Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. BC242735, George H. Wu, Judge.
Nick A. Alden for Plaintiff and Appellant.
Kaye Scholer LLP, Aton Arbisser, Kate S. Gold and Matthew G. Clark for Fremantle Media North America, Inc. and Syd Vinnedge, Defendants and Respondents.
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro LLP, Patricia Glaser and Sean Riley for Bob Barker, Defendant and Respondent.
Sidley Austin LLP, Jeffrey A. Berman, James M. Harris, Kiran A. Seldon for Marvin Goodson, as co-executor of the Estate of Mark Goodson, the Estate of Mark Goodson; TPIR, LLC and Alan Sandler, Defendants and Respondents.
Linda Riegert, a former production assistant for the nationally televised game show “The Price Is Right,” appeals from the judgment confirming an arbitration award rejecting her employment termination claims against Bob Barker, Marvin Goodson, as co-executor of the Estate of Mark Goodson, the Estate of Mark Goodson, TPIR, LLC, Fremantle Media North America, Inc. (Fremantle), Syd Vinnedge and Alan Sandler, primarily contending the arbitration agreement she signed is unconscionable and should not have been enforced.
PERLUSS, P. J.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Parties
Riegert was a production assistant on “The Price Is Right” from 1996 until October 19, 2000. Barker was the host and later also the executive producer of “The Price Is Right,” which has been broadcast since 1972.
In 1992, following the death of Mark Goodson, who with his partner Bill Todman had developed and produced “The Price Is Right,” ownership of the program passed to the Estate of Mark Goodson (Estate). On October 6, 1995 All American Communications, Inc. (All American) purchased “The Price Is Right.” In connection with the sale, the Estate formed TPIR to produce the program pursuant to a five-year licensing and production agreement, that is, until October 2000. Sandler was an executive with TPIR.
In 1998 Pearson Television, Inc. (the predecessor of Fremantle) acquired All American. Vinnedge, a Pearson executive, thereafter began planning the transition of production from TPIR to Pearson itself through a newly formed subsidiary named Price Productions.
2. The Separation Agreement, Release and Agreement To Arbitrate
In mid-2000 the staff of “The Price Is Right” was informed Pearson would be taking over production of the program in October 2000. On October 9, 2000 TPIR offered all program staff, including Riegert, a two-page separation agreement and general release. A memorandum accompanying the separation agreement explained each staff member would receive a final paycheck on October 19, 2000, when TPIR would cease producing the program, but receipt of a severance payment was conditioned on execution of the separation agreement and general release by close of business on October 18, 2000.
The agreement executed by Riegert (identified as “Employee”) expressly states Riegert will be “laid off” by TPIR on or about October 19, 2000, “at which time Employee will receive Employee’s final paycheck.” In addition, TPIR agreed to give Riegert severance pay in the sum of $7,670 on October 20, 2000 if she signed the agreement.
Paragraph 1 of the agreement states TPIR’s intention “to settle and resolve any differences and/or disputes that have or may have arisen between Employer [defined as TIPR, LLC] and Employee.” Paragraph 4 of the agreement contains a broad release by Riegert of all claims, including claims arising out of, or in any way connected with, Riegert’s employment or termination through “the date this Agreement was excuted.” The parties released include not only TPIR but also the Estate and Pearson and their employees and agents.
The Release provides, “Employee hereby releases Employer, TPIR, LLC, the Estate of Mark Goodson, Mark Goodson Productions and Price Productions and each and every of the foregoing’s partners, officers, directors, shareholders, agents, employees, heirs, parents, attorneys, trustees, administrators, executors, representatives, legal predecessors, successors (including Pearson Television, Inc.), assigns, companies, affiliates, related organizations and related employee benefit plans (hereinafter collectively referred to as ‘Releasees’) from any and all claims, rights, causes of action, and potential suits, known or unknown, which Employee may have or claim to have had, arising at any time in the past to and including the date this Agreement was executed, against the Releasees, including those arising out of or in any way connected with Employee’s employment with, or termination from Employer. Employee represents that the releases provided for in this Agreement were given knowingly and voluntarily.”
Paragraph 9, the final paragraph of the agreement, contains three sentences covering three separate topics: a severance provision, an integration clause and an agreement to arbitrate, which states, “All disputes arising out of or relating to this Agreement will be submitted to final and binding arbitration pursuant to the Employment Dispute rules of the American Arbitration Association.” Riegert’s signature and the date “10-10, 2000” appear on the line immediately below this paragraph.
Paragraph 9 in its entirety reads, “If any part, term or provision of this Agreement is found to be illegal or invalid, such illegality or invalidity will not affect the validity of the remainder of the Agreement. This agreement constitutes the entire agreement and understanding concerning the matters addressed herein and replaces all prior discussions and agreements, and may only be modified by a writing signed by all of the parties. All disputes arising out of or relating to this Agreement will be submitted to final and binding arbitration pursuant to the Employment Dispute rules of the American Arbitration Association.”
3. Riegert’s Lawsuit
On January 3, 2001 Riegert filed a complaint against Barker, the Estate, TPIR, Pearson and others asserting causes of action for wrongful termination under the Fair Employment and Housing Act (FEHA), Government Code section 12940 et seq., retaliation, age and sex discrimination and other employment related claims. The complaint alleged Riegert had worked on “The Price Is Right” as a production assistant under an implied agreement that her employment would continue so long as her performance was satisfactory and she would not be demoted or discharged without good cause and fair warning. Riegert asserted she was at all relevant times “willing and able to perform the duties and functions of her position.” She “consistently received either good or excellent performance evaluations and merit raises [and] was assured on numerous occasions . . . she would not be terminated arbitrarily and relied on these assurances.”
Riegert alleged she was terminated in breach of this implied employment agreement and further alleged she and four other female employees were unlawfully terminated on October 19, 2000 because of their sex and, as to Riegert, based on her age: Riegert averred at the time she was 53 years old and “was replaced by a younger, less senior employee on [the] Show.”
Riegert also asserted her termination was in retaliation for testifying truthfully in a lawsuit involving Barker and Holly Hallstrom, a former model on “The Price Is Right.” In support of her claim of retaliatory termination, Riegert alleged Dian Parkinson, a model who had left the “The Price Is Right” in 1993, sued Barker for sexual harassment in 1994. Barker purportedly asked Hallstrom to testify falsely Parkinson had lied in her lawsuit against him. Hallstrom refused, and Barker later admitted he had consensual sex with Parkinson. After Hallstom refused to lie on behalf of Barker, Barker began harassing Hallstrom about her weight. Riegert alleged she had overheard two conversations between Barker and Hallstrom. In the first Barker instructed Hallstrom to lose weight. Hallstrom stated the only way to do so immediately was to cease taking her prescription medication for a hormonal imbalance. Barker then told Hallstrom “do whatever it takes to lose the weight.” During the second conversation Riegert overheard, about a week later, Barker told Hallstrom “she had had weight problems throughout the years” and “she would have problems in the future” and instructed her to take early retirement. Hallstrom told Barker “she had gone off the medication and lost most of the excess weight.” She requested he delay any early retirement decision until after “the summer hiatus” and offered to take early retirement if she had not lost the remaining weight. Barker responded, “‘That’s not an option,’” because “‘retirement is what is offered.’”
Riegert further alleged Hallstrom was forced to leave “The Price Is Right” on July 27, 1995. Hallstrom then stated on national television “Barker had told her to ‘do whatever it takes to lose weight’” and “he refused to give her the summer hiatus to lose the weight.” In response to these comments Barker sued Hallstrom for defamation. Riegert was deposed in the defamation lawsuit in August 18, 2000. Riegert alleged that counsel for Barker and the other defendants in the defamation action “attempted to influence her testimony through lies, threats and intimidation.” Nonetheless, Riegert testified truthfully about the two conversations she had overheard, which “contradicted Barker’s testimony under oath.” Approximately one month after Riegert’s August 2000 testimony Barker dismissed his lawsuit against Hallstrom, “which made Barker furious” at Riegert and several other employees who had testified truthfully against him. Riegert alleged her termination upon transfer of production of “The Price Is Right” from TPIR to Pearson in October 2000 was in retaliation for testifying truthfully at her deposition.
