Court Opinion

ID: 1085651
Source: CourtListenerOpinion
Date Created: 2013-10-17 17:14:47.025143+00
Date Added: 2024-06-11T12:51:11.049172
License: Public Domain

Filed 10/17/13

      IN THE SUPREME COURT OF CALIFORNIA

SONIC-CALABASAS A, INC.,             )
                                     )
           Plaintiff and Appellant,  )
                                     )                              S174475
           v.                        )
                                     )                       Ct.App. 2/4 B204902
FRANK MORENO,                        )
                                     )                       Los Angeles County
           Defendant and Respondent. )                     Super. Ct. No. BS107161
____________________________________)

        In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 (Sonic I), we
held as a categorical rule that it is contrary to public policy and unconscionable for
an employer to require an employee, as a condition of employment, to waive the
right to a Berman hearing, a dispute resolution forum established by the
Legislature to assist employees in recovering wages owed. We further held that
our rule prohibiting waiver of a Berman hearing does not discriminate against
arbitration agreements and is therefore not preempted by the Federal Arbitration
Act (FAA). We did not invalidate the arbitration agreement at issue. Instead, we
held that if one of the parties is dissatisfied with the result of the Berman hearing,
it can move to arbitrate the wage dispute consistent with the arbitration agreement,
just as a dissatisfied party can obtain a trial in court without such an agreement.
        The United States Supreme Court granted certiorari in this case, vacated the
judgment, and remanded the case to this court for consideration in light of AT&T
Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S.Ct. 1740] (Concepcion).
In Concepcion, the high court clarified the limitations that the FAA imposes on a
state‘s capacity to enforce its rules of unconscionability on parties to arbitration
agreements. In light of Concepcion, we conclude that because compelling the
parties to undergo a Berman hearing would impose significant delays in the
commencement of arbitration, the approach we took in Sonic I is inconsistent with
the FAA. Accordingly, we now hold, contrary to Sonic I, that the FAA preempts
our state-law rule categorically prohibiting waiver of a Berman hearing in a
predispute arbitration agreement imposed on an employee as a condition of
employment.
       At the same time, we conclude that state courts may continue to enforce
unconscionability rules that do not ―interfere[] with fundamental attributes of
arbitration.‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1748].)
Although a court may not refuse to enforce an arbitration agreement imposed on
an employee as a condition of employment simply because it requires the
employee to bypass a Berman hearing, such an agreement may be unconscionable
if it is otherwise unreasonably one-sided in favor of the employer. As we
explained in Sonic I and reiterate below, the Berman statutes confer important
benefits on wage claimants by lowering the costs of pursuing their claims and by
ensuring that they are able to enforce judgments in their favor. There is no reason
why an arbitral forum cannot provide these benefits, and an employee‘s surrender
of such benefits does not necessarily make the agreement unconscionable. The
fundamental fairness of the bargain, as with all contracts, will depend on what
benefits the employee received under the agreement‘s substantive terms and the
totality of circumstances surrounding the formation of the agreement.
       The employee in this case contends that the particular arbitration scheme at
issue is unconscionable, while the employer contends that its arbitration agreement
offers adequate protections and advantages to facilitate the employee‘s claim and
                                           2
is not unreasonably one-sided. Because evidence relevant to the unconscionability
claim was not developed below, we remand to the trial court to determine whether
the present arbitration agreement is unconscionable under the principles set forth
in this opinion.
                                          I.
       Frank Moreno is a former employee of Sonic-Calabasas A, Inc. (Sonic),
which owns and operates an automobile dealership. As a condition of his
employment with Sonic, Moreno signed a document entitled ―Applicant‘s
Statement & Agreement.‖ The agreement set forth a number of conditions of
employment, including consent to drug testing and permission to contact former
employers, as well as a provision making the employment at will. The agreement
also contained a paragraph governing dispute resolution, which required both
parties to submit employment disputes to ―binding arbitration under the Federal
Arbitration Act, in conformity with the procedures of the California Arbitration
Act (Cal. Code Civ. Proc. sec. 1280 et seq. . . .).‖ The arbitration provision
applied to ―all disputes that may arise out of the employment context . . . that
either [party] may have against the other which would otherwise require or allow
resort to any court or other governmental dispute resolution forum[,] . . . whether
based on tort, contract, statutory, or equitable law, or otherwise.‖ The provision
specified that it did not apply to claims brought under the National Labor
Relations Act or the California Workers‘ Compensation Act, or to claims before
the Employment Development Department. The provision further stated that the
employee was not prevented from ―filing and pursuing administrative proceedings
only before the California Department of Fair Employment and Housing or the
U.S. Equal Opportunity Commission.‖
       In addition, the agreement provided that arbitration is to be conducted by a
―retired California Superior Court Judge‖ and that ―to the extent applicable in civil
                                          3
actions in California courts, the following shall apply and be observed: all rules of
pleading (including the right of demurrer), all rules of evidence, all rights to
resolution of the dispute by means of motions for summary judgment, judgment
on the pleadings, and judgment under Code of Civil Procedure section 631.8.‖ At
the request of either party, an arbitration award may be reviewed by a second
arbitrator who will, ―as far as practicable, proceed according to the law and
procedures applicable to appellate review by the California Court of Appeal of a
civil judgment following court trial.‖
       In December 2006, after leaving his position with Sonic, Moreno filed an
administrative wage claim with the Labor Commissioner for unpaid vacation pay
pursuant to Labor Code section 98 et seq. (All statutory references are to the
Labor Code unless otherwise indicated.) Moreno alleged he was entitled to unpaid
―[v]acation wages for 63 days earned 7/15/02 to 7/15/06 at the rate of $441.29 per
day.‖ The filing of such a claim is the first step toward obtaining a Berman
hearing.
       In February 2007, Sonic petitioned the superior court to compel arbitration
of the wage claim and to dismiss the pending administrative action, arguing that
Moreno waived his right to a Berman hearing in the arbitration agreement. The
Labor Commissioner intervened on Moreno‘s behalf (§ 98.5), and Moreno
adopted the Labor Commissioner‘s arguments. The Labor Commissioner argued
that the arbitration agreement, properly construed, did not preclude Moreno from
filing an administrative wage claim under section 98 et seq. According to the
Labor Commissioner, resort to a Berman hearing was compatible with the
arbitration agreement because the hearing could be followed by arbitration in lieu
of a de novo appeal in the superior court under section 98.2, subdivision (a). The
Labor Commissioner further argued that interpreting the arbitration agreement to

                                           4
waive a Berman hearing would violate public policy, relying on Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz).
       The superior court denied the petition to compel arbitration as premature.
Citing Armendariz, the court said that as a matter of ―basic public policy . . . until
there has been the preliminary non-binding hearing and decision by the Labor
Commissioner, the arbitration provisions of the employment contract are
unenforceable, and any petition to compel arbitration is premature and must be
denied.‖
       Sonic appealed. The Labor Commissioner did not participate in the appeal.
During the briefing period in the Court of Appeal, the United States Supreme
Court decided Preston v. Ferrer (2008) 552 U.S. 346 (Preston), which held that
the Labor Commissioner‘s original and exclusive jurisdiction under the Talent
Agencies Act (§ 1700 et seq.) was preempted when the parties entered into an
arbitration agreement governed by the FAA. The Court of Appeal concluded that
Preston was not dispositive of Sonic‘s appeal. According to the court, Preston
applies when a party challenges the validity of a contract as a whole and seeks to
have that challenge adjudicated by an administrative agency; it does not apply
when a party challenges the arbitration clause itself as unconscionable. The Court
of Appeal further concluded that the arbitration agreement, correctly interpreted,
constituted a waiver of a Berman hearing. By its terms, the agreement precluded
Moreno from pursuing any judicial ―or other government dispute resolution
forum,‖ subject to certain enumerated exceptions. The court stated: ―Given that
neither the Division of Labor Standards Enforcement nor the Labor Commissioner
was listed among the stated exceptions, we conclude, as a matter of law, that
Moreno was barred from pursuing an administrative wage claim under section 98
et seq.‖ The Court of Appeal then held that a Berman waiver is enforceable and
not contrary to public policy.
                                           5
       We granted Moreno‘s petition for review. As discussed below, we held in
Sonic I that although Moreno could be compelled to arbitrate, he could not be
required to waive his right to a Berman hearing before arbitration. Accordingly,
we reversed the Court of Appeal and ordered reinstatement of the trial court‘s
denial of Sonic‘s petition to compel arbitration. Sonic then petitioned the United
States Supreme Court for a writ of certiorari. The high court granted the petition,
vacated our judgment, and remanded the case to this court ―for further
consideration in light of AT&T Mobility LLC v. Concepcion, 563 U.S. __ [131
S.Ct. 1740, 179 L.Ed.2d 742] (2011).‖ (Sonic-Calabasas A, Inc. v. Moreno (2011)
565 U.S. __ [132 S.Ct. 496].) We requested supplemental briefing from the
parties on how Concepcion affects our decision in Sonic I.
                                         II.
       We begin by reviewing the Berman statutes and our opinion in Sonic I.
                                         A.
       In Sonic I, supra, 51 Cal.4th 569, we explained how Berman hearings and
related statutory protections benefit employees with wage claims against their
employers: ― ‗If an employer fails to pay wages in the amount, time or manner
required by contract or by statute, the employee has two principal options. The
employee may seek judicial relief by filing an ordinary civil action against the
employer for breach of contract and/or for the wages prescribed by statute.
(§§ 218, 1194.) Or the employee may seek administrative relief by filing a wage
claim with the commissioner pursuant to a special statutory scheme codified in
sections 98 to 98.8. The latter option was added by legislation enacted in 1976
(Stats. 1976, ch. 1190, §§ 4–11, pp. 5368–5371) and is commonly known as the
―Berman‖ hearing procedure after the name of its sponsor.‘ [Citation.]
       ―Once an employee files a complaint with the Labor Commissioner for
nonpayment of wages, section 98, subdivision (a) ‗ ―provides for three
                                         6
alternatives: the commissioner may either accept the matter and conduct an
administrative hearing [citation], prosecute a civil action for the collection of
wages and other money payable to employees arising out of an employment
relationship [citation], or take no further action on the complaint. [Citation.]‖ ‘
(Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1115.) ‗If the
commissioner decides to accept the matter and conduct an administrative hearing,
he or she must hold the hearing within 90 days.‘ (Ibid.) Moreover, prior to
holding a Berman hearing or pursuing a civil action, the Labor Commissioner‘s
staff may attempt to settle claims either informally or through a conference
between the parties. (Dept. of Industrial Relations, Div. of Labor Stds.
Enforcement (DLSE), Policies and Procedures for Wage Claim Processing (2001
rev.) pp. 2–3.)
       ―A Berman hearing is conducted by a deputy [labor] commissioner, who
has the authority to issue subpoenas. (Cal. Code Regs., tit. 8, §§ 13502, 13506.)
‗The Berman hearing procedure is designed to provide a speedy, informal, and
affordable method of resolving wage claims. In brief, in a Berman proceeding the
commissioner may hold a hearing on the wage claim; the pleadings are limited to a
complaint and an answer; the answer may set forth the evidence that the defendant
intends to rely on . . . ; if the defendant fails to appear or answer no default is taken
and the commissioner proceeds to decide the claim, but may grant a new hearing
on request. (§ 98.) The commissioner must decide the claim within 15 days after
the hearing. (§ 98.1.)‘ [Citation.] The hearings are not governed by the technical
rules of evidence, and any relevant evidence is admitted ‗if it is the sort of
evidence on which responsible persons are accustomed to rely in the conduct of
serious affairs.‘ (Cal. Code Regs., tit. 8, § 13502.) The hearing officer is
authorized to assist the parties in cross-examining witnesses and to explain issues
and terms not understood by the parties. (DLSE, Policies and Procedures for
                                           7
Wage Claim Processing, supra, at p. 4.) The parties have a right to have a
translator present. (Ibid.; see § 105 . . . .)
       ―Once judgment is entered in the Berman hearing, enforcement of the
judgment is to be a court priority. (§ 98.2, subd. (e).) The Labor Commissioner is
charged with the responsibility of enforcing the judgment and ‗shall make every
reasonable effort to ensure that judgments are satisfied, including taking all
appropriate legal action and requiring the employer to deposit a bond as provided
in Section 240.‘ (Id., subd. (i).)
       ―Within 10 days after notice of the decision any party may appeal to the
appropriate court, where the claim will be heard de novo; if no appeal is taken, the
commissioner‘s decision will be deemed a judgment, final immediately, and
enforceable as a judgment in a civil action. (§ 98.2.) If an employer appeals the
Labor Commissioner‘s award, ‗[a]s a condition to filing an appeal pursuant to this
section, an employer shall first post an undertaking with the reviewing court in the
amount of the order, decision, or award. The undertaking shall consist of an
appeal bond issued by a licensed surety or a cash deposit with the court in the
amount of the order, decision, or award.‘ (§ 98.2, subd. (b).) The purpose of this
requirement is to discourage employers from filing frivolous appeals and from
hiding assets in order to avoid enforcement of the judgment. (Sen. Com. on Labor
and Industrial Relations, Analysis of Assem. Bill No. 2772 (2009–2010 Reg.
Sess.) as amended Apr. 8, 2010, p. 4.)
       ―Under section 98.2, subdivision (c), ‗If the party seeking review by filing
an appeal to the superior court is unsuccessful in the appeal, the court shall
determine the costs and reasonable attorney‘s fees incurred by the other parties to
the appeal, and assess that amount as a cost upon the party filing the appeal. An
employee is successful if the court awards an amount greater than zero.‘ This
provision thereby establishes a one-way fee-shifting scheme, whereby
                                             8
unsuccessful appellants pay attorney fees while successful appellants may not
obtain such fees. [Citation.] This is in contrast to section 218.5, which provides
that in civil actions for nonpayment of wages initiated in the superior court, the
‗prevailing party‘ may obtain attorney fees.
       ―Furthermore, the Labor Commissioner ‗may‘ upon request represent a
claimant ‗financially unable to afford counsel‘ in the de novo proceeding and
‗shall‘ represent the claimant if he or she is attempting to uphold the Labor
Commissioner‘s award and is not objecting to the Commissioner‘s final order.
(§ 98.4.) Such claimants represented by the Labor Commissioner may still collect
attorney fees pursuant to section 98.2, although such claimants have not, strictly
speaking, incurred attorneys fees, because construction of the statute in this
manner is consistent with the statute‘s goals of discouraging unmeritorious appeals
of wage claims. [Citation.]‖ (Sonic I, supra, 51 Cal.4th at pp. 672–674,
fn. omitted.)
       In sum, the Berman statutes provide important benefits to employees by
reducing the costs and risks of pursuing a wage claim in several ways. First, the
Berman hearing itself provides an accessible, informal, and affordable mechanism
for lay persons to seek resolution of such claims. (See Cuadra v. Millan (1998)
17 Cal.4th 855, 858 (Cuadra).) Second, section 98.2, subdivision (c) discourages
unmeritorious appeals of Berman hearing awards by providing that a party who
unsuccessfully appeals an award must pay the other party‘s costs and attorney
fees. (See Lolley v. Campbell (2002) 28 Cal.4th 367, 376 (Lolley).) Third, section
98.2, subdivision (c) provides that an employee will not be saddled with the
employer‘s attorney fees and costs unless the employee appeals from a Berman
hearing award and receives a judgment of zero on appeal. This rule differs from
section 218.5, which provides for attorney fees for the ―prevailing party‖ in wage
actions initiated in the superior court. Fourth, section 98.4 provides that a wage
                                          9
claimant who is ―financially unable to afford counsel‖ may be represented by the
commissioner in the event the employer appeals and ―shall‖ be represented by the
commissioner if the employee seeks to uphold a Berman hearing award. Fifth, the
Berman statutes ensure that an employee will actually collect a judgment or award
by mandating that the Labor Commissioner use her best efforts to collect a
Berman hearing award and by requiring the employer to post an undertaking for
the amount of the award if it takes an appeal. (See Sonic I, supra, 51 Cal.4th at
p. 674; § 98.2, subds. (b), (e), (i).) Finally, the Berman process ensures that
employees have assistance in resolving their claims, including the use of a
translator if needed. (§ 105.)
                                           B.
       In considering whether a Berman waiver violates public policy, Sonic I first
reviewed the law governing mandatory employment arbitration agreements, i.e.,
arbitration agreements that are conditions of new or continuing employment. As
we explained, ―[i]n Armendariz, supra, 24 Cal.4th 83, we concluded that such
agreements were enforceable, provided they did not contain features that were
contrary to public policy or unconscionable. (Id. at p. 99.) We concluded that
‗arbitration agreements cannot be made to serve as a vehicle for the waiver of
[unwaivable] statutory rights,‘ such as rights under the Fair Employment and
Housing Act (FEHA . . .). To ensure that such waiver did not occur, we held that
arbitrations addressing such statutory rights would be subject to certain minimal
requirements. As we later summarized these: ‗(1) the arbitration agreement may
not limit the damages normally available under the statute (Armendariz, supra, 24
Cal.4th at p. 103); (2) there must be discovery ―sufficient to adequately arbitrate
their statutory claim‖ (id. at p. 106); (3) there must be a written arbitration
decision and judicial review ― ‗sufficient to ensure the arbitrators comply with the
requirements of the statute‘ ‖ (ibid.); and (4) the employer must ―pay all types of
                                          10
costs that are unique to arbitration‖ (id. at p. 113).‘ (Little v. Auto Stiegler, Inc.
(2003) 29 Cal.4th 1064, 1076 (Little).) We did not hold that the above
requirements were the only conditions that public policy could place on arbitration
agreements, and have since recognized other limitations. (See Gentry v. Superior
Court (2007) 42 Cal.4th 443, 463 (Gentry) [prohibition of class arbitration
contrary to public policy in some cases].)‖ (Sonic I, supra, 51 Cal.4th at p. 677.)
       We then concluded that the protections afforded by a Berman hearing may
not be waived as a condition of employment: ―There is no question that the lawful
payment of wages owed is not merely an individual right but an important public
policy goal. . . . ‗Civil Code section 3513 provides, in pertinent part, that:
―[a]nyone may waive the advantage of a law intended solely for his benefit. But a
law established for a public reason cannot be contravened by a private agreement.‖
[¶] The determination of whether a particular statute is for public or private
benefit is for the court in each case (1 Witkin, Summary of Cal. Law (9th ed.
1987) Contracts, § 645, p. 586). The provisions of the Labor Code, particularly
those directed toward the payment of wages to employees entitled to be paid, were
established to protect the workers and hence have a public purpose. As was
pointed out in In re Trombley (1948) 31 Cal.2d 801, 809: ―[i]t has long been
recognized that wages are not ordinary debts, that they may be preferred over
other claims, and that, because of the economic position of the average worker
and, in particular, his dependence on wages for the necessities of life for himself
and his family, it is essential to the public welfare that he receive his pay when it is
due.‖ [Citation.]‘ [Citation.]‖ (Sonic I, supra, 51 Cal.4th at p. 679.)
       We went on to explain: ―Although the statutory protections that the
Berman hearing and the posthearing procedures afford employees were added
piecemeal over a number of years, their common purpose is evident: Given the
dependence of the average worker on prompt payment of wages, the Legislature
                                           11
has devised the Berman hearing and posthearing process as a means of affording
an employee with a meritorious wage claim certain advantages, chiefly designed
to reduce the costs and risks of pursuing a wage claim, recognizing that such costs
and risks could prevent a theoretical right from becoming a reality. These
procedures, including the employer undertaking and the one-way fee provision,
also deter employers from unjustifiably prolonging a wage dispute by filing an
unmeritorious appeal. This statutory regime therefore furthers the important and
long-recognized public purpose of ensuring that workers are paid wages owed.
The public benefit of the Berman procedures, therefore, is not merely incidental to
the legislation‘s primary purpose but in fact central to that purpose. Nor can there
be any doubt that permitting employers to require employees, as a condition of
employment, to waive their right to a Berman hearing would seriously undermine
the efficacy of the Berman hearing statutes and hence thwart the public purpose
behind the statutes.‖ (Sonic I, supra, 51 Cal.4th at p. 679.)
       We rejected Sonic‘s argument that ―even if a nonarbitration clause that
required a Berman hearing waiver is contrary to public policy, an arbitration
clause containing the same waiver would not be, because arbitration offers the
same or similar advantages as does the Berman hearing process.‖ (Sonic I, supra,
51 Cal.4th at p. 680.) We explained that ―the choice is not between a Berman
hearing and arbitration, because a person subject to binding arbitration and eligible
for a Berman hearing will still be subject to binding arbitration if the employer
appeals the Berman hearing award. The choice is rather between arbitration that is
or is not preceded by a Berman hearing. As discussed above, there are
considerable advantages for employees to undergo the Berman hearing process
before arbitration.‖ (Ibid.) ―In contrast, arbitration, notwithstanding its
advantages as a reasonably expeditious means of resolving disputes, still generally
bears the hallmark of a formal legal proceeding in which representation by counsel
                                          12
is necessary or at least highly advantageous. The arbitration in question here, for
example, is to be conducted by a ‗retired California Superior Court Judge‘ and ‗to
the extent applicable in civil actions in California courts, the following shall apply
and be observed: all rules of pleading (including the right of demurrer), all rules
of evidence, all rights to resolution of the dispute by means of motions for
summary judgment, judgment on the pleadings, and judgment under Code of Civil
Procedure section 631.8.‘ The arbitrator‘s award at either party‘s request will be
reviewed by a second arbitrator who will ‗as far as practicable, proceed according
to the law and procedures applicable to appellate review by the California Court of
Appeal of a civil judgment following court trial.‘ A wage claimant undergoing
arbitration will need the same kind of legal representation as if he or she were
going to superior court.‖ (Sonic I, supra, 51 Cal.4th at pp. 680–681.)
       We therefore concluded that ―an employee going directly to arbitration will
lose a number of benefits and advantages. He or she will not benefit from the
Labor Commissioner‘s settlement efforts and expertise. He or she must pay for
his or her own attorney whether or not he or she is able to afford it — an attorney
who may not have the expertise of the Labor Commissioner. Moreover, what
matters to the employee is not a favorable arbitration award per se but the
enforcement of that award, and an employee going directly to arbitration will have
no special advantage obtaining such enforcement. Nor is there any guaranty that
the employee will not be responsible for any successful employer‘s attorney fees,
for under section 218.5, an employee who proceeds directly against an employer
with a wage claim not preceded by a Berman hearing will be liable for such fees if
the employer prevails on appeal. In short, the Berman hearing process, even when
followed by binding arbitration, provides on the whole substantially lower costs
and risks to the employee, greater deterrence of frivolous employer claims, and

