Court Opinion

ID: 5130363
Source: CourtListenerOpinion
Date Created: 2021-12-01 00:02:37.358339+00
Date Added: 2024-06-11T08:23:17.300211
License: Public Domain

Filed 11/30/21 Sanchez v. JFK Memorial Hospital CA4/2
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
  California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
                                      or ordered published for purposes of rule 8.1115.

           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO

 ARACELI SANCHEZ,

          Plaintiff and Respondent,                                        E072560

 v.                                                                        (Super. Ct. No. PSC1805119)

 JFK MEMORIAL HOSPITAL, INC. et al.,                                       OPINION

          Defendants and Appellants.

         APPEAL from the Superior Court of Riverside County. David M. Chapman,

Judge. Reversed.

         Hill, Farrer & Burrill, Michael S. Turner, Dean E. Dennis and Jenner C. Tseng, for

Appellants and Defendants.

         Law Offices of Ramin R. Younessi, Ramin R. Younessi, Gabrielle A. Pedone and

Samantha L. Ortiz, for Plaintiff and Respondent.

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                                             I.

                                    INTRODUCTION

       Plaintiff and Respondent, Araceli Sanchez, sued her employer, Defendant and

Appellant, JFK Memorial Hospital, Inc. (JFK), and her supervisor, Jose Pecero, for

various claims related to her employment. In response, defendants petitioned to compel

arbitration of her claims. The trial court denied the petition because the parties’

arbitration agreement’s prearbitration dispute resolution process is unconscionable and

not severable. We reverse.

                                             II.

                  FACTUAL AND PROCEDURAL BACKGROUND

       JFK hired Sanchez in 2015. As part of her onboarding, Sanchez electronically
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signed JFK’s “Handbook and Fair Treatment Process Acknowledgement.” The

Acknowledgement provides in relevant part: “Except to the extent that any applicable

collective bargaining agreement provides otherwise, I hereby voluntarily agree to use the

Company’s Fair Treatment Process [(FTP)] and to submit to final and binding arbitration

any and all claims and disputes that are related in any way to my employment or the

termination of my employment” with JFK.

       1
          JFK is a part of Tenet Healthcare. All of Sanchez’s employment documents
refer to “Tenet” instead of JFK, but there is no material difference between them for
purposes of this appeal.

                                             2
       In 2018, Sanchez filed this case against JFK and Pecero, alleging various
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employment-related claims. Defendants therefore petitioned to compel arbitration of

Sanchez’s claims, except for her claim under the Private Attorneys General Act (PAGA;

Lab. Code, §§ 2699 et seq.). Sanchez opposed the petition on the grounds that she did

not agree to arbitrate her claims and the FTP is unconscionable.

       The trial court denied the petition. The court found that Sanchez agreed to

arbitrate her claims, but found that the FTP is unconscionable and thus unenforceable.

The court reasoned that the FTP was “presumed to be procedurally unconscionable

because of the inequality of the parties’ bargaining power and an absence of real

negotiation or a meaningful choice on the part of Sanchez whether to agree to the

[arbitration] agreement.” The trial court found that the FTP’s four-step prearbitration

procedure was substantively unconscionable because it would afford JFK a “‘free peek’”

at Sanchez’s case before she requested arbitration, which would give JFK “‘an advantage

if and when [she] were to later demand arbitration.’” The trial court also found it was

“not possible” to sever the FTP’s “prearbitration requirements” and, even if it were,

severing them was inappropriate because the FTP’s prearbitration process sought “to

inhibit Sanchez’s access to a fair resolution of the dispute by requiring her to disclose to

JFK the evidence and arguments she would present before arbitration.”

       Defendants timely appealed.

       2
           The allegations underlying Sanchez’s claims are not relevant to the issues on
appeal.

                                              3
                                             III.

                                       DISCUSSION

       Defendants argue the trial court erred in denying its petition to compel arbitration

because (1) the FTP’s prearbitration process is not unconscionable and (2) even if it were,

the trial court should have severed the prearbitration provisions, upheld the parties’

arbitration agreement, and ordered them to arbitration. We assume without deciding that

the FTP’s prearbitration process is unconscionable because, even if it is, the trial court

should have severed it, granted defendants’ petition, and ordered the parties to arbitration.

       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.”

Accordingly, “[u]nder this section the court, in its discretion, may refuse to enforce the

contract as a whole if it is permeated by the unconscionability, or it may strike any single

clause or group of clauses which are so tainted or which are contrary to the essential

purpose of the agreement, or it may simply limit unconscionable clauses so as to avoid

unconscionable results.” (Cal. Civ. Code, § 1670.5, Legis. Comm. Comments, n. 2; see

also Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 826 [“The trial

court has discretion under [Civil Code section 1670.5, subdivision (a)] to refuse to

enforce an entire agreement if the agreement is ‘permeated’ by unconscionability.”].)

                                              4
       Two policies support severing a contract’s illegal provision rather than voiding the

entire contract: “The first is to prevent parties from gaining undeserved benefit or

suffering undeserved detriment as a result of voiding the entire agreement—particularly

when there has been full or partial performance of the contract. [Citations.] Second,

more generally, the doctrine of severance attempts to conserve a contractual relationship

if to do so would not be condoning an illegal scheme.” (Armendariz v. Foundation

Health Psychcare Servs. (2000) 24 Cal.4th 83, 123-124.)

       To determine whether to sever unconscionable provisions in an arbitration

agreement, “[c]ourts are to look to the various purposes of the contract. 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 v. Foundation Health

Psychcare Servs., supra, 24 Cal.4th at p. 124.)

       Thus, “[i]n determining whether to sever or restrict illegal terms rather than

voiding the entire contract, ‘[t]he overarching inquiry is whether “‘the interests of justice

. . . would be furthered’” by severance.’ [Citation.] Significantly, the 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

                                               5
agreement is “permeated” by unconscionability.’ [Citation.]” (Roman v. Superior Court

(2009) 172 Cal.App.4th 1462, 1477-1478.) To determine whether an arbitration

agreement is “permeated” with unconscionability, courts look to (1) whether there are

multiple unconscionable provisions; (2) whether “the central purpose” of the contract is

illegal; and (3) whether the contract can be “saved” by severing the unconscionable

terms, or whether the contract would have to be “reformed.” (Poublon v. C.H. Robinson

Co. (9th Cir. 2017) 846 F.3d 1251, 1273.)

       Sanchez did not comply with the FTP prearbitration process and defendants have

not sought to enforce it. The arbitration agreement can be “saved” by severing the

prearbitration provisions of the FTP and ordering the parties to arbitration. After doing

so, Sanchez’s claims can be arbitrated free of any allegedly unconscionable terms. The

trial court thus could have easily severed the FTP’s prearbitration provisions, upheld the

remainder of the parties’ arbitration agreement (none of which Sanchez challenges), and

ordered the parties to arbitration. As a result, we conclude the trial court abused its

discretion in declining to sever the FTP’s prearbitration provisions and denying

defendants’ petition to compel arbitration.

                                              IV.

                                      DISPOSITION

       The trial court’s order denying defendants’ petition to compel arbitration is

reversed. The trial court is directed to sever the FTP’s prearbitration provisions, grant

                                              6
defendants’ petition to compel arbitration, and order the parties to arbitrate Sanchez’s

claims. Defendants may recover their costs on appeal.

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS

                                                                CODRINGTON
                                                                          Acting P. J.

We concur:

FIELDS
                          J.

MENETREZ
                          J.

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