With respect to the separation agreement, Riegert alleged “[o]n or about October 10, 2000, the employees of the Show, including [Riegert] were asked to sign a release in order to receive a bonus from TPIR, because, as was explained to [Riegert], TPIR ceased producing the Show. No one explained to [Riegert] the ramifications of the release.” Riegert further alleged, “Barker, Pearson and TPIR, and each of the other Defendants, entered into a conspiracy to make all the employees of TPIR, including [Riegert], sign a release as a condition of receiving their bonus. In furtherance of that conspiracy, Defendants represented to all the employees, including [Riegert], . . . no one would be fired, after the transfer of the show to Pearson, as an inducement to signing the release.” Once Riegert signed the release, however, Barker and Pearson fired her. The complaint alleged “the release is invalid, unconscionable, illegal, one[-]sided and obtained by fraud and for no consideration.”
4. Arbitration of Riegert’s Claims
On February 13, 2001 the defendants jointly filed a motion to stay proceedings and a petition to compel arbitration based on the arbitration clause in the separation agreement and general release signed by Riegert and TPIR. In her opposition to the petition to compel arbitration, Riegert claimed “the contract is illegal, unconscionable and was fraudulently obtained” and she “was never asked to, and she never intended to release anyone or agree to arbitrate any dispute.”
With her opposition memorandum Riegert submitted her own declaration and declarations from two other former TPIR employees (Sherrell Paris and Sharon Friem). Describing her execution of the separation agreement, Riegert stated, “On September 19, 2000, one month after [her] deposition, [she] attended a meeting with . . . Barker, representatives of TPIR and . . .Vinnedge . . ., and all the employees of TPIR, LLC.” At the meeting Vinnedge stated Pearson would be producing “The Price Is Right” starting October 2000 and “emphasized . . . no one should worry about his or her job and Pearson does not inten[d] to fire anyone or make any change [to] anyone’s job. Everything remains the same and . . . Barker will remain in charge as before.” Although “The Price Is Right” had been “produced by different entities at different time[s]” during her 10-year employment, Riegert was unaffected and “always continued doing [her] job” as before. When informed Pearson would be producing “The Price Is Right,” Riegert “thought of it just another change of entity, as before.” At the end of the day on October 9, 2000 Riegert received a copy of the separation agreement, which she kept overnight, and “was asked to sign it immediately and return it so [she could] be paid [her] final salary and [her] severance pay from TPIR.” Sandler, chief financial officer for TPIR, told Riegert specifically “unless [she] return[ed] immediately the [agreement] signed, [she] would not be paid.” Riegert heard Theresa Savage, who worked for Sandler, “telling everyone who came to the office . . ., unless they sign the [agreement] immediately and return it, they will not be paid.” Riegert also declared she had signed and returned the separation agreement within hours of receiving it and “never read the [document] before signing it.”
Riegert specifically stated “[n]o one discussed with [her] the arbitration clause. Nor did [she] ever agree[] to arbitrate any dispute. In fact, [she] did not know [the agreement] included an arbitration clause. Nor did [she] understand the difference between [a j]ury trial and arbitration until after [she] was fired and consulted an attorney.”
In her declaration Paris stated she had been employed as the “Executive Personal Assistant to the Executive Producer for 23 years,” including 12 years on behalf of Barker. After Hallstrom filed her lawsuit, Paris refused to corroborate Barker’s testimony. She was “fired a few weeks later.” Paris described the circumstances surrounding her execution of the separation agreement in terms substantially similar to those contained in Riegert’s declaration. Friem stated in her amended declaration she had been employed for 20 years as an editorial consultant for “The Price Is Right.” Her description of signing the separation agreement, like Paris’s, mirrored Riegert’s in most material respects.
In their joint reply in support of the petition to compel arbitration, defendants provided declarations from Sandler and Savage, which disputed Riegert’s description of events. Sandler explained that, “[e]ffective October 19, 2000, TPIR’s license to produce new episodes of [“The Price Is Right”] expired, and essentially all employees of TPIR were laid off. In connection with the lay off . . ., TPIR offered a severance package to each TPIR employee, other than talent, in exchange for a release of claims.” Sandler attached to his declaration a copy of the “Office Communication from Jeremy Shamos of TPIR” to Riegert dated October 9, 2000, which Sandler testified he had personally delivered along with “the unexecuted Release in an envelope to Riegert” on that same date. Sandler told Riegert inside the envelope was a letter from Shamos and “a release agreement she could execute if she wanted to. [He] also told her . . . she would receive her final paycheck from TPIR on October 19, 2000, and if she signed the Release and returned it to [him] by October 18, 2000, she would also receive the severance pay stated in the Release.” He told Riegert “if she had any questions, she could call or see [him] at any time.” Sandler met with each of the other employees of TPIR, as well, and delivered the same office communication and separation agreement and general release to them and made the same statements to each as he had made to Riegert.
Sandler denied making the statements attributed to him by Riegert, Paris and Friem. He pointed to the office communication as informing the recipient on October 19, 2000 he or she would receive a final paycheck from TPIR; the agreement and release did not have to be executed and returned to Sandler until October 18, 2000; and, if it were not returned by that date, there would be no severance pay.
In her declaration Savage stated until October 19, 2000 she had been employed by TPIR as an assistant to Sandler, its chief financial officer. On October 9, 2000 she met with Sandler in his office and received an envelope containing Shamos’s office communication addressed to her and the separation agreement and general release. Sandler told her the envelope contained a memorandum from Shamos and a release she could execute if she wanted; she would receive her final paycheck from TPIR on October 19, 2000; and, if she signed and returned the Release to him by October 18, 2000, she also would receive the severance pay stated in the agreement. He advised her to call or see him any time if she had any questions. Savage denied making the statements Riegert attributed to her in Riegert’s declaration.
On May 1, 2001, following a hearing, the trial court granted the motion to stay proceedings and took the petition to compel arbitration under submission. On July 20, 2001 the court granted the petition to compel arbitration. In its decision and order granting petition to compel arbitration the court rejected Riegert’s challenges to the validity of the arbitration agreement, including her claims the separation agreement and the arbitration provision itself had been induced by fraud and were unconscionable. As to the scope of the arbitration provision, the court ruled it “covers any claims or causes of action arising at any time in the past and up to the effective date of the [separation agreement].” Thus, the wrongful termination and related claims asserted in Riegert’s original complaint were arbitrable. However, the court also found, “to the extent [Riegert] is claiming an improper or discriminatory failure to re-hire her by Pearson, those contentions would not fall within or relate to the [separation agreement] and hence would be not referenced to arbitration. The [separation agreement], by its own terms, covers only the employment relationship between [Riegert] and TPIR. Should Pearson have had some obligation to [her] or should it have acted with discriminatory intent or in violation of public policy in refusing to re-hire her, then she would have a claim which is outside of the [separation agreement] and not related to it.” The trial court directed TPIR to bear the costs of arbitration.
In its decision the trial court noted, pursuant to the Supreme Court’s decision in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113, “[a] mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obligates the employer to pay all types of costs that are unique to arbitration.”
After arbitration was ordered, Riegert sought to have her claims presented to a three-arbitrator panel, rather than a single arbitrator. TPIR and the other defendants, in essence, agreed to this proposal but only if Riegert would pay the costs of the two additional arbitrators. On October 15, 2001 Riegert filed a motion to compel defendants to pay all fees and costs associated with a three-arbitrator proceeding. Riegert also sought to vacate the order for arbitration and to lift the stay to enable her to proceed to trial on the ground the operative date of the separation agreement and release was the date it was actually executed by Riegert (October 10, 2000), not the effective date of the agreement (October 19, 2000), as found by the trial court, and thus Riegert’s claims, which arose on October 19, 2000, were outside the scope of the agreement. On November 15, 2001, following a hearing, Riegert’s motion was denied.