                                          13
greater assurance that awards will be collected, than does the binding arbitration
process alone.‖ (Sonic I, supra, at p. 681, fns. omitted.)
       We also rejected Sonic‘s argument that because employees have the option
of pursuing a Berman hearing or going directly to court (§ 218), Berman hearings
must be waivable in a predispute agreement. ―The purpose of the Berman hearing
statutes is to empower wage claimants by giving them access to a Berman hearing
with all of its advantages. Allowing an employee the freedom to choose whether
to resort to a Berman hearing when a wage claim arises, after evaluating in light of
the particular circumstances whether such a hearing is advantageous, is wholly
consistent with the public policy behind the Berman hearing statutes. A
requirement that the employee surrender the option of a Berman hearing as a
condition of employment is not. As we recognized in Armendariz, our concern is
with the impermissible waiver of certain rights and protections as a condition of
employment before a dispute has arisen. (See Armendariz, supra, 24 Cal.4th at
p. 103, fn. 8.) We therefore find the argument that, because the Legislature
intended an employee to have the option of a Berman hearing when a wage claim
arises, the Legislature also must have intended to permit employers to require
employees to waive that option as a condition of employment, to be
unpersuasive.‖ (Sonic I, supra, 51 Cal.4th at pp. 682–683, fn. omitted.) For the
reasons above, we held that a Berman waiver in the context of a predispute
arbitration agreement violates public policy. (Id. at p. 684.)
                                         C.
       Sonic I further held that a Berman waiver is unconscionable. As we
explained: ―One common formulation of unconscionability is that it refers to ‗ ―an
absence of meaningful choice on the part of one of the parties together with
contract terms which are unreasonably favorable to the other party.‖ ‘ [Citation.]
As that formulation implicitly recognizes, the doctrine of unconscionability has
                                         14
both a procedural and a substantive element, the former focusing on oppression or
surprise due to unequal bargaining power, the latter on overly harsh or one-sided
results. ‗The procedural element of an unconscionable contract generally takes the
form of a contract of adhesion, ― ‗which, imposed and drafted by the party of
superior bargaining strength, relegates to the subscribing party only the
opportunity to adhere to the contract or reject it.‘ ‖ ‘ (Little, supra, 29 Cal.4th at
p. 1071.)
       ― ‗Substantively unconscionable terms can take various forms, but may
generally be described as unfairly one-sided. One such form, as in Armendariz, is
the arbitration agreement‘s lack of a ― ‗modicum of bilaterality,‘ ‖ wherein the
employee‘s claims against the employer, but not the employer‘s claims against the
employee, are subject to arbitration. (Armendariz, supra, 24 Cal.4th at p. 119.)
Another kind of substantively unconscionable provision occurs when the party
imposing arbitration mandates a post-arbitration proceeding, either judicial or
arbitral, wholly or largely to its benefit at the expense of the party on which the
arbitration is imposed.‘ (Little, supra, 29 Cal.4th at pp. 1071–1072.) In
determining unconscionability, our inquiry is into whether a contract provision
was ‗unconscionable at the time it was made.‘ (Civ. Code, § 1670.5, subd. (a).)‖
(Sonic I, supra, 51 Cal.4th at pp. 684–685.)
       Applying these principles, we first observed that ―the arbitration agreement
was a contract of adhesion indisputably imposed as a condition of employment‖
and that ―contract terms imposed as a condition of employment are particularly
prone to procedural unconscionability.‖ (Sonic I, supra, 51 Cal.4th at pp. 685–
686.) ― ‗[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
                                           15
because of an arbitration requirement.‘ (Armendariz, supra, 24 Cal.4th at p. 115.)
Moreover, many employees may not give careful scrutiny to routine personnel
documents that employers ask them to sign. (See Gentry, supra, 42 Cal.4th at
p. 471.)
       ―Furthermore, for reasons suggested above, significant substantive
unconscionability is also present. As explained, Berman hearing and posthearing
procedures were designed to provide wage claimants with meritorious claims
unique protections that lower the costs and risks of pursuing such claims, leveling
a playing field that generally favors employers with greater resources and
bargaining power. Requiring employees to forgo these protections as a condition
of employment can only benefit the employer at the expense of the employee. Nor
can we say, as also explained, that the benefits the employee gains from arbitration
compensates for what he or she loses by forgoing the option of a Berman hearing.
       ―In sum, rather than being justified by ‗legitimate commercial needs‘ (see
Armendariz, supra, 24 Cal.4th at p. 117), the main purpose of the Berman waiver
appears to be for employers to gain an advantage in the dispute resolution process
by eliminating the statutory advantages accorded to employees designed to make
that process fairer and more efficient. We conclude the waiver is markedly one-
sided and therefore substantively unconscionable. This substantive
unconscionability, together with the significant element of procedural
unconscionability, leads to the conclusion that the Berman waiver in the
arbitration agreement at issue here is unconscionable.‖ (Sonic I, supra, 51 Cal.4th
at p. 686.)
                                        D.
       Although we found the Berman waiver unconscionable and contrary to
public policy, we did not invalidate the arbitration agreement. Instead, we held
that an arbitration agreement may be enforced so long as arbitration is preceded by
                                        16
the option of a Berman hearing at the employee‘s request. If the employee
chooses to have a Berman hearing, then the post-Berman hearing protections for
employees would apply in arbitration: ―A party to a Berman hearing seeking a de
novo appeal via arbitration pursuant to a prior agreement rather than through a
judicial proceeding would initially file an appeal in superior court pursuant to
section 98.2, subdivision (a), together with a petition to compel arbitration. The
superior court would determine whether the appeal is timely and whether it
comports with all the statutory requirements, such as the undertaking requirement
in subdivision (b). If so, and if the petition to compel arbitration is unopposed, or
found to be meritorious, the trial court will grant the petition. The Labor
Commissioner, pursuant to section 98.4, may then represent an eligible wage
claimant in the arbitration proceeding. The one-way fee-shifting provisions of
section 98.2, subdivision (c) will be enforced initially by the arbitrator, with such
judicial review as may be appropriate.‖ (Sonic I, supra, 51 Cal.4th at p. 676.)
       Finally, we held that the FAA does not preempt this approach because ―our
conclusion that Berman waivers are contrary to public policy and unconscionable
does not discriminate against arbitration agreements.‖ (Sonic I, supra, 51 Cal.4th
at p. 689.) ―Rather, our conclusion that a Berman waiver is contrary to public
policy and unconscionable is equally applicable whether the waiver appears within
an arbitration agreement or independent of arbitration.‖ (Ibid.) Below we discuss
in greater detail Sonic I‘s analysis of the preemption issue after first examining the
high court‘s decision in Concepcion.
                                         III.
       Two months after Sonic I was filed, the United States Supreme Court
issued its decision in Concepcion, supra, 563 U.S. __ [131 S.Ct. 1740]. We now
analyze the effect of that decision on Sonic I, beginning with a review of the state-
law rule at issue in Concepcion.
                                          17
                                          A.
       In Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover Bank),
this court confronted the question of whether provisions in arbitration agreements
waiving class actions are unconscionable. We had previously approved of class
arbitration as a means of ― ‗provid[ing] small claimants with a method of
obtaining redress for claims which would otherwise be too small to warrant
individual litigation.‘ [Citation.] Denial of a class action in cases where it is
appropriate may have the effect of allowing an unscrupulous wrongdoer to
‗retain[ ] the benefits of its wrongful conduct.‘ [Citation.]‖ (Keating v. Superior
Court (1982) 31 Cal.3d 584, 609 (Keating), overruled on other grounds in
Southland Corp. v. Keating (1984) 465 U.S. 1, 16.) We held in Discover Bank
that when a class arbitration waiver ―is found in a consumer contract of adhesion
in a setting in which disputes between the contracting parties predictably involve
small amounts of damages, and when it is alleged that the party with the superior
bargaining power has carried out a scheme to deliberately cheat large numbers of
consumers out of individually small sums of money, then . . . the waiver becomes
in practice the exemption of the party ‗from responsibility for [its] own fraud, or
willful injury to the person or property of another.‘ (Civ. Code, § 1668.) Under
these circumstances, such waivers are unconscionable under California law and
should not be enforced.‖ (Discover Bank, at pp. 162–163.)
       We further held that the FAA does not preempt this unconscionability rule.
Reciting the applicable law, we said that ― ‗the text of § 2 [of the FAA] provides
the touchstone for choosing between state-law principles and the principles of
federal common law envisioned by the passage of that statute: An agreement to
arbitrate is valid, irrevocable, and enforceable, as a matter of federal law [citation],
―save upon such grounds as exist at law or in equity for the revocation of any
contract.‖ 9 U.S.C. § 2 . . . . Thus state law, whether of legislative or judicial
                                          18
origin, is applicable if that law arose to govern issues concerning the validity,
revocability, and enforceability of contracts generally. A state-law principle that
takes its meaning precisely from the fact that a contract to arbitrate is at issue does
not comport with this requirement of § 2. [Citations.] A court may not, then, in
assessing the rights of litigants to enforce an arbitration agreement, construe that
agreement in a manner different from that in which it otherwise construes
nonarbitration agreements under state law. Nor may a court rely on the
uniqueness of an agreement to arbitrate as a basis for a state-law holding that
enforcement would be unconscionable, for this would enable the court to effect
what . . . the state legislature cannot.‘ ‖ (Discover Bank, supra, 36 Cal.4th at
pp. 164–165, quoting Perry v. Thomas (1987) 482 U.S. 483, 492–493, fn. 9, italics
added by Discover Bank.)
       We reasoned that our unconscionability rule prohibiting class waivers is not
preempted because it applies equally to arbitration and nonarbitration agreements:
―[T]he principle that class action waivers are, under certain circumstances,
unconscionable as unlawfully exculpatory is a principle of California law that does
not specifically apply to arbitration agreements, but to contracts generally. In
other words, it applies equally to class action litigation waivers in contracts
without arbitration agreements as it does to class arbitration waivers in contracts
with such agreements. (See America Online [Inc. v. Superior Court (2001)] 90
Cal.App.4th [1], 17–18.)‖ (Discover Bank, supra, 36 Cal.4th at pp. 165–166.) In
addition, we observed that in the years since Keating was decided, class arbitration
had proven to be a viable alternative to class litigation or bilateral arbitration.
(Discover Bank, at p. 172 and cases cited therein.)
                                           B.
       The high court in Concepcion held that the FAA preempts the
unconscionability of class arbitration waivers in consumer contracts, thereby
                                           19
abrogating Discover Bank. Concepcion involved a class action filed in federal
court alleging that AT&T engaged in fraud and false advertising by charging sales
tax for phones it advertised as free. The value of the claim of the class
representatives, Vincent and Liza Concepcion, was $30.22. AT&T moved to
compel arbitration. The arbitration agreement provided that if an arbitration award
was greater than AT&T‘s last written settlement offer, AT&T would pay at
minimum $7,500 plus twice plaintiff‘s attorney fees. The district court denied the
motion to compel, holding that the class waiver made the arbitration agreement
unconscionable under Discover Bank and that the $7,500 penalty did not cure the
unconscionability because AT&T could always avoid the penalty by paying the
face value of the claim. As the Ninth Circuit said in affirming the district court,
―the maximum gain to a customer for the hassle of arbitrating a $30.22 dispute is
still just $30.22.‖ (Laster v. AT&T Mobility LLC (2009) 584 F.3d 849, 856.)
       The Supreme Court reversed. While acknowledging that Discover Bank‘s
unconscionability rule applies equally to arbitration and nonarbitration contracts,
the high court concluded that more is required to avoid FAA preemption: ―the
inquiry becomes more complex when a doctrine normally thought to be generally
applicable, such as duress or, as relevant here, unconscionability, is alleged to
have been applied in a fashion that disfavors arbitration. . . . [A] court may not
‗rely on the uniqueness of an agreement to arbitrate as a basis for a state-law
holding that enforcement would be unconscionable . . . .‘ [Citation.]‖
(Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1747].)
       ―An obvious illustration of this point,‖ Concepcion said, ―would be a case
finding unconscionable or unenforceable as against public policy consumer
arbitration agreements that fail to provide for judicially monitored discovery. The
rationalizations for such a holding are neither difficult to imagine nor different in
kind from those articulated in Discover Bank. A court might reason that no
                                          20
consumer would knowingly waive his right to full discovery, as this would enable
companies to hide their wrongdoing. Or the court might simply say that such
agreements are exculpatory — restricting discovery would be of greater benefit to
the company than the consumer, since the former is more likely to be sued than to
sue. See Discover Bank, supra, at 161 (arguing that class waivers are similarly
one-sided). And, the reasoning would continue, because such a rule applies the
general principle of unconscionability or public-policy disapproval of exculpatory
agreements, it is applicable to ‗any‘ contract and thus preserved by § 2 of the
FAA. In practice, of course, the rule would have a disproportionate impact on
arbitration agreements; but it would presumably apply to contracts purporting to
restrict discovery in litigation as well.‖ (Concepcion, supra, 563 U.S. at p. __
[131 S.Ct. at p. 1747].) The high court added that ―[t]he same argument might
apply to a rule classifying as unconscionable arbitration agreements that fail to
abide by the Federal Rules of Evidence, or that disallow an ultimate disposition by
a jury (perhaps termed ‗a panel of twelve lay arbitrators‘ . . . ).‖ (Ibid.)
       Such unconscionability rules, ― ‗aimed at destroying arbitration‘ or
‗demanding procedures incompatible with arbitration,‘ ‖ would contravene the
FAA‘s ―overarching purpose‖ of ―ensur[ing] the enforcement of arbitration
agreements according to their terms so as to facilitate streamlined proceedings.‖
(Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1748].) Similarly, the high
court reasoned, ―[r]equiring the availability of classwide arbitration interferes with
fundamental attributes of arbitration and thus creates a scheme inconsistent with
the FAA.‖ (Ibid.) According to Concepcion, classwide arbitration interferes with
fundamental attributes of arbitration in several ways.
       First, classwide arbitration ―sacrifices the principal advantage of arbitration
— its informality — and makes the process slower, more costly, and more likely
to generate procedural morass than final judgment.‖ (Concepcion, supra, 563 U.S.
                                           21
at p. __ [131 S.Ct. at p. 1751].) ― ‗In bilateral arbitration, parties forgo the
procedural rigor and appellate review of the courts in order to realize the benefits
of private dispute resolution: lower costs, greater efficiency and speed, and the
ability to choose expert adjudicators to resolve specialized disputes.‘ [Citation.]‖
(Ibid.) Classwide arbitration, by contrast, is a slower process because ―before an
arbitrator may decide the merits of a claim in classwide procedures, he must first
decide, for example, whether the class itself may be certified, whether the named
parties are sufficiently representative and typical, and how discovery for the class
should be conducted.‖ (Ibid.)
       Second, ―class arbitration requires procedural formality‖ because of due
process concerns. (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1751];
see ibid. [―The [American Arbitration Association‘s] rules governing class
arbitrations mimic the Federal Rules of Civil Procedure for class litigation.‖].) ―If
procedures are too informal, absent class members would not be bound by the
arbitration. For a class-action money judgment to bind absentees in litigation,
class representatives must at all times adequately represent absent class members,
and absent members must be afforded notice, an opportunity to be heard, and a
right to opt out of the class. . . . [¶] We find it unlikely that in passing the FAA
Congress meant to leave the disposition of these procedural requirements to an
arbitrator.‖ (Id. at pp. __–__ [131 S.Ct. at pp. 1751–1752].)
       ―Third, class arbitration greatly increases risks to defendants‖ and ―is
poorly suited to the higher stakes of class litigation‖ because of the lack of judicial
review. (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1752].) ―[I]n class-
action arbitration huge awards (with limited judicial review) will be entirely
predictable, thus rendering arbitration unattractive. It is not reasonably deniable
that requiring consumer disputes to be arbitrated on a class-wide basis will have a

                                           22
substantial deterrent effect on incentives to arbitrate.‖ (Id. at p. __, fn. 8 [131
S.Ct. at p. 1752, fn. 8].)
       The high court concluded: ―Because it ‗stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress,‘
[citation], California‘s Discover Bank rule is preempted by the FAA.‖
(Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1753].)
                                           C.
       Sonic contends that the FAA as construed by Concepcion preempts our
holding in Sonic I that a waiver of Berman procedures in an arbitration agreement
is, in and of itself, unconscionable and contrary to public policy. Sonic points to
our acknowledgment that the usual time between the filing of a complaint with the
Labor Commissioner and the conclusion of a Berman hearing is four to six
months. (Sonic I, supra, 51 Cal.4th at p. 681, fn. 5.) Sonic then underscores
Concepcion‘s observation that ―in Preston v. Ferrer, holding preempted a state-
law rule requiring exhaustion of administrative remedies before arbitration, we
said: ‗A prime objective of an agreement to arbitrate is to achieve ―streamlined
proceedings and expeditious results,‖ ‘ which objective would be ‗frustrated‘ by
requiring a dispute to be heard by an agency first. 552 U.S., at 357–358. That
rule, we said, would ‗at the least, hinder speedy resolution of the controversy.‘
Id., at 358.‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct at p. 1749],
fn. omitted.) We agree with Sonic that the FAA as construed by Concepcion
preempts Sonic I‘s rule categorically prohibiting waiver of a Berman hearing in
arbitration agreements. Accordingly, we overrule the contrary holding in Sonic-
Calabasas A, Inc. v. Moreno, supra, 51 Cal.4th 659.
       In Sonic I, we distinguished Preston on grounds that, after Concepcion, are
no longer dispositive of the preemption issue before us. Preston involved a
dispute between Ferrer, a television personality, and Preston, an attorney, over
                                           23
fees that Ferrer allegedly owed Preston. Ferrer claimed that the contract between
him and Preston was invalid because Preston had acted as a personal manager
without a license. In addition, Ferrer argued that despite an arbitration agreement
in the contract, California‘s Talent Agency Act (TAA) gave the Labor
Commissioner primary jurisdiction to resolve such disputes, with a trial de novo
available if either party appeals. (§ 1744, subd. (a).) Sonic I observed that
Preston followed a line of cases establishing that when a party subject to an
arbitration agreement challenges the contract as a whole and not merely the
arbitration clause, it is the arbitrator who decides the validity of the contract.
(Sonic I, supra, 51 Cal.4th at pp. 689–690; accord, Preston, supra, 552 U.S. at
p. 353; see also Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440,
446; Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967) 388 U.S. 395, 403–
404.)
        Sonic I explained that the present case was distinguishable from Preston
because ―the challenge is to a portion of the arbitration agreement — the Berman
waiver — as contrary to public policy and unconscionable, rather than to the
contract as a whole. . . . These cases are distinguished not merely because of the
nature of the litigants‘ challenges, but also because of the fundamental differences
between the two statutory regimes at issue. The statute in Preston, the TAA,
merely lodges primary jurisdiction in the Labor Commissioner, and does not come
with the same type of statutory protections as are found in the Berman hearing and
posthearing procedures discussed above. In fact, notwithstanding Ferrer‘s
argument that those in his position would be deprived of the Labor
Commissioner‘s expertise (Preston, supra, 552 U.S. at p. 358), the Preston court
recognized that section 1700.45 explicitly authorizes predispute agreements that
allow parties to bypass the Labor Commissioner to resolve TAA issues through
arbitration, albeit with certain conditions that could not lawfully be applied in that
                                           24
case (Preston, at p. 356). A predispute agreement that provides for such
arbitration of TAA disputes, therefore, cannot be unconscionable or contrary to
public policy. This is in marked contrast to the Berman hearing statutes, which
have no comparable provision authorizing arbitration agreements that bypass the
Labor Commissioner, and which we have construed as not permitting such
agreements as a condition of employment.‖ (Sonic I, supra, 51 Cal.4th at p. 692,
fn. omitted.)
       We now re-examine Sonic I‘s conclusion in light of Concepcion‘s precept
that ―efficient, streamlined procedures‖ is a fundamental attribute of arbitration
with which state law may not interfere. (Concepcion, supra, 563 U.S. at p. __
[131 S.Ct. at p. 1749].) As noted, Sonic I distinguished Preston on the ground that
predispute waiver of the administrative procedure at issue in Preston was
expressly authorized by the TAA and thus ―cannot be unconscionable or contrary
to public policy.‖ (Sonic I, supra, 51 Cal.4th at p. 692.) Concepcion, unlike
Preston, did address unconscionability, and the high court made clear that courts
cannot impose unconscionability rules that interfere with arbitral efficiency,
including rules forbidding waiver of administrative procedures that delay
arbitration. (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct at p. 1749].) The
high court responded to the argument that ―class proceedings are necessary to
prosecute small-dollar claims that might otherwise slip through the legal system‖
by asserting that ―States cannot require a procedure that is inconsistent with the
FAA, even if it is desirable for unrelated reasons.‖ (Id. at p. __ [131 S.Ct. at
p. 1753].) The same logic applies to Sonic I‘s rule categorically prohibiting
waiver of a Berman hearing. Because a Berman hearing causes arbitration to be
substantially delayed, the unwaivability of such a hearing, even if desirable as a
matter of contractual fairness or public policy, interferes with a fundamental
attribute of arbitration — namely, its objective ― ‗to achieve ―streamlined
                                          25
proceedings and expeditious results.‖ ‘ ‖ (Concepcion, at p. __ [131 S.Ct. at
p. 1749], quoting Preston, supra, 552 U.S. at p. 357.) Sonic I‘s rule is thus
preempted by the FAA.
       Moreno and the Labor Commissioner as amicus curiae contend that the
delay contemplated here presents no obstacle to accomplishing the objectives of
the FAA. In his briefing, Moreno says: ―While the facilitation of streamlined
proceedings is an important purpose of the FAA, it is unequivocally clear that
requiring arbitration proceedings to go forward at once, without any postponement
or delay, regardless of the existence of generally applicable state contract law
grounds supporting a discrete challenge to the enforceability of an arbitration
agreement, is not a ‗fundamental attribute‘ of arbitration. Thus, a defense of
fraud, duress or unconscionability as to some specific provision of the arbitration
agreement will require the postponement of arbitration while the validity of the
defense is adjudicated. ‗If a party challenges the validity under § 2 of the precise
agreement to arbitrate at issue, the federal court must consider the challenge
before ordering compliance with that agreement under § 4.‘ (Rent-A-Center West,
Inc. v. Jackson, 561 U.S. __, __ [130 S.Ct. 2772, 2778] (2010).) Thus, the policy
of promoting streamlined arbitration proceedings must yield to the assertion of a
ground for revocation of a contract under the § 2 savings clause. This is necessary
because the § 2 savings clause recognizes that implementation of a state policy
aimed at preventing the unfairness of enforcing an arbitration agreement procured
by fraud or duress, or a provision within the agreement that is unconscionable or
that violates public policy, trumps the purpose of facilitating streamlined
arbitration proceedings.‖
       It is one thing to acknowledge that the arbitration process must permit time
to adjudicate state-law defenses under the FAA‘s savings clause. But that is
different from asserting that the FAA therefore permits state law to categorically
                                         26
forbid waiver of administrative procedures that significantly delay the
commencement of arbitration. To be sure, the parties to a contract must have an
opportunity to determine whether the arbitration agreement should be enforced;
the FAA does not require arbitration when there are valid contract defenses to the
enforcement of the arbitration agreement. But it does not follow that the FAA, as
interpreted by Concepcion, permits additional delay that results not from
adjudicating whether there is an enforceable arbitration agreement, but from an
administrative scheme to effectuate state policies unrelated to the agreement‘s
enforceability. Moreno‘s argument that the former implies the latter is
unpersuasive.
       In sum, we hold that Sonic I‘s rule prohibiting waiver of a Berman hearing
is preempted by the FAA.
                                         IV.
       Although we conclude that the FAA preempts a state-law rule categorically
requiring arbitration to be preceded by a Berman hearing, our holding does not
fully resolve the unconscionability claim in this case. In his opposition to the
petition to compel arbitration, Moreno stated as an affirmative defense that ―[i]f
the arbitration agreement between the parties is construed as absolutely prohibiting
Respondent from exercising [his] statutory right to initially invoke the non-binding
or administrative remedy afforded by the Labor Commissioner, then the arbitral
scheme crafted by Petitioner fails to provide an arbitral forum in which employees
can fully and effectively vindicate their statutory rights to recover unpaid wages,
and is thus contrary to public policy, unconscionable and unenforceable.‖
Because Sonic I concluded categorically that arbitration must be preceded by a
Berman hearing and that the petition to compel arbitration was premature, we had
no occasion to address whether, without a Berman hearing, Moreno can vindicate
his right to recover unpaid wages under this particular arbitral scheme. Moreover,
                                         27
we did not address whether any barrier to vindicating such rights would make the
arbitration agreement unconscionable or otherwise unenforceable under California
law and, if so, whether such a rule would be preempted by the FAA. We turn now
to these questions.
                                         A.
       We begin by noting that after Concepcion, unconscionability remains a
valid defense to a petition to compel arbitration. Quoting the FAA‘s saving
clause, Concepcion reaffirmed that the FAA ―permits arbitration agreements to be
declared unenforceable ‗upon such grounds as exist at law or in equity for the
revocation of any contract‘ ‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at
p. 1746], quoting 9 U.S.C. § 2), including ― ‗generally applicable contract
defenses, such as fraud, duress, or unconscionability‘ [citation]‖ (Concepcion, at
p. __ [131 S.Ct. at p. 1746]). Although courts may not rewrite agreements and
impose terms to which neither party has agreed, it has long been the proper role of
courts enforcing the common law to ensure that the terms of a bargain are not
unreasonably harsh, oppressive, or one-sided. (See A&M Produce Co. v. FMC
Corp. (1982) 135 Cal.App.3d 473, 485–493 (A&M Produce); Williams v. Walker-
Thomas Furniture Co. (D.C. Cir. 1965) 350 F.2d 445 (Walker-Thomas Furniture);
Henningsen v. Bloomfield Motors, Inc. (N.J. 1960) 161 A.2d 69.) After
Concepcion, the exercise of that judicial function as applied to arbitration
agreements remains intact, as the FAA expressly provides.
       What is new is that Concepcion clarifies the limits the FAA places on state
unconscionability rules as they pertain to arbitration agreements. It is well-
established that such rules must not facially discriminate against arbitration and
must be enforced evenhandedly. Concepcion goes further to make clear that such
rules, even when facially nondiscriminatory, must not disfavor arbitration as
applied by imposing procedural requirements that ―interfere[] with fundamental
                                         28
attributes of arbitration,‖ especially its ― ‗lower costs, greater efficiency and speed,
and the ability to choose expert adjudicators to resolve specialized disputes.‘
[Citation.]‖ (Concepcion, supra, 563 U.S. at pp. __, __ [131 S.Ct.at pp. 1748,
1751].) As the high court explained, if facial neutrality or evenhanded
enforcement were the only principles limiting the scope of permissible state law
defenses to arbitration, then a state court could — on grounds of unconscionability
or public policy — compel the adoption of an arbitration procedure that would be
arbitration in name only. It could impose judicially monitored discovery,
evidentiary rules, jury trials, or other procedures that mimic court proceedings, and
thereby undermine the FAA‘s purpose of encouraging arbitration as an efficient
alternative to litigation. (Id. at p. __ [131 S.Ct. at p. 1747].)
       Importantly, state-law rules that do not ―interfere[] with fundamental
attributes of arbitration‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at
p. 1748]) do not implicate Concepcion‘s limits on state unconscionability rules.
As our cases have held, such rules may address issues that arise uniquely in the
context of arbitration. In Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 826–
827 (Scissor-Tail), for example, we held unconscionable a provision in an
arbitration agreement that effectively gave the party imposing an adhesive contract
the right to choose a biased arbitrator. In addition, we held in Armendariz that
because arbitrators, unlike judges, are paid by the parties, an equal division of
costs between employer and employee has the potential in practice of being
unreasonably one-sided or burdening an employee‘s exercise of statutory rights.
(Armendariz, supra, 24 Cal.4th at pp. 107–113.) As these examples suggest, a
facially neutral state-law rule is not preempted simply because its evenhanded
application ―would have a disproportionate impact on arbitration agreements.‖
(Concepcion, at p. __ [131 S.Ct. at p. 1747].) Under Concepcion, a state-law rule

