal degree of procedural
unconscionability. (Swain v. LaserAway Medical Group, Inc.
(2020) 57 Cal.App.5th 59, 68 [analyzing an adhesive contract in a
non-employment context].)
       To determine whether a heightened degree of procedural
unconscionability existed, we consider “whether circumstances of
the contract’s formation created such oppression or surprise that
closer scrutiny of its overall fairness is required.” (OTO, supra,
8 Cal.5th at p. 126.) “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.” (Ibid. [quotation marks omitted].)

                               17
      Here, the circumstances surrounding the contract’s
formation involved a significant degree of surprise and
oppression. Rice purportedly agreed to arbitrate by signing the
application containing the following language: “I agree to the
exclusive resolution of all claims arising out of or relating to . . .
employment . . . by the procedures set forth in the Company’s
Dispute Resolution Policy. . . . I understand that as a result of
my and the Company’s mutual agreement to resolve claims
exclusively through the Company’s Dispute Resolution Policy, I
and the Company hereby waive any rights to a jury trial.”
      The trial court found Rice “was never provided a copy of the
[dispute resolution policy].” There was substantial evidence to
support that finding. Gulfstream acknowledges Rice was not
provided with a copy at the time he signed the application, and
Rice declared he had never received a copy either before or after
signing. Rice’s declaration constitutes substantial evidence to
support the court’s finding that he never received the policy.
Gulfstream devotes many pages of its briefs discussing the
evidence in support of its position that Rice was provided with a
copy of the policy while he was previously employed with the
company and at the orientation after he was rehired, but that
evidence is irrelevant because there is substantial evidence to
support the trial court’s finding that he never received it.
      Further, the application did not explicitly state that Rice
agreed to binding arbitration or that he waived the right to have
any disputes determined in a court of law. It referred only to an
undefined “dispute resolution policy.” Although the application
states the applicant waived the right to a jury, the applicant was
not informed he or she waived all rights to a judicial forum.
Gulfstream presents no evidence that this was explained to Rice

                                 18
at the time he signed the application. In his declaration, Rice
stated the policy was never explained to him, either before or
after he signed the application.
       These facts demonstrate Rice’s agreement to arbitrate
involved a high degree of surprise. Even the fact the dispute
resolution policy required arbitration was “artfully hidden.” (See
Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246
[discussing cases standing “for the proposition that courts will
more closely scrutinize the substantive unconscionability of terms
that were ‘artfully hidden’ by the simple expedient of
incorporating them by reference rather than including them in or
attaching them to the arbitration agreement”].) Further, the
specific terms Rice contends are substantially unconscionable
were hidden from him when he signed. (Ibid.; see also Ali v.
Daylight Transport, LLC (2020) 59 Cal.App.5th 462, 476-477
[element of surprise is shown when allegedly unconscionable
terms are included in AAA arbitration rules that are incorporated
by reference into an employee’s arbitration agreement but are not
provided to the employee].)
       These facts also support the conclusion that Rice was
subjected to a higher degree of oppression than an employee is
normally subjected to when agreeing to arbitration. In
considering the degree of oppression, courts consider, among
other things, whether the employee had a sufficient opportunity
to review the arbitration agreement, whether the employer
explained the terms of the agreement to the employee, and
whether the circumstances as a whole indicate the employee
understood the terms of the agreement before signing. (See, e.g.,
OTO, supra, 8 Cal.5th at pp. 126-129.) Here, Rice’s agreement to
comply with the dispute resolution policy involved a higher-than-