5. Subsequent Proceedings in the Trial Court
On January 4, 2002 Riegert moved for leave to file a first amended complaint, which asserted for the first time that Pearson, based on pressure from TPIR and Barker, had failed to hire (or re-hire) Riegert on October 20, 2000. Three weeks later she withdrew her motion; the trial court granted permission to refile after arbitration proceedings had begun. The court lifted its stay of judicial proceedings “only as to the pleading stage” of the action and ordered the matter to arbitration within 30 days.
On April 22, 2002 Riegert filed a new motion for leave to file a first amended complaint. In addition to their oppositions to the motion, defendants filed two joint statements regarding the arbitrability of the claims asserted in Riegert’s proposed amended complaint. On December 5, 2002 the trial court granted Riegert’s motion “on the basis . . . it will clarify the disti[n]ction between those claims . . . subject to arbitration pursuant to its 7/20/01 order, and those that are not.” The court further made “an order regarding which causes of action are subject to the order to arbitration as fully reflected in the notes of the court reporter” and ordered the parties to meet and confer as to how the case was to proceed.
At the December 5, 2002 hearing the court once again emphasized the distinction between Riegert’s termination-related claims and those based on a purported failure by Pearson to re-hire her for impermissible reasons. The court stated causes of action one through six would “remain in arbitration,” as would the wrongful-termination portion of the seventh cause of action, but “that portion which discusses or deals with the supposed failure to re-hire would remain here in this court to be litigated.” Similarly, the eighth and ninth causes of action alleging age and sex discrimination “based on post-October 19/20 scenario” would remain with the court on the issue of failure to re-hire. The court ordered into arbitration the tenth (fraud), eleventh (false promise) and thirteenth (declaratory relief) causes of action, but the twelfth (intentional interference with economic advantage) would remain with the court. As for the fourteenth (intentional infliction of emotional distress) and the fifteenth (negligent infliction of emotional distress) causes of action, the court explained the portion of those claims “based on the pre-October 18, 2000 situation would go to arbitration” while the portion that “occurred after the release, in other words, the nonhiring,” would be left with the court. On April 4, 2003, in response to a defense request for clarification, the court specified that the thirteenth (declaratory relief) cause of action was triable only as to Pearson.
On April 16, 2003 Riegert filed a second amended complaint alleging on October 20, 2000, after Fremantle (named a defendant as the successor to Pearson), took over production of “The Price Is Right,” defendants (including all those named in Riegert’s prior complaints) retaliated and discriminated against Riegert in violation of FEHA and public policy “by terminating [her] employment, or refusing to hire [her], because [Riegert] testified truthfully in the Hallstrom Action.” The parties stipulated the first cause of action was “exclusively failure to hire or re-hire and not wrongful termination.” The second cause of action alleged on or about October 20, 2000, after Fremantle/Pearson took over, defendants discriminated against Riegert because of her age by terminating her and transferring her position to a “younger male, and less senior employee.” The third cause of action for sex discrimination was based on this same factual allegation.
The fourth and fifth causes of action were based on the allegedly false and fraudulent representations or promises by Fremantle/Pearson, Vinnedge and Barker to Riegert she would remain on “The Price Is Right” after Pearson/Fremantle took over production of the show on October 20, 2000. “The true facts were: at the time Barker and Vinnedge made the representations, a decision had already been made not [to] hire [Riegert] on October 20, 2000.” In support of the sixth cause of action it was alleged Barker, TPIR, and Mark Goodson Productions (MGP) interfered with and pressured “Fremantle in order to cause [Riegert] to lose her job on October 20, 1995, after Fremantle took over production of the Show, because [Riegert] testified adversely to Barker, TPIR and MGP in the Hallstrom Action” by testifying truthfully.
The seventh cause of action pleaded the existence of an actual controversy as to whether Riegert was entitled to rescind the separation agreement and general release because it had been obtained by fraud. Riegert further alleged “the [separation agreement and general release] is invalid, unconscionable, illegal, one[-]sided and obtained by fraud and for no consideration” and violated Riegert’s statutory rights under Civil Code section 1668, which prohibits contractual exculpatory clauses for fraudulent or intentional acts or negligent violations of statutory obligations. The eighth and ninth causes of action for intentional and negligent infliction of emotional distress arose from defendants’ alleged wrongful conduct.
On August 1, 2003 the trial court ruled the fourth and fifth causes of action were arbitrable and allowed Riegert “to dismiss these causes of action without prejudice, each side preserving its right to appeal.” On September 16, 2003 the trial court overruled defendants’ demurrers to the first, second, third and sixth causes of action, but sustained without leave to amend the demurrers to the seventh, eighth and ninth causes of action.
After answers were filed, defendants moved for summary judgment, arguing the decision not to hire Riegert following transfer of production from TPIR to Pearson in October 2000 had in fact been made in July 2000, prior to her testimony in the Hallstrom litigation. Riegert did not dispute the evidence presented in support of the motion that the decision not to re-hire her had been made in July 2000. Defendants also introduced Riegert’s deposition testimony admitting Pearson had informed her on October 19, 2000, not October 20, 2000, that her position had been eliminated and Pearson was not “pick[ing] her up.”
Following a hearing, and based on the largely undisputed evidence submitted in connection with the summary judgment motion establishing that all of the allegedly wrongful conduct relating to Riegert’s employment had occurred on or before October 19, 2000, the trial court on June 14, 2004 ruled Riegert’s remaining causes of action against TPIR were subject to final and binding arbitration pursuant to its July 20, 2001 decision and order granting the petition to compel arbitration. Similarly, on July 29, 2004 the court ordered the remaining claims against Fremantle/Pearson and Barker to arbitration, once again confirming its prior order that Fremantle/Pearson and Barker, together with TPIR, were responsible for payment of the fees of the arbitrator.
6. The Arbitration Proceedings
Riegert filed her arbitration complaint on August 4, 2004 asserting nine causes of action and naming TPIR, Fremantle, Barker, the Estate, Goodson as co-executor of the Estate, Vinnedge and Sandler as defendants. TPIR’s earlier filed demand, which initiated the arbitration, was characterized as a counterclaim for purposes of the arbitration proceedings.
Motions for summary judgment/adjudication were filed by both sides. Riegert’s was denied; the motion of TPIR, Fremantle, Barker, the Estate, Goodson as co-executor of the Estate, Vinnedge and Sandler was granted in part. Following the presentation of evidence, which extended over two weeks in March 2006, on April 27, 2006 the arbitrator (Hon. Richard P. Byrne, ret.) made his final award, rejecting all of Riegert’s claims. The arbitrator expressly found Riegert had not been terminated in retaliation for protected conduct: “Riegert was not hired [by Pearson] as part of [a] reorganization plan and the plan was not a pretext or cover-up for illegal retaliation.” The arbitrator also concluded Riegert had failed to prove she had been pressured by Barker or his counsel to lie at her deposition in the Hallstrom litigation and found “Barker’s contribution to Pearson’s decision to not hire Riegert was made in good faith for the benefit of the Show and was not a pretext or cover-up for illegal retaliation on his part.” In addition, the arbitrator found the separation agreement had not been obtained by fraud, Riegert had not been pressured into signing the agreement and Riegert was not entitled to its rescission.
Although concluding TPIR, Fremantle, Barker and the other defendants were the prevailing parties, the arbitrator declined to award them attorney fees and held TPIR was not entitled to damages, including attorney fees, on its counterclaim. He ordered “[t]he administrative fees and expenses of the [American Arbitration Association], totaling $4,022.84 and the Arbitrator’s compensation and expenses, totaling $83,880.00 [to] be borne as incurred.”