                                           29
is preempted when its impact is such that it interferes with fundamental attributes
of arbitration. (Id. at p. __ [131 S.Ct. at p. 1748].)
       Moreover, there are other ways an arbitration agreement may be
unconscionable that have nothing to do with fundamental attributes of arbitration.
In Little, for example, we found unconscionable a $50,000 threshold for an
arbitration appeal that decidedly favored defendants in employment contract
disputes. (Little, supra, 29 Cal.4th at pp. 1071–1074.) In Harper v. Ultimo (2003)
113 Cal.App.4th 1402, 1407, the court found unconscionable an arbitration
agreement with a damages limitation clause under which ―the customer does not
even have the theoretical possibility he or she can be made whole.‖ And in
Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 799–800 (Ajamian),
the court found unconscionable an arbitration agreement that, among other things,
―impos[ed] upon [the employee] the obligation to pay [the employer‘s] attorney
fees if [the employer] prevails in the proceeding, without granting her the right to
recoup her own attorney fees if she prevails.‖
       Consider also the form of unconscionability identified in Gutierrez v.
Autowest, Inc. (2003) 114 Cal.App.4th 77 (Gutierrez). There, the plaintiff entered
into an automobile lease agreement with defendant automobile dealer. He
subsequently sued the dealer over alleged fraud in the transaction. The adhesive
agreement contained an inconspicuous arbitration clause. (Id. at pp. 83–84.) The
Court of Appeal found that, based on the American Arbitration Association rules
in effect at the time the defendant moved to compel arbitration, the plaintiff would
have had to pay $8,000 in administrative fees to initiate the arbitration. (Id. at
pp. 90–91.) It was undisputed that such fees exceeded the plaintiff‘s ability to
pay. (Id. at p. 91.) In holding this aspect of the arbitration agreement
unconscionable, Gutierrez said: ―We conclude that where a consumer enters into
an adhesive contract that mandates arbitration, it is unconscionable to condition
                                           30
that process on the consumer posting fees he or she cannot pay. It is self-evident
that such a provision is unduly harsh and one-sided, defeats the expectations of the
non-drafting party, and shocks the conscience. While arbitration may be within
the reasonable expectations of consumers, a process that builds prohibitively
expensive fees into the arbitration process is not. (See Patterson v. ITT Consumer
Financial Corp. [(1993) 14 Cal.App.4th 1659, 1665].) To state it simply: it is
substantively unconscionable to require a consumer to give up the right to utilize
the judicial system, while imposing arbitral forum fees that are prohibitively high.
Whatever preference for arbitration might exist, it is not served by an adhesive
agreement that effectively blocks every forum for the redress of disputes,
including arbitration itself.‖ (Id. at pp. 89–90, fns. omitted.)
       As the cases above illustrate, the core concern of unconscionability doctrine
is the ― ‗ ―absence of meaningful choice on the part of one of the parties together
with contract terms which are unreasonably favorable to the other party.‖ ‘ ‖
(Sonic I, supra, 51 Cal.4th at pp. 684–685; Walker-Thomas Furniture, supra, 350
F.2d at p. 449.) Unconscionability doctrine ensures that contracts, particularly
contracts of adhesion, do not impose terms that have been variously described as
― ‗ ―overly harsh‖ ‘ ‖ (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532
(Stirlen)), ―unduly oppressive‖ (Perdue v. Crocker National Bank (1985) 38
Cal.3d 913, 925 (Perdue)), ― ‗so one-sided as to ―shock the conscience‖ ‘ ‖
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55
Cal.4th 223, 246 (Pinnacle)), or ―unfairly one-sided‖ (Little, supra, 29 Cal.4th at
p. 1071). All of these formulations point to the central idea that unconscionability
doctrine is concerned not with ―a simple old-fashioned bad bargain‖ (Schnuerle v.
Insight Communications Co. (Ky. 2012) 376 S.W.3d 561, 575 (Schnuerle)), but
with terms that are ―unreasonably favorable to the more powerful party‖ (8
Williston on Contracts (4th ed. 2010) § 18.10, p. 91). These include ―terms that
                                          31
impair the integrity of the bargaining process or otherwise contravene the public
interest or public policy; terms (usually of an adhesion or boilerplate nature) that
attempt to alter in an impermissible manner fundamental duties otherwise imposed
by the law, fine-print terms, or provisions that seek to negate the reasonable
expectations of the nondrafting party, or unreasonably and unexpectedly harsh
terms having to do with price or other central aspects of the transaction.‖ (Ibid.)
       After Concepcion, courts may continue to apply unconscionability doctrine
to arbitration agreements. (See Schnuerle, supra, 376 S.W.2d at pp. 579–580
[Concepcion does not preempt holding that confidentiality provision of arbitration
agreement is unconscionable]; In re Checking Account Overdrafts Litigation (11th
Cir. 2012) 685 F.3d 1269, 1280–1283 [Concepcion does not preempt holding
under South Carolina law that fee-shifting provision in arbitration agreement is
unconscionable].) As the FAA contemplates in its savings clause (9 U.S.C. § 2),
courts may examine the terms of adhesive arbitration agreements to determine
whether they are unreasonably one-sided. What courts may not do, in applying
unconscionability doctrine, is to mandate procedural rules that are inconsistent
with fundamental attributes of arbitration, even if such rules are ―desirable for
unrelated reasons.‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1753].)
                                          B.
       Under Concepcion, the FAA preempts Sonic I‘s rule that waiver of a
Berman hearing necessarily renders an adhesive arbitration agreement
unconscionable regardless of what the terms of the agreement provide or how the
agreement was formed. State law may not categorically require arbitration to be
preceded by an administrative hearing because the hearing interferes with arbitral
efficiency by substantially delaying arbitration. Thus, the fact that arbitration
supplants an administrative hearing cannot be a basis for finding an arbitration
agreement unconscionable.
                                          32
       But the waivability of a Berman hearing in favor of arbitration does not end
the unconscionability inquiry. The Berman statutes include various features
designed to lower the costs and risks for employees in pursuing wage claims,
including procedural informality, assistance of a translator, use of an expert
adjudicator who is authorized to help the parties by questioning witnesses and
explaining issues and terms, and provisions on fee shifting, mandatory
undertaking, and assistance of the Labor Commissioner as counsel to help
employees defend and enforce any award on appeal. Waiver of these protections
does not necessarily render an arbitration agreement unenforceable, nor does it
render an arbitration agreement unconscionable per se. But waiver of these
protections in the context of an agreement that does not provide an employee with
an accessible and affordable arbitral forum for resolving wage disputes may
support a finding of unconscionability. As with any contract, the
unconscionability inquiry requires a court to examine the totality of the
agreement‘s substantive terms as well as the circumstances of its formation to
determine whether the overall bargain was unreasonably one-sided. In the present
case, we remand to the trial court to conduct this fact-specific inquiry.
       In evaluating the substantive terms of an arbitration agreement, a court
applying unconscionability doctrine must consider not only what features of
dispute resolution the agreement eliminates but also what features it contemplates.
Here, the agreement between Sonic and Moreno says that arbitration shall be
conducted by a ―retired California Superior Court Judge.‖ The agreement further
provides for a right to conduct discovery and take depositions, and it makes
applicable, ―to the extent applicable in civil actions in California courts[,] . . . all
rules of pleading (including the right of demurrer), all rules of evidence, all rights
to resolution of the dispute by means of motions for summary judgment, judgment
on the pleadings, and judgment under Code of Civil Procedure section 631.8.‖ At
                                            33
either party‘s request, an arbitration award may be reviewed by a second arbitrator
who will, ―as far as practicable, proceed according to the law and procedures
applicable to appellate review by the California Court of Appeal of a civil
judgment following court trial.‖ Moreno contends that these terms of arbitration,
which impose many of the formalities of litigation, do not offer a ―speedy,
informal, and affordable method of resolving wage claims‖ (Cuadra, supra, 17
Cal.4th at p. 858) and unconscionably prevent him from pursuing his claim.
       On the other hand, the agreement on its face does not necessarily reveal
many of the particulars of the arbitration process that Sonic has adopted. (See,
e.g., Truly Nolen of America v. Superior Court (2012) 208 Cal.App.4th 487, 494–
495 [examining American Arbitration Association rules to determine the nature of
the arbitration agreement].) It may be, for example, that the actual arbitration
process Sonic uses has rules that enable an employee to obtain prompt, affordable,
and enforceable resolution of a wage claim. Indeed, we recognized in Sonic I that
―[i]t may be possible for an arbitration system to be designed so that it provides an
employee all the advantages of the Berman hearing and posthearing protections.‖
(Sonic I, supra, 51 Cal.4th at p. 681, fn. 4.) At oral argument here and in Sonic I,
counsel for Sonic said that the present agreement is so designed. According to
counsel, the agreement authorizes or mandates cost savings comparable to what an
employee would realize through the Berman process, it requires Sonic to post an
undertaking to ensure that an employee can collect an arbitral award, and it
provides for a translator if needed. (See also ibid. [―At oral argument, Sonic‘s
counsel argued that its arbitration in fact resembled a Berman hearing in its
informality, and the arbitrator would or might incorporate Berman-like protections
such as one-way fee shifting.‖].) These facts about the arbitration process are not
in the record before us, but they may be introduced by Sonic and considered by the
trial court on remand. Civil Code section 1670.5, subdivision (b) provides that
                                         34
―[w]hen it is claimed or appears to the court that the contract or any clause thereof
may be unconscionable the parties shall be afforded a reasonable opportunity to
present evidence as to its commercial setting, purpose, and effect to aid the court
in making the determination,‖ and we have said, in construing this statute, that ―a
claim of unconscionability often cannot be determined merely by examining the
face of the contract.‖ (Perdue, supra, 38 Cal.3d at p. 926.)
       We emphasize that there is no single formula for designing an arbitration
process that provides an effective and low-cost approach to resolving wage
disputes. There are potentially many ways to structure arbitration, without
replicating the Berman protections, so that it facilitates accessible, affordable
resolution of wage disputes. We see no reason to believe that the specific
elements of the Berman statutes are the only way to achieve this goal or that
employees will be unable to pursue their claims effectively without initial resort to
an administrative hearing as opposed to an adequate arbitral forum. Waiver of the
Berman protections will not, by itself, support a finding of unconscionability
where the arbitral scheme at issue provides employees with an accessible and
affordable process for resolving wage disputes. The unconscionability inquiry is
not a license for courts to impose their renditions of an ideal arbitral scheme.
Rather, in the context of a standard contract of adhesion setting forth conditions of
employment, the unconscionability inquiry focuses on whether the arbitral scheme
imposes costs and risks on a wage claimant that make the resolution of the wage
dispute inaccessible and unaffordable, and thereby ―effectively blocks every forum
for the redress of disputes, including arbitration itself.‖ (Gutierrez, supra, 114
Cal.App.4th at p. 90.)
       In Sonic I, we acknowledged that outside the context of an adhesive form
contract, other considerations may inform the unconscionability inquiry. Evidence
that a Berman waiver is part of a nonstandard contract freely negotiated by parties
                                          35
of comparable bargaining power, ―such as may exist between an employer and a
highly compensated executive employee,‖ weighs against a finding of
unconscionability. (Sonic I, supra, 51 Cal.4th at p. 682, fn. 7.) Whether Moreno,
who was not a low-wage worker at Sonic and whose wage claim alleges
― ‘[v]acation wages for 63 days . . . at the rate of $441.29 per day‘ ‖ (id. at p. 670),
had comparable bargaining power or freely negotiated his contract are matters for
the trial court to determine on remand. Further, when a negotiated or nonstandard
contract is at issue, terms of employment unrelated to arbitration may confer
substantial benefits that inform the fairness of requiring the employee to surrender
statutory protections in favor of arbitration. In addition, Civil Code section
1670.5, subdivision (b) indicates that any evidence concerning the ―commercial
setting, purpose, and effect‖ of the agreement is pertinent to the inquiry.
       In sum, unconscionability doctrine does not mandate the adoption of any
particular form of dispute resolution mechanism, and courts may not decline to
enforce an arbitration agreement simply on the ground that it appears to be a bad
bargain or that one party could have done better. Unconscionability doctrine is
instead concerned with whether the agreement is unreasonably favorable to one
party, considering in context ―its commercial setting, purpose, and effect.‖ (Civ.
Code, § 1670.5, subd. (b).) In applying the doctrine to the arbitration agreement
here, the trial court may consider as one factor Moreno‘s surrender of the Berman
protections in their entirety, although that factor alone does not necessarily render
the agreement unconscionable. Because it may not have been clear before our
decision today that evidence concerning the specific arbitral scheme at issue in this
case is pertinent to the unconscionability inquiry, the parties will have the
opportunity to present such evidence in order to inform the trial court‘s
unconscionability determination. ―Since unconscionability is a contract defense,‖
it will be Moreno‘s burden on remand to prove ―that an arbitration provision is
                                          36
unenforceable on that ground.‖ (Chin v. Advanced Fresh Concepts Franchise
Corp. (2011) 194 Cal.App.4th 704, 708.) Further, the Labor Commissioner may
intervene in any proceedings when it appears that his or her jurisdiction is being
usurped by an unenforceable arbitration agreement. (See City of San Jose v.
International Assn. of Firefighters, Local 230 (2009) 178 Cal.App.4th 408, 412.)
                                          C.
       The unconscionability doctrine we have stated above is not preempted by
the FAA. In holding that an employee‘s surrender of Berman protections in their
totality may be considered as a factor in determining whether an arbitration
agreement is unconscionable, our doctrine does not facially discriminate against
arbitration. It applies equally to arbitration and nonarbitration agreements that
require employees to forgo the Berman protections in resolving wage claims. In
addition, our unconscionability doctrine as applied does not pose an obstacle to the
achievement of the FAA‘s objectives as construed in Concepcion. Because the
Berman statutes promote the very objectives of ―informality,‖ ―lower costs,‖
―greater efficiency and speed,‖ and use of ―expert adjudicators‖ that the high court
has deemed ―fundamental attributes of arbitration‖ (Concepcion, supra, 563 U.S.
at pp. __, __ [131 S.Ct. at pp. 1748, 1751]; see Cuadra, supra, 17 Cal.4th at
p. 858), the case-by-case application of unconscionability doctrine to agreements
that require employees to forgo such benefits will, if anything, tend to promote the
FAA‘s objectives rather than lead to any increase in cost, procedural rigor,
complexity, or formality. As noted, there are potentially many ways to design
arbitration, consistent with its fundamental attributes, so that it is affordable and
accessible for wage claimants. Sonic argues that the arbitration process at issue
here fits this description, and Sonic will have the opportunity on remand to
provide evidence in support of its contention.