                               19
average degree of oppression because Gulfstream did not provide
Rice with a copy of the dispute resolution policy, did not use the
word “arbitration” in the employment application, and did not
explain to Rice that he was agreeing to arbitrate by signing the
application. (See Carlson v. Home Team Pest Defense, Inc. (2015)
239 Cal.App.4th 619, 634 [high degree of procedural
unconscionability was present when employee was required to
sign an agreement to be bound by a dispute resolution policy but
employer would not provide a copy of the policy for her review].)
       Gulfstream argues at most only minimal procedural
unconscionability was shown. Gulfstream asserts it does not
matter that the application Rice signed did not mention
arbitration, that the dispute resolution policy was incorporated
by reference, and that Rice was not provided with a copy of the
policy. Gulfstream cites cases for the proposition that a contract
can be formed when an arbitration provision is incorporated by
reference or when the document containing the arbitration clause
is not provided to the employee, but those cases are not relevant
to procedural unconscionability. Even if a contract may be
formed under those circumstances, those factors add to the
procedural unconscionability in the agreement’s formation. (See
OTO, supra, 8 Cal.5th at pp. 126-127.) The cases Gulfstream
cites do not suggest otherwise.3

3     In Gulfstream’s discussion of procedural unconscionability
on pages 29 to 44 of its opening brief, Gulfstream cited only a
single case concerning procedural unconscionability; the rest
concerned contract formation. The procedural unconscionability
case Gulfstream cites, Sanchez v. Valencia Holding Co., LLC,
supra, 61 Cal.4th 899 does not support its position. There, the
court found there was some degree of procedural
unconscionability in an adhesive vehicle sales agreement but the

                               20
      2.     The Arbitration Agreement Is Substantively
             Unconscionable
      Because we conclude the agreement to arbitrate involved a
heightened degree of procedural unconscionability, we “closely
scrutinize the substantive terms ‘to ensure they are not
manifestly unfair or one-sided.’” (OTO, supra, 8 Cal.5th at
p. 130; accord, Baltazar, supra, 62 Cal.4th at p. 1244.)

             a.    The limitations on discovery are unconscionable
       A provision limiting discovery in an arbitration agreement
in the employment context is substantively unconscionable if the
discovery is not sufficient to allow employees to vindicate their
statutory rights. As we explained in Mills, supra, 84 Cal.App.5th
at page 1058: “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). . . . ’ [Citations.]
As the Supreme Court in Armendariz explained with respect to
FEHA claims, ‘We agree that adequate discovery is indispensable
for the vindication of FEHA claims.’ [Citation.] ‘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 permitted under the arbitration
agreement, the standard for obtaining additional discovery, and

unconscionability was not heightened by the consumer’s failure to
read the agreement and the vendor’s failure to highlight the
arbitration clause. (Id. at pp. 914-915.) Sanchez is entirely
consistent with the conclusion Gulfstream subjected Rice to a
heightened degree of procedural unconscionability here.

                                21
whether the plaintiffs have demonstrated that the discovery
limitations will prevent them from adequately arbitrating their
statutory claims.’ [Citations.] ‘The denial of adequate discovery
in arbitration proceedings leads to the de facto frustration of the
employee’s statutory rights.’” (Armendariz, supra, 24 Cal.4th 83
at pp. 1058-1059.)
       The only discovery requests that are allowed as a matter of
right under the dispute resolution policy are requests for
production. Depositions are allowed only by agreement of the
parties or by order of the arbitrator. The parties are similarly not
allowed to propound interrogatories or requests for admission
except by order of the arbitrator. While the policy does require
the parties to disclose the witnesses and documents they intend
to rely on at the hearing, the disclosure does not have to be made
until after the close of discovery.
       In Mills, we concluded that similar limitations on discovery
were substantively unconscionable because the discovery was not
sufficient to allow the plaintiff to arbitrate his statutory claims.
(Mills, supra, 84 Cal.App.5th at pp. 1059-1060.) There, the
arbitration agreement allowed each party to take depositions,
designate expert witnesses, and subpoena witnesses, but did not
expressly allow for document requests, requests for admission, or
interrogatories. Instead, such discovery could be had “‘only
where the hearing arbitrator so orders, upon a showing of
substantial need.’” (Id. at p. 1059.) We concluded that the
provision allowing the arbitrator to order additional discovery
upon a showing of substantial need was an “‘inadequate safety
valve’” to ensure sufficient discovery would be allowed to
vindicate the plaintiff’s statutory rights. (Id. at p. 1060

