Filed 7/26/13 Mercado v. Doctors Med. Center of Modesto CA5




                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.




              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT



SUSAN MERCADO,
                                                                                           F064478
         Plaintiff and Respondent,
                                                                                 (Super. Ct. No. 670116)
          v.
DOCTORS MEDICAL CENTER OF
MODESTO, INC.,                                                                           OPINION

         Defendant and Appellant.



         APPEAL from a judgment of the Superior Court of Stanislaus. Timothy W.
Salter, Judge.
         Horvitz & Levy, David S. Ettinger, James A. Sonne, Jeremy B. Rosen; Fox
Rothschild and Jeffrey D. Polsky for Defendant and Appellant.
         Rancaño & Rancaño and David C. Rancaño for Plaintiff and Respondent.


                                                        -ooOoo-


         Defendant appeals from the order denying its petition to compel arbitration of the
disability discrimination claims asserted in plaintiff‘s complaint. The trial court denied
the petition on the ground the arbitration agreement was unconscionable. We conclude
the agreement was not substantively unconscionable and reverse.
                   FACTUAL AND PROCEDURAL BACKGROUND
       Plaintiff filed a complaint against her employer, Doctors Medical Center of
Modesto, Inc., alleging three causes of action sounding in disability discrimination. In
response, defendant filed a petition to compel arbitration pursuant to Code of Civil
Procedure section 1281.2. Defendant asserted plaintiff agreed to arbitrate employment
disputes by signing an employee acknowledgement form, which stated that she
acknowledged receipt of the employee handbook and that she voluntarily agreed to
submit all employment related disputes, with specified exceptions, to binding arbitration
in accordance with the employee handbook. Plaintiff opposed the petition, arguing there
was no enforceable agreement to arbitrate because defendant did not sign the
acknowledgement, plaintiff was not aware when she signed the acknowledgement that it
included an arbitration provision, and the arbitration agreement was unconscionable.
After hearing, the trial court denied the petition to compel on the ground the arbitration
agreement was unconscionable and therefore unenforceable. Defendant appeals, arguing
the arbitration agreement is not unconscionable and a recent United States Supreme Court
case, AT&T Mobility LLC v. Concepcion (2011) __ U.S. __, 131 S.Ct. 1740
(Concepcion), held that the Federal Arbitration Act (FAA) preempted the state authorities
on which the trial court‘s reasoning was based.
                                       DISCUSSION
I.     Burden of Proof and Standard of Review
       ―On petition of a party to an arbitration agreement alleging the existence of a
written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate
such controversy, the court shall order the petitioner and the respondent to arbitrate the
controversy if it determines that an agreement to arbitrate the controversy exists, unless it

                                              2
determines that [¶] … [g]rounds exist for the revocation of the agreement.‖ (Code Civ.
Proc., § 1281.2, subd. (b).) The party seeking arbitration bears the burden of proving by
a preponderance of the evidence the existence of an arbitration agreement; the party
opposing arbitration bears the burden of proving by a preponderance of the evidence any
defense to enforcement of the agreement, including unconscionability. (Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223,
236 (Pinnacle); Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
―Absent conflicting extrinsic evidence, the validity of an arbitration clause, including
whether it is subject to revocation as unconscionable, is a question of law subject to de
novo review.‖ (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th
695, 702 (Serpa).) Where the trial court‘s decision is based on resolution of disputed
facts, however, the substantial evidence standard of review applies to the factual findings.
(Amalgamated Transit Union Local 1277 v. Los Angeles County Metropolitan Trans.
Authority (2003) 107 Cal.App.4th 673, 685.)
II.    Effect of Concepcion
       The decision in Concepcion did not preclude the trial court from relying on
unconscionability as a ground for invalidating an arbitration agreement. In Concepcion,
the court overruled Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover
Bank), which had held that class action waivers in certain adhesive consumer contracts
were per se unconscionable when the party with the superior bargaining power engaged
in a scheme to defraud large numbers of consumers out of individually small sums of
money; Discover Bank reasoned such waivers had the practical effect of exempting the
wrongful party from responsibility for its own fraud. (Concepcion, supra, 131 S.Ct. at
p. 1746.) Concepcion held that the rule set out in Discover Bank was preempted by the
FAA. (Concepcion, at p. 1753.) The FAA, which was enacted in response to widespread
judicial hostility to arbitration agreements, provides that arbitration agreements are