                                          37
       The fact that the FAA preempts Sonic I‘s rule requiring arbitration of wage
disputes to be preceded by a Berman hearing does not mean that a court applying
unconscionability analysis may not consider the value of benefits provided by the
Berman statutes, which go well beyond the hearing itself. The FAA preempts
Sonic I‘s rule because it categorically favors a particular form of dispute resolution
— the Berman hearing — over arbitration and creates an immovable obstacle to a
streamlined arbitral process. By contrast, the unconscionability analysis we
describe today is not premised on the superiority of the Berman hearing as a
dispute resolution forum. Our rule contemplates that arbitration, no less than an
administrative hearing, can be designed to achieve speedy, informal, and
affordable resolution of wage claims and that the features of arbitration set forth in
an agreement properly inform the unconscionability inquiry. Sonic I‘s rule runs
afoul of Concepcion because it interposes the Berman hearing as an unwaivable
prerequisite to arbitration and thereby significantly delays the start of arbitration.
The rule we adopt today, which makes clear that the Berman hearing is waivable,
does not delay arbitration or otherwise interfere with fundamental attributes of
arbitration. It simply requires an adhesive arbitration agreement that compels the
surrender of Berman protections as a condition of employment to provide for
accessible, affordable resolution of wage disputes.
       The distinction between state-law rules that undermine fundamental
attributes of arbitration and state-law rules that do not may be further elucidated
by considering an example drawn from the facts of Concepcion. As noted,
Concepcion held that because class proceedings undermine arbitration‘s
fundamental attributes of informality and efficiency, the FAA preempts a state
unconscionability rule forbidding waiver of class proceedings. But Concepcion
did not rule out other ways to enable consumers ―to prosecute small-dollar claims
that might otherwise slip through the legal system.‖ (Concepcion, supra, 563 U.S.
                                          38
at p. __ [131 S.Ct. at p. 1753].) The high court noted that the arbitration
agreement at issue there ―provides that AT&T will pay claimants a minimum of
$7,500 and twice their attorney‘s fees if they obtain an arbitration award greater
than AT&T‘s last settlement offer‖ and then observed that ―[t]he District Court
found this scheme sufficient to provide incentive for the individual prosecution of
meritorious claims that are not immediately settled, and the Ninth Circuit admitted
that aggrieved customers who filed claims would be ‗essentially guarantee[d]‘ to
be made whole, [citation].‖ (Ibid.)
       Suppose that, in light of Concepcion, a state legislature seeking to protect
small-dollar claimants were to enact a generally applicable, unwaivable statute
similar to the provision just described, requiring a defendant to pay a penalty plus
attorney fees if a plaintiff with a low-value claim obtains an award through
litigation or arbitration greater than the defendant‘s last settlement offer. Nothing
in Concepcion suggests that such a statute — which is designed to achieve the
same objective as a rule forbidding class waivers but does not interfere with
fundamental attributes of arbitration — would be preempted by the FAA.
Moreover, the fact that the statute would render invalid an arbitration (or
nonarbitration) agreement at odds with the penalty scheme — and thus leave the
parties to their usual rights and remedies under state law, including class
proceedings — does not mean that the statute has somehow circumvented the
FAA‘s preemption of state-law rules forbidding class waivers.
       The unconscionability rule we set forth today stands on exactly the same
legal footing. Many of the Berman protections are situated no differently than
state laws concerning attorney fee-shifting, assistance of counsel, or other rights
designed to benefit one or both parties in civil litigation. The FAA‘s preemption
of any state-law rule categorically forbidding waiver of formal discovery, jury
factfinding, class procedures, or civil litigation generally (see Concepcion, supra,
                                         39
563 U.S. at p. __ [131 S.Ct. at p. 1747]) does not mean that a party‘s surrender of
specific statutory benefits that would otherwise apply to certain kinds of claims
becomes a prohibited consideration in deciding whether an arbitration agreement
is unconscionable. Although the mere substitution of arbitration for litigation does
not itself entail the loss of a benefit (see Armendariz, supra, 24 Cal.4th at pp. 98–
99; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. (1985) 473 U.S.
614, 626–628 (Mitsubishi Motors)), an assessment of what a party has lost through
an arbitration agreement often involves consideration of what specific rights,
protections, or benefits would otherwise apply. (See, e.g., Armendariz, at pp. 110–
111 [―[W]hen an employer imposes mandatory arbitration as a condition of
employment, the arbitration agreement or arbitration process 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.‖]; Serpa v.
California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 709–710
(Serpa) [finding arbitration agreement unconscionable because it deprived
employee of a favorable fee-shifting rule under the Fair Employment and Housing
Act (FEHA)]; Ajamian, supra, 203 Cal.App.4th at p. 800 [finding arbitration
agreement unconscionable because it ―arguably strips [the employee] of her right
to recover attorney fees under her California statutory claims‖ and ―imposes on
her 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‖].)
       In this case, the types of benefits that would otherwise apply are ones
designed to promote, not undermine, the speed, economy, informality, and
efficiency of dispute resolution. Our unconscionability analysis does not pose an
obstacle to the FAA‘s objectives any more than if the Legislature were to enact a
statute requiring any dispute resolution mechanism, including arbitration, used in
lieu of the Berman procedures to have features that mitigate risks and costs for
                                          40
wage claimants, so long as those features do not interfere with fundamental
attributes of arbitration. Although Concepcion says state law cannot require a
procedure that undermines fundamental attributes of arbitration ―even if it is
desirable for unrelated reasons‖ (Concepcion, at p. __ [131 S.Ct. at p. 1753]), this
does not mean that the FAA preempts generally applicable state laws that do not
undermine fundamental attributes of arbitration.
       To be sure, when a court invalidates an arbitration agreement on
unconscionability grounds, it may be said that unconscionability doctrine results in
a refusal to enforce arbitration agreements ―according to their terms.‖
(Concepcion, supra, at p. __ [131 S.Ct. at p. 1748].) It also may be said that
unconscionability doctrine results in arbitration rules that ―increase[] risks to
defendants‖ or lessen a defendant‘s incentives to arbitrate. (Id. at p. __ & fn. 8
[131 S.Ct. at p. 1752 & fn. 8].) But that is true of any generally applicable
principle of unconscionability as applied to an adhesive arbitration agreement. For
example, an adhesive agreement that gives the employer the right to choose a
biased arbitrator is unconscionable (see Scissor-Tail, supra, 28 Cal.3d at pp. 826–
827), even though such a rule does not enforce the agreement according to its
terms and increases risk to the employer, who would prefer to pick the arbitrator.
The FAA plainly does not preempt such a state-law rule. The directive to enforce
arbitration ―in accordance with the terms of the agreement,‖ which appears in
section 4 of the FAA (9 U.S.C. § 4), logically applies after a court has determined
that there is an ―enforceable‖ agreement under section 2 of the FAA (9 U.S.C.
§ 2). Were it otherwise, we would attribute to Congress an irrational intent to
negate, through section 4, the savings clause it wrote into section 2. Neither a
mere refusal to enforce an arbitration agreement according to its terms nor
increased risk to a defendant can, by itself, serve as a principle that distinguishes
between an unconscionability rule that is preempted and one that is not.
                                          41
       In sum, we do not hold that any time arbitration is substituted for a judicial
or administrative forum, there is a loss of benefits. Nor do we hold that the
proponent of arbitration will invariably have to justify the agreement through
provision of benefits comparable to those otherwise afforded by statute. Both
California and federal law treat the substitution of arbitration for litigation as the
mere replacement of one dispute resolution forum for another, resulting in no
inherent disadvantage. (See Armendariz, supra, 24 Cal.4th at pp. 98–99;
Mitsubishi Motors, supra, 473 U.S. at pp. 626–628.) But where, as here, a
particular class has been legislatively afforded specific protections in order to
mitigate the risks and costs of pursuing certain types of claims, and to the extent
those protections do not interfere with fundamental attributes of arbitration, an
arbitration agreement requiring a party to forgo those protections may properly be
understood not only to substitute one dispute resolution forum for another, but also
to compel the loss of a benefit. The benefit lost is not dispositive but may be one
factor in an unconscionability analysis.
                                           V.
       While this case was pending before our court, the United States Supreme
Court decided another arbitration case, American Express Co. v. Italian Colors
Restaurant (2013) 570 U.S. __ [133 S.Ct. 2304] (Italian Colors). We requested
supplemental briefing from the parties on the significance of Italian Colors to the
present dispute. Having reviewed the high court‘s opinion and the parties‘
submissions, we do not believe Italian Colors alters our conclusions above.
       In Italian Colors, the owner of a small restaurant sought to bring a class
action suit alleging that American Express had violated the Sherman Act by
―us[ing] its monopoly power in the market for charge cards to force merchants to
accept credit cards at rates approximately 30% higher than the fees for competing
credit cards.‖ (Italian Colors, supra, 570 U.S. at p. __ [133 S.Ct. at p. 2308].)
                                           42
American Express moved to compel individual, bilateral arbitration pursuant to a
standardized agreement with an express class action waiver. In response, the
plaintiff merchants submitted a declaration from an economist showing that the
cost of an expert analysis necessary to prove the antitrust claims would far exceed
the maximum recovery for any individual plaintiff. On that basis, the plaintiffs
argued that individual arbitration would be prohibitively costly and that enforcing
the class action waiver would prevent them from effectively vindicating their
rights under the Sherman Act. The high court rejected the plaintiffs‘ argument and
upheld the arbitration agreement. (Id. at p. __ [133 S.Ct. at p. 2312].)
       The high court explained that the principle that the FAA requires courts to
enforce arbitration agreements according to their terms ―holds true for claims that
allege a violation of a federal statute, unless the FAA‘s mandate has been
‗ ―overridden by a contrary congressional command.‖ ‘ ‖ (Italian Colors, supra,
570 U.S.at p. __ [133 S.Ct. at p. 2309], citations omitted.) The high court found
no contrary congressional command evident in the Sherman Act, observing that
―the antitrust laws do not guarantee an affordable procedural path to the
vindication of every claim.‖ (Id. at p. __ [133 S.Ct. at p. 2309]; see id. at p. __
[133 S.Ct. at p. 2309] [―The antitrust laws do not ‗evinc[e] an intention to preclude
a waiver‘ of class-action procedure. [Citation.]‖].) Further, the high court said:
―Nor does congressional approval of [Federal Rule of Civil Procedure] 23
establish an entitlement to class proceedings for the vindication of statutory
rights.‖ (Id. at p. __ [133 S.Ct. at p. 2309].)
       The high court then addressed the plaintiffs‘ contention that ―a judge-made
exception to the FAA . . . serves to harmonize competing federal policies by
allowing courts to invalidate agreements that prevent the ‗effective vindication‘ of
a federal statutory right. Enforcing the waiver of class arbitration bars effective
vindication, [the plaintiffs] contend, because they have no economic incentive to
                                           43
pursue their antitrust claims individually in arbitration.‖ (Italian Colors, supra,
570 U.S.at p. __ [133 S. Ct. at p. 2310].) According to the high court, the
―effective vindication‖ exception ―finds its origin in the desire to prevent
‗prospective waiver of a party‘s right to pursue statutory remedies,‘ [(Mitsubishi
Motors, supra, 473 U.S. at p. 637, fn. 19)] (emphasis added). That would
certainly cover a provision in an arbitration agreement forbidding the assertion of
certain statutory rights. And it would perhaps cover filing and administrative fees
attached to arbitration that are so high as to make access to the forum
impracticable. [Citation.] But the fact that it is not worth the expense involved in
proving a statutory remedy does not constitute the elimination of the right to
pursue that remedy. [Citation.] The class-action waiver merely limits arbitration
to the two contracting parties. It no more eliminates those parties‘ right to pursue
their statutory remedy than did federal law before its adoption of the class action
for legal relief in 1938, [citations]. Or, to put it differently, the individual suit that
was considered adequate to assure ‗effective vindication‘ of a federal right before
adoption of class-action procedures did not suddenly become ‗ineffective
vindication‘ upon their adoption.‖ (Italian Colors, at p. __ [133 S.Ct. at pp. 2310–
2311], fns. omitted.)
       We believe the reasoning of Italian Colors does not alter the
unconscionability analysis applicable to the present case. As an initial matter,
Italian Colors involved the harmonization of the FAA with other federal law; it
was not a preemption case. The high court thus had no occasion to consider the
well-established principle that ―courts should assume that ‗the historic police
powers of the States‘ are not superseded ‗unless that was the clear and manifest
purpose of Congress.‘ ‖ (Arizona v. United States (2012) 567 U.S. __, __ [132
S.Ct. 2492, 2501]; see Chamber of Commerce v. Whiting (2011) 563 U.S. __, __
[131 S.Ct. 1968, 1985] [―Our precedents ‗establish that a high threshold must be
                                            44
met if a state law is to be preempted for conflicting with the purposes of a federal
Act.‘ [Citation.]‖].) Laws ensuring the prompt and full payment of wages
unquestionably fall within the historic police powers of the state (see Kerr’s
Catering Service v. Dept. of Industrial Relations (1962) 57 Cal.2d 319, 326–327,
and cases cited therein), as does the power to police unfairly one-sided contracts of
adhesion (see Stevens v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 879–882
(Stevens), and cases cited therein). Italian Colors did not construe the FAA in
light of basic principles of federalism.
       In any event, neither the federal antitrust laws nor Federal Rule of
Procedure 23 ―establish[ed] an entitlement to class proceedings for the vindication
of [the] statutory rights‖ at issue in Italian Colors. (Italian Colors, supra, 570
U.S. at p. __ [133 S.Ct. at p. 2309].) According to the high court, the class waiver
in Italian Colors could not have conflicted with other federal policy because ―[n]o
contrary congressional command requires us to reject the waiver of class
arbitration here.‖ (Id. at p. __ [133 S.Ct. at p. 2309].) Here, by contrast, the
Legislature has ―establish[ed] an entitlement‖ (id. at p. __ [133 S.Ct. at p. 2309])
to a specific set of protections in order to provide lay persons with an accessible,
informal, and affordable mechanism for resolving wage claims. Whereas the class
waiver in Italian Colors eliminated no statutory entitlement specifically designed
to help vindicate the rights at issue there, the same is not true of the waiver of
statutorily provided Berman protections in this case.
       Similarly, the high court‘s discussion of the ―effective vindication‖
exception in Italian Colors — a doctrine that guides the harmonization of federal
statutes — does not affect our analysis in the present case. In stating that ―the fact
that it is not worth the expense involved in proving a statutory remedy does not
constitute the elimination of the right to pursue that remedy‖ (Italian Colors,
supra, 570 U.S. at p. __ [133 S.Ct. at p. 2311]), the high court was proceeding on
                                           45
the premise, established earlier in its opinion, that the ―right to pursue‖ the
antitrust remedy in that case encompassed no specific entitlement under the
antitrust laws or Federal Rule of Civil Procedure 23 to a class proceeding or to ―an
affordable procedural path to the vindication of every claim‖ (id. at p. __ [133
S.Ct. at p. 2309]). Here, by contrast, the Legislature adopted the Berman
protections specifically to provide a ―speedy, informal, and affordable method of
resolving wage claims.‖ (Cuadra, supra, 17 Cal.4th at p. 858.) Whereas in Italian
Colors ―the individual suit that was considered adequate to assure ‗effective
vindication‘ of a federal right before adoption of class-action procedures did not
suddenly become ‗ineffective vindication‘ upon their adoption‖ (Italian Colors, at
p. __ [133 S.Ct. at p. 2311]), here the Legislature enacted the Berman protections
―as a means of affording an employee with a meritorious wage claim certain
advantages, chiefly designed to reduce the costs and risks of pursuing a wage
claim, recognizing that such costs and risks could prevent a theoretical right from
becoming a reality.‖ (Sonic I, supra, 51 Cal.4th at p. 679.)
       Toward the end of its opinion in Italian Colors, the high court added this
paragraph concerning Concepcion: ―Truth to tell, our decision in [Concepcion] all
but resolves this case. There we invalidated a law conditioning enforcement of
arbitration on the availability of class procedure because that law ‗interfere[d] with
fundamental attributes of arbitration.‘ 563 U.S., at __, 131 S.Ct., at 1748. ‗[T]he
switch from bilateral to class arbitration,‘ we said, ‗sacrifices the principal
advantage of arbitration — its informality — and makes the process slower, more
costly, and more likely to generate procedural morass than final judgment.‘ Id., at
__, 131 S.Ct., at 1751. We specifically rejected the argument that class arbitration
was necessary to prosecute claims ‗that might otherwise slip through the legal
system.‘ Id., at __, 131 S.Ct., at 1753.‖ (Italian Colors, supra, 570 U.S. at p. __
[133 S. Ct. at p. 2312].) The high court ended this paragraph with a footnote
                                          46
responding to the dissent: ―In dismissing [Concepcion] as a case involving pre-
emption and not the effective-vindication exception, the dissent ignores what that
case established—that the FAA‘s command to enforce arbitration agreements
trumps any interest in ensuring the prosecution of low-value claims. The latter
interest, we said, is ‗unrelated‘ to the FAA. 563 U.S., at __, 131 S.Ct., at 1752–
1753. Accordingly, the FAA does, contrary to the dissent‘s assertion [citation],
favor the absence of litigation when that is the consequence of a class-action
waiver, since its ‗ ―principal purpose‖ ‘ is the enforcement of arbitration
agreements according to their terms.‖ (Id. at p. __, fn. 5 [133 S.Ct. at p. 2312,
fn. 5].)
           As indicated, the high court understood the result in Italian Colors to be
entailed by Concepcion, and one can see why. Concepcion upheld a class
arbitration waiver in the face of a contrary unconscionability rule because the rule
interfered with fundamental attributes of arbitration. In light of Concepcion‘s
holding that class procedures interfere with fundamental attributes of arbitration, it
is unsurprising that the high court in Italian Colors upheld a class waiver in the
face of no contrary legislative command. But the logic that unites Italian Colors
and Concepcion does not speak to whether the FAA preempts state-law
protections for wage claimants that, unlike class procedures, do not interfere with
fundamental attributes of arbitration. The high court‘s assertion in footnote 5 of
Italian Colors that Concepcion ―established . . . that the FAA‘s command to
enforce arbitration agreements trumps any interest in ensuring the prosecution of
low-value claims‖ (Italian Colors, supra, 570 U.S. at p. __ [133 S.Ct. at p. 2312,
fn. 5]) must be read in the context of the paragraph that precedes it. Concepcion
held that the FAA preempts a state-law rule that interferes with fundamental
attributes of arbitration ―even if [the rule] is desirable for unrelated reasons,‖ such
as facilitating the prosecution of ―small-dollar claims that might otherwise slip
                                             47
through the legal system.‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at
p. 1753].) Concepcion did not hold that the FAA preempts state-law rules
designed to facilitate prosecution of small-dollar claims even when the rules do
not interfere with fundamental attributes of arbitration, and we decline to infer
such a broad expansion of Concepcion‘s holding from a footnote in Italian Colors.
       Finally, the high court in Italian Colors ended its opinion by decrying
prearbitration litigation over the expected costs of pursuing a particular legal claim
or theory: ―Such a preliminary litigating hurdle would undoubtedly destroy the
prospect of speedy resolution that arbitration in general and bilateral arbitration in
particular was meant to secure. The FAA does not sanction such a judicially
created superstructure.‖ (Italian Colors, supra, 570 U.S. at p. __ [133 S.Ct. at
p. 2312.) Again, the high court disapproved of ―[s]uch a preliminary litigating
hurdle‖ (ibid.) in a statutory context where no specific legislative mandate sought
to ensure the affordability of pursuing the antitrust claim at issue there. The high
court had no occasion to consider a statutory context in which specific legislation
does seek to ensure the affordability of pursuing a particular kind of claim. Nor
did the high court in Italian Colors consider the savings clause in section 2 of the
FAA (9 U.S.C. § 2), which plainly contemplates litigation and judicial
determination of ― ‗generally applicable contract defenses, such as fraud, duress,
or unconscionability‘ [citation]‖ (Concepcion, 563 U.S. at p. __ [131 S.Ct. at
p. 1746]) as a prelude to enforcement of an arbitration agreement. (See Rent-A-
Center West, Inc. v. Jackson (2010) 561 U.S. __, __ [130 S.Ct. 2772, 2778].)
       In any event, we do not anticipate that our unconscionability inquiry will
create ―a preliminary litigating hurdle‖ that would delay arbitration under a valid
agreement. The wage claim here is simpler than the antitrust claim at issue in
Italian Colors, and courts here and elsewhere have routinely decided whether
arbitration is affordable in a given case. (See post, at p. 57.) Moreover, Code of
                                          48
Civil Procedure section 1290.2, which governs petitions to compel arbitration
brought in California courts, provides that such petitions ―shall be heard in a
summary way in the manner and upon the notice provided by law for the making
and hearing of motions . . . .‖ As we explained in Rosenthal v. Great Western
Financial Securities Corp. (1996) 14 Cal.4th 394, hearing and determination ― ‗in
the manner . . . provided by law for the . . . hearing of motions‘ (§ 1290.2)‖
generally means that ―the facts are to be proven by affidavit or declaration and
documentary evidence with oral testimony taken only in the court‘s discretion.‖
(Id. at pp. 413–414.) With respect to claims of fraud, where factual differences
may be difficult to resolve without making credibility determinations, oral
testimony is generally appropriate. (Id. at p. 414.) In cases such as this one,
however, there is no reason to suppose that the trial court cannot resolve the claim
of unconscionability in a summary fashion based on declarations or other
documentary evidence submitted in connection with a motion to compel
arbitration. (See, e.g., Gutierrez, supra, 114 Cal.App.4th at pp. 90–91.)
       In sum, Italian Colors does not alter the unconscionability analysis we set
forth above. Where a state-law rule interferes with fundamental attributes of
arbitration, the FAA preempts the state-law rule even if the rule is designed to
facilitate prosecution of certain kinds of claims. Concepcion established this
principle, Italian Colors reaffirmed it, and we apply it today to invalidate the
categorical rule on waiving a Berman hearing that we adopted in Sonic I. Yet a
court, when faced with an unconscionability claim arising from an adhesive
employment contract requiring waiver of the Berman protections in their entirety,
must still determine whether the overall bargain was unreasonably one-sided. This
unconscionability inquiry does not, in purpose or effect, express a preference for
nonarbitral as opposed to arbitral forums. To the contrary, it promotes and
encourages the use of conventional bilateral arbitration as a means of low-cost,
                                         49
efficient dispute resolution. Our unconscionability doctrine poses no obstacle to
enforcement of arbitration agreements so long as the arbitral scheme, however
designed, provides employees with an accessible, affordable process for resolving
wage disputes that does not ―effectively block[] every forum for the redress of
[wage] disputes, including arbitration itself.‖ (Gutierrez, supra, 114 Cal.App.4th
at p. 90.)
                                          VI.

       Justice Chin dissents from our treatment of Moreno‘s unconscionability
claim on several grounds. To a significant extent, his dissent relitigates issues that
this court has already decided to the contrary. And his only new argument — that
the FAA preempts the unconscionability rule we set forth today — is unpersuasive
for reasons we have discussed above and further elucidate below.

                                          A.

       As an initial matter, Justice Chin says Moreno forfeited his right to litigate
the unconscionability issue. The dissent acknowledges that Moreno asserted in the
trial court, as a defense to enforcement of the arbitration agreement, that the
agreement was unconscionable because it ― ‗fails to provide an arbitral forum in
which employees can fully and effectively vindicate their statutory rights to
recover unpaid wages.‘ ‖ (Conc. & dis. opn., post, at p. 4.) The dissent insists,
nevertheless, that Moreno‘s unconscionability claim should be deemed forfeited
because ―he did nothing further in the trial court to pursue either this or any other
unconscionability defense.‖ (Ibid.) But a similar argument failed to persuade the
court in Sonic I. (See Sonic I, supra, 51 Cal.4th at p. 685, fn. 10; id. at p. 713
(conc. & dis. opn. of Chin, J.).) Moreno raised the unconscionability defense and
then chose, given the state of the law at the time, to focus in the trial court on his
argument that waiver of a Berman hearing was per se unconscionable and contrary
                                          50
to public policy. Moreno will now have the opportunity to develop his
unconscionability defense in light of the principles we articulate today.
       Justice Chin also characterizes our discussion of unconscionability as
―dicta‖ and an ―advisory opinion.‖ (Conc. & dis. opn., post, at pp. 1, 7.) But this
is incorrect. ―Dicta consists of observations and statements unnecessary to the
appellate court‘s resolution of the case.‖ (Garfield Medical Center v. Belshé
(1998) 68 Cal.App.4th 798, 806.) Statements by appellate courts ―responsive to
the issues raised on appeal and . . . intended to guide the parties and the trial court
in resolving the matter following . . . remand‖ are not dicta. (Ibid.; see United
Steelworkers of America v. Board of Education (1984) 162 Cal.App.3d 823, 834–
835.) Our discussion of unconscionability is responsive to whether Moreno has a
viable unconscionability defense after Concepcion, and it is intended to guide the
parties and the trial court on remand. The discussion is neither dicta nor an
advisory opinion.
                                          B.

       The core of Justice Chin‘s dissent is his contention that the arbitration
agreement at issue here is not unconscionable. He advances several arguments in
support of this claim.
                                           1.

       Justice Chin says we have improperly relaxed the unconscionability
standard by using the phrase ―unreasonably one-sided‖ instead of ―so one-sided as
to shock the conscience.‖ (Conc. & dis. opn., post, at p. 8.) Justice Corrigan also
favors the term ―shock the conscience.‖ (Conc. opn., post, at pp. 1–2.) But an
examination of the case law does not indicate that ―shock the conscience‖ is a
different standard in practice than other formulations or that it is the one true,
authoritative standard for substantive unconscionability, exclusive of all others.

                                          51
       In Armendariz, the seminal California case to examine unconscionability in
the context of adhesive arbitration agreements, we relied in part on A&M Produce,
supra, 135 Cal.App.3d 473, to elucidate general principles of unconscionability.
(See Armendariz, supra, 24 Cal.4th at pp. 113–114.) A&M Produce, which
predates our arbitration cases, did not involve arbitration and made no reference to
the ―shock the conscience‖ standard. Upon reviewing case law from a variety of
jurisdictions, A&M Produce stated that ― ‗[u]nconscionability has generally been
recognized to include an absence of meaningful choice on the part of one of the
parties together with contract terms which are unreasonably favorable to the other
party.‘ ‖ (A&M Produce, at p. 486, quoting Walker-Thomas Furniture, supra, 350
F.2d at p. 449.)
       Some Courts of Appeal, starting with California Grocers Assn. v. Bank of
America (1994) 22 Cal.App.4th 205, 214–215, have criticized the term
―unreasonable‖ as overly subjective and have instead used the ―shock the
conscience‖ standard. But no uniformity has emerged in our lower courts. Some
Courts of Appeal have used the ―shock the conscience‖ standard in arbitration
cases (see, e.g., Bigler v. Harker School (2013) 213 Cal.App.4th 727, 736; Mission
Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197
Cal.App.4th 1146, 1158–1159; Cotchett, Pitre & McCarthy v. Universal Paragon
Corp. (2010) 187 Cal.App.4th 1405, 1419), while others have not (see, e.g., Zullo
v. Superior Court (2011) 197 Cal.App.4th 477, 484; Olvera v. El Pollo Loco, Inc.
(2009) 173 Cal.App.4th 447, 456; Martinez v. Master Protection Corp. (2004) 118
Cal.App.4th 107, 113). And still others have regarded the term ―shock the
conscience‖ as interchangeable with various other formulations. (See, e.g., Serpa,
supra, 215 Cal.App.4th at p. 703.)
       As Justice Chin notes, we recently said in Pinnacle, an arbitration case, that
―[a] contract term is not substantively unconscionable when it merely gives one
                                         52
side a greater benefit; rather, the term must be ‗so one-sided as to ―shock the
conscience.‖ ‘ ‖ (Pinnacle, supra, 55 Cal.4th at p. 246.) But whether ―shock the
conscience‖ has a different meaning than ―unreasonably one-sided‖ or should be
the exclusive formulation of substantive unconscionability was not remotely at
issue in Pinnacle, and ―it is axiomatic that cases are not authority for propositions
not considered.‖ (People v. Alvarez (2002) 27 Cal.4th 1161, 1176.) Likewise
here, whether these different formulations actually constitute different standards in
practice and whether one is more objective than the other are issues that have not
been briefed and are not before us. It is enough to observe that courts, including
ours, have used various nonexclusive formulations to capture the notion that
unconscionability requires a substantial degree of unfairness beyond ―a simple
old-fashioned bad bargain.‖ (Schnuerle, supra, 376 S.W.3d at p. 575; see ante, at
pp. 31, 36.)
                                          2.