                                22
[explaining and following Fitz v. NCR Corp. (2004)
118 Cal.App.4th 702, 718-719].)
       Here, the provision prohibiting depositions except upon
agreement of the parties or order of the arbitrator is especially
onerous. Although the provision is facially neutral, it unfairly
favors Gulfstream. (See De Leon v. Pinnacle Property
Management Services, LLC (2021) 72 Cal.App.5th 476, 487
(De Leon).) “‘Employment disputes are factually complex, and
their outcomes ‘are often determined by the testimony of multiple
percipient witnesses . . . .’ [Citation.] Seemingly neutral
limitations on discovery in employment disputes may be
nonmutual in effect.’” (Id. at pp. 487-488.) Gulfstream is likely
to employ and have access to many of the relevant witnesses and
thus would not need to take their depositions. The inability of
Rice to depose such witnesses would “unfairly prevent [Rice] from
vindicating statutory claims.” (See Nunez v. Cycad Management
LLC (2022) 77 Cal.App.5th 276, 285 (Nunez); see also Kinney v.
United Healthcare Services, Inc. (1999) 70 Cal.App.4th 1322,
1332 [because an employer “is presumably in possession of the
vast majority of evidence that would be relevant to employment-
related claims against it, the limitations on discovery, although
equally applicable to both parties, work to curtail the employee’s
ability to substantiate any claim”].)
       Courts have concluded provisions limiting depositions were
substantively unconscionable when they allowed for more
depositions than are allowed here. (Nunez, supra, 77 Cal.App.5th
at p. 285 [arbitration provision in employment contract limiting
discovery to three depositions and 30 discovery responses is
substantively unconscionable]; De Leon, supra, 72 Cal.App.5th at
pp. 487-488 [provision limiting parties to 20 interrogatories and

                               23
three depositions was substantively unconscionable]; Davis v.
Kozak (2020) 53 Cal.App.5th 897, 911 [provision allowing parties
to take two depositions but allowing for no written discovery was
substantively unconscionable].) We agree with the trial court
that the limitations on discovery are substantively
unconscionable.
      Gulfstream attempts to distinguish cases finding discovery
limitations unconscionable by arguing that, in the agreements in
those cases, the arbitrator could order additional discovery only
on a showing of “compelling need.” Gulfstream misreads the
applicable cases. In Mills, for example, the discovery provision
we found unconscionable allowed the arbitrator to order
additional discovery on a showing of “‘substantial need.’” (Mills,
supra, 84 Cal.App.5th at p. 1059; see also Davis v. Kozak, supra,
53 Cal.App.5th at p. 912 [finding discovery limitation
unconscionable even though arbitrator could order additional
discovery on a finding of “‘sufficient cause’”].)
      Here, as Gulfstream notes, the dispute resolution policy
does not articulate the standard the arbitrator is to apply in
deciding whether to allow additional discovery. But that does not
lessen the substantive unconscionability. An arbitrator could
conclude he or she has unfettered discretion to deny a request or
could require a party to show “substantial need” or “sufficient
cause” for the discovery. There is no reason to believe an
arbitrator would apply a less onerous standard.
      Contrary to Gulfstream’s argument, the conclusion that the
discovery limitations are substantively unconscionable is not
inconsistent with the United States Supreme Court’s holdings in
Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 32
(Gilmer) and AT&T Mobility LLC v. Concepcion (2011) 563