                                              3
―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.) The final provision, the ―saving
clause,‖ ―permits agreements to arbitrate to be invalidated by ‗generally applicable
contract defenses, such as fraud, duress, or unconscionability,‘ but not by defenses that
apply only to arbitration or that derive their meaning from the fact that an agreement to
arbitrate is at issue.‖ (Concepcion, at p. 1746.) The Concepcion court concluded the
FAA did not permit a state to rely on categorical rules prohibiting arbitration of a
particular type of claim. (Id. at p. 1747.) Although California‘s general
unconscionability doctrine was not such a categorical rule, because the Discover Bank
rule would apply to most consumer contracts, it stood ―as an obstacle to the
accomplishment of the FAA‘s objectives, ‖ one of which was to ―‗ensure the enforcement
of arbitration agreements according to their terms so as to facilitate streamlined
proceedings.‘‖ (Concepcion, at p. 1748.) Allowing a party to a consumer contract to
demand class wide arbitration notwithstanding an express class arbitration waiver in the
arbitration agreement ―interferes with fundamental attributes of arbitration and thus
creates a scheme inconsistent with the FAA.‖ (Ibid.) Further, imposing class wide
arbitration on a party who did not agree to it is inconsistent with the FAA. (Id. at
pp. 1750–1751.)
       Concepcion does not ―preclude[] a court from relying on unconscionability as a
ground for invalidating an arbitration provision … for three reasons. First, our Supreme
Court‘s decision in Pinnacle, which was handed down more than a year after
Concepcion, applied California‘s traditional unconscionability principles in concluding
that an arbitration provision governing a condominium complex was not unconscionable.
Second, Concepcion itself recognized the continuing validity of the doctrine of
unconscionability as a basis for declaring an arbitration agreement unenforceable.
[Citation.] Third, the California Courts of Appeal have recognized that ‗Concepcion did

                                             4
not eliminate state law unconscionability as a defense to the enforcement of arbitration
agreements subject to the Federal Arbitration Act.‘ [Citations.]‖ (Vargas v. SAI
Monrovia B, Inc. (2013) 216 Cal.App.4th 1269, 1287–1288.)
       Accordingly, unconscionability remains a valid basis for refusing to enforce an
arbitration agreement when it does not interfere with the fundamental attributes of
arbitration.
III.   Agreement to Arbitrate
       Plaintiff‘s complaint alleges she was employed by defendant. Defendant
presented evidence that plaintiff entered into an agreement to arbitrate disputes arising
out of her employment with defendant. The agreement was headed ―EMPLOYEE
ACKNOWLEDGMENT,‖ bore plaintiff‘s signature, and was dated April 23, 2007. It
contained the following language:

               ―I acknowledge that I have received a copy of the Tenet Fair
       Treatment Process brochure. Except to the extent that any applicable
       collective bargaining agreement provided otherwise, I hereby voluntarily
       agree to use the Company‘s Fair Treatment Process and to submit to final
       and binding arbitration any and all claims and disputes except ‗Excluded
       Issues‘ that are related in any way to my employment or the termination of
       my employment with Tenet. I understand that final and binding arbitration
       will be the sole and exclusive remedy of any such claim or dispute against
       Tenet or its parent, subsidiary or affiliated companies or entities, and each
       of its and/or their employees, officers, directors or agents, and that, by
       agreeing to use of arbitration to resolve my dispute, both the Company and
       I agree to forego any right we each may have had to a jury trial on issues
       covered by the Fair Treatment Process. I also agree that such arbitration
       will be conducted before an experienced arbitrator chosen by me and the
       Company, and will be conducted under the Federal Arbitration Act and the
       procedural rules of American Arbitration Association (‗AAA‘).