       Next, Justice Chin argues what neither Sonic nor its amici curiae contend:
that the Berman procedures do not actually benefit employees. He claims that
because the Labor Commissioner may exercise her discretion in deciding whether
to conduct Berman hearings, any value of the Berman procedure to Moreno is
―entirely speculative.‖ (Conc. & dis. opn., post, at pp. 12, 14.) Of course, no one
can foresee with total certainty whether a particular employee‘s application for a
Berman hearing will be granted, but that hardly means the Berman procedures
have merely speculative value ex ante. If the Berman procedures were, in
practice, rarely used and generally unavailable to the employee, the significance of
waiving such procedures would be diminished. But the parties have not
suggested, nor does the record before us indicate, that such is the case.

                                         53
       To the extent Justice Chin suggests that the Berman process is not well
designed to facilitate prompt and enforceable resolution of wage claims, we have
repeatedly concluded otherwise. In Cuadra, the court unanimously said: ―The
Berman hearing procedure is designed to provide a speedy, informal, and
affordable method of resolving wage claims.‖ (Cuadra, supra, 17 Cal.4th at
p. 858.) In Lolley, the court unanimously said the fee-shifting provision in the
Berman statutes ―serves the legislative purpose of discouraging unmeritorious
appeals of wage claims, thereby reducing the costs and delays of prolonged
disputes.‖ (Lolley, supra, 28 Cal.4th at p. 376.) And in Sonic I, the court said the
benefits afforded to employees by the Berman statutes are ―chiefly designed to
reduce the costs and risks of pursuing a wage claim.‖ (Sonic I, supra, 51 Cal.4th
at p. 679.)
       To the extent Justice Chin suggests that the Berman protections, despite
their design, do not actually achieve their intended purpose, his contention is
unsupported by the record before us. Although it may take several months or even
a year to resolve a wage claim through the Berman process, the record contains no
evidence, and the dissent cites none, that enables us to compare this timeframe
with the time required to resolve a similar claim through arbitration of the sort
contemplated in the agreement here. Such evidence, if any, may be considered on
remand. In addition, Justice Chin notes our statement in Gentry that ―Berman
hearings may result in no cost savings to the employee‖ because of the possibility
that ―a losing employer has a right to a trial de novo in superior court.‖ (Gentry,
supra, 42 Cal.4th at p. 464.) But the court made that statement in the context of
concluding that ―Berman hearings are neither effective nor practical substitutes for
class action or arbitration.‖ (Id. at p. 465.) The fact that thousands of individual
Berman hearings would not result in cost savings as compared to a single class
proceeding (id. at p. 464) sheds no light on whether Berman hearings would result
                                          54
in cost savings as compared to individual arbitrations of the same wage claims
under the litigation-like rules set forth in the agreement in this case.
       The rest of Justice Chin‘s dissent provides similarly scant support for its
disparagement of the ―asserted benefits of the Berman procedure‖ as
―speculative.‖ (Conc. & dis. opn., post, at p. 14.) Although the mandatory
assessment of costs and attorney fees against the unsuccessful party in an appeal
applies to the employee as well as the employer, the statute‘s asymmetric
definition of success plainly works in the employee‘s favor. (§ 98.2, subd. (c)
[―An employee is successful if the court awards an amount greater than zero.‖].)
And even if the benefit of this provision was not available when Moreno signed
his agreement in July 2002 — a fact relevant to the unconscionability analysis on
remand — there is no question that the benefit has been available since July 2003
(Stats. 2003, ch. 93, § 2, p. 790) and helps to ―reduc[e] the costs and delays of
prolonged disputes‖ by deterring meritless appeals (Lolley, supra, 28 Cal.4th at
p. 376). Further, although the Labor Commissioner has discretion to stay an
award for good cause, it is unclear how this detracts from the Labor
Commissioner‘s statutory duty to ―make every reasonable effort to ensure that
judgments are satisfied.‖ (§ 98.2, subd. (i).) For an employee seeking to collect a
judgment, it surely helps to have the Labor Commissioner on your side. Finally,
with regard to the undertaking that an employer must post before taking an appeal
(id., subd. (b)), the dissent notes that an employee who arbitrates a wage claim
may obtain a provisional remedy requiring payment of wages during arbitration.
(Conc. & dis. opn., post, at pp. 12–13.) But such a remedy is available only upon
a showing that ―the award to which the applicant may be entitled may be rendered
ineffectual without provisional relief.‖ (Code Civ. Proc., § 1281.8, subd. (b).)
       In sum, the Berman procedures taken together are the Legislature‘s solution
to the real-world problems employees face in recovering wages owed. The
                                          55
Legislature has structured a set of informal procedures and incentives that make it
more likely employees will be able to recover wages without incurring substantial
attorney fees or the risk of liability for an employer‘s attorney fees. The
Legislature has also enacted provisions to deter meritless appeals of wage claims
through a trial de novo in superior court and to ensure that employees will be able
to actually collect a favorable judgment. The dissent does not persuade us to
second-guess the efficacy of this legislative solution or to depart from this court‘s
consistent understanding of the Berman statutes‘ benefits. Because we see no
basis to conclude that the benefits of the Berman procedures are ―entirely
speculative‖ (conc. & dis. opn., post, at pp. 12, 14) or that ―arbitration is more
streamlined than the Berman process‖ in this and every case (id. at p. 21), we
decline to reject Moreno‘s claim of unconscionability on such grounds and instead
direct the trial court on remand to consider Moreno‘s claim in light of any relevant
evidence that the parties may submit.
                                          3.

       Justice Chin‘s other reasons for challenging our unconscionability analysis
are likewise unpersuasive. He contends that our unconscionability rule is
―hopelessly vague, uncertain, and subjective‖ because we do not define the terms
―accessible,‖ ―affordable,‖ ―low-cost,‖ ―speedy,‖ or ―effective.‖ (Conc. & dis.
opn., post, at p. 10.) But the principles we set forth today are hardly anomalous
insofar as they are not bright-line formulations. As this court long ago stated in
determining ―reasonable water use‖ in a water rights case: ―There would seem to
be no more difficulty in ascertaining what is a reasonable use of water than there is
in determining probable cause, reasonable doubt, reasonable diligence,
preponderance of evidence, a rate that is just and reasonable, public convenience
and necessity, and numerous other problems which in their nature are not subject

                                          56
to precise definition but which tribunals exercising judicial functions must
determine.‖ (Gin S. Chow v. City of Santa Barbara (1933) 217 Cal. 673, 706.)
Many other examples abound. This court in Cel-Tech Communications, Inc. v.
Los Angeles Cellular Telephone (1999) 20 Cal.4th 163, 187, in an opinion by
Justice Chin, defined ―unfair competition‖ for purposes of the Unfair Competition
Law (Bus. & Prof. Code, § 17200 et seq.) as conduct that ―threatens an incipient
violation of an antitrust law, or violates the policy or spirit of one of those laws
. . . , or otherwise significantly threatens or harms competition,‖ while providing
no definition or elaboration of the terms ―threatens,‖ ―incipient,‖ ―policy,‖ ―spirit,‖
or ―significantly threatens or harms competition.‖
       It has long been recognized that substantive unconscionability is not
susceptible to ―precise definition‖ (A&M Produce, supra, 135 Cal.App.3d at
p. 487), and neither Civil Code section 1670.5 nor Uniform Commercial Code
article 2-302 suggests otherwise. The fact that ―affordable,‖ ―accessible,‖
―effective,‖ and similar terms are not subject to precise definition has not
prevented common-law courts from applying these terms one case at a time to
enforce the basic principle that the nondrafting party to an adhesive contract may
not be subject to unconscionably one-sided terms. Indeed, the extant case law
belies Justice Chin‘s concern that courts are simply unable to make reasonable
determinations about whether an arbitration process is affordable. (See, e.g.,
Gutierrez, supra, 114 Cal.App.4th at pp. 90–91; Patterson v. ITT Consumer
Financial Corporation (1993) 14 Cal.App.4th 1659, 1665–1666; Alexander v.
Anthony Intern, L.P. (3d Cir. 2003) 341 F.3d 256, 269–270; Brady v. Williams
Capital Group, L.P. (N.Y.App.Div. 2009) 64 A.D.3d 127, 135–136; Murphy v.
Mid-West Nat. Life Ins. Co. of Tennessee (Idaho 2003) 78 P.3d 766, 768.) Despite
the dire assertion that our approach to unconscionability is ―hopelessly vague and
unworkable‖ (conc. & dis. opn., post, at p. 17), we doubt the standards in our
                                          57
opinion today will cause judges throughout the state to simply throw up their
hands in despair.
       Nor is our approach inconsistent with Little, in which we said that,
―[w]ithout more,‖ arbitration conducted with many of the formalities of litigation
is not unconscionably one-sided. (Little, supra, 29 Cal.4th at p. 1075, fn. 1.) We
reaffirm that such arbitration is not per se unconscionable or contrary to public
policy, and as explained above, there are many ways to structure arbitration to
facilitate accessible and affordable resolution of wage disputes. (See ante, at
p. 35.) Our approach to unconscionability insists only that arbitration be so
structured, and whether the arbitral process in this case, which includes the
litigation-like formalities specified in the arbitration agreement, puts Moreno at
such a disadvantage as to be unconscionable is a question to be determined on
remand.
       As noted, Sonic‘s counsel has represented that the arbitral process at issue
here includes features not disclosed in the arbitration agreement, and the trial court
may consider such features on remand. (See ante, at pp. 34–35.) Justice Chin
says a court cannot perform this task because ―arbitrators have broad discretion in
determining the procedures and law governing the arbitration.‖ (Conc. & dis.
opn., post, at p. 11.) Again, his concern is unfounded. Although arbitrators have
discretion to decide on features of arbitration that are not specified in the
agreement, courts can and routinely do inquire into the rules that guide the conduct
of arbitration in order to resolve unconscionability and related claims. (See, e.g.,
Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1475–1478 [examining
American Arbitration Association‘s (AAA) rules to determine if arbitration
agreement is contrary to public policy]; D.C. v. Harvard-Westlake School (2009)
176 Cal.App.4th 836, 863 [examining Judicial Arbitration and Mediation Services
cost allocation rules to determine whether they adequately protect vindication of
                                          58
statutory claim]; Gutierrez, supra, 114 Cal.App.4th at pp. 90–91 [examining AAA
rules regarding arbitration costs to determine unconscionability]; Popovich v.
McDonald’s Corp. (N.D.Ill. 2002) 189 F.Supp.2d 772, 778 [concluding arbitration
agreement unconscionable after examining the fees the employee would have to
pay under the AAA commercial arbitration rules]); Spinetti v. Serv. Corp. Int’l (3d
Cir. 2003) 324 F.3d 212, 217 [affirming district court ruling that fees were
exorbitant under AAA rules in employment cases].) We see no reason why the
trial court cannot do the same on remand.
       Justice Chin further contends that our unconscionability inquiry is
unworkable because ―a determination of unconscionability must be based on the
circumstances that existed ‗at the time [the contract] was made‘ (Civ. Code,
§ 1670.5, subd. (a)), not on hindsight in light of subsequent events. [Citations.]
Accordingly, . . . a trial court, in determining accessibility and affordability, will
have to determine, not what Moreno can afford today, but what he could have
afforded at the time he signed the arbitration agreement.‖ (Conc. & dis. opn., post,
at pp. 10–11.) This is not quite correct. Because a predispute arbitration
agreement is an agreement to settle future disputes by arbitration, the proper
inquiry is what dispute resolution mechanism the parties reasonably expected the
employee to be able to afford. Absent unforeseeable (and thus not reasonably
expected) circumstances, there is no reason to think that what an employee can
afford when a wage dispute arises will materially differ from the parties‘
understanding of what the employee could afford at the time of entering the
agreement. The dissent‘s concern that the affordability inquiry is ―difficult, if not
impossible‖ (id. at p. 10) is, once again, overblown. (See, e.g., Gutierrez, supra,
114 Cal.App.4th at pp. 90–91 [examining affordability of arbitration in the course
of determining unconscionability ―as of the time the contract is made‖].)

                                           59
       Finally, Justice Chin quotes Sonic I‘s statement that a trial court confronted
with a petition to compel arbitration ― ‗is in no position to determine‘ ‗whether and
to what extent a particular wage claimant will benefit from the Berman hearing
process.‘ ‖ (Conc. & dis. opn., post, at p. 17, quoting Sonic I, supra, 51 Cal.4th at
p. 683.) But this quotation, as the dissent presents it, is stripped of its essential
context. In Sonic I, we rejected Sonic‘s argument that instead of imposing a
categorical prohibition on Berman waivers, we should take a case-by-case
approach, like the ad hoc approach to class action waivers we adopted in Gentry.
(See Gentry, supra, 42 Cal.4th at pp. 462–464.) In finding Gentry ―readily
distinguishable,‖ we observed that whereas a class action is ―a judicially devised
procedure‖ whose efficiencies and practicalities a trial court is ― ‗ ―ideally situated
to evaluate,‖ ‘ ‖ a trial court ―is in no position to determine‖ ―whether and to what
extent a particular wage claimant will benefit from the Berman hearing process.‖
(Sonic I, at p. 683.) It is clear in context that we made this latter statement in
support of the point that courts are in no position to second-guess, on an ad hoc
basis, the Legislature‘s ―judgment about the special protections and procedural
rights that should be afforded to persons with wage claims in order to ensure that
such claims be fairly resolved.‖ (Id. at p. 683.) Indeed, in the paragraph right
before the one in which the statement appears, we said: ―The purpose of the
Berman hearing statutes is to empower wage claimants by giving them access to a
Berman hearing with all of its advantages.‖ (Id. at p. 682.) Our point in Sonic I
that courts are in no position to disclaim the benefits of the Berman procedures on
a case-by-case basis does not remotely suggest that courts are in no position to
consider such benefits in determining whether an arbitration agreement is
unconscionable. If anything, the relevant passage in Sonic I points the other way.
(Id. at pp. 682–683.)