                               24
U.S. 333 (Concepcion). In Gilmer, the issue was whether a claim
for age discrimination under federal law could be subject to
compulsory arbitration pursuant to an arbitration agreement in a
securities registration application. The appellant raised a “host
of challenges to the adequacy of arbitration procedures,”
including that discovery in arbitration would be more limited
than in federal court. The court stated that even though
discovery in arbitration might not be as extensive as in the
federal courts, “there has been no showing in this case that the
NYSE discovery provisions, which allow for document production,
information requests, depositions, and subpoenas . . . will prove
insufficient to allow ADEA claimants such as Gilmer a fair
opportunity to present their claims.” (Gilmer, at pp. 30-31.)
Here, by contrast, the discovery provision does not allow for any
depositions or interrogatories as a matter of right.
       In Concepcion, the court held that although section 2 of the
Federal Arbitration Act “preserves generally applicable contract
defenses, nothing in [section 2] suggests an intent to preserve
state-law rules that stand as an obstacle to the accomplishment
of the FAA’s objectives.” (Concepcion, supra, 563 U.S. at p. 343.)
The court stated, “An obvious illustration of this point would be a
case finding unconscionable . . . arbitration agreements that fail
to provide for judicially monitored discovery.” (Id. at pp. 341-342
[italics added].) That illustration does not apply here.
Concepcion did not hold a court could never find an agreement
was unconscionable because of limitations on discovery.
       Gulfstream cites Caley v. Gulfstream Aerospace Corp. (11th
Cir. 2005) 428 F.3d 1359, in which the Eleventh Circuit
concluded Gulfstream’s dispute resolution policy was not
unconscionable under Georgia law. We decline to follow Caley

                                25
because, among other reasons, the standard for unconscionability
under Georgia law is different from the standard here. (Caley, at
p. 1378 [agreement is unconscionable under Georgia law only if
the agreement is one that “‘no sane man not acting under a
delusion would make and that no honest man would take
advantage of’”].)

            b.      The deadlines an employee must comply with in
                    the four-level review process are unconscionable
       Arbitration provisions that shorten the applicable statutes
of limitations for statutory employment claims are substantively
unconscionable. (See, e.g., De Leon, supra, 72 Cal.App.5th at
p. 487; Ali v. Daylight Transport, LLC (2020) 59 Cal.App.5th 462,
478; Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th
227, 254; Samaniego v. Empire Today, LLC (2012)
205 Cal.App.4th 1138, 1147; Martinez v. Master Protection Corp.
(2004) 118 Cal.App.4th 107, 117.) Here, the policy requires an
employee who submits a dispute for informal resolution to
Human Resources to initiate the next level in the process within
30 days after the termination of that and each subsequent step,
or the employee will waive the claim. These strict deadlines will
likely have the effect of shortening the statute of limitations in
many cases and thus are unconscionable.
       Under the policy, “[t]he Company encourages Employees to
attempt to resolve matters informally with their supervisor.” If
the employee is unable to resolve the matter informally, the
employee may bring the matter to Human Resources for a
“Level 1” review. In Level 1, “Human Resources will informally
meet with the Employee, his or her supervisor, and other parties
involved in the dispute to ascertain the circumstances and to try

                                26
to resolve the matter informally and by agreement of the persons
involved.”
       The policy provides the matter “should” be submitted to
Human Resources “within 30 days after the dispute arises,” but
this initial deadline is not mandatory. The policy states: “This
30-day guideline shall not be applied by the Company to bar the
submission of any Covered Claim to Human Resources Review
(Level 1) within the applicable statute of limitations.”
       Once the matter is submitted to Human Resources,
however, the employee must comply with a series of strict 30-day
deadlines to initiate the next level, or the employee waives the
claims. As the policy explains: “After an Employee submits a
Covered Claim at the initial filing at Level 1 for Human
Resources Review, the Employee must (1) follow each step and
cannot skip any level; and (2) file any request to proceed to any of
the next levels within thirty (30) days after the date after Final
Determination at the previous level. If an Employee does not file
for the next step within the 30-day period, the Employee will
waive his or her rights to pursue his or her covered claims.”
These deadlines are reiterated several times throughout the
policy.
       Here, among other claims, Rice asserts claims for violations
of FEHA and the Labor Code, which have a three-year statute of
limitations, and violations of the Unfair Competition Law, which
has a four-year statute of limitations. Under the policy, if Rice
had been unable to resolve these disputes with his supervisor and
escalated the matters to Human Resources within the period
suggested by the policy, Rice would then have been bound by the
interim 30-day deadlines, which likely would have the effect of
dramatically reducing the statute of limitations period. This