7. Post-arbitration Proceedings
On May 9, 2006 TPIR, Fremantle, Barker, the Estate, Goodson as co-executor of the Estate, Vinnedge and Sandler filed a joint petition to confirm the arbitration award. In opposition Riegert argued the arbitration provision in the separation agreement was unenforceable, asserting it was unconscionable and violative of her due process and statutory rights. Riegert also argued the arbitration clause was procured by fraud. The trial court granted the petition to confirm the arbitration award on June 7, 2006 and signed and entered the judgment the same day. Riegert filed a notice of appeal on August 3, 2006 seeking review of the “[j]udgment affirming arbitration award.”
Six weeks after entry of judgment, Riegert filed an ex parte application to vacate the arbitration award, asserting the arbitrator had improperly accepted parking validations and lunch during the arbitration from defendants. Riegert also sought to compel the arbitrator or defendants to file the entire arbitration record with the superior court. The trial court denied the ex parte application by minute order three days after it was filed. Riegert did not file a separate notice of appeal from this postjudgment order.
CONTENTIONS
Riegert contends the judgment confirming the arbitration award should be reversed because the arbitration clause in the separation agreement and general release is unconscionable and, therefore, unenforceable; the purpose of the separation agreement was misrepresented at the time she signed it; and the significance of the document, including the arbitration clause and the related waiver of her right to a jury trial, was not adequately explained to her. In addition, Riegert contends the arbitration provision covers only claims arising on or before October 10, 2000, the date she executed the agreement, not through October 19, 2000, and asserts defendants waived their right to compel arbitration by litigating her claims in the superior court.
Riegert also purports to appeal from the postjudgment order denying her application to vacate the arbitration award and judgment. However, as discussed, her notice of appeal states she is appealing only from the “[j]udgment affirming [sic] arbitration award,” not any postjudgment orders. Absent a timely notice of appeal, the issues raised by Riegert relating to the postjudgment order -- even if otherwise appealable, a question we do not decide -- are not properly before us. (See In re Brandon M. (1997) 54 Cal.App.4th 1387, 1400-1401 [dismissing purported appeal from order not included in notice of appeal but raised in brief]; Fish v. Guevara (1993) 12 Cal.App.4th 142, 148.)
DISCUSSION
1. The Trial Court Properly Compelled Arbitration of Riegert’s Claims
a. Standard of review
The validity of the arbitration agreement, when properly raised during the arbitration proceedings, is subject to review on appeal. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30.) “The determination of the validity of an arbitration clause, which may be made only ‘upon such grounds as exist for the revocation of any contract’ [citation], ‘is solely a judicial function unless it turns upon the credibility of extrinsic evidence; accordingly, an appellate court is not bound by a trial court’s construction of a contract based solely upon the terms of the instrument without the aid of evidence.’” (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1527, fn omitted.) When extrinsic evidence is not presented, a determination of the enforceability of an arbitration clause, like the interpretation of any contract provision, is subject to this court’s de novo review. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 684; Stirlen,at p. 1527.)
Similarly, unconscionability is a question of law for the court. (Civ. Code, § 1670.5; Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466, 480; Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 89; Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1055.) However, when the trial court’s determination of unconscionability is based on its resolution of evidentiary conflicts or on factual inferences drawn from the evidence, this court considers the evidence in the light most favorable to the trial court’s determination and reviews that determination according to whether substantial evidence supports it. (Gutierrez, at p. 89.)
Civil Code section 1670.5 provides, “(a) 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. [¶] (b) When 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.”
b. The law of unconscionability
Unconscionability has both procedural and substantive elements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 99 (Armendariz); Jones v. Wells Fargo Bank (2003) 112 Cal.App.4th 1527, 1539.) Both must appear for a court to invalidate a contract or one of its individual terms (Armendariz, at p. 114; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174 (Mercuro)), but need not be present in the same degree: “[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Armendariz, at p. 114; see Wayne v. Staples, Inc., supra, 135 Cal.App.4th at p. 480.)
Procedural unconscionability focuses on the elements of oppression and surprise. (Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 160.) “‘“Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice . . . . Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.”’” (Crippen v. Central Valley RV Outlet (2004) 124 Cal.App.4th 1159, 1165; Mercuro, supra, 96 Cal.App.4th at p. 174 [“procedural unconscionability focuses on the oppressiveness of the stronger party’s conduct”].)
Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create “‘“overly harsh”’” or “‘one-sided’ results” (Armendariz, supra, 24 Cal.4th at p. 114), that is, whether contractual provisions reallocate risks in an objectively unreasonable or unexpected manner. (Jones v. Wells Fargo Bank, supra, 112 Cal.App.4th at p. 1539.) To be substantively unconscionable, a contractual provision must shock the conscience. (California Grocers Assn. v. Bank of America (1994) 22 Cal.App.4th 205, 214; Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1330 [“‘[s]ubstantive unconscionability’ focuses on the terms of the agreement and whether those terms are ‘so one-sided as to “shock the conscience.”’”]; see Wayne v. Staples, Inc., supra, 135 Cal.App.4th at p. 480.) “The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not 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.’” (Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1322-1323.)
c. The separation agreement and general release is not substantively unconscionable
Riegert devotes most of her appellate argument to demonstrating the myriad ways in which the arbitration clause in the separation agreement and general release was procedurally unconscionable: The agreement itself was a printed “form” that was, in effect, a contract of adhesion presented on a take-it-or-leave-it basis. Riegert and the other employees were pressured to sign the agreement. The arbitration clause was neither prominent nor conspicuous; to the contrary, it was buried in the final paragraph of the agreement, combined with other terms unrelated to the subject of arbitration and was not set out in distinctive typeface or otherwise highlighted. There was no effort to explain the clause to Riegert nor was there any attempt to call it to her attention by requiring it be separately initialed. The rules governing the conduct of the arbitration, although referred to in the agreement (the arbitration will be conducted “pursuant to the Employment Dispute rules of the American Arbitration Association”) were not attached or otherwise disclosed to Riegert when she signed the agreement. Justice Johnson’s dissent echoes these concerns.
A number of Riegert’s arguments are inconsistent with the trial court’s factual findings in support of its conclusion the separation agreement and general release “was not significantly adhesive” and was not obtained by duress. Even if we were to agree with Riegert (and our dissenting colleague) on the issue of procedural unconscionability, however, Riegert’s claim the arbitration agreement is unenforceable necessarily fails because she has made no showing of any substantive unconscionability -- an essential component of her claim the arbitration clause is unconscionable. Indeed, even when this deficiency was pointed out in defendants’ brief on appeal, Riegert in her reply brief made no effort to identify any element of substantive unconscionability in the arbitration clause. Having failed to raise any valid claim of substantive unconscionability in the trial court or on appeal (even when directly asked by the court at oral argument), Riegert has forfeited that basis for challenging the arbitration agreement. (See, e.g., Kolani v. Gluska (1998) 64 Cal.App.4th 402, 412 [failure to raise issue or argument in the trial court results in forfeiture on appeal]; Sunset Drive Corp. v. City of Redlands (1999) 73 Cal.App.4th 215, 226 [“[a]bsent a sufficient showing of justification for the failure to raise an issue in a timely fashion, we need not consider any issue which, although raised at oral argument, was not adequately raised in the briefs”]; see generally Ernst v. Searle (1933) 218 Cal. 233, 240-241 [“party is not permitted to change his [or her] position and adopt a new and different theory on appeal. To permit him [or her] to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant”]; In re Aaron B. (1996) 46 Cal.App.4th 843, 846.)