                                           60
                                          C.
       In addition to the concerns discussed above, Justice Chin argues that our
approach to unconscionability violates the FAA as interpreted in Concepcion and
Italian Colors. Again, the dissent‘s contention does not withstand scrutiny.
                                          1.
       The dissent‘s fundamental error is its characterization of Concepcion‘s
holding in the following terms: ―The FAA, as the high court has construed it,
precludes state courts from finding an arbitration provision unconscionable based
on the need to protect ‗small-dollar claims that might otherwise slip through the
legal system,‘ even though that goal may be ‗desirable.‘ (Concepcion, supra, 563
U.S. at p. __ [131 S.Ct. at p. 1753].) It ‗trumps any interest in ensuring the
prosecution of low-value claims‘ and ‗favor[s] the absence of litigation when that
is the consequence of‘ following its ‗command‘ to enforce arbitration agreements
‗according to their terms.‘ (Italian Colors, supra, 570 U.S. at p. __ [133 S.Ct. at
p. 2312, fn. 5], italics added.)‖ (Conc. & dis. opn., post, at p. 20.) This is a
misreading of Concepcion and, in turn, Italian Colors.
       If the broad principle that arbitration agreements must be enforced
according to their terms, notwithstanding the desirability of state laws protecting
small-dollar claims, were the decisive principle in Concepcion, then why would
the high court have bothered to spill so much ink explaining why class
proceedings are incompatible with ―fundamental attributes of arbitration‖?
(Concepcion, supra, 563 U.S. at pp. __–__ [131 S.Ct. at pp. 1748–1753].) That
entire discussion would have been unnecessary on Justice Chin‘s account of
Concepcion. The holding of Concepcion is that ―[r]equiring the availability of
classwide arbitration interferes with fundamental attributes of arbitration and thus
creates a scheme inconsistent with the FAA.‖ (Id. at p. 1748, italics added.)
Italian Colors, another case involving a class waiver, restated Concepcion‘s
                                          61
holding in exactly the same terms: ―There [in Concepcion] we invalidated a law
conditioning enforcement of arbitration on the availability of class procedure
because that law ‘interfere[d] with fundamental attributes of arbitration.’ 563
U.S. at —, 131 S.Ct., at 1748.‖ (Italian Colors, supra, 570 U.S. at p. __ [133
S.Ct. at p. 2312], italics added.) When footnote 5 of Italian Colors is read
together with the paragraph in the main text that precedes it, the high court‘s
statement that Concepcion established that ―the FAA‘s command to enforce
arbitration agreements trumps any interest in ensuring the prosecution of low-
value claims‖ means that no such interest can save a state law from FAA
preemption where ―that law ‗interfere[s] with fundamental attributes of
arbitration.‘ ‖ (Italian Colors, at p. __ & fn. 5 [133 S.Ct. at p. 2312 & fn. 5]; see
ante, at pp. 47–48.)
       Thus, Concepcion expressly states, and Italian Colors expressly confirms,
that the dispositive rationale for Concepcion‘s preemption holding is that class
proceedings interfere with ―fundamental attributes of arbitration.‖ (Concepcion,
supra, 563 U.S. at p. __ [131 S.Ct. at p. 1748]; see Italian Colors, supra, 570 U.S.
at p. __ [133 S.Ct. at p. 2312].) Remarkably, however, Justice Chin never
mentions the high court‘s sustained focus on ―fundamental attributes of
arbitration‖ in his rendition of Concepcion‘s reasoning and result, and even
affirmatively disclaims the relevance of such fundamental attributes in
characterizing the principle established by Concepcion. (Conc. & dis. opn., post,
at pp. 18–21, 23–24.)
       Justice Chin does claim that ―arbitration is more streamlined than the
Berman process‖ and that our approach to unconscionability ―is likely to produce
procedures that are less efficient, more costly, more formal, and more time
consuming than arbitration.‖ (Conc. & dis. opn., post, at p. 21.) But, as explained
above, these bare assertions have no evidentiary support, and this court‘s settled
                                          62
understanding that the Berman process provides a speedy, informal, and low-cost
method of resolving wage disputes (see ante, at pp. 9–10, 37, 53–56) cannot be
dislodged by the dissent‘s mere disbelief. Although the dissent says ―the majority
never factors in the trial-de-novo option under the Berman statutes‖ (conc. & dis.
opn., post, at p. 21), it is the dissent that ignores what we have repeatedly said here
(see ante, at pp. 8, 9, 54, 55, 56) and elsewhere (see Lolley, supra, 28 Cal.4th at
p. 376; Sonic I, supra, 51 Cal.4th at p. 674) about the considerable incentives built
into the Berman process to discourage de novo appeals in superior court and
thereby promote speed, efficiency, affordability, and informality in dispute
resolution. Indeed, it is hardly ―self-evident‖ that the option to appeal necessarily
means the Berman process ―is not speedier or more streamlined than arbitration‖
(conc. & dis. opn., post, at p. 13), for surely it matters how often the option is
actually used. Moreover, as noted, our approach to unconscionability does not
erect a ― ‗preliminary litigating hurdle‘ ‖ of the sort prohibited by Italian Colors.
(Ante, at pp. 48–49.) The FAA‘s saving clause contemplates initial resolution of
unconscionability claims, and despite Justice Chin‘s determined effort to portray
the inquiry as exceedingly complex (see conc. & dis. opn., post, at pp. 22–23), we
do not share his lack of confidence in the ability of our trial courts to swiftly
examine relevant evidence and resolve such claims.
       Instead of coming to grips with Concepcion‘s core rationale, Justice Chin‘s
dissent assigns decisive weight to the general proposition that the FAA‘s principal
purpose is to ensure enforcement of arbitration agreements ― ‗according to their
terms.‘ ‖ (Conc. & dis. opn., post, at pp. 19, 20, 21, 24, 27.) To be sure, this
proposition is well established in the high court‘s FAA precedents. (See, e.g.,
Italian Colors, supra, 570 U.S. at p. __, fn. 5 [133 S.Ct. at p. 2312, fn. 5];
Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1748].) But the dissent
attributes to the FAA a purpose to ―pursue that broadest goal only at the expense
                                          63
of harming other values that the legislature deems important. After all, no statute
. . . pursues its ‗broad purpose‘ at all costs.‖ (Scalia & Garner, Reading Law: The
Interpretation of Legal Texts (2012) p. 21, citing Pension Benefit Guarantee Corp.
v. LTV Corp. (1990) 496 U.S. 633, 647 [― ‗[I]t frustrates rather than effectuates
legislative intent simplistically to assume that whatever furthers the statute‘s
primary objective must be the law.‘ [Citation.]‖].) The FAA itself makes explicit
the other values at play. The statute‘s saving clause says an arbitration agreement
may be held unenforceable ―upon such grounds as exist at law or in equity for the
revocation of any contract‖ (9 U.S.C. § 2), and the high court in Concepcion, after
quoting this saving clause, recognized that the FAA ―permits agreements to
arbitrate to be invalidated by ‗generally applicable contract defenses, such as
fraud, duress, or unconscionability.‘ ‖ (Concepcion, at p. __ [131 S.Ct. at
p. 1746], italics added.) In reconciling the FAA‘s purpose of enforcing arbitration
agreements with the FAA‘s preservation of an unconscionability defense,
Concepcion plainly did not hold that the FAA preempts all unconscionability
rules; it held that the FAA preempts unconscionability rules that interfere with
fundamental attributes of arbitration. By contrast, it is not clear what meaning, if
any, Justice Chin would assign to the FAA‘s saving clause. His theory that the
FAA preempts any unconscionability rule that interferes with enforcement of
arbitration agreements according to their terms would authorize even blatant forms
of unconscionability, such as an adhesive agreement that gives the drafting party
the sole power to choose the arbitrator (Scissor-Tail, supra, 28 Cal.3d at p. 828) or
imposes a one-sided provision for appealing an arbitral award (Little, supra, 29
Cal.4th at pp. 1071–1074). (Compare ante, at pp. 29–30 with conc. & dis. opn.,
post, at p. 26, fn. 7.)
       Under the dissent‘s sweeping view of FAA preemption, no
unconscionability rule may take into account the surrender of statutory protections
                                          64
for certain claimants, whether or not those protections interfere with fundamental
attributes of arbitration. Waiver of fee-shifting provisions favoring particular
litigants (see Serpa, supra, 215 Cal.App.4th at pp. 709–710 [discussing fee-
shifting under FEHA]; Ajamian, supra, 203 Cal.App.4th at p. 800 [discussing
§ 1194]) or statutory protections for small-dollar claims modeled on the very
arbitration agreement that the high court discussed approvingly in Concepcion (see
ante, at p. 39) must apparently count for nothing in a court‘s assessment of
unconscionability. It is this approach, not ours, that ―appears to go far beyond‖
the high court‘s pronouncements on FAA preemption. (Conc. & dis. opn., post, at
p. 20.) For the high court has never suggested that unconscionability doctrine
must disavow any concerns about cost or other features of arbitration that prevent
effective resolution of arbitral disputes.
       In Concepcion and in Italian Colors, the high court rejected a challenge to
an arbitration agreement where the only asserted defect was the absence of class
proceedings and where the only remedy — to allow class proceedings — was
deemed incompatible with fundamental attributes of arbitration. Unlike Discover
Bank‘s rule entitling consumers to class proceedings, and unlike Sonic I‘s rule
entitling wage claimants to pursue a Berman hearing, the unconscionability rule
we articulate today requires no such incompatible proceedings. Our rule fully
recognizes that parties may opt out of the Berman process with any agreement that
provides for accessible, affordable arbitration of wage disputes. Contrary to the
dissent‘s characterization, our unconscionability rule does not ―impose all sorts of
arbitration procedures‖ (conc. & dis. opn., post, at p. 23); instead, it targets
practical impediments to the use of arbitration to resolve wage disputes while
imposing no specific procedural requirements. Our rule thus serves to facilitate
access to arbitration without compromising any of its fundamental attributes.
How such a rule ― ‗stands as an obstacle to the accomplishment and execution of
                                             65
the full purposes and objectives of [the FAA]‘ ‖ (Concepcion, supra, 563 U.S. at
p. __ [131 S.Ct. at p. 1753]) is difficult to fathom. Indeed, the very notion that an
arbitration agreement might increase the cost and complexity of dispute resolution
would have been foreign to the Congress that enacted the FAA. (See Joint
Hearings on Sen. No. 1005 and H.R. No. 646 before Subcoms. of Coms. on
Judiciary, 68th Cong., 1st Sess., § 15, at pp. 34–35 (1924) [advocating arbitration
as a means of lowering the cost of dispute resolution]; Sen.Rep. No. 536, 68th
Cong., 1st Sess., § 2, at p. 3 (1924) [same].)
                                            2.
          Justice Chin also asserts, using various formulations, that our approach to
unconscionability discriminates against arbitration. (Conc. & dis. opn., post, at
p. 26 [― ‗construe[s] [an arbitration] agreement in a manner different from that in
which [a court] otherwise construes nonarbitration agreements under state law‘ ‖];
ibid. [―crafts different unconscionability rules for arbitration agreements‖]; id. at
p. 28 [― ‗disfavors arbitration‘ ‖ and ― ‗derive[s] [its] meaning from the fact that an
agreement to arbitrate is at issue‘ ‖].) The main problem, the dissent says, is that
our unconscionability rule is ―not a ground that exists at law or in equity for the
revocation of any contract, but is . . . merely a ground that exists for the revocation
of arbitration provisions in contracts subject to the Berman statutes or to other
statutes that ‗legislatively‘ afford to ‗a particular class . . . specific protections in
order to mitigate the risks and costs of pursuing certain types of claims.‘ ‖ (Id. at
p. 25.)
          Again, the reasoning of Concepcion is instructive. In calling into question
unconscionability rules that ―would have a disproportionate impact on arbitration
agreements‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1747]), the
high court was careful not to suggest that the FAA preempts any such rule.
Instead, the high court marshaled a series of examples to show that
                                            66
unconscionability rules nominally applicable to both arbitration and nonarbitration
agreements may, in practice, be ― ‗aimed at destroying arbitration‘ ‖ or
― ‗demand[] procedures incompatible with arbitration.‘ ‖ (Concepcion, at p. __
[131 S.Ct. at p. 1747]; see ibid. [positing unconscionability rules that require
judicially monitored discovery, adherence to the Federal Rules of Evidence, or
ultimate disposition by a jury].) In those circumstances, the rule is preempted by
the FAA. But we have long recognized that the mere fact that general
unconscionability principles are applied to the specific context of arbitration does
not mean that the rule is preempted by the FAA. (See Armendariz, supra, 24
Cal.4th at p. 119.) The crucial issue is whether the rule undermines the procedural
essence of arbitration in some way — that is, whether the rule ―interferes with
fundamental attributes of arbitration.‖ (Concepcion, at p. __ [131 S.Ct. at
p. 1748].) Where, as here, an unconscionability rule that is equally applicable to
arbitration and nonarbitration agreements does not interfere with fundamental
attributes of arbitration, the rule cannot be said to discriminate against arbitration
simply because it applies more often to arbitration agreements.
       Neither Perry v. Thomas (1987) 482 U.S. 483 (Perry) nor Southland Corp.
v. Keating (1984) 465 U.S. 1 (Southland) suggests otherwise. Perry held that the
FAA preempted a state statute providing that ―actions for the collection of wages
may be maintained ‗without regard to the existence of any private agreement to
arbitrate.‘ [Citation.]‖ (Perry, at p. 484.) Similarly, Southland held that the FAA
preempted a decision of this court that had read into the California Franchise
Investment Law a ―defense to arbitration‖ that ―require[d] judicial consideration of
claims brought under [that] state statute.‖ (Southland, at pp. 10, 16, fn. 11.) In
Perry, the high court explained in a footnote that unconscionability doctrine could
not be used to avoid the preemptive rule: ―[S]tate law, whether of legislative or
judicial origin, is applicable if that law arose to govern issues concerning the
                                          67
validity, revocability, and enforceability of contracts generally. A state-law
principle that takes its meaning precisely from the fact that a contract to arbitrate is
at issue does not comport with this requirement of [the FAA‘s saving clause].
[Citation.] A court may not, then, in assessing the rights of litigants to enforce an
arbitration agreement, construe that agreement in a manner different from that in
which it otherwise construes nonarbitration agreements under state law. Nor may
a court rely on the uniqueness of an agreement to arbitrate as a basis for a state-
law holding that enforcement would be unconscionable, for this would enable the
court to effect what we hold today the state legislature cannot.‖ (Perry, at
pp. 492–493, fn. 9.)
       Under Perry and Southland, the FAA clearly preempts a state
unconscionability rule that establishes an unwaivable right to litigate particular
claims by categorically deeming agreements to arbitrate such claims
unenforceable. That is what the high court meant by its reference to ―[a] state-law
principle that takes its meaning precisely from the fact that a contract to arbitrate is
at issue.‖ (Perry, supra, 482 U.S. at p. 492, fn. 9.) The unconscionability rule we
set forth today is not at all similar to the preempted state laws in Perry and
Southland or their functional equivalents in unconscionability doctrine. Whereas
the state-law rules in those cases overtly discriminated against arbitration in favor
of litigation of certain claims, thereby rendering contracts to arbitrate such claims
entirely enforceable, our unconscionability rule fully contemplates the
enforceability of agreements to resolve wage disputes through arbitration in lieu of
the Berman process. Our rule requires only that wage claimants have an
accessible and affordable mechanism for dispute resolution, not that the
mechanism adopt any particular procedure or assume any particular form.
Moreover, the principles informing our rule plainly ―arose to govern issues
concerning the validity, revocability, and enforceability of contracts generally‖
                                          68
(Perry, at p. 492, fn. 9), for the doctrine that courts will not enforce adhesive
contracts or terms that are unreasonably one-sided in favor of the drafting party,
such as terms that effectively insulate the drafting party from liability, is a body of
state law that long predates and subsumes its more recent extension to arbitration
agreements. (See Stevens, supra, 58 Cal.2d at pp. 879–882 [collecting cases].)
       Justice Chin‘s dissent concludes with the ominous implication that the
unconscionability rule we adopt today demonstrates ― ‗judicial hostility‘ ‖ toward
arbitration agreements. (Conc. & dis. opn., post, at p. 28.) But we are well past
the day when prevailing judicial sensibilities regarded reasonable state regulation
of the employment relationship as an expression of hostility to contractual
freedom. Our unconscionability rule does not treat arbitration agreements
differently from nonarbitration agreements, does not remotely foreclose the
enforceability of agreements to arbitrate wage disputes, and does not require such
agreements to adopt any devices or procedures inimical to arbitration‘s
fundamental attributes. ―It should be stressed,‖ as Justice Corrigan observes, ―that
our decision today does not require trial courts to adopt a new procedure or
analytical approach when an unconscionability defense concerns an arbitration
provision in an employment contract.‖ (Conc. opn., post, at p. 2.) In short, our
rule does not discriminate against arbitration. The FAA requires courts to place
arbitration agreements on equal footing with other contracts. At the same time,
the FAA makes clear that the legal footing on which arbitration and nonarbitration
agreements may be placed encompasses any ―grounds as exist at law or in equity
for the revocation of any contract‖ (9 U.SC. § 2), including ― ‗generally applicable
contract defenses, such as fraud, duress, or unconscionability‘ ‖ (Concepcion,
supra, 563 U.S. at p. __ [131 S.Ct. at p. 1746]). Our opinion today is fully
consistent with this governing law.

                                          69
                                 CONCLUSION
       The trial court denied the petition to compel arbitration as premature, ruling
that arbitration may not be ordered until completion of a Berman hearing. (Sonic
I, supra, 51 Cal.4th at p. 671.) Although we affirmed that order in Sonic I, we
now hold, in light of Concepcion, that the FAA preempts a state-law rule that
categorically prohibits an adhesive arbitration agreement from requiring an
employee to waive access to a Berman hearing. A court faced with a petition to
compel arbitration under these circumstances must grant the petition unless the
party opposing the petition asserts a valid contract defense. Moreno has asserted
an unconscionability defense, whose merits should now be determined by the trial
court in the first instance in light of our decision today. Accordingly, we reverse
the judgment of the Court of Appeal granting the petition to compel arbitration
and remand with directions to remand the case to the trial court for proceedings
consistent with this opinion.
                                                 LIU, J.

WE CONCUR: CANTIL-SAKAUYE, C. J.
           KENNARD, J.
           WERDEGAR, J.
           CORRIGAN, J.

                                         70
                 CONCURRING OPINION BY CORRIGAN, J.

       I concur in the result and much of the analysis in the majority opinion, but I
disagree with its failure to articulate a clear standard for assessing the
unconscionability of arbitration terms in employment agreements.
       The majority refers to several formulations but does not settle on a test for
unconscionability. It describes an analysis in which the trial court weighs the
Berman advantages waived against the benefits of arbitration to decide if the
agreement is ―unreasonably one-sided.‖ (Maj. opn., ante, at pp. 33, 49.) Justice
Chin characterizes this approach as interest weighing and criticizes it as
insufficiently deferential to arbitration. Whereas the majority would remand for
the trial court to determine unconscionability, Justice Chin would have us decide
here that the agreement is not unconscionable.
       I agree with Justice Chin that the proper test for determining
unconscionability here is whether the terms are ― ‗so one-sided as to ―shock the
conscience.‖ ‘ ‖ (Pinnacle Museum Tower Assn. v. Pinnacle Market Development
(US), LLC (2012) 55 Cal.4th 223, 246.) Courts are not free to alter terms to which
the contracting parties agreed simply because they find the terms unreasonable or
ill-advised. (American Software, Inc. v. Ali (1996) 46 Cal.App.4th 1386, 1391.)
The unconscionability defense requires a much stronger showing of unfairness.
The majority opinion mentions the ―shock the conscience‖ standard, but only as
one of several formulations. (See maj. opn., ante, at p. 31.) In my view, we
should provide clarity here. Courts of Appeal have successfully applied the
―shock the conscience‖ standard to decide whether contractual employment
arbitration terms are substantively unconscionable. (See, e.g., Peng v. First
Republic Bank (Aug. 29, 2013, A135503) __ Cal.App.4th __ [2013 Cal. App.
Lexis 772, at pp. *18-*22]; Serpa v. California Surety Investigations, Inc. (2013)
215 Cal.App.4th 695, 703, 710.) We should settle on this clear test. Under the
―shock the conscience‖ standard, arbitration provisions are not unconscionable
simply because their enforcement will require the employee to forego Berman
procedures.
       However, unconscionability is a fact-specific defense. Appellate courts are
at a disadvantage when the question is not fleshed out in the trial court. Thus, I
agree with the majority that this case should be remanded for the trial court to
decide the merits of the unconscionability defense. The majority opinion
discusses many considerations to guide the lower court‘s analysis. Justice Chin
criticizes several of these and faults the majority for requiring ―a mini-trial on the
comparative costs and benefits of arbitration and the Berman procedure‖ in every
case. (Conc. & dis. opn. of Chin, J., post, at p. 22.)
       It should be stressed that our decision today does not require trial courts to
adopt a new procedure or analytical approach when an unconscionability defense
concerns an arbitration provision in an employment contract. Considerations
outlined in the majority opinion may be relevant to such an analysis, but lower
courts retain discretion to weigh these considerations as appropriate in each
particular case. Today‘s decision holds only that unconscionability remains a
defense to enforcement of an arbitration clause in an employment contract and
that, while the relinquishment of Berman procedures is one factor to be weighed in
considering unconscionability, this factor alone is not sufficient to support an
unconscionability finding.

                                           2
With this understanding, I join the majority‘s decision.
                                                 CORRIGAN, J.

                                  3
            CONCURRING AND DISSENTING OPINION BY CHIN, J.

       In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 669 (Sonic I),
a bare four-to-three majority of this court held that the arbitration provision here at
issue is both contrary to our state‘s public policy and unconscionable — and
therefore unenforceable — to the extent it precludes Frank Moreno from pursuing
an administrative hearing — known as a ―Berman hearing‖ — before submitting
his claim for vacation pay to arbitration. I agree with the majority‘s conclusion
that the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) preempts Sonic I‘s
public policy rationale. However, I disagree with the majority‘s decision to
remand this case on the issue of unconscionability. As I explain below, we should
reject Moreno‘s unconscionability claim for two reasons: (1) he forfeited it by
failing to raise and pursue it below; and (2) he has not met, and cannot meet, his
burden of showing unconscionability. I also disagree with the majority‘s advisory
opinion regarding the unconscionability principles the trial court should apply on
remand. In my view, those principles are both contrary to state law and invalid
under — and thus preempted by — the FAA. I dissent from this aspect of the
majority‘s opinion and from the judgment.

       I.     Factual Background.

       Frank Moreno was an employee of Sonic-Calabasas A, Inc. (Sonic). In
December 2006, after voluntarily ending his employment, he filed a wage claim
with the Labor Commissioner pursuant to Labor Code section 98 et seq.1 seeking
allegedly unpaid ―vacation wages‖ for 63 days at the rate of $441.29 per day, for a
total of $18,203.54. He also requested ―additional wages accrued pursuant to
Labor Code Section 203 as a penalty.‖
       In February 2007, Sonic filed in the superior court a petition to compel
arbitration of Moreno‘s claim and to dismiss his pending administrative action. It
relied on the broad and comprehensive arbitration provision in an agreement
Moreno signed on July 14, 2002, which provides in relevant part: ―I . . .
acknowledge that [Sonic] utilizes a system of alternative dispute resolution that
involves binding arbitration to resolve all disputes that may arise out of the
employment context. Because of the mutual benefits (such as reduced expense
and increased efficiency) which private binding arbitration can provide both
[Sonic] and myself, both [Sonic] and I agree that any claim, dispute, and/or
controversy (including, but not limited to, any claims of discrimination and
harassment . . .) that either I or [Sonic] . . . may have against the other which
would otherwise require or allow resort to any court or other governmental dispute
resolution forum arising from, related to, or having any relationship or connection
whatsoever with my seeking employment with, employment by, or other
association with [Sonic], whether based on tort, contract, statutory, or equitable
law, or otherwise, (with the sole exception of claims arising under the National
Labor Relations Act . . . , claims for medical and disability benefits under the
California Workers Compensation Act, and Employment Development
Department claims) shall be submitted to and determined exclusively by binding
arbitration under the Federal Arbitration Act, in conformity with the procedures of
the California Arbitration Act (Cal. Code Civ. Proc. sec. 1280 et seq., including

1
       All further unlabeled statutory references are to the Labor Code.

                                           2
section 1283.05 and all of the Act‘s other mandatory and permissive rights to
discovery). However, nothing herein shall prevent me from filing and pursuing
administrative proceedings only before the California Department of Fair
Employment and Housing, or the U.S. Equal Opportunity Commission.‖
       Moreno and the Labor Commissioner, who intervened on Moreno‘s behalf,
opposed Sonic‘s motion to compel. They argued that, insofar as the arbitration
agreement deprives Moreno of the benefits of the Berman procedure, it is
unenforceable as against public policy.
       The superior court denied the petition to compel arbitration, agreeing that
the arbitration provision violates public policy insofar as it waives Moreno‘s right
to pursue a Berman hearing. The Court of Appeal reversed, finding ―no evidence‖
in the record ―that Moreno or any other wage claimant lacks the knowledge, skills,
abilities, or resources to vindicate his or her statutory rights in an arbitral forum.‖
       As noted above, in Sonic I, a narrow majority of this court held that the
arbitration provision is both contrary to our state‘s public policy and
unconscionable — and therefore unenforceable — to the extent it precludes
Moreno from pursuing a Berman hearing before submitting his claim for vacation
pay to arbitration. (Sonic I, supra, 51 Cal.4th at p. 669.) The United States
Supreme Court granted certiorari, vacated the judgment, and remanded the case to
us for consideration in light of AT&T Mobility LLC v. Concepcion (2011) 563 U.S.
__ [131 S.Ct. 1740] (Concepcion).

       II.   The FAA Preempts Sonic I’s Public Policy Rationale.

       In my dissent in Sonic I, I explained that the FAA, under the United States
Supreme Court‘s binding interpretation of that statute, preempts the Sonic I
majority‘s public policy rationale. (Sonic I, supra, 51 Cal.4th at pp. 706-712 (dis.
opn. of Chin, J.).) After we decided Sonic I, the high court held in Concepcion

                                           3
that the FAA preempts the California rule, announced by another four-to-three
majority of this court in Discover Bank v. Superior Court (2005) 36 Cal.4th 148
(Discover Bank), that certain waivers of classwide arbitration procedures are
unconscionable and unenforceable. (Concepcion, supra, 563 U.S. at pp. ___ [131
S.Ct. at pp. 1747-1748].) Concepcion confirms my discussion in Sonic I. I
therefore agree with the majority that the FAA preempts Sonic I‘s public policy
rationale.

       III. Moreno Has Forfeited His Unconscionability Claim.

       As the majority acknowledges (maj. opn., ante, at p. 38), because
unconscionability is a contract defense, the party resisting enforcement of an
arbitration provision has the burden of proving unconscionability. (Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55
Cal.4th 223, 236 (Pinnacle).) In light of this principle, both this court and our
Courts of Appeal have held that a party resisting arbitration forfeits the defense of
unconscionability by failing to pursue it in the trial court. (Pearson Dental
Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 681; Mastick v. TD
Ameritrade, Inc. (2012) 209 Cal.App.4th 1258, 1266-1267.)
       The record here supports application of this forfeiture rule to Moreno‘s
unconscionability claim. At no point in the trial court did Moreno claim that the
arbitration provision here is ―unreasonably one-sided in favor of the employer.‖
(Maj. opn., ante, at p. 2.) He did allege in his response to Sonic‘s petition to
compel that the arbitration provision is unconscionable because it ―fails to provide
an arbitral forum in which employees can fully and effectively vindicate their
statutory rights to recover unpaid wages.‖ However, he did nothing further in the
trial court to pursue either this or any other unconscionability defense. In his
briefs, he did not, as the majority asserts, argue that the Berman waiver ―was per

                                          4
se unconscionable.‖ (Maj. opn., ante, at p. 50.) Rather, he argued only that the
arbitration provision violates public policy. Nor did he assert unconscionability in
the Court of Appeal, in the petition for review he filed in this court, or in the
opening and reply briefs he filed with us. In fact, Moreno never mentioned
unconscionability again until well after briefing closed in this court, when we
resurrected the issue by asking the parties to discuss it in supplemental briefs. On
this record, Moreno has forfeited the claim that the arbitration provision is
unconscionable. The majority fails to explain why it does not apply the forfeiture
rule and why it is giving Moreno a second chance ―to develop‖ a defense that, as
the majority acknowledges, he ―chose‖ to abandon below as a matter of litigation
strategy. (Maj. opn., ante, at p. 50.)

       IV. Under Existing California Law, the Arbitration Provision Is
           Not Unconscionable.

       Were it either necessary or appropriate to reach the unconscionability claim
Moreno is now asserting, under existing California law, I would reject it.
       Civil Code section 1670.5, subdivision (a), authorizes a court, upon finding
―as a matter of law‖ that a ―contract or any clause of the contract‖ was
―unconscionable at the time it was made,‖ to ―refuse to enforce the contract,‖ to
―enforce the remainder of the contract without the unconscionable clause,‖ or to
―so limit the application of any unconscionable clause as to avoid any
unconscionable result.‖ The official Assembly comment accompanying this
section explains: ―The basic test [of unconscionability] is whether, in light of the
general background and the needs of the particular case, the clauses involved are
so one-sided as to be unconscionable under the circumstances at the time of the
making of the contract. . . . The principle is one of prevention of oppression and
unfair surprise [citation] and not of disturbance of allocation of risks because of
superior bargaining power.‖ (Rep. on Assem. Bill No. 510 (1979-1980 Reg.

                                           5
Sess.) 5 Assem. J. (1979-1980 Reg. Sess.) p. 9231, reprinted as Legis. Com. com.,
9 West‘s Ann. Civ. Code (2011 ed.) p. 74 (Official Comment).) Consistent with
this comment, we recently reaffirmed in the context of determining the validity of
an arbitration provision that ―[a] contract term is not substantively unconscionable
when it merely gives one side a greater benefit; rather, the term must be ‗so one-
sided as to ―shock the conscience.‖ ‘ [Citation.]‖ (Pinnacle, supra, 55 Cal.4th at
p. 246.)
       Under these principles, the arbitration provision at issue here is not
unconscionable. As the majority notes, in evaluating a claim that a contract is
unconscionable, we look to the parties‘ ―overall‖ agreement, not to a single aspect
of the agreement in isolation. (Maj. opn., ante, at p. 49.) The agreement at issue
here is not simply a Berman waiver, and does not target the Berman procedure.
Rather, it is a broad, bilateral arbitration provision that applies, with certain
exceptions, to ―all disputes‖ between the parties ―aris[ing] out of the employment
context that either [party] . . . may have against the other.‖ As Sonic observes, this
provision ―does not inequitably exempt the employer from arbitration of claims
more likely to be brought by an employee.‖ On the contrary, to the extent the
provision lacks mutuality, it favors Moreno, by excluding claims that are generally
brought by employees. That Moreno‘s wage claim is not one of those excluded
claims does not render the arbitration provision as a whole one-sided in Sonic‘s
favor, let alone ― ‗so one-sided as to ―shock the conscience.‖ ‘ [Citation.]‖
(Pinnacle, supra, 55 Cal.4th at p. 246.)
       Supporting my conclusion is this court‘s decision in Little v. Auto Steigler,
Inc. (2003) 29 Cal.4th 1064. There, a terminated employee sued his former
employer for tortious demotion and termination in violation of public policy,
breach of an implied contract of continued employment, and breach of the implied
covenant of good faith and fair dealing. (Id. at p. 1069.) The employer moved to

                                           6
compel arbitration under a provision that, like the one now at issue, specified that
the arbitrator must be a retired California superior court judge and made applicable
the ordinary civil rules of pleading, rules of evidence, and resolution of disputes
by motions. (Id. at pp. 1069-1070.) The majority rejected the argument that
―incorporation of [these] legal formalities into‖ the arbitration procedure rendered
the arbitration agreement ―unconscionable,‖ explaining: ―Without more, . . . we
cannot say that these provisions, which make arbitration more closely follow
judicial procedures, are unconscionably one-sided. It is not at all obvious that
such provisions would inordinately benefit [the employer] rather than [the
employee].‖ (Little, supra, 29 Cal.4th at p. 1075, fn. 1.) A similar conclusion is
appropriate here.