                                27
reduction in the statute of limitations period is substantively
unconscionable.
       Carlson v. Home Team Pest Defense, Inc., supra,
239 Cal.App.4th at page 636 is on point. The dispute resolution
policy in that case, as here, required employees to submit
disputes to the company for an attempt at informal resolution
before an arbitration could be initiated. If informal resolution
was not successful, the employee had to file a demand for
arbitration within 90 days after filing the initial request for
dispute resolution. “The practical effect of this last provision is
that, while [the employee] may present her claims to [the
employer] well within the otherwise applicable legal statutes of
limitations, the addition of a 90-day time limitation to demand
arbitration acts to limit the time that would be available
otherwise for filing a complaint in superior court.” (Ibid.) The
court concluded the provision was substantively unconscionable.
The same reasoning applies here.
       Indeed, an employee subjected to this policy could be forced
to initiate arbitration before the claim had even accrued. The
facts of Romano v. Rockwell International, Inc. (1996) 14 Cal.4th
479 (Romano) are illustrative. There, the employer informed the
employee he would be terminated in two years, when he reached
a certain level of seniority. (Id. at p. 484.) The employee
contended the decision was the result of age discrimination and
retaliation under FEHA. After the employee was actually
discharged, the employee filed suit, and the employer claimed the
suit was barred by the statute of limitations. The issue was
whether the cause of action accrued for statute of limitations
purposes on the date he was notified he would be discharged or
the actual date of discharge.

                                28
        The court held the statute of limitations ran from date of
discharge, not from the date the employee had been informed
discharge was inevitable. The court concluded that “a holding
that the statute of limitations on a claim under FEHA runs from
the time of notification of termination would promote premature
and potentially destructive claims” and “would reduce sharply
any chance of conciliation between employer and employee.”
(Romano, supra, 14 Cal.4th at p. 494.)
        Under the dispute resolution policy here, an employee in
the position of the Romano plaintiff who was informed of a
discharge decision and who sought to pursue an informal
resolution by submitting the dispute to Human Resources would
then be required to comply with strict 30-day deadlines to
continue through the process, culminating in the initiation of
arbitration. The employee could be required to initiate
arbitration before the cause of action had even accrued.
        The substantive unconscionability of the deadlines in the
tiered resolution process is heightened because they apply only to
employees and not to the company. While employees “must
complete each level of the process before proceeding to the next
level[,] [t]he Company may elect to bypass one or more steps prior
to arbitration for disputes with applicants for employment, with
former employees, or if the Company is the initiating party.”
“Mutuality is the ‘“paramount consideration”’ in assessing
substantive conscionability.” (Gostev v. Skillz Platform, Inc.
(2023) 88 Cal.App.5th 1035, 1056.) Where, as here, a provision
unilaterally favors the employer and the employer has presented
no evidence showing a legitimate reason for the disparate
treatment, the provision must be closely scrutinized to determine
if it is unconscionable. (Id. at p. 1057.)