               ―I further acknowledge that in exchange for my agreement to
       arbitrate, the Company also agrees to submit all claims and disputes it may
       have with me to final and binding arbitration, and that the Company further
       agrees that if I submit a request for binding arbitration, my maximum out-
       or pocket [sic] expenses for the arbitrator and the administrative cost of the
                                             5
       AAA will be an amount equal to one day‘s pay (if I am an exempt
       employee) or eight times my hourly rate of pay (if I am a non-exempt
       employee), and that the Company will pay all of the remaining fees and
       administrative costs of the arbitrator and the AAA. I further acknowledge
       that this mutual agreement to arbitrate may not be modified or rescinded
       except in writing by both me and the Company.‖
       In support of its petition to compel arbitration, defendant presented evidence that
defendant is a subsidiary of Tenet. It also presented an excerpt from its employee
handbook setting out the provisions of the Fair Treatment Process (FTP). The FTP
included five steps for resolving employment disputes, the last of which was final and
binding arbitration. It provided that the FTP applied to all employees and covered ―all
disputes relating to or arising out of an employee‘s employment with the company or the
termination of employment.‖ It stated: ―Your decision to accept employment or to
continue employment with the company constitutes your agreement to be bound by the
FTP. Likewise, the company agrees to be bound by the FTP. This mutual agreement to
arbitrate claims means that both you and the company are bound to use the FTP as the
only means of resolving employment-related disputes and to forego any right either may
have to a jury trial on issues covered by the FTP.‖
       Plaintiff admitted she was employed by defendant; she did not dispute that she
signed the arbitration agreement submitted by defendant. Rather, she declared that she
―was under the impression‖ the employee acknowledgment she signed on April 23, 2007,
―was a code of ethics agreement‖ between herself and defendant. She stated: ―Since my
hire in 2001 I have had to sign a code of ethics agreement every year in order to keep my
employment.‖ Plaintiff asserted she ―believed [she] had no choice but to sign it in order
to keep [her] employment with DMC.‖
       Plaintiff, who bore the burden of proving any defense to enforceability of the
arbitration agreement, presented no evidence of the circumstances under which she
signed the agreement. There was no evidence that defendant, or anyone connected with

                                             6
it, misrepresented the nature of the document she signed or deceived her in any way
about the content of the acknowledgment form. She presented no evidence defendant
prevented her from reading the document before signing it, or denied her sufficient time
to read it. Apparently, she simply signed the employee acknowledgment without reading
it to determine its content. A party who fails to read a contract, but objectively manifests
assent by signing it, may not avoid its effect by claiming he or she did not agree to its
terms. (Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1589 (Stewart).)
―‗It is well established, in the absence of fraud, overreaching or excusable neglect, that
one who signs an instrument may not avoid the impact of its terms on the ground that he
failed to read the instrument before signing it.‘ [Citations.]‖ (Id. at pp. 1588–1589.)
       Plaintiff argues that the arbitration agreement is not enforceable because it is not
mutually binding on plaintiff and DMC. She asserts the Employee Acknowledgment was
an agreement between plaintiff and Tenet only, concerning her employment with Tenet
(which did not exist), and she had no dispute with Tenet (which was not a party to her
action against DMC). She points to language in the Employee Acknowledgment stating
that she voluntarily agreed ―to submit to final and binding arbitration any and all claims
and disputes … related in any way to my employment or the termination of my
employment with Tenet.‖ (Italics added.) From this she concludes DMC was not a party
against whom she could enforce the arbitration agreement; consequently, it was not
mutually binding or mutually enforceable.
       The Employee Acknowledgment, however, contains provisions mentioning Tenet
and numerous other provisions concerning ―the Company.‖ The first paragraph contains
an acknowledgment of the receipt of the Tenet Healthcare Corporation Employee
Handbook and Standards of Conduct, which contain ―important information about the
Company‘s general personnel policies and about my privileges and obligations as an
employee.‖ The Employee Acknowledgment reflects plaintiff‘s understanding that her

                                              7
―employment with the Company is not for a specified term‖ and ―either I or the Company
can terminate my employment relationship at will.‖ The arbitration agreement reflects
plaintiff‘s voluntary agreement to use ―the Company‘s Fair Treatment Process‖ and to
submit to arbitration her claims or disputes related to her employment or termination of
her employment with Tenet, including claims against Tenet or its subsidiary. The
agreement also states that she and ―the Company‖ agree to forego the right to a jury trial,
and will mutually choose the arbitrator. It states that, in exchange for plaintiff‘s
agreement to arbitrate, ―the Company also agrees to submit all claims and disputes it may
have with me to final and binding arbitration.‖
       Plaintiff conceded in her declaration that DMC was her employer. She did not
dispute defendant‘s evidence that DMC was a subsidiary of Tenet. Although neither
party submitted any provision of the agreement or the FTP that defined the term ―the
Company,‖ in context, it is clear the references to ―the Company‖ in the arbitration
agreement meant plaintiff‘s employer, DMC. Plaintiff offers no explanation why, if the
term ―the Company‖ referred to Tenet and she was not employed by Tenet, as she
contends, she signed an acknowledgment of her at will employment with Tenet.
       The trial court found that ―although there is an apparent agreement to arbitrate any
disputes or claims that are related in any way to employment or termination of
employment with Defendant medical center, other grounds exist for the revocation of
such agreement.‖ Thus, it found that an arbitration agreement existed between plaintiff
and DMC, but that it was revocable, or unenforceable, because it was unconscionable.
To the extent this finding was based on factual evidence, such as the identity of plaintiff‘s
employer, it is supported by substantial evidence. To the extent it is based on
interpretation of the terms of the Employee Acknowledgment and the FTP, we agree that
the agreement was between plaintiff and DMC and concerned her employment with
DMC, although it also included some provisions concerning disputes she might have with