       V.   The Majority’s Test for Unconscionability is Vague,
            Unworkable, and Inconsistent with Existing California Law.

       The majority believes that Moreno, who made no attempt in the trial court
to show unconscionability, should nevertheless have a second chance. After
concluding that, under the FAA, ―unconscionability remains a valid defense to a
petition to compel arbitration‖ (maj. opn., ante, at p. 28), the majority reasons that,
because Moreno did not ―develop[]‖ his unconscionability claim below (maj. opn.,
ante, at p. 3), remand is appropriate so the trial court can consider that claim ―in
the first instance‖ (maj. opn., ante, at p. 50). Because this conclusion ―is decisive
of the appeal‖ (Stockton Theatres, Inc. v. Palermo (1956) 47 Cal.2d 469, 474), the
majority‘s lengthy discussion of various principles and factors it believes should
―properly inform‖ the trial court‘s ―unconscionability inquiry‖ (maj. opn., ante, at
p. 38), which the majority offers ―to guide the parties and the trial court on
remand‖ (id. at p. 51), is ―obiter dictum‖ and is not ―the law of the case‖ (Stockton
Theatres, Inc. v. Palermo, supra, at p. 474).

                                           7
         Moreover, there are numerous problems with the majority‘s dicta, starting
with its articulation of the general unconscionability standard. According to the
majority, the trial court may declare the arbitration provision unconscionable upon
finding that it is ―unreasonably‖ one-sided in favor of the employer. (Maj. opn.,
ante, at p. 2.) If, by this, the majority means ― ‗so one-sided as to ―shock the
conscience‖ ‘ ‖ (Pinnacle, supra, 55 Cal.4th at p. 246), then, as discussed above, I
agree. And, as explained above, the arbitration agreement is not so one-sided as to
shock the conscience simply because it fails to exclude wage claims from the
otherwise broad agreement to arbitrate all claims either party may have against the
other.
         However, if, by ―unreasonably one-sided,‖ the majority means something
less, then I disagree. As our Courts of Appeal have consistently recognized, the
phrase ―shock the conscience‖ is not, as the majority suggests (maj. opn., ante, at
p. 33), ―synonymous with ‗unreasonable.‘ Basing an unconscionability
determination on the reasonableness of a contract provision would inject an
inappropriate level of judicial subjectivity into the analysis. ‗With a concept as
nebulous as ―unconscionability‖ it is important that courts not be thrust in the
paternalistic role of intervening to change contractual terms that the parties have
agreed to merely because the court believes the terms are unreasonable. The terms
must shock the conscience.‘ [Citation.]‖ (Morris v. Redwood Empire Bancorp.
(2005) 128 Cal.App.4th 1305, 1322-1323, quoting American Software, Inc. v. Ali
(1996) 46 Cal.App.4th 1386, 1391; see also Walnut Producers of California v.
Diamond Foods, Inc. (2010) 187 Cal.App.4th 634, 647-648; Belton v. Comcast
(2007) 151 Cal.App.4th 1224, 1247; Aron v. U-Haul Co. of California (2006) 143
Cal.App.4th 796, 809; Wayne v. Staples (2006) 135 Cal.App.4th 466, 483; Koehl
v. Verio, Inc. (2006) 142 Cal.App.4th 1313, 1340; California Grocers Assn. v.
Bank of America (1994) 22 Cal.App.4th 205, 214-215.)

                                          8
       Unfortunately, it appears the majority does, in fact, mean something less.
Early in its opinion, the majority indicates that whether the arbitration provision is
unconscionable turns on ―the fundamental fairness of the bargain,‖ which
―depend[s] on what benefits the employee may have received under the
agreement‘s substantive terms and the totality of the circumstances surrounding
the formation of the agreement.‖ (Maj. opn., ante, at pp. 2-3.) Later, the majority
indicates that the key question is whether the agreement is ―unreasonably
favorable to one party.‖ (Maj. opn., ante, at p. 37.) These formulations seem
tantamount to asking whether the arbitration provision was a bad bargain, and thus
are inconsistent with our statement in Pinnacle that a contract term is not
substantively unconscionable merely because it ―gives one side a greater benefit.‖
(Pinnacle, supra, 55 Cal.4th at p. 246.) They are also inconsistent with the
Legislature‘s intent in enacting the unconscionability statute, Civil Code section
1670.5, subdivision (a), which was to prevent oppression and unfair surprise, ―not
[to] disturb[] [the] allocation of risks because of superior bargaining power.‖ (Off.
Com., 9 West‘s Ann. Civ. Code, supra, foll. § 1670.5, p. 74.) And, they endorse
the subjective ―unreasonableness‖ standard that, as explained above, California
courts have consistently rejected.
       In the end, the majority, though purporting to provide guidance to the trial
court, refuses to say precisely what standard the court should apply on remand in
determining unconscionability. Instead, after asserting that our case law ―does not
indicate‖ whether the shock the conscience standard is ―different‖ from the many
other standards the majority puts forth, or ―is the one true, authoritative standard
for substantive unconscionability, exclusive of all others‖ (maj. opn., ante, at p.
51), the majority declines to decide these questions and leaves it to the trial court
to determine which of the majority‘s ―nonexclusive formulations‖ to apply (maj.
opn., ante, at p. 53). In my view, Pinnacle settles the question; the arbitration

                                           9
provision at issue is unconscionable only if it is so one-sided as to shock the
conscience. (Pinnacle, supra, 55 Cal.4th at p. 246.)
       The majority‘s dicta regarding how the general unconscionability standard
should be applied in this specific case is also problematic. The majority offers a
number of different formulations, indicating that the arbitration agreement‘s
validity turns, variously, on whether the arbitration procedure (1) will enable
Moreno to ―vindicate his right to recover unpaid wages‖ (maj. opn., ante, at p. 29)
or ―obtain prompt, affordable, and enforceable resolution of [his] wage claim‖
(maj. opn., ante, at p. 35); (2) will ―impose[] costs and risks . . . that make the
resolution of the wage dispute inaccessible and unaffordable, and thereby
‗effectively blocks every forum for redress‘ ‖ (ibid.); and (3) will provide ―an
effective and low-cost approach to resolving wage disputes‖ (ibid.), a ―speedy,
informal, and affordable resolution‖ of Moreno‘s wage claim (maj. opn., ante, at
p. 38), or an ―accessible‖ and ―affordable‖ forum for resolving his wage dispute
(maj. opn., ante, at pp. 34, 36, 39). These terms are hopelessly vague, uncertain,
and subjective. The majority offers no clue as to what it means to be ―accessible,‖
―affordable,‖ ―low-cost,‖ ―speedy,‖ or ―effective,‖ and concedes that these terms
―are not subject to precise definition.‖ (Maj. opn., ante, at p. 57.) Nor does the
majority specify whether the arbitration procedure is to be judged on these
measures in the abstract, relative to litigation, or relative to the Berman procedure.
       Even were these terms capable of precise definition, the inquiry necessary
to apply them would be difficult, if not impossible. Under our law, a
determination of unconscionability must be based on the circumstances that
existed ―at the time [the contract] was made‖ (Civ. Code, § 1670.5, subd. (a)), not
on hindsight in light of subsequent events. (Setzer v. Robinson (1962) 57 Cal.2d
213, 217; Colton v. Stanford (1890) 82 Cal. 351, 403.) Accordingly, under the
majority‘s approach, a trial court, in determining accessibility and affordability,

                                           10
will have to determine, not what Moreno can afford today, but what he could have
afforded at the time he signed the arbitration agreement. (Parada v. Superior
Court (2009) 176 Cal.App.4th 1554, 1583 (Parada).)2 It will also have to
determine, not how an arbitration would be conducted today, but how it would
have been conducted at the time the parties signed the arbitration agreement.
(O’Hare v. Municipal Resource Consultants (2009) 107 Cal.App.4th 267, 281-
282.) Moreover, whether the inquiry looks to the present or to the future, a court
simply cannot perform the task the majority assigns it: determining ―the
particulars‖ of Sonic‘s arbitration process that the agreement does not ―reveal.‖
(Maj. opn., ante, at p. 34.) The particulars of an arbitration process that are not
specified in the arbitration agreement or the applicable arbitration rules are for the
arbitrator, not the court, to decide (Howsam v. Dean Witter Reynolds, Inc. (2002)
537 U.S. 79, 84 [procedural questions are for the arbitrator]), and arbitrators have
broad discretion in determining the procedures and law governing the arbitration,
including their contractual authority to fashion remedies (Advanced Micro
Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376; Sanchez v. Western Pizza
Enterprises, Inc. (2009) 172 Cal.App.4th 154, 177). Thus, until the parties here
actually submit the matter to arbitration and the arbitrator determines the
arbitration procedures, a trial court cannot know all ―the particulars‖ of the
specific arbitration process now at issue (maj. opn., ante, at p. 34) and, therefore,
cannot consider those features in determining unconscionability.
       Equally, if not more, problematic is the majority‘s view that, in determining
unconscionability, a trial court may consider ―the value of‖ the benefits under the
Berman procedure that Moreno has surrendered. (Maj. opn., ante, at p. 38.) To

2
        The majority‘s view that it is enough to determine ―what an employee can
afford when a wage dispute arises‖ (maj. opn., ante, at p. 59), ―is contrary to
statute.‖ (Parada, supra, 176 Cal.App.4th at p. 1583.)

                                          11
begin with, as the majority‘s introductory discussion explains, an employee has no
entitlement to a Berman hearing; upon receiving a wage claim, the Labor
Commissioner has discretion to provide for a hearing, but may also choose to
― ‗take no further action on the complaint.‘ ‖ (Maj. opn., ante, at p. 7; see § 98,
subd. (a).) Thus, it was at the time the agreement was signed, and remains today,
entirely speculative whether the Berman procedure is of any value to Moreno.
       Also speculative is the majority‘s assertion that the Berman procedure is
speedy, informal, and affordable. Regarding speed, we have previously observed
that, because of ―the time consumed by the various procedural steps‖ in Berman
proceedings, there is ―typically‖ a four- to six-month ―delay‖ between the filing
date and the Berman hearing. (Cuadra v. Milan (1998) 17 Cal.4th 855, 860.) In
this case, Sonic has documented cases in which commencement of a Berman
hearing took a year or more. 3 (Sonic I, supra, 51 Cal.4th at p. 681, fn. 5.) After
concluding the hearing, the Labor Commissioner has 15 days to file a decision,
and that decision, assuming there is no appeal, does not become final for another
10 days. (§§ 98.1, subd. (a), 98.2, subds. (a), (d).) Either side may appeal from
the Labor Commissioner‘s decision and obtain a trial de novo in court. (§ 98.2,
subd. (a)). Finally, the Labor Commissioner has discretion to ―stay execution of
any [final] judgment‖ for ―good cause‖ and to ―impose the terms and conditions of
the stay of execution.‖ (§ 98.2, subd. (g).) Notably, the majority concedes that it
is ―unclear‖ — i.e., it is speculative — how the Labor Commissioner‘s statutory
discretion to stay execution of a final judgment impacts the Labor Commissioner‘s
3
       Under the Berman statutes, the Labor Commissioner has at least 90 days
after deciding to proceed with a hearing actually to hold it, and may ―postpone or
grant additional time before setting a hearing [upon] find[ing] that it would lead to
an equitable and just resolution of the dispute.‖ (§ 98, subd. (a).) The Labor
Commissioner‘s ―understanding‖ of this provision is that a simple request by one
of the parties constitutes an appropriate ground for delay. (Cuadra v. Milan,
supra, 17 Cal.4th at p. 860.)

                                          12
duty to make efforts to ensure that judgments are satisfied. (Maj. opn., ante, at p.
55.) More broadly, despite its claims about the Berman process‘s ― ‗greater
efficiency and speed‘ ‖ (maj. opn., ante, at p. 37), the majority also concedes that
there is ―no evidence‖ a wage claim will be resolved faster through the Berman
process than through Sonic‘s arbitration procedure. (Maj. opn., ante, at p. 54.)
This is not surprising; it is self-evident that the dual fora procedure under the
Berman statutes — involving an administrative hearing potentially followed by a
formal trial de novo in superior court — is not speedier or more streamlined than
arbitration.
       Regarding formality, a Berman hearing is not nearly as informal as the
majority suggests. In 2002, when Moreno signed the arbitration agreement, the
Labor Commissioner‘s published policies and procedures stressed (and still stress
today) that Berman hearings ―are formal procedures‖ at which each party has the
right to be represented by counsel, to present evidence, to testify under oath and
have other witnesses testify under oath, to cross-examine the opposing party and
witnesses, and to subpoena witnesses, documents and records. (Dept. of Industrial
Relations, Div. of Labor Stds. Enforcement (DLSE), Policies and Procedures for
Wage Claim Processing (2001 rev.) pp. 2-4; see also DLSE, Policies and
Procedures for Wage Claim Processing (2012 rev.) pp. 2-4.) Of course, the trial
de novo in superior court to which either side is entitled after a Berman hearing
would involve all the formalities of any litigation. It would also greatly increase
the cost of the Berman procedure; as this court has observed, because a losing
employer has a right to a trial de novo in superior court, ―Berman hearings may
result in no cost savings to the employee.‖ (Gentry v. Superior Court (2007) 42
Cal.4th 443, 464 (Gentry).)4 Thus, whether a Berman procedure is speedy,

4
       Gentry was not, as the majority states, discussing whether ―thousands of
individual Berman hearings would . . . result in cost savings as compared to a

                                          13
informal, and low cost, either in the abstract or in comparison to Sonic‘s
arbitration procedure — which does not provide for a formal trial de novo in
court — is entirely speculative.
       Other asserted benefits of the Berman procedure are likewise speculative.
The majority notes that, before the holding of a Berman hearing, the Labor
Commissioner‘s staff ―may attempt to settle claims either informally or through a
conference between the parties.‖ (Maj. opn., ante, at p. 7, italics added.)
However, these efforts are entirely discretionary; in any given case, the Labor
Commissioner may choose not to make any informal settlement attempts. The
majority also emphasizes the requirement that an employer wishing to file an
appeal must post an undertaking with the court in the amount of the award. (Maj.
opn., ante, at p. 8.) However, an employee who has agreed to arbitrate a
controversy may obtain provisional remedies — such as an attachment or a
preliminary injunction requiring payment of wages during the arbitration — in
connection with the controversy. 5 (Code Civ. Proc., § 1281.8.) The majority next
emphasizes the Berman procedure‘s fee-shifting provision, which specifies that
only unsuccessful appellants are liable for attorney fees. (Maj. opn., ante, at p. 9.)
As the majority notes, this provision may discourage an employer who is
unsuccessful in the administrative proceeding from filing an appeal. (Maj. opn.,
ante, at p. 10.) But it likewise may discourage an employee who is unsuccessful in

single class proceeding.‖ (Maj. opn., ante, at p. 54.) It was explaining that a
losing employer‘s right to a trial de novo under the Berman procedure can negate
any cost savings of the procedure ―to the employee,‖ i.e., to an individual
employee. (Gentry, supra, 42 Cal.4th at p. 464, italics added.)
5
        If, as the majority asserts, the purpose of the Berman undertaking
requirement is to counteract an employer‘s efforts ―to avoid enforcement of the
judgment‖ (maj. opn., ante, at p. 8), then it is unclear why the majority finds it
significant that obtaining provisional relief requires a showing that ― ‗the award to
which the applicant may be entitled may be rendered ineffectual without
provisional relief.‘ ‖ (Maj. opn., ante, at p. 55.)

                                          14
the administrative proceeding — because he or she recovered either nothing at all
or less than was sought — from filing an appeal. Of course, we have no evidence
regarding the provision‘s actual effect on either employers or employees, and any
attempt to quantify that effect would be pure speculation. Moreover, although, as
the majority notes, the current version of section 98.2, subdivision (c) provides
that ―[a]n employee is successful [on appeal] if the court awards an amount greater
than zero‖ (§ 98.2, subd. (c); see maj. opn., ante, at pp. 8-9), this provision did not
exist until the year after Moreno signed the arbitration agreement, so it is
irrelevant to determining whether the arbitration agreement in this case was
―unconscionable at the time it was made.‖ 6 (Civ. Code, § 1670.5, subd. (a).) The
majority also emphasizes the Labor Commissioner‘s statutory authority to
represent claimants in de novo proceedings. (Maj. opn., ante, at p. 9.) But that
authority applies only to ―a claimant financially unable to afford counsel‖ and,
even as to such a claimant, is discretionary unless the claimant ―is attempting to
uphold the amount awarded by the Labor Commissioner and is not objecting to
any part of the Labor Commissioner‘s final order.‖ (§ 98.4.) Given all of these
uncertainties, the trial court on remand can only speculate on what, if any, ―value‖
the possibility of a Berman hearing had to Moreno at the time he signed the
arbitration agreement.

6
       In July 2002, when Moreno signed the agreement, the law was unclear as to
whether an appealing employee was successful if the award on appeal was not
greater than the administrative award, and we had granted review to resolve a split
of published authority on the issue. (Smith v. Rae-Venter Law Group, rev. granted
Aug. 29, 2001, S098760.) In December 2002, we held that an appealing employee
is ―unsuccessful‖ within the meaning of the fee statute if he or she does not obtain
a ―more favorable‖ judgment on appeal. (Smith v. Rae-Venter Law Group (2002)
29 Cal.4th 345, 351, 370.) The next year, the Legislature added the sentence the
majority quotes. (Stats. 2003, ch. 93, § 2, p. 790.)

                                          15
       My conclusion that, at the petition to compel stage, the value of the Berman
procedure to a particular employee in a given case is speculative does not, as the
majority asserts, ―disparage[]‖ that procedure. (Maj. opn., ante, at p. 55.) It is,
after all, the majority that is requiring the trial court to determine the potential
―value‖ of the Berman procedure to Moreno. (Maj. opn., ante, at p. 38.) Insofar
as the majority presumes that the Berman procedure would be beneficial to
Moreno and superior to Sonic‘s arbitration procedure, and the majority places the
burden on Sonic to introduce evidence showing otherwise (see maj. opn., ante, at
p. 34), the majority reverses our established approach to unconscionability. As
earlier noted, Moreno, as the party asserting the defense, has the burden to prove
unconscionability. (Pinnacle, supra, 55 Cal.4th at p. 236.) Thus, he should have
the burden of proving the value of the Berman procedure in this case and the
features, costs, and risks of Sonic‘s arbitration procedure. (See Dryer v. Los
Angeles Rams (1985) 40 Cal.3d 406, 415 [―the party resisting arbitration‖ must
show ―that the rules under which arbitration is to proceed will deprive it of a fair
procedure‖].)
       Indeed, my conclusion regarding the speculative benefit of a Berman
proceeding, and my consequent rejection of the majority‘s case-by-case approach,
are fully consistent with our existing precedent, including the Sonic I majority‘s
opinion in this very case. In Armendariz v. Foundation Health Psychcare
Services, Inc. (2000) 24 Cal.4th 83, 111, the court observed that ―[t]urning a
motion to compel arbitration into a mini-trial on the comparative costs and
benefits of arbitration and litigation for a particular employee would not only be
burdensome on the trial court and the parties, but would likely yield speculative
answers.‖ In this case, the Sonic I majority extended this analysis to the
comparative costs and benefits of arbitration and Berman procedures; in adopting
a categorical prohibition against all Berman waivers as a matter of public policy, it

                                           16
expressly rejected the very case-by-case approach the majority now proposes
precisely because a trial court, at the petition-to-compel ―stage,‖ ―is in no position
to determine‖ ―whether and to what extent a particular wage claimant will benefit
from the Berman hearing process.‖ (Sonic I, supra, 51 Cal.4th at p. 683.) The
majority fails to explain why, in the context of determining unconscionability —
rather than public policy — during a petition to compel, a trial court is in any
better position to determine ―whether and to what extent a particular wage
claimant will benefit from the Berman hearing process.‖ (Sonic I, supra, 51
Cal.4th at p. 683.) The majority‘s superficial and unpersuasive attempt to distance
itself from Sonic I‘s unqualified statement (maj. opn., ante, at pp. 59-60), and its
embrace of the case-by-case approach it previously rejected in this very case,
suggest that the majority, having been rebuffed by the high court in its first attack
on this predispute arbitration agreement, is now simply searching for a new plan of
attack.
          For all of the preceding reasons, the approach to unconscionability the
majority‘s dicta outlines is hopelessly vague and unworkable, and is inconsistent
with existing California law.