                               29
              c.    The confidentiality provision is unconscionable
       The dispute resolution policy contains a confidentiality
clause providing: “All aspects of the proceedings pursuant to this
[dispute resolution policy], including the hearing and recording of
the proceeding, shall be confidential to the fullest extent
permitted by law.” The trial court found the confidentiality
provision unconscionable. We agree.
       In Ramos v. Superior Court (2018) 28 Cal.App.5th 1042,
1066-1077 (Ramos), the court found a confidentiality provision in
an arbitration agreement substantively unconscionable because it
impaired the employee’s ability to gather evidence in support of
her claim. The provision required the employee to keep “all
aspects” of the arbitration proceedings confidential. The court
found the provision effectively prohibited an employee from
contacting witnesses or conducting informal discovery, including
by interviewing other employees. Such limitation “would not
only increase [the employee’s] costs unnecessarily by requiring
her to conduct depositions rather than informal interviews, it
also defeats the purpose of using arbitration as a simpler, more
time-effective forum for resolving disputes. In addition, requiring
discrimination cases be kept secret unreasonably favors the
employer to the detriment of employees seeking to vindicate
unwaivable statutory rights and may discourage potential
plaintiffs from filing discrimination cases.” (Id. at p. 1066.) For
those reasons, the court found the provision to be unconscionable.
(Ibid.; see also Baxter v. Genworth North America Corp. (2017)
16 Cal.App.5th 713, 725-726 [provision in employment
arbitration agreement prohibiting employees and their attorneys
from communicating with other employees about the aggrieved
employee’s claim was substantively unconscionable because

                                30
“without the ability to conduct such an informal investigation, an
employee will be hampered in his or her ability to effectively
tailor the limited discovery allowed under the arbitration
agreement”].)
       The provision here is more expansive than the one at issue
in Ramos, supra, 28 Cal.App.5th 1042 since it covers all aspects
of the dispute resolution process, including Level 1, in which
Human Resources meets informally with the employee, his or her
supervisor, and other parties involved in the dispute. Requiring
an employee to keep all attempts at dispute resolution
confidential—including informal discussions with Human
Resources—would substantially impair an employee’s ability to
investigate and develop evidence in support of his or her claim.
The restriction would preclude an employee, for example, from
talking to his or her colleagues about assertions made by the
employee’s supervisor in the Level 1 meetings to determine the
veracity of the statements. It would hamper an employee’s
ability to determine whether his or her colleagues support the
employee’s version of events or to gather evidence showing a
pattern of discrimination. The secrecy would also make it less
likely potential witnesses would learn about a plaintiff’s dispute
and come forward with relevant evidence.
       The confidentiality provision would be especially harmful
here, where the agreement does not allow for any depositions or
interrogatories in the arbitration proceeding without an order
from the arbitrator. Taken together, the restrictions could
substantially impair the employee’s ability to conduct both formal
and informal discovery. For the reasons stated in Ramos, we
uphold the trial court’s finding that the confidentiality provision
is unconscionable.

                                31
       Gulfstream argues the confidentiality provision is not
unconscionable because it requires confidentiality only to the
extent “permitted by law.” The inclusion of such language does
not significantly reduce the unconscionability of the provision
because a layperson without legal training would not know the
provision could not be enforced. (See OTO, supra, 8 Cal.5th at
pp. 128-129 [discussing such language in the context of
procedural unconscionability].)
       Gulfstream also argues the confidentiality provision is akin
to the ones upheld in Sanchez v. Carmax Auto Superstores
California, LLC (2014) 224 Cal.App.4th 398 (Carmax) and
Woodside Homes of California, Inc. v. Superior Court (2003)
107 Cal.App.4th 723 (Woodside). Gulfstream’s position lacks
merit. The confidentiality provision in Woodside required the
parties to keep the transcript of the judicial reference hearing
confidential. (Woodside, at pp. 731-732.) This is substantially
narrower than a provision requiring a claimant to keep “all
aspects” of dispute resolution attempts confidential, from Level 1
informal discussions with the human resources department
forward.
       Further, as Ramos stated, Carmax did not address the
argument “that a confidentiality clause like the one at issue in
this case would impair [an employee’s] ability to engage in
informal discovery in pursuit of her litigation claims” and is thus
not authority on that point. (Ramos, supra, 28 Cal.App.5th at
p. 1066 [distinguishing Carmax, supra, 224 Cal.App.4th 398].)
       In its reply brief, Gulfstream suggests the confidentiality
provision applies only to the arbitration hearing and the
recording of the proceeding. That argument is inconsistent with
the express language of the provision and the structure of dispute