                                              8
DMC‘s parent, Tenet. Plaintiff‘s claim that the agreement lacked mutuality because
DMC was not bound by it is without merit.
       The trial court correctly found there was ―an apparent agreement to arbitrate any
disputes or claims that are related in any way to employment or termination of
employment with Defendant medical center.‖ The remaining question is whether the
unconscionability of that agreement justified the trial court‘s refusal to enforce it.
IV.    Unconscionability
       Under California law, unconscionability is a defense against enforcement of
contracts in general: ―If the court as a matter of law finds the contract or any clause of
the contract to have been unconscionable at the time it was made the court may refuse to
enforce the contract, or it may enforce the remainder of the contract without the
unconscionable clause, or it may so limit the application of any unconscionable clause as
to avoid any unconscionable result.‖ (Civ. Code, § 1670.5, subd. (a).)
―Unconscionability consists of both procedural and substantive elements. The procedural
element addresses the circumstances of contract negotiation and formation, focusing on
oppression or surprise due to unequal bargaining power. [Citation.] Substantive
unconscionability pertains to the fairness of an agreement‘s actual terms and to
assessments of whether they are overly harsh or one-sided. [Citations.] 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.)
       ―Both procedural unconscionability and substantive unconscionability must be
shown, but ‗they need not be present in the same degree‘ and are evaluated on ‗―a sliding
scale.‖‘ [Citation.] ‗[T]he more substantively oppressive the contract term, the less
evidence of procedural unconscionability is required to come to the conclusion that the


                                              9
term is unenforceable, and vice versa.‘ [Citation.]‖ (Pinnacle, supra, 55 Cal.App.4th at
p. 247.)
       A.     Procedural unconscionability
       ―[P]rocedural unconscionability requires oppression or surprise. ‗―Oppression
occurs where a contract involves lack of negotiation and meaningful choice, surprise
where the allegedly unconscionable provision is hidden within a prolix printed form.‖‘
[Citation.]‖ (Pinnacle, supra, 55 Cal.4th at p. 247.) ―The procedural element of an
unconscionable contract generally takes the form of a contract of adhesion. (Little v.
Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 (Little).) A contract of adhesion is ―‗a
standardized contract, 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.‘ [Citation.]‖ (Armendariz v. Foundation Health Psychcare Services, Inc.
(2000) 24 Cal.4th 83, 113.) ―It is well settled that adhesion contracts in the employment
context, that is, those contracts offered to employees on a take-it-or-leave-it basis,
typically contain some aspects of procedural unconscionability.‖ (Serpa, supra, 215
Cal.App.4th at p. 704.)
       Plaintiff presented no evidence of the circumstances under which she signed the
Employee Acknowledgment, so there was no specific evidence it was presented to her on
a take-it-or-leave-it basis. The FTP, however, which plaintiff agreed to use to resolve
any employment disputes, included provisions that the FTP applied to all employees and
that accepting or continuing employment with defendant ―constitutes your agreement to
be bound by the FTP.‖ These provisions suggest plaintiff would not have been permitted
to opt out of the arbitration agreement or to negotiate terms other than those contained in
the FTP. Thus, the arbitration agreement was adhesive.
       Plaintiff asserts surprise was established because the Employee Acknowledgment
was located on page 103 of the employee handbook and did not conspicuously advise that