          VI. The Majority’s Approach Is Inconsistent with, and Preempted
              by, the FAA.

          In Sonic I, it was clear to me that the FAA, as authoritatively construed by
the United States Supreme Court, preempts the Sonic I majority‘s public policy
rule. (Sonic I, supra, 51 Cal.4th at pp. 706-712 (dis. opn. of Chin, J.).) It is
equally, if not more, clear that, under the high court‘s decisions, the FAA
preempts the unconscionability analysis the majority‘s dicta now describes.
          Not surprisingly, this conclusion most clearly appears from Concepcion,
the very decision the high court directed us to consider when it vacated the
judgment in Sonic I and remanded the case to us. There, as noted above, the high

                                            17
court held that the FAA preempts ―the Discover Bank rule,‖ which ―classifie[s]
most collective-arbitration waivers in consumer contracts as unconscionable.‖
(Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1746].) In adopting this
rule, this court found that such waivers are ―exculpatory‖ because damages in
consumer cases are ―often [too] small‖ to warrant individual action. (Discover
Bank, supra, 36 Cal.4th at p. 161.) Thus, the court reasoned, class arbitrations
often are ―inextricably linked to the vindication of substantive rights‖ and provide
― ‗the only effective way to halt and redress . . . exploitation‘ ‖ of consumers.
(Ibid.) In Concepcion, the high court rejected that analysis, holding that the FAA
precludes a state court from finding an arbitration provision unconscionable based
on the need to protect ―small-dollar claims that might otherwise slip through the
legal system.‖ (Concepcion, supra, at p. __ [131 S.Ct. at p. 1753].) ―States,‖ the
court declared, ―cannot require a procedure that is inconsistent with the FAA, even
if it is desirable for unrelated reasons.‖ (Ibid.)
       More recently, in American Express Co. v. Italian Colors Restaurant
(2013) __ U.S. __, __ [133 S.Ct. 2304, 2310] (Italian Colors), the high court
further explored the ―effective vindication‖ approach that underlies the majority‘s
unconscionability discussion. (See maj. opn., ante, at p. 29 [Sonic I ―did not
address whether any barrier to vindicating such rights would make the arbitration
agreement unconscionable‖].) There, in resisting a motion to compel arbitration,
plaintiffs argued that a class action waiver in the relevant arbitration provision
prevented them from effectively vindicating their rights under the federal antitrust
laws ―because they [had] no economic incentive to pursue their antitrust claims
individually in arbitration.‖ (Italian Colors, supra, at p. __ [133 S.Ct. at p. 2310].)
In support, they submitted a declaration showing that their maximum individual
recovery would be approximately $38,000, and the cost of the expert analysis
necessary to prove their claims would be at least several hundred thousand dollars

                                           18
and could exceed $1 million. (Id. at p. __ [133 S.Ct. at p. 2308].) The high court
rejected the argument, explaining: The effective vindication ―exception‖ to the
FAA‘s requirement that arbitration agreements be enforced according to their
terms ―finds its origin in the desire to prevent ‗prospective waiver of a party‘s
right to pursue statutory remedies,‘ [citation]. That would certainly cover a
provision in an arbitration agreement forbidding the assertion of certain statutory
rights. And it would perhaps cover filing and administrative fees attached to
arbitration that are so high as to make access to the forum impracticable.
[Citation.] But the fact that it is not worth the expense involved in proving a
statutory remedy does not constitute the elimination of the right to pursue that
remedy. [Citation.]‖ (Id., at pp. __ [133 S.Ct. at pp. 2310–2311].) As
Concepcion ―established,‖ ―the FAA‘s command to enforce arbitration agreements
trumps any interest in ensuring the prosecution of low-value claims.‖ (Italian
Colors, supra, at p. __, fn. 5 [133 S.Ct. at p. 2312, fn. 5].) Because its
― ‗ ―principal purpose‖ ‘ is the enforcement of arbitration agreements according to
their terms,‖ the FAA ―favor[s] the absence of litigation when that is the
consequence of a class-action waiver.‖ (Ibid.)
       Under these binding precedents, the FAA preempts the approach to
unconscionability the majority describes. To the extent an arbitration agreement
―forbid[s] the assertion of certain statutory rights,‖ and ―perhaps‖ to the extent it
imposes ―filing and administrative fees . . . that are so high as to make access to
the forum impracticable,‖ the FAA may not require enforcement of the agreement
according to its term. (Italian Colors, supra, __ U.S. at p. __ [133 S.Ct. at p.
2310-2311].) Short of that, under the FAA, an arbitration provision may not be
invalidated as unconscionable because of a court‘s subjective determination that a
given arbitration procedure is not ―affordable and accessible‖ (maj. opn., ante, at
pp. 34, 36, 39), or that its costs and risks ― ‗effectively‘ ‖ render a wage claim not

                                          19
worth pursuing (maj. opn., ante, at p. 36) and thus erect a ―barrier to vindicating
[wage] rights‖ (maj. opn., ante, at p. 29). The FAA, as the high court has
construed it, precludes state courts from finding an arbitration provision
unconscionable based on the need to protect ―small-dollar claims that might
otherwise slip through the legal system,‖ even though that goal may be
―desirable.‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1753].) It
―trumps any interest in ensuring the prosecution of low-value claims‖ and
―favor[s] the absence of litigation when that is the consequence of‖ following its
―command‖ to enforce arbitration agreements ―according to their terms.‖ (Italian
Colors, supra, at p. __, fn. 5 [133 S.Ct. at p. 2312, fn. 5], italics added.) The
majority‘s approach, which appears to go far beyond what the high court has
declared the FAA permits, is therefore preempted.
       The majority‘s attempts to reconcile its dicta with these binding precedents
are unpersuasive. The majority first asserts that, ―because the Berman statutes
‗promote the very objectives of ‗informality,‘ ‗lower costs,‘ ‗greater efficiency and
speed,‘ and use of ‗expert adjudicators,‘ ‖ its approach ―does not pose an obstacle
to the achievement of the FAA‘s objectives as construed in Concepcion.‖ (Maj.
opn., ante, at p. 38.) However, it is obvious that using the unconscionability
doctrine to invalidate arbitration agreements and mandate either Berman
procedures or Berman-like procedures frustrates what Concepcion, like many high
court decisions before it, identified as ―[t]he ‗principal purpose‘ of the FAA‖: ―to
‗ensur[e] that private arbitration agreements are enforced according to their terms.‘
[Citations.]‖ (Concepcion, supra, 563 U.S. at p. ___ [131 S.Ct. at p. 1748]; see
also Stolt-Nielsen v. Animalfeeds International Corp. (2010) 559 U.S. 662, 682
[―we have said on numerous occasions that the central or ‗primary‘ purpose of the
FAA is to ensure that ‗private agreements to arbitrate are enforced according to
their terms‘ ‖].) Concepcion and other high court decisions unequivocally

                                          20
establish that this ―preeminent‖ principle (Dean Witter Reynolds, Inc. v. Byrd
(1985) 470 U.S. 213, 221) applies even to adhesive contracts, even when the state
seeks to vest initial jurisdiction of the dispute in another forum, and even if
arbitration is not the most streamlined means of resolving a dispute. (Concepcion,
supra, at pp. ___ [131 S.Ct. at p. 1748-1749]; Preston v. Ferrer (2008) 552 U.S.
346, 349-350; Dean Witter Reynolds, Inc. v. Byrd, supra, at pp. 217-221.)
       But here, because arbitration is more streamlined than the Berman process,
the majority‘s approach also frustrates other FAA objectives the high court
emphasized in Concepcion. (Concepcion, supra, 563 U.S. at p. ___ [131 S.Ct. at
p. 1749].) As explained above (ante, pp. 10-11), because the procedural steps of
the Berman process cause appreciable delay before an administrative hearing is
even held and because any party to that process is entitled to a formal trial de novo
in superior court after a Berman hearing, the majority‘s approach is likely to
produce procedures that are less efficient, more costly, more formal, and more
time consuming than arbitration. In asserting otherwise, the majority never factors
in the trial de novo option under the Berman statutes; it makes no attempt to
explain how a procedure involving an administrative hearing followed by a full,
formal trial de novo in superior court does not interfere with the attributes of
arbitration it identifies: lower costs, greater efficiency and speed, and informality.
(Maj. opn., ante, at pp. 28-29.) Moreover, Concepcion does not, as the majority
suggests, identify the ―use of ‗expert adjudicators‘ ‖ as a benefit of arbitration
(maj. opn., ante, at p. 38); it identifies ― ‗the ability to choose expert
adjudicators‘ ‖ (Concepcion, supra, at p. ___ [131 S.Ct. at p. 1751], italics added).
The Berman process eliminates this choice and, contrary to the parties‘ agreement,
imposes a particular adjudicator. Thus, contrary to the majority‘s assertion (maj.
opn., ante, at p. 38), the majority‘s approach does contravene Concepcion‘s
preemption principles by ― ‗stand[ing] as an obstacle to the accomplishment and

                                           21
execution of the full purposes and objectives of Congress‘ ‖ in passing the FAA.
(Concepcion, supra, 563 U.S. at p. ___ [131 S.Ct. at p. 1753], italics added).
       Moreover, Italian Colors establishes that the very process the majority
prescribes for determining the accessibility and affordability of the arbitration
procedure in a given case poses such an obstacle. There, the high court rejected an
approach that would ― ‗require courts to proceed case by case to tally the costs and
burdens to particular plaintiffs in light of their means‘ ‖ and ― ‗the size of their
claims . . . .‘ ‖ (Italian Colors, supra, __ U.S. at pp. __ [133 S.Ct. at pp. 2311-
2312].) ―Such a preliminary litigating hurdle,‖ the court explained, ―would
undoubtedly destroy the prospect of speedy resolution that arbitration in general
and bilateral arbitration in particular was meant to secure. The FAA does not
sanction such a judicially created superstructure.‖ (Id. at p. __ [133 S.Ct. at p.
2312].) The majority‘s case-by-case inquiry is the very type of ―superstructure‖
the FAA prohibits. (Ibid.)
       Nothing supports the majority‘s unsupported speculation that its case-by-
case inquiry will be different, i.e., that a mini-trial on the comparative costs and
benefits of arbitration and the Berman procedure for a particular employee will not
impose a preliminary litigating hurdle. (Maj. opn., ante, at pp. 50-51.) Under the
majority‘s approach, the parties will be submitting evidence on any number of
issues, including the following: what arbitration procedure the employee can
currently afford and whether that ―materially differ[s]‖ from what he or should
could have afforded when the parties signed the arbitration agreement (maj. opn.,
ante, at p. 59); what were (and perhaps are) the rules that govern the arbitration;
what will the unspecified arbitration procedures be; are Berman procedures ―in
practice, rarely used and generally unavailable to the employee‖ (maj. opn., ante,
at p. 53); how long will it take to resolve the employee‘s wage claim through the
Berman procedure, including a possible trial de novo in superior court, and how

                                           22
long will it take to resolve the wage claim through the arbitration procedure (maj.
opn., ante, at p. 54); how much will it cost to resolve the employee‘s wage claim
through the Berman procedure, including a possible trial de novo, and how much
will it cost to resolve the wage claim through the arbitration procedure (maj. opn.,
ante, at p. 54); how often do parties request a trial de novo ((Maj. opn., ante, at p.
opn., ante, at p. 63)? Given the parties‘ need to litigate all of these matters in the
trial court, and the availability of appellate review of the trial court‘s decision
(Code Civ. Proc., § 1294, subd. (a); Parada, supra, 176 Cal.App.4th at p. 1560),
the majority‘s ―anticipat[ion]‖ that its approach will not create the kind of
preliminary, arbitration-delaying litigating hurdle Italian Colors discussed (maj.
opn., ante, at p. 48) is just wishful thinking. This conclusion reflects a ―lack of
confidence‖ only in the majority‘s unwarranted optimism, not, as the majority
asserts, ―in the ability of our trial courts.‖ (Maj. opn., ante, at p. 63.)
       In any event, I disagree with the majority that, so long as states and their
courts do not interfere with fundamental attributes of arbitration, Concepcion
allows them to invalidate arbitration agreements as unconscionable based on a
policy judgment that the arbitration procedure is not adequately affordable and
accessible. (Maj. opn., ante, at pp. 30-51.) Under the majority‘s narrow reading
of Concepcion, the FAA‘s savings clause permits states, for policy reasons, to
impose all sorts of arbitration procedures that are not within the terms of the
parties‘ arbitration agreement, so long as those procedures do not interfere with
fundamental attributes of arbitration. This view is contrary to the high court‘s
statement in Concepcion that the FAA embodies a ― ‗liberal federal policy
favoring arbitration agreements, notwithstanding any state substantive or
procedural policies to the contrary,‘ [citations].‖ (Concepcion, supra, 563 U.S. at
p. ___ [131 S.Ct. at p. 1749], italics added.) It is also inconsistent with
Concepcion‘s statement that, although a state‘s unconscionability rules may

                                            23
―address[] the concerns that attend contracts of adhesion,‖ they may not ―conflict
with the FAA or frustrate its purpose to ensure that private arbitration
agreements are enforced according to their terms.‖ (Id. at p. __, fn. 6 [131 S.Ct.
at p. 1750, fn. 6], italics added.) Thus, under the FAA, a state court may not,
based on principles of unconscionability, refuse to enforce an arbitration
agreement according to its terms simply because the arbitration procedure lacks
features the Legislature, as a matter of policy, established for ―a particular
class‖ — employees — to ―mitigate the risks and costs of pursuing‖ wage claims
(maj. opn., ante, at p. 44) or to make recovery of wages owed more ―accessible,
informal, and affordable‖ (maj. opn., ante, at p. 48). In enacting the FAA,
Congress ―intended to foreclose [such] legislative attempts to undercut the
enforceability of arbitration agreements.‖ (Southland Corp. v. Keating (1984) 465
U.S. 1, 16 (Southland).)
       Indeed, the majority‘s assertion that its weighing approach to
unconscionability applies, not generally, but only where ―a particular class has
been legislatively afforded specific protections in order to mitigate the risks and
costs of pursuing certain types of claims‖ (maj. opn., ante, at p. 42) further
demonstrates that the majority‘s approach is inconsistent with, and therefore
preempted by, the FAA. The majority premises its approach on the FAA‘s
savings clause, which provides that arbitration agreements ―shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.‖ (9 U.S.C. § 2; see maj. opn., ante, at p. 29.)
In Southland, Justice Stevens invoked this clause to justify the prohibition against
arbitration we had read into California‘s Franchise Investment Law (Corp. Code
§ 31000 et seq.). (Southland, supra, 465 U.S. at pp. 18-22 (conc. & dis. opn. of
Stevens, J.).) He reasoned that, because a contract void as contrary to public
policy is revocable at law or in equity, the FAA does not preempt a state law that

                                          24
―provid[es] special protection‖ to franchisees by declaring agreements to arbitrate
claims under the Franchise Investment Law void as a matter of public policy. (Id.
at pp. 21-22 (conc. & dis. opn. of Stevens, J.).) The majority in Southland rejected
this view, finding that the ―defense to arbitration‖ we had read into the Franchise
Investment Law was ―not a ground that exists at law or in equity ‗for the
revocation of any contract‘ but merely a ground that exists for the revocation of
arbitration provisions in contracts subject to the California Franchise Investment
Law.‖ (Id. at p. 16, fn. 11.) It also rejected the view that ― ‗a state policy of
providing special protection for franchisees . . . can be recognized without
impairing the basic purposes of the [FAA],‘ [citation].‖ (Ibid.) ―If we accepted
this analysis,‖ the court explained, ―states could wholly eviscerate congressional
intent to place arbitration agreements ‗upon the same footing as other contracts,‘
[citation] simply by passing statutes such as the Franchise Investment Law. We
. . . reject[] this analysis because it is in conflict with the [FAA] and would permit
states to override the declared policy requiring enforcement of arbitration
agreements.‖ (Ibid.)
       The majority‘s approach is inconsistent with Southland. Like the defense
to arbitration we read into the Franchise Investment Law, the defense to arbitration
the majority now reads into the Berman statutes is not a ground that exists at law
or in equity for the revocation of any contract, but is, according to the majority‘s
own assertion, merely a ground that exists for the revocation of arbitration
provisions in contracts subject to the Berman statutes or to other statutes that
―legislatively‖ afford to ―a particular class . . . specific protections in order to
mitigate the risks and costs of pursuing certain types of claims.‖ (Maj. opn., ante,
at p. 44.) Moreover, it ―conflict[s] with‖ the FAA by enabling our Legislature,
―simply by passing statutes such as‖ the Berman statutes, ―to override the declared
[federal] policy requiring enforcement of arbitration agreements‖ and to ―wholly

                                            25
eviscerate congressional intent to place arbitration agreements ‗upon the same
footing as other contracts.‘ ‖ (Southland, supra, 465 U.S. at pp. 16-17, fn. 11.)
Under Southland, it is, therefore, preempted.
       Given this analysis, I disagree with the majority‘s broad assertion that the
FAA does not preempt unconscionability rules that apply ―uniquely in the context
of arbitration.‖ (Maj. opn., ante, at p. 30.) As the high court has held, in cases
where the FAA applies, a state court may not, ―in assessing the rights of litigants
to enforce an arbitration agreement, construe that agreement in a manner different
from that in which it otherwise construes nonarbitration agreements under state
law.‖ (Perry v. Thomas (1987) 482 U.S. 483, 492, fn. 9.) In other words, as
Concepcion explains, ―a [state] court may not ‗rely on the uniqueness of an
agreement to arbitrate as a basis for a state-law holding that enforcement would be
unconscionable.‘ ‖ (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1747].)
The majority‘s approach violates this principle insofar as it departs from our
existing law of unconscionability and crafts different unconscionability rules for
arbitration agreements.7 Under the high court‘s decisions, the majority cannot
invent a unique rule for implementing a legislative policy decision to confer
―specific protections‖ on ―a particular class‖ (maj. opn., ante, at p. 42) and avoid
preemption simply by calling that rule a rule of unconscionability.
       Finally, for two reasons, I also disagree with the majority‘s view that the
high court‘s FAA decisions allow us to ―consider the value of benefits provided by
the Berman statutes‖ in determining unconscionability. (Maj. opn., ante, at p. 38.)
First, insofar as this approach will require a complex and speculative inquiry into
the purported value of the Berman statutes to a particular employee at the time the

7
       Whether, under current high court precedent, the FAA preempts any of the
other unique unconscionability rules the majority‘s dicta discusses (maj. opn.,
ante, at pp. 29-31) is not before us in this case.

                                          26
contract was signed, it is, as earlier explained, inconsistent with Italian Colors,
supra, __ U.S. at pages __ [133 S.Ct. at pp. 2311-2312]. Second, even were it
possible for a trial court to assign any meaningful value to these speculative
benefits, considering that value would be fundamentally inconsistent with
Concepcion and Italian Colors. In the former, the high court held that state courts
may not base a finding of unconscionability on the value of class arbitration to
litigants with ―small-dollar claims.‖ (Concepcion, supra, 563 U.S. at p. __ [131
S.Ct. at p. 1740].) In the latter, the court, expressly applying Concepcion, held
that an arbitration agreement may not be invalidated based on individualized proof
that what the plaintiffs have waived — the right to class arbitration — is so
valuable that, without it, the costs of pursuing their claims are prohibitive. (Italian
Colors, supra, __ U.S. at pp. __ [133 S.Ct. at pp. 2311-2312].) These binding
interpretations of the FAA preclude us from invalidating an arbitration provision
as unconscionable based on the supposed value to a particular employee of the
Berman procedure. As Concepcion ―established,‖ ―the FAA‘s command to
enforce arbitration agreements trumps any interest in ensuring the prosecution of
low-value claims.‖ (Italian Colors, supra, at p. __, fn. 5 [133 S.Ct. at p. 2321, fn.
5].) Thus, it is the high court, not I, that has construed the FAA to require
adherence to its primary purpose — enforcing arbitration agreements according to
their terms — ― ‗at the expense of harming other values that the legislature deems
important.‘ ‖ (Maj. opn., ante, at p. 63.) The court could hardly have been clearer
in Italian Colors: the FAA ―favor[s] the absence of litigation when that is the
consequence of‖ following its ―command‖ to enforce arbitration agreements
―according to their terms.‖ (Italian Colors, supra, at p. __, fn. 5 [133 S.Ct. at p.
2312, fn. 5].)
       For all of the above reasons, the majority‘s approach is inconsistent with
the FAA. Although the majority purports to be faithfully applying ―the FAA‘s

                                          27
savings clause‖ (maj. opn., ante, at p. 29), which permits arbitration agreements
―to be invalidated by ‗generally applicable contract defenses, such as . . .
unconscionability‘ ‖ (Concepcion, supra, 563 U.S. at p. ___ [131 S.Ct. at p. 1746];
see 9 U.S.C. § 2), it is, in reality and contrary to Concepcion, applying the
unconscionability defense ―in a fashion that disfavors arbitration‖ (Concepcion, at
p. __ [131 S.Ct. at p. 1747]) and that ―derive[s] [its] meaning from the fact that an
agreement to arbitrate is at issue‖ (id. at p. __ [131 S.Ct. at p. 1746]). Therefore,
the majority‘s unconscionability approach is preempted by the FAA.

       VII. Conclusion.

       In Concepcion, the high court, in invalidating another of this court‘s
unconscionability rules for refusing to enforce arbitration provisions, first noted
that ―judicial hostility‖ towards arbitration has ―manifested itself in ‗a great
variety‘ of ‗devices and formulas.‘ ‖ (Concepcion, supra, 563 U.S. at p. ___ [131
S.Ct. at p. 1747].) Then, in the very next sentence, it commented: ―And although
these statistics are not definitive, it is worth noting that California‘s courts have
been more likely to hold contracts to arbitrate unconscionable than other contracts.
[Citations.]‖ (Ibid.) Ignoring the high court‘s clear message and undeterred by
another reversal, today, the majority ― ‗formula[tes]‘ ‖ yet another ― ‗device‘ ‖
(ibid.) for invalidating arbitration agreements: a case-by-case, hopelessly vague,
subjective, and indeterminable assessment of (1) the value of the benefits of the
Berman procedure to a particular employee, and (2) the accessibility and
affordability to that employee of the specific arbitration procedure to which he or

                                           28
she has agreed. The majority‘s approach is inconsistent with California law and is
preempted by the FAA. I therefore dissent from that part of the majority‘s opinion
and from the judgment.
                                                       CHIN, J.

I CONCUR:

BAXTER, J.

                                        29
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Sonic-Calabasas A, Inc. v. Moreno
__________________________________________________________________________________

Unpublished Opinion XXX NP opn. filed 7/12/11 2d Dist., Div. 4
Original Appeal
Original Proceeding
Review Granted
Rehearing Granted

__________________________________________________________________________________

Opinion No. S174475
Date Filed: October 17, 2013
__________________________________________________________________________________

Court: Superior
County: Los Angeles
Judge: Aurelio Munoz

__________________________________________________________________________________

Counsel:

Fine, Boggs & Perkins, John P. Boggs and David J. Reese for Plaintiff and Appellant.

Mayer Brown, Evan M. Tager, Archis A. Parasharami, Brian J. Wong, Donald M. Falk; National Chamber
Litigation Center, Inc., and Robin S. Conrad for the Chamber of Commerce of the United States as Amicus
Curiae on behalf of Plaintiff and Appellant.

Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Karin Dougan Vogel and Matthew M. Sonne
for Employers Group as Amicus Curiae on behalf of Plaintiff and Appellant.

Horvitz & Levy, Lisa Perrochet, Felix Shafir and James A. Sonne for California New Car Dealers
Association as Amicus Curiae on behalf of Plaintiff and Appellant.

Locker Folberg, Miles E. Locker and Rachel Folberg for Defendant and Respondent.

Hina B. Shah; Cynthia Rice; Jose Tello; Miye Goishi; Silas Shawver; Fernando Flores and Charlotte Noss
for Asian Law Caucus, Asian Pacific American Legal Center, Bet Tzedek Legal Services, California Rural
Legal Assistance, Inc., Centro Legal de La Raza , Garment Worker Center, Hastings Civil Justice Clinic,
Katharine and George Alexander Community Law Center, La Raza Centro Legal, Lawyers‘ Committee for
Civil Rights of the San Francisco Bay Area, Legal Aid Foundation of Los Angeles, Legal Aid Society-
Employment Law Center, Maintenance Cooperation Trust Fund, National Employment Law Project,
National Lawyers Guild Labor and Employment Committee, Neighborhood Legal Services of Los Angeles
County, Wage Justice Center, Women‘s Employment Rights Clinic of Golden Gate University School of
Law and Worksafe Law Center as Amici Curiae on behalf of Defendant and Respondent.

McGuinn, Hillsman & Palefsky, Cliff Palefsky, Keith Ehrman; Smith & McGinty and Valerie T. McGinty
for California Employment Lawyers Association and Consumers Attorneys of California as Amici Curiae
on behalf of Defendant and Respondent.

William A. Reich and Anne Hipshman for California Labor Commissioner Julie A. Su as Amicus Curiae
on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):

John P. Boggs
Fine, Boggs & Perkins
80 Stone Pine Road, Suite 210
Half Moon Bay, CA 94019
(650) 712-8908

Felix Shafir
Horvitz & Levy
15760 Ventura Boulevard, 18th Floor
Encino, CA 91436-3000
(818) 995-0800

Miles E. Locker
Locker Folberg
71 Stevenson Street, Suite 422
San Francisco, CA 94105
(415) 962-1626

Cliff Palefsky
McGuinn, Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA 94133
(415) 421-9292