The trial court also rejected Riegert’s unconscionability arguments predicated on her lack of awareness of the presence of an arbitration clause in the separation agreement. “[W]hile Riegert claims that she did not know that the [separation agreement and general release] included an arbitration provision, given her admission that she didn’t read the document, that ignorance is not surprising and must be placed on her own negligence.” (See Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710 [“one who assents to a contract is bound by its provisions and cannot complain of unfamiliarity with the language of the instrument”].)
Purportedly relying on language from the Supreme Court’s decision in Armendariz, supra, 24 Cal.4th at page 103, Riegert does argue paragraph 7 of the separation agreement, by which she agreed not to accept any award of damages if a claim is brought on her behalf in a judicial or administrative proceeding, impermissibly limits her remedies and thereby invalidates the arbitration agreement. Unlike the provision discussed in Armendariz, however, which purported to preclude the complaining party in an arbitration proceeding from seeking certain relief that would be available in court, paragraph 7 is simply a covenant not to sue, directly or indirectly, other than in accordance with the arbitration clause in the separation agreement. Neither paragraph 7 nor any other provision in the separation agreement attempts to restrict the remedies available to a successful party in arbitration. To the contrary, the applicable American Arbitration Association employment dispute rules authorized the arbitrator to grant any remedy or relief he or she deemed just and equitable “including any remedy or relief that would have been available to the parties had the matter been heard in court.”
Although Riegert herself fails to address this absence of substantive unconscionability, the dissent posits the failure to disclose to Riegert she was waiving her right to a jury trial “where nothing suggests she gained any substantial benefit (other than a possible expedited resolution) from giving up that constitutional right constitutes substantive unconscionability.” In addition, the dissent argues both the shared-cost and discovery provisions in the Employment Dispute Rules of the American Arbitration Association in effect in 2000, incorporated by reference into the arbitration clause, makes the agreement substantively unconscionable. Independently of Riegert’s forfeiture, these arguments fail on their merits.
First, as the Supreme Court recognized more than 30 years ago, “[T]o predicate the legality of a consensual arbitration agreement upon the parties’ express waiver of jury trial would be as artificial as it would be disastrous.” (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 713.) “When parties agree to submit their disputes to arbitration they select a forum that is alternative to, and independent of, the judicial -- a forum in which, as they well know, disputes are not resolved by juries. Hence there are literally thousands of commercial and labor contracts that provide for arbitration but do not contain express waivers of jury trial. Courts have regularly enforced such agreements . . . . Before today no one has so much as imagined that such agreements are consequently invalid; to destroy their viability upon an extreme hypothesis that they fail expressly to negative jury trials would be to frustrate the parties’ interests and destroy the sanctity of their mutual promises.” (Id. at p. 714.) To be sure, the failure to inform a party of the existence of the rights they are relinquishing by agreeing to arbitration and to explain the consequences of a waiver certainly may, in appropriate cases, constitute procedural unconscionability. But if an inadequately explained waiver of that substantive right equates to substantive unconscionability, as the dissent suggests, then in most (if not all) contracts of adhesion the requirement that there be both procedural and substantive unconscionability will be effectively eliminated.
Moreover, the second prong of the dissent’s jury waiver analysis -- that Riegert gained nothing by agreeing to arbitration -- is also flawed. By virtue of the arbitration provision, Riegert obtained the benefit of a faster, more efficient dispute resolution process -- the time to trial is shorter; the time in trial is briefer. Pardee Construction Co. v. Superior Court (2002) 100 Cal.App.4th 1081, 1091, cited by the dissent, in contrast, involved a provision for judicial reference and jury trial waiver in a judicial forum (as well as a waiver of the right to seek punitive damages), not arbitration. The Court of Appeal in that case explained there was no showing a judicial reference or court trial would be heard sooner or would be tried any more quickly than a jury trial. (Ibid.) The analysis in Pardee, therefore, is simply not applicable to this case in particular or to comprehensive, reciprocal arbitration provisions generally. (See Madden v. Kaiser Foundation Hospitals, supra, 17 Cal.3d at p. 711 [“Although plaintiff asserts that the arbitration amendment promotes Kaiser’s interest to the disadvantage of the members reenrolled under the Kaiser plan, she overlooks the benefits of the arbitral forum. The speed and economy of arbitration, in contrast to the expense and delay of jury trial, could prove helpful to all parties; the simplified procedures and relaxed rules of evidence in arbitration may aid an injured plaintiff in presenting his case”].)
The fact Riegert employed a litigation strategy that involved multiple challenges to the enforceability and scope of the arbitration clause (both in the trial court and by successive petitions for extraordinary writ relief in this court) and thereby defeated the prospect for an efficient and prompt resolution of her claims against TPIR and the other defendants in no way vitiates this significant benefit of arbitration agreements.
The dissent’s second proposed point of substantive unconscionability -- the scope of discovery available to Riegert in arbitration -- is curious. In Armendariz, supra, 24 Cal.4th 83 the Supreme Court rejected the employees’ claim that the purportedly inadequate provision for discovery in the arbitration agreement was a proper ground for denying arbitration of their FEHA claims. Although the Court observed “some discovery is often necessary for vindicating a FEHA claim” (id. at p. 106), it held “whether or not the employees in this case are entitled to the full range of discovery provided in Code of Civil Procedure section 1283.05, they are at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s) . . . .” (Ibid., italics added.) Similarly, in this case the American Arbitration Association’s employment dispute rules applicable to Riegert’s arbitration proceeding expressly authorized the arbitrator to order “such discovery, by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.” There appears to be no meaningful difference between the scope of discovery approved in Armendariz and that authorized by the American Arbitration Association employment dispute rules, certainly not the role of the arbitrator in controlling the extent of actual discovery permitted.
Moreover, pursuant to Code of Civil Procedure section 1283.1 the full panoply of discovery provided in Code of Civil Procedure section 1283.05 is “conclusively deemed to be incorporated into” an agreement to arbitrate if the dispute arises “out of . . . any injury to, or death of, a person caused by the wrongful act or neglect of another.” The Armendariz Court strongly suggested, but did not decide, a FEHA discrimination claim is properly considered an “‘injury to . . . a person’” within the meaning of this provision. (See Armendariz, supra, 24 Cal.4th at p. 105.) Nonetheless, the Court expressly noted “one Court of Appeal case has held that a FEHA sexual harassment claim is considered an ‘injury to . . . a person’ within the meaning of Code of Civil Procedure section 1283.1, subdivision (a),” citing Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 1005 (Bihun), disapproved on other grounds in Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 664. (Armendariz, at p. 105.) The Bihun case was a unanimous opinion written by Justice Johnson for this court. Under its reasoning, as the Supreme Court acknowledged in Armendariz, the discovery procedures in Code of Civil Procedure section 1283.05 -- plainly adequate for the vindication of Riegert’s retaliation and discrimination claims -- are fully incorporated into the arbitration provision in the separation agreement, overcoming any claim of substantive unconscionability on this ground.
Code of Civil Procedure section 1283.1, subdivision (a), provides, “All of the provisions of Section 1283.05 shall be conclusively deemed to be incorporated into, made a part of, and shall be applicable to, every agreement to arbitrate any dispute, controversy, or issue arising out of or resulting from any injury to, or death of, a person caused by the wrongful act or neglect of another.”
Justice Johnson, the author of Bihun, supra, 13 Cal.App.4th 975, properly notes in his dissent that the precise issue before this court was not whether a FEHA claim is an injury to a person within the meaning of section 1283.1 but whether a statutory action under FEHA is an action brought to recover damages for personal injury under Civil Code section 3291. Significantly, however, Justice Johnson does not suggest our analysis or holding in Bihun that “a sexual harassment claim under FEHA seeks to vindicate decidedly personal rights” (Bihun, at p. 1005) does not fully support a similar interpretation under section 1283.1, as the Supreme Court concluded it did in Armendariz, supra, 24 Cal.4th at page 105. Indeed, given Justice Johnson’s views concerning arbitration, it would be remarkable if he were to argue that the full panoply of discovery rights guaranteed by section 1283.05 is not automatically incorporated into an agreement to arbitrate a FEHA discrimination or retaliation claim under section 1283.1 As for Justice Johnson’s dismissal of the Supreme Court’s discussion of Bihun and its clear suggestion regarding the incorporation of discovery rights as “dictum unsupported by any analysis” (dis. opn. at p. 13), we adhere to the wisdom of the late, former Justice Otto Kaus, writing when he was the presiding justice of Division Five of this court, “Whether the Supreme Court’s obvious awareness of its statement elevates the dictum to a holding or whether it is a dictum that we must follow, does not make much difference. We follow.” (People v. Trice (1977) 75 Cal.App.3d 984, 986-987.)
With respect to costs, it is true the American Arbitration Association’s employment dispute rules in effect at the relevant time provided for the parties to share equally the various costs of arbitration “unless they agree otherwise or unless the arbitrator directs otherwise in the award.” It is also correct unconscionability is determined as of the time the contract is made. (Civ. Code, § 1670.5, subd. (a); Gutierrez v. Autowest, Inc., supra, 114 Cal.App.4th at p. 91.) However, in Armendariz, supra, 24 Cal.4th at page 113 (in language quoted by the trial court in 2001 when initially ordering arbitration of most of Riegert’s claims), the Supreme Court held “a mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obliges the employer to pay all types of costs that are unique to arbitration. Accordingly, we interpret the arbitration agreement in the present case as providing, consistent with the above, that the employer must bear the arbitration forum costs.” Here, the trial court found under Armendariz -- decided prior to the time TPIR presented Riegert with the separation agreement -- TPIR and the other employer-parties had impliedly agreed to bear the arbitration costs at the time of the agreement, not after the fact, and in effect interpreted the agreement to include that provision. Thus, while a subsequent agreement to pay costs, or even a court order to the same effect, does not vitiate substantive unconscionability, here the ruling is that the arbitration provision itself, from inception, contained this implied agreement regarding costs. As a result, again in the words of Armendariz, “[t]he absence of specific provisions on arbitration costs would therefore not be grounds for denying the enforcement of an arbitration agreement.” (Armendariz, at p. 113.)
This implied agreement found by the trial court is in no way inconsistent with the American Arbitration Association rules, which expressly provide the parties may structure their own agreement as to arbitration costs different from the default equal-sharing provision.
Even if, notwithstanding the analysis in the preceding paragraph, we were to determine the American Arbitration Association employment dispute rules provisions for costs incorporated into the separation agreement were substantively unconscionable and thus unenforceable, that conclusion would not mean the entire arbitration agreement is void and the trial court erred in ordering Riegert’s claims to arbitration. Civil Code section 1670.5, subdivision (a), provides, “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.” “Comment 2 of the Legislative Committee comment on section 1670.5, incorporating the comments from the Uniform Commercial Code, states: ‘Under this section the court, in its discretion, may refuse to enforce the contract as a whole if it is permeated by the unconscionability, or it may strike any single clause or group of clauses which are so tainted or which are contrary to the essential purpose of the agreement, or it may simply limit unconscionable clauses so as to avoid unconscionable results.’” (Armendariz, supra, 24 Cal.4th at p. 122, italics added.) In determining whether to sever or restrict illegal terms rather than voiding the entire contract, “[t]he overarching inquiry is whether ‘“the interests of justice . . . would be furthered’” by severance.” (Id. at p. 124.) Significantly, the strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement: Although “the statute appears to give a trial court discretion as to whether to sever or restrict the unconscionable provision or whether to refuse to enforce the entire agreement[,] . . . it also appears to contemplate the latter course only when an agreement is ‘permeated’ by unconscionability.” (Id. at p. 122.)
In Armendariz, supra, 24 Cal.4th at pages 124 to 125, the Count found two factors weighed against severance of the unlawful provisions. “First, the arbitration agreement contains more than one unlawful provision; it has both an unlawful damages provision and an unconscionably unilateral arbitration clause. Such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer’s advantage. . . . [¶] Second, in the case of the agreement’s lack of mutuality, . . . permeation [by an unlawful purpose] is indicated by the fact that there is no single provision a court can strike or restrict in order to remove the unconscionable taint from the agreement. Rather, the court would have to, in effect, reform the contract, not through severance or restriction, but by augmenting it with additional terms. Civil Code section 1670.5 does not authorize such reformation by augmentation, nor does the arbitration statute. Code of Civil Procedure section 1281.2 authorizes the court to refuse arbitration if grounds for revocation exist, not to reform the agreement to make it lawful. Nor do courts have any such power under their inherent limited authority to reform contracts.” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1074-1075.) Neither factor is present here; and the arbitration agreement was properly found valid and enforceable once the provision for arbitration costs -- assuming it was unconscionable in the first place -- was modified to require TPIR and the other employer parties to pay all costs.
d. The claims against Fremantle/Pearson were properly submitted to arbitration
i. The October 19, 2000 cut-off date
In its July 2001 order compelling arbitration the trial court held all causes of action related to Riegert’s loss of her job at TPIR on October 19, 2000 were arbitrable. Pointing to language in paragraph 4 of the separation agreement, the release of claims, which refers to claims or causes of action “arising at any time in the past to and including the date this Agreement was executed,” Riegert, as well as our dissenting colleague, argues the arbitration provision, even if valid, is limited to claims through October 10, 2000, the date on which she signed the separation agreement. (The employer’s signature line has a printed date of October 9, 2000.)
Although Riegert’s argument might have some merit if directed to the release provision itself, the language of the arbitration clause is broader than the release, covering all disputes arising out of or relating to the separation agreement (that is, with a subject matter but no time limitation). Paragraph 1 expressly defines the scope of the separation agreement and thus the arbitration clause, stating Riegert will be laid off on or about October 19, 2000 and the intent of the agreement is to settle and resolve any differences or disputes that have or may have arisen between TPIR and Riegert “[i]n connection therewith” -- that is, in connection with the October 19, 2000 termination. Claims that Riegert was fired in retaliation for her testimony in the Hallstrom litigation or as the victim of sex or age discrimination necessarily arose out of or relate to the subject of the separation agreement. Resolving, as we must, any doubts regarding the arbitrability of a dispute in favor of arbitration (see, e.g., Oakland-Alameda County Coliseum Authority v. CC Partners (2002) 101 Cal.App.4th 635, 644; Coast Plaza Doctors Hospital v. Blue Cross of California, supra, 83 Cal.App.4th at pp. 686), the trial court’s July 2001 determination regarding the scope of the arbitration clause was proper.
Riegert’s argument the release in paragraph 4 (quoted in fn. 1, above) violates Civil Code section 1668 is misplaced both because the release does not purport to exculpate the released parties from liability for future acts (cf. Tunkl v. Regents of University of California (1963) 60 Cal.2d 92, 104) and because any such invalidity of the release provision would not bar enforcement of the arbitration clause.
Paragraph 2 of the separation agreement repeats the statement that Riegert will be laid off effective October 19, 2000.
By referring to the separation agreement and general release signed by Riegert as the “Release,” rather than the “Agreement” as the document itself does, the dissent is able to quote the arbitration clause as providing “‘[a]ll disputes arising out of or relating to this [Release] will be submitted to final and binding arbitration . . . .” The dissent then argues the release (that is, paragraph 4 of the “Agreement”) relates only to events that occurred on or before October 10, 2000. While probably true, that point is irrelevant. The arbitration provision, unlike the release (with a lower case “r”), governs all disputes arising out of or relating “to this Agreement”; and paragraph 1 of the separation agreement unmistakably includes within its scope TPIR’s intended termination of Riegert’s employment. Any claim Riegert may have relating to or arising out of that action by TPIR must be arbitrated.