                                             10
it contained an arbitration provision. There is no evidence in the record demonstrating
that the acknowledgment appeared on page 103 of the employee handbook. The
declaration of Michele Bava, submitted by defendant in support of the petition to compel
arbitration, merely states that exhibit A to her declaration is ―a true and correct copy of an
Employee Acknowledgment Form signed by‖ plaintiff. Exhibit A to her declaration
consists of the one-page Employee Acknowledgment and a second one-page employee
acknowledgment, which acknowledges receipt of an employee handbook supplement.
Plaintiff‘s declaration in opposition to the petition says nothing about the form being part
of the employee handbook.
       The Employee Acknowledgment, as presented, is a one-page document,
containing five paragraphs, with the heading ―Employee Acknowledgment‖ at the top
and an employee signature line and date at the bottom. The first three paragraphs
acknowledge receipt of a copy of the employee handbook and standards of conduct,
express an understanding that the employee is ―expected to read, understand, familiarize
[himself or herself] with and comply with the policies contained in them,‖ and
acknowledge the employment is at will. The last two paragraphs of the document set out
the arbitration agreement. There is no separate heading identifying it as an arbitration
agreement, and it does not appear in larger or darker typeface. It does, however, take up
half of the page, immediately above plaintiff‘s signature.
       The Employee Acknowledgment provided that the arbitration ―will be conducted
under the Federal Arbitration Act and the procedural rules of American Arbitration
Association (‗AAA‘).‖ Plaintiff asserts that the failure to furnish her a copy of the AAA
procedures at the time she signed the arbitration agreement is further evidence of
procedural unconscionability. Cases have held that incorporating procedural rules into
the arbitration agreement without providing a copy of those rules to the employee is an
aspect of procedural unconscionability. (See, e.g., Trivedi v. Curexo Technology Corp.

                                             11
(2010) 189 Cal.App.4th 387, 393; Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721.)
Defendant did not present the AAA rules as part of the arbitration agreement between the
parties. Plaintiff, however, presented no evidence the AAA rules were not provided to
her at the time she signed the arbitration agreement.
       The evidence presented in the trial court, including evidence of the adhesive
nature of the agreement and the lack of a prominent heading or bold print to highlight the
arbitration provision itself, established at least some degree of procedural
unconscionability. However, ―a finding of procedural unconscionability does not mean
that a contract will not be enforced, but rather that courts will scrutinize the substantive
terms of the contract to ensure they are not manifestly unfair or one-sided.‖ (Gentry v.
Superior Court (2007) 42 Cal.4th 443, 469.) Accordingly, we must examine the
agreement for substantive unconscionability.
       B.     Substantive unconscionability
       Substantive unconscionability exists when the terms of an agreement are overly
harsh or so one-sided as to shock the conscience. (Pinnacle, supra, 55 Cal.4th at p. 246.)
In the employment context, substantive unconscionability may be found ―when the
arbitration agreement is ‗one-sided‘ in favor of the employer without sufficient
justification, for example, when ‗the employee‘s claims against the employer, but not the
employer‘s claims against the employee, are subject to arbitration.‘ [Citations.]‖ (Serpa,
supra, 215 Cal.App.4th at p. 703.) The arbitration agreement provided that both plaintiff
and defendant agreed to arbitrate their claims against the other. It stated: ―I further
acknowledge that in exchange for my agreement to arbitrate, the Company also agrees to
submit all claims and disputes it may have with me to final and binding arbitration.‖ The
FTP reiterated that both parties agreed to be bound by the FTP ―as the only means of
resolving employment-related disputes‖ and to waive their right to a jury trial of those
disputes. The only claims excluded from the arbitration agreement were those listed in

                                              12
the ―Excluded Issues‖ section of the FTP: ―Workers‘ Compensation Claims, any claim
involving the construction or application of a benefit plan covered by ERISA, and claims
for unemployment benefits.‖ Thus, the agreement was bilateral and not unfairly one-
sided.
         The trial court, however, found the agreement to be substantively unconscionable
because of ―the general nature of the terms, i.e. without specific reference to the nature
and extent of discovery and that findings of fact and conclusions of law must be included
in the written decision; the ambiguity surrounding the provisions concerning the right to
recover attorney‘s fees and costs; and the absence of any provision for limited judicial
review.‖ Plaintiff had argued in her opposition to the petition to compel arbitration that
the arbitration agreement was substantively unconscionable because the discovery
provision lacked guidance as to exercising the arbitrator‘s discretion, the agreement
provided that the employee was entitled to legal representation at her own expense,
contrary to the statutory provision for an award of attorney fees to a successful employee
plaintiff under the FEHA (Gov. Code, § 12965), and the agreement failed to provide for
limited judicial review of the arbitrator‘s decision.
         Plaintiff‘s contentions and the trial court‘s conclusions regarding what the
agreement should have included and what it lacked appear to be based on Armendariz. In
discussing an agreement to arbitrate claims involving ―unwaivable statutory rights,‖ the
Armendariz court concluded there were 5 minimum requirements necessary in order for
such an arbitration agreement to be enforceable: the agreement ―is lawful if it ‗(1)
provides for neutral arbitrators, (2) provides for more than minimal discovery, (3)
requires a written award, (4) provides for all of the types of relief that would otherwise be
available in court, and (5) does not require employees to pay either unreasonable costs or
any arbitrators‘ fees or expenses as a condition of access to the arbitration forum.‘‖
(Armendariz, supra, 24 Cal.4th at p. 102.)