                                32
resolution policy. The provision again states: “All aspects of the
proceedings pursuant to the [dispute resolution policy], including
the hearing and recording of the proceeding, shall be confidential
to the fullest extent permitted by law.” Levels 1 through 3 are
“proceedings pursuant to the [dispute resolution policy].”
Further, if Gulfstream intended for this provision to apply only to
the arbitration proceeding in Level 4, Gulfstream could have
included it in the terms that apply solely to Level 4. Instead, it is
included among the general provisions that apply to all levels.

       d.     The PAGA waiver is unconscionable
       The policy provides: “[N]o Covered Claim may be brought
as a class or collective action either under this Policy or in court.”
Further, the employee represents “that he/she will not act as a
class or collective action representative . . . with respect to any
Covered Claim.” The parties agree this provision, if enforced,
would preclude Rice from bringing a PAGA claim in a
representative capacity on behalf of other aggrieved employees.
       This provision is substantively unconscionable. PAGA
waivers are “contrary to public policy and unenforceable as a
matter of state law.” (Iskanian v. CLS Transportation
Los Angeles, LLC (2014) 59 Cal.4th 348, 384.) Gulfstream
inexplicably argues that Viking River Cruises v. Moriana (2022)
__ U.S. __, 142 S.Ct. 1906 overruled Iskanian on this point.
Gulfstream is wrong. The Supreme Court expressly held the
FAA does not preempt Iskanian’s holding that PAGA waivers are
unenforceable. (Viking River Cruises, at pp. 1924-1925 [“Under
Iskanian, [the PAGA waiver] 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.”]; see also id. at

                                 33
p. 1921 [“Nothing in the FAA establishes a categorical rule
mandating enforcement of waivers of standing to assert claims on
behalf of absent principals”]; Galarsa v. Dolgen California, LLC
(2023) 88 Cal.App.5th 639, 649-650 [analyzing Viking River
Cruises and concluding “the rule precluding the waiver of the
right to bring a representative action under PAGA is an aspect of
Iskanian that is not preempted by federal law and remains good
law”].)
       An illegal waiver of statutory rights is substantively
unconscionable. (See, e.g., Lange v. Monster Energy Co. (2020)
46 Cal.App.5th 436, 448-449 [punitive damages waiver is
substantively unconscionable].) While a PAGA waiver alone is
not enough to render the entire arbitration agreement
unconscionable because it could easily be severed, the fact an
agreement contains multiple unconscionable terms is relevant to
whether the arbitration agreement is permeated with an
unlawful purpose. (See Armendariz, supra, 24 Cal.4th at
p. 124.)4

             e.     Other provisions
       The trial court concluded two other provisions were
substantively unconscionable: the “one-sided injunction provision
only for actions likely to be brought by the employer” and the
“[e]mployer’s unilateral ability to bypass the DPR upon 30 days’

4      The fact the agreement contained this unconscionable term
is relevant regardless of whether Rice asserts a representative
PAGA claim or only one in his individual capacity. Whether an
arbitration agreement is unconscionable is measured at the time
the contract is made. (See, e.g., Armendariz, supra, 24 Cal.4th at
p. 122.)

                               34
notice.” Because we conclude the provisions already discussed
demonstrate the agreement is permeated with unconscionability,
we do not reach the issue whether the interim relief and
modification provisions were also unconscionable.

C.     The Trial Court Did Not Abuse Its Discretion in Declining
       to Sever the Unconscionable Arbitration Provisions
       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.”
       “The Supreme Court has interpreted this provision to mean
that if a trial court concludes that an arbitration agreement
contains unconscionable terms, it then ‘must determine whether
these terms should be severed, or whether instead the arbitration
agreement as a whole should be invalidated.’” (Lange v. Monster
Energy Co., supra, 46 Cal.App.5th at pp. 452-453). “[T]he strong
legislative and judicial preference is to sever the offending term
and enforce the balance of the agreement: Although ‘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[,] . . . it also appears to
contemplate the latter course only when an agreement is
“permeated” by unconscionability.’” (Roman v. Superior Court
(2009) 172 Cal.App.4th 1462, 1477-1478, quoting Armendariz,
supra, 24 Cal.4th at p. 122.) We review the trial court’s decision