Riegert’s related argument regarding the limited scope of the arbitration clause -- that her claims against Fremantle/Pearson arose only on October 20, 2000 and therefore were not properly sent to arbitration -- similarly lacks merit. It is undisputed Pearson had made the decision not to hire Riegert in July 2000 and informed her of the decision on October 19, 2000. In fact, in Riegert’s June 22, 2004 “separate statement of undisputed material facts in support of her opposition to [Fremantle/Pearson’s] MSJ,” Riegert posited as undisputed fact that Pearson had actually made the decision regarding her employment in July 2000. In terms of timing, therefore, all of the conduct underlying Riegert’s claims occurred no later than October 19, 2000; and any tortious or unlawful element to that decision falls within the broad scope of the separation agreement’s arbitration provision.
To be sure, as the authorities cited by our dissenting colleague establish, if Riegert’s claims against Fremantle/Pearson were for wrongful termination and had she been terminated on October 20, 2000, that would be the date on which her claims accrued, even if she had been advised of the decision earlier. But it is undisputed Riegert was never employed by Fremantle/Pearson. Therefore, whatever terminology she may have used in her pleadings, her claims against that entity could only be for a wrongful refusal to hire. As discussed, it is also now undisputed the decision not to hire Riegert was made during the summer and communicated to her on October 19, 2000. That the job was scheduled to begin the following day (or the following year) is immaterial: Her claims against Fremantle/Pearson for an allegedly discriminatory or unlawful failure to hire necessarily accrued on October 19, 2000 and were properly found by the trial court to be arbitrable. (See Williams v. City of Belvedere (1999) 72 Cal.App.4th 84, 92 [“refusal to hire” claim under FEHA accrues on date applicant is first notified he or she will not be hired, not on date job is to begin or position is ultimately filled; “[t]he record shows that refusal [to hire] occurred on June 21, 1994, when Belvedere notified Williams, by letter, that he would not be hired. [U]nder the plain wording of [Gov. Code] sections 12940 and 12960 [FEHA], the time limit for filing an administrative claim started to run on that date”]; see also Gates v. Georgia Pac. Corp. (9th Cir. 1974) 492 F.2d 292, 294-295 [“refusal to hire” claim brought under title VII accrues on date employer notifies applicant of decision].)
ii. Fremantle/Pearson’s nonsignatory status
An individual who is not a party to an arbitration agreement generally cannot be compelled to arbitrate; and only signatories to the arbitration agreement can enforce it. (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1284; County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 243 [“[a]ll nonsignatory arbitration cases are grounded in the authority of the signatory to contract for medical services on behalf of the nonsignatory -- to bind the nonsignatory in some manner”]; see Frederick v. First Union Securities, Inc. (2002) 100 Cal.App.4th 694, 697 [“[t]he right to arbitration depends on the existence of an agreement to arbitrate, and hence a party cannot be forced to arbitrate in the absence of an agreement to do so”].) Because Fremantle/Pearson was not a signatory to the separation agreement, at oral argument the court asked whether Riegert’s claims against that entity were properly ordered to arbitration, even though that issue had not been raised by Riegert either in the trial court or in her briefs on appeal.
A nonsignatory may enforce or be bound by an arbitration agreement under applicable principles of agency and contract law. (See, e.g., Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 418 [holding individual defendants in breach of contract action are entitled to benefit of arbitration even though not parties to contract between plaintiff and corporate defendant; “[i]f it is true that all of the significant issues in this suit arise out of the contract or the alleged breach of contract, and if the trial court correctly concluded that the individual defendants are not parties to the contract (presumably because they were not signatories), then it is not clear that these defendants belong in this suit at all” (fn. omitted)]; City of Hope v. Bryan Cave, L.L.P. (2002) 102 Cal.App.4th 1356, 1358-1359; see generally Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2005) ¶ 5:267, p. 5-153.)
Pearson (which subsequently became Fremantle) is expressly named in paragraph 4 as one of the parties covered by the release and thus would appear to be a third party beneficiary of the separation agreement, entitled as such to enforce the arbitration clause -- a point that was asserted in the initial petition to compel arbitration in February 2001. (See Macaulay v. Norlander (1992) 12 Cal.App.4th 1, 4 [introducing broker had standing as a third party beneficiary to enforce arbitration agreement entered into between clearing broker and stock investor]; see also City of Hope v. Bryan Cave, L.L.P., supra, 102 Cal.App.4th at pp. 1370-1371 [arbitration properly denied in absence of proof petitioning party was third-party beneficiary of settlement agreement].) In addition, it appears Riegert asserted at various times that Fremantle/Pearson acted as the agent of TPIR (and vice versa) in the collective decision to terminate Riegert and/or decline to re-hire her in retaliation for her adverse testimony in Barker’s defamation action against Hallstrom -- yet another potential basis for allowing Fremantle/Pearson to enforce the arbitration provision. (See Westra v. Marcus & Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 765 [“nonsignatory to an agreement to arbitrate may be required to arbitrate, and may invoke arbitration against a party, if a preexisting confidential relationship, such as an agency relationship between the nonsignatory and one of the parties to the arbitration agreement, makes it equitable to impose the duty to arbitrate upon the nonsignatory”].)
Because Riegert never contested Fremantle/Pearson’s right to compel arbitration based on its status as a nonsignatory, however, these issues were never litigated in the trial court. Rather, as discussed, Riegert insisted arbitration of her claims against Fremantle/Pearson arose after the effective date of the separation agreement and thus are outside the scope of both the release and the arbitration provision. Any claim that Fremantle/Pearson is not entitled to enforce the arbitration provision has been forfeited and, in any event, based on the record before us lacks merit.
2. Riegert’s Waiver Claim Lacks Merit
Although the term “waiver” is generally defined as the voluntary relinquishment of a known right, the term is also used “as a shorthand statement for the conclusion that a contractual right to arbitration has been lost.” (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 315.)
Riegert argues defendants waived their right to arbitrate those of her claims not sent to arbitration in July 2001 because they continued to litigate those remaining claims in superior court. Riegert’s burden of proof to establish a waiver defense is heavy. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 [“waivers are not to be lightly inferred and the party seeking to establish waiver bears a heavy burden of proof”].) Courts consider a number of factors when assessing a waiver claim: “‘“(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, mislead, or prejudiced’ the opposing party.”’” (Id. at p. 1196.)
Defendants contend Riegert failed to preserve her waiver argument by timely asserting it in the trial court. Riegert concedes she initially raised the argument in her opposition to the petition to confirm the arbitration award, but asserts that was her first opportunity to do so because the June-July 2004 orders sending the remaining claims to arbitration were made sua sponte by the trial court. Although we have considerable doubt regarding Riegert’s position in light of her failure to object to defendants’ proposed order compelling arbitration on the basis of waiver and the lack of any motion for reconsideration on that ground, because we reject Riegert’s waiver claim on the merits, we need not resolve the forfeiture argument.
There is no question defendants actively litigated certain of Riegert’s claims in the trial court. However, from the outset defendants insisted all of Riegert’s claims were within the scope of the arbitration clause in the separation agreement: Their initial submission to the superior court on February 13, 2001 was a motion to compel arbitration of all claims asserted in Riegert’s complaint. Once the trial court indicated certain of Riegert’s claims might not be arbitrable (those arising after October 19, 2000), defendants vigorously defended against those claims while periodically advancing their position these remaining claims should also be arbitrated. Nothing about that course of conduct permits the conclusion defendants unreasonably delayed in seeking arbitration, took actions in the trial court that were inconsistent with their position, ultimately accepted by the court, that all of Riegert’s claims were covered by the arbitration clause or otherwise engaged in procedural game-playing or acted in bad faith with respect to the arbitration issue. (See, e.g., Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1096 [“Cases have found arbitration waiver ‘in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration [citations] to instances in which the petitioning party has unreasonably delayed in undertaking the procedure. [Citations.] The decisions likewise hold that the “bad faith” or “wilful misconduct” of a party may constitute a waiver and thus justify a refusal to compel arbitration’”].)
