Unreported / Non-Citable
Background
Luis Antonio Salazar applied for work at CN Motor Company LLC, an automobile dealership doing business as Santa Monica Lincoln, on June 6, 2022, signed a two-page arbitration agreement on June 8, 2022, and completed other hiring documents on June 13 and June 16, 2022. He worked there as an hourly employee from June 2022 until March 2024. In June 2024, he filed a class action complaint in Los Angeles Superior Court alleging overtime, minimum-wage, meal-period, rest-period, waiting-time, wage-statement, timely-payment, indemnification, Labor Code section 227.3, and unfair-competition claims. CN Motor moved to compel arbitration based on the signed agreement.
On December 16, 2024, the trial court found that CN Motor had carried its burden to prove an agreement to arbitrate but denied enforcement of the agreement. The trial court found moderate-to-high procedural unconscionability based on oppression and surprise, and moderate substantive unconscionability based on the agreement's scope, duration, treatment of affiliates, and arbitration-initiation procedure. It declined to sever those provisions, reasoning that curing them would require rewriting the agreement. CN Motor timely appealed.
The Court of Appeal, Division Eight of the Second Appellate District, reviewed the factual findings for substantial evidence and legal issues independently. Because the facts were largely undisputed, the court applied de novo review to the final ruling on the motion to compel arbitration.
The Court’s Holding
The Court of Appeal held that CN Motor forfeited its challenge to consideration of Salazar's translated declaration because CN Motor did not ask the trial court to rule the declaration inadmissible and had itself relied on Salazar's declarations. The court nevertheless held that substantial evidence did not support the trial court's findings of oppression or surprise: the cited workplace pressure occurred after Salazar signed the agreement, he had not told CN Motor before signing that he needed Spanish-language documents, and capital-letter warnings appeared at both ends of the readable 11-point agreement. The agreement's adhesive nature still established a low degree of procedural unconscionability.
On substantive unconscionability, the court found a high degree of unconscionability in provisions extending arbitration to disputes of 'any nature,' other relationships or interactions, and broadly defined affiliates, as well as in the nonmutual procedure for initiating arbitration. It rejected the trial court's conclusion that the phrase 'not revocable' made the entire agreement infinite in duration, explaining that the phrase appeared within a paragraph listing limited exceptions and that a contract without a stated duration terminates after a reasonable time. Because the offending language could be removed without rewriting the contract, the court held that the trial court's refusal to sever was error. It directed severance of specified language and examples from paragraph 4 and all of paragraph 11, and enforcement of the remaining agreement only for claims arising from and connected to Salazar's employment with CN Motor.
The order denying arbitration was reversed with directions to grant the motion to compel arbitration of Salazar's individual claims under the amended agreement. Because the trial court had not addressed Salazar's challenge to the class action waiver, the Court of Appeal directed the trial court to address that issue on remand. No costs were awarded. Justice Wiley separately concurred, stating only that he joined in the result.
Key Takeaways
- An adhesion agreement's minimal procedural unconscionability can combine with highly one-sided substantive terms to make the agreement unenforceable as written.
- The court treated broad coverage of nonemployment disputes and affiliates, together with nonmutual initiation procedures, as severe substantive defects.
- Severance was appropriate because deleting the identified language and examples cured those defects without augmenting or rewriting the parties' agreement.
- The appellate ruling compels only Salazar's individual employment-related claims and does not resolve the validity of the class action waiver.
- CN Motor forfeited its appellate admissibility challenge to Salazar's translated declaration by not presenting that objection for a trial-court ruling.
Why It Matters
The decision distinguishes defects in an arbitration agreement's formation from defects in particular terms. Although the court rejected the evidentiary basis for heightened oppression and surprise, it still refused enforcement of the agreement as written because its scope and mutuality provisions were excessively one-sided.
The remedy is equally important: rather than invalidate the entire agreement, the court prescribed deletions that confine arbitration to the employment relationship. Its disposition also preserves a meaningful limit on remand—the trial court must separately address the class action waiver before the controversy is fully resolved.