                                35
not to sever unconscionable terms for an abuse of discretion.
(Mills, supra, 84 Cal.App.5th at p. 1065.)
       Here, the unconscionability permeates the agreement. The
court could not simply sever the offending terms but would have
to rewrite the agreement, which the court may not do. (See, e.g.,
Mills, supra, 84 Cal.App.5th at p. 1066 [“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”].) At the very
least, the discovery provisions and the provisions requiring the
employee but not the employer to go through all levels of the
dispute resolution process would have to be rewritten. (Id. at
pp. 1066-1067; see also De Leon, supra, 72 Cal.App.5th at p. 493
[declining to sever unlawful statute of limitations and discovery
provisions of the 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 the entire agreement’”].)
       Further, the fact there are multiple unconscionable
provisions supports the conclusion that unconscionability
permeates the agreement. “[M]ultiple defects indicate a systemic
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.” (Armendariz, supra, 24 Cal.4th at
p. 124; see also Mills, supra, 84 Cal.App.5th at p. 1066.)
       Accordingly, we conclude the court did not abuse its
discretion by denying the motion instead of severing the
unconscionable provisions.
       Gulfstream asserts the trial court did not consider
severance because it did not address it in its written order.

                                36
Gulfstream’s inference is not supported by the record. The
parties thoroughly briefed whether any unconscionable provision
could be severed, and the issue was touched on at the hearing.
       Moreover, Gulfstream has forfeited any objection on this
basis. Gulfstream had the right to request a statement of
decision under Code of Civil Procedure section 1291, which
states, “A statement of decision shall be made by the court, if
requested pursuant to Section 632, whenever an order or
judgment . . . is made that is appealable under this title [i.e., the
California Arbitration Act].” Gulfstream did not request a
statement of decision, and thus the trial court was not required to
provide one. (See Acquire II, Ltd. v. Colton Real Estate Group
(2013) 213 Cal.App.4th 959, 970 (Acquire II, Ltd.).)
       “A party’s failure to request a statement of decision when
one is available has two consequences. First, the party waives
any objection to the trial court’s failure to make all findings
necessary to support its decision. Second, the appellate court
applies the doctrine of implied findings and presumes the trial
court made all necessary findings supported by substantial
evidence.” (Acquire II, Ltd., supra, 213 Cal.App.4th at p. 970
[applying these principles in an appeal from an order denying a
motion to compel arbitration].)
       Accordingly, we presume the trial court found the
agreement was permeated with substantive unconscionability.
Further, because the court could not sever the discovery provision
without rewriting the contract, the only way the trial court could
validly exercise its discretion was to decline to enforce the
agreement. Thus, regardless whether the court actually
exercised its discretion, we affirm.

                                 37
D.     Rice’s Request for Sanctions Is Denied
       Rice asserts the appeal was frivolous and requests attorney
fees under Code of Civil Procedure section 907. We deny the
request. An appeal is frivolous “only when it is prosecuted for an
improper motive—to harass the respondent or delay the effect of
an adverse judgment—or when it indisputably has no merit—
when any reasonable attorney would agree that the appeal is
totally and completely without merit.” (In re Marriage of
Flaherty (1982) 31 Cal.3d 637, 650.) Gulfstream’s appeal does
not meet that standard. Gulfstream cites several trial court
decisions enforcing the dispute resolution policy under California
law and an Eleventh Circuit case (Caley, supra, 428 F.3d 1359)
enforcing it under Georgia law. That is enough to show the
appeal is not frivolous.

                         DISPOSITION

     The order is affirmed. Rice is to recover his costs on
appeal.

                                     ESCALANTE, J.*
      We concur:

      PERLUSS, P. J.                 FEUER, J.

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

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