                                              13
       We question whether the Armendariz test survives recent United States Supreme
Court decisions. Concepcion determined ―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,‘‖ nor may it enforce ―state-law rules that stand as an obstacle to the
accomplishment of the FAA‘s objectives,‖ including the objective of ―‗ensur[ing] that
private arbitration agreements are enforced according to their terms.‘ [Citations.]‖
(Concepcion, supra, 131 S.Ct. at pp. 1747, 1748.) Refusing to enforce an arbitration
agreement according to its terms because the claims involve unwaivable statutory rights
and the agreement does not contain specific provisions the court believes are necessary to
vindicate those statutory rights appears contrary to the decision in Concepcion.
Armendariz carved out a class of claims— those involving unwaivable statutory rights—
and applied a special rule to agreements to arbitrate those claims—requiring them to meet
its five minimum requirements—in order for them to be enforceable. That appears to be
the type of state rule Concepcion condemned. More recently, the decision in American
Express Co. v. Italian Colors Restaurant, __U.S.__, 133 S.Ct. 2304, 2013 U.S. Lexis
4700, narrowed the ability of courts to invalidate arbitration agreements on the ground
they inhibit or preclude vindication of statutory rights. There, the court held arbitration
agreements must be ―‗rigorously enforce[d]‘ … according to their terms,‖ even when the
claims to be arbitrated allege a violation of a federal statute. (Id. at pp. *8–10.) The
parties to an arbitration agreement sought to invalidate the agreement‘s prohibition of
class arbitration on the ground individual arbitration of the claims would be prohibitively
expensive. The court rejected application of a judge-made exception to the FAA, which
permitted courts to invalidate arbitration agreements that prevented the effective
vindication of a federal statutory right. (Id. at pp. *11–17.) It concluded the exception
applied only ―to prevent ‗prospective waiver of a party‘s right to pursue statutory


                                             14
remedies,‘‖ not to prevent the economic infeasibility of proving the claim and obtaining
the remedy. (Id. at pp. *12–13.)
          Although these cases cast doubt on the continued validity of the Armendariz
requirements for arbitration agreements that apply to claims of violation of unwaivable
statutory rights, Armendariz has not been overruled and is not clearly abrogated by these
decisions; we are still bound by it. Even if Armendariz remains good law, however, the
arbitration agreement before us meets its requirements and therefore is not substantively
unconscionable.
          Armendariz determined that an employee who is required to arbitrate FEHA
claims is entitled to sufficient discovery to vindicate those claims. (Armendariz, supra,
24 Cal.4th at p. 106.) ―[W]hen parties agree to arbitrate statutory claims, they also
implicitly agree, absent express language to the contrary, to such procedures as are
necessary to vindicate that claim.‖ (Ibid.) The court held that ―the employer, by agreeing
to arbitrate the FEHA claim, has already impliedly consented to such discovery.
Therefore, lack of discovery is not grounds for holding a FEHA claim inarbitrable.‖
(Ibid.)
          The parties agreed to arbitrate according to the procedural rules of the AAA; the
FTP provided that ―[a]ll discovery shall be conducted in accordance with the
Employment Dispute Resolution Rules of the AAA.‖ Additionally, ―[t]he arbitrator shall
have the authority to order discovery sufficient to enable a full and fair exploration of the
issues in dispute, consistent with the expedited nature of arbitration.‖ Plaintiff has not
demonstrated that the AAA discovery rules are inadequate to vindicate her FEHA rights.
We note that at least one court has found the discovery provisions of those rules to be
fair. (Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105,
1130, fn. 21.) The provision of the FTP expressly granting the arbitrator authority to
order discovery also permits the arbitrator to adjust the scope of discovery to whatever is