3. The Determination by the Arbitrator of the Merits of Riegert’s Claims, Including Her Fraudulent Inducement Claim, Is Not Reviewable
Riegert’s disputed description of the circumstances surrounding her execution of the separation agreement and general release forms the basis not only for her argument the arbitration clause is procedurally unconscionable but also for her contention the entire agreement, including the agreement to arbitrate, was procured by fraud and therefore is unenforceable. Unlike the question of unconscionability, which is determined by the court, however, the question of fraud in the inducement of the contract in general must be decided by the arbitrator. (St. Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p. 1199 [“an arbitration clause is separable from other portions of a contract, such that fraud in the inducement relating to the contractual terms does not render an arbitration clause unenforceable, even when such fraud might justify rescission of the contract as a whole”]; accord, Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 419 (Rosenthal).)
In contrast to claims the contract as a whole was obtained through fraud in the inducement, claims a party employed fraud in inducing consent specifically to the arbitration agreement, as well as claims of fraud in the execution of the entire agreement -- that is, a claim the party signing the agreement was deceived as to the nature of his or her act and did not intend to enter into a contract at all -- are not arbitrable. (Rosenthal, supra, 14 Cal.4th at pp. 416, 419.)
Riegert’s reliance on Court of Appeal cases predating Rosenthal that held the court, not an arbitrator, properly decides claims of fraud in the inducement when it was alleged the fraud “permeated the entire agreement including the arbitration clause” (e.g., Bayscene Resident Negotiators v. Bayscene Mobilehome Park (1993) 15 Cal.App.4th 119, 128) is simply misplaced. The so-called permeation doctrine was expressly considered and unequivocally rejected by the Supreme Court in Rosenthal: “[T]he permeation doctrine conflicts with [the United States Supreme Court’s decision in] Prima Paint [v. Flood & Conklin (1967) 388 U.S. 395 [87 S.Ct. 1801, 18 L.Ed.2d 1270]] ‘to the extent it indicates that an agreement to arbitrate may be found invalid simply because the contract as a whole was induced by fraud.’ . . . Seeing, therefore, no legally valid use for the theory, we decline further to recognize it. . . . [C]laims that the contract as a whole was obtained through fraud in the inducement are, in the absence of evidence of the parties’ contrary intent, arbitrable . . . . Included in this rule of arbitrability are claims of a ‘grand scheme’ of fraud, or fraud ‘permeating’ the transaction.” (Rosenthal, supra, 14 Cal.4th at pp. 418-419.)
Riegert’s claims of fraudulent inducement, specifically her allegations she was pressured into signing the separation agreement and promised (falsely) her job was not in jeopardy, were considered and denied by the arbitrator, who did not find Riegert’s testimony persuasive and rejected her version of events preceding execution of the separation agreement. That ruling is not subject to judicial review. (Moncharsh v. Heily & Blase, supra, 3 Cal.4th at p. 11; Luster v. Collins (1993) 15 Cal.App.4th 1338, 1344 [courts “cannot review the merits of the controversy, the validity of the arbitrator’s reasoning, or the sufficiency of the evidence supporting an arbitrator’s award”].)
Indeed, to further California’s long established and well-settled policy favoring arbitration as a speedy and inexpensive means of settling disputes (see Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 322), an arbitrator’s award, even if erroneous on its face, may not be vacated except in extremely limited circumstances specifically identified by statute. (Moncharsh v. Heily & Blase, supra,3 Cal.4th at p. 9; see also Code Civ. Proc., § 1286.2 [identifying six grounds for vacating arbitration award].) Riegert’s opposition to the petition to confirm the arbitration award argued the arbitration agreement itself was not enforceable, but did not attempt to establish any of the statutory grounds for vacating the award as issued. As discussed, Riegert’s claim of unenforceability was properly rejected. Accordingly, the trial court did not err in confirming the award.
DISPOSITION
The judgment is affirmed. Defendants are to recover their costs on appeal.
I concur: WOODS, J.
Dissenting Opinion
Retired Associate Justice of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
I respectfully dissent on three independent and alternative grounds.
First, it is my view the entire judgment must be reversed because the arbitration clause, actually a single arbitration sentence, was unconscionable and thus none of Riegert’s causes of action should have been ordered to be heard by the arbitrator.
Second, assuming the arbitration clause was not unconscionable it failed to encompass any of Riegert’s causes of action because they accrued after the “effective” date of the agreement, i.e., the Release. Thus, once again none of Riegert’s causes of action should have been ordered to arbitration.
Third, assuming the arbitration clause was not unconscionable and embraced causes of action involving respondent Fremantle (sometimes called Pearson) the arbitration clause did not apply to Riegert’s cause of action against Fremantle based on that party’s failure to hire (or rehire) Riegert on October 20, 2000. This is because at the most the subject matter of the agreement Riegert signed only applied to the release and TPIR’s termination of all its employees on October 19, 2007. Thus, it was error to order arbitration of the cause of action for Fremantle’s failure to hire or rehire Riegert on October 20, 2007 and, at a minimum, that claim should have remained with the court.
In sum, the judgment must be reversed and the trial court directed first to vacate the arbitration award in its entirety, or at a minimum as to Fremantle, and then to allow Riegert’s action to proceed in the judicial forum.
I. The Arbitration Clause Should Not Be Enforced Because It Is Unconscionable.
The threshold issue is whether a valid agreement to arbitrate the dispute exists. This issue is initially resolved in the context of a petition to compel arbitration. The legality of the arbitration agreement where raised during the arbitration is subject to review on appeal.
See Villa Milano Homeowners Ass’n v. Il Davorge (2000) 84 Cal.App.4th 819, 824-825; Code of Civil Procedure section 1281.
Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30.
“The determination of the validity of an arbitration clause, which may be made only ‘upon such grounds as exist for the revocation of any contract’ [citation], ‘is solely a judicial function unless it turns upon the credibility of extrinsic evidence; accordingly, an appellate court is not bound by a trial court’s construction of a contract based solely upon the terms of the instrument without the aid of evidence.’ [Citation.]” Where extrinsic evidence is not presented, a determination of the enforceability of an arbitration clause, like the interpretation of any contract provision, is subject to this court’s de novo review.
Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1527, footnote omitted.
Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at page 1527.
Where “[t]here is no factual dispute as to the language of that agreement[,] . . . we are required to determine the legal interpretation to be given that language and that is something we do de novo. We are not bound by the trial court’s construction or interpretation. [Citations.]”
Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 684.
“‘Unconscionability is ultimately a question of law for the court’ [Citation.]” However, . . . where the trial court bases its determination of unconscionability on its resolution of evidentiary conflicts or on factual inferences drawn from the evidence, this court considers the evidence in the light most favorable to the trial court’s determination and reviews that determination according to whether substantial evidence supports it.
Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 89.
A. The Law Of Unconscionability.
Arbitration agreements rely on the parties’ voluntary submission of disputes for resolution in a non-judicial forum. “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” Unconscionability provides one such ground for invalidating arbitration agreements. Whether it implicates public or private rights, the arbitration clause must meet conscionability standards.
Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 115 (Armendariz); Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711.
Code of Civil Procedure section 1281; see also id., section 1281.2, subdivision (b).
Armendariz, supra, 24 Cal.4th at pages 113-114; see also, Civil Code section 1670.5, which provides: “(a) 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. [¶] (b) When 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.”
Fitz v. NCR Corp., supra, 118 Cal.App.4th at pages 712, 713; Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 652.
“Unconscionability analysis begins with an inquiry into whether the contract is one of adhesion.” A contract of adhesion “‘signifies 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.]” The court then determines whether other factors operate to render it unenforceable. Generally speaking, there are two such factors. First, a contract or provision that does not fall within the weaker or “adhering” party’s expectation will not be enforced against that party. Second, even if consistent with the parties’ reasonable expectations