                                               15
necessary, in the particular case, ―to enable a full and fair exploration of the issues in
dispute.‖ The provisions for discovery do not make the arbitration agreement harsh or
one-sided.
       The trial court also found substantive unconscionability because ―findings of fact
and conclusions of law must be included in the written decision.‖ Armendariz concluded
that ―an arbitrator in a FEHA case must issue a written arbitration decision that will
reveal, however briefly, the essential findings and conclusions on which the award is
based.‖ (Armendariz, supra, 24 Cal.4th at p. 107.) The arbitration agreement considered
by the Armendariz court did not contain a requirement of written findings and
conclusions. The court concluded, however, that ―nothing in the present arbitration
agreement precludes such written findings, and to the extent it applies to FEHA claims
the agreement must be interpreted to provide for such findings.‖ (Ibid.) The FTP
requires that the arbitrator render a written decision. Nothing precludes the arbitrator
from setting out findings and conclusions in the written decision. In fact, the requirement
of a written decision implies that it include some explanation of the reasons for the
decision. Pursuant to Armendariz, the arbitration agreement and FTP should be
interpreted to require the essential findings and conclusions in the written decision.
Consequently, the arbitration agreement is not unconscionable for failing to include a
requirement that the arbitrator‘s written decision include the essential findings and
conclusions on which the decision is based.
       The trial court also based its finding of substantive unconscionability on ambiguity
in the provisions regarding recovery of attorney‘s fees and costs. The FTP provides that
plaintiff and defendant ―will be responsible for the fees and costs of [their] own
respective legal counsel, if any.‖ Plaintiff contends this provision denies her the right
under the FEHA to recover attorney fees from defendant if she prevails in her FEHA
claims. The FTP also provides, however, that ―[t]he arbitrator has the authority to award

                                              16
any remedy that would have been available to you had you litigated the dispute in court
under applicable law.‖ Further, ―no remedies that otherwise would be available to you or
the company in a court of law will be forfeited by virtue of the agreement to use and be
bound by the FTP.‖ Thus, although each party is initially responsible for that party‘s
attorney fees and costs, the arbitrator may include an award of attorney‘s fees and costs to
one party where such an award is authorized or required by applicable law; neither party
forfeits any statutory right to recover attorney fees by agreeing to arbitration. The
provisions relating to attorney‘s fees are neither ambiguous nor one-sided. They do not
support a finding of substantive unconscionability.
       Finally, the trial court found the absence of any provision for limited judicial
review contributed to the substantive unconscionability of the arbitration agreement.
Armendariz did not require that an arbitration agreement applicable to statutory claims
include a provision for limited judicial review. Indeed, ―the fact that an arbitration
agreement does not explicitly provide for judicial review is no basis for invalidating it.
[Citation.]‖ (Little, supra, 29 Cal.4th at p. 1075, fn. 1.) Sections 10 and 11 of the FAA
(9 U.S.C. §§ 10, 11) and sections 1286.2 and 1286.6 of the California Arbitration Act
(Code Civ. Proc., §§1286.2, 1286.6) provide for limited judicial review of arbitration
awards governed by their respective provisions. Nothing in the arbitration agreement
denies either party the benefit of that review. Consequently, there is nothing
unconscionable in the lack of a provision for review in the arbitration agreement.
       We conclude that, although there were elements of procedural unconscionability
in the presentation of the arbitration agreement, the terms of the agreement were not
substantively unconscionable. Because both procedural and substantive
unconscionability must be found in order to invalidate an arbitration agreement, the trial
court erred in refusing to enforce the arbitration agreement and denying defendant‘s


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petition to compel plaintiff to arbitrate her employment-related claims in accordance with
the arbitration agreement.
                                      DISPOSITION
       The judgment is reversed and remanded with instructions to the trial court to
vacate its order denying defendant‘s petition to compel arbitration and to enter a new
order granting that petition and staying the litigation while the arbitration proceeding is
pending. Defendant is entitled to its costs on appeal.



                                                                  _____________________
                                                                              HILL, P. J.
WE CONCUR:


_____________________
WISEMAN, J.


 _____________________
LEVY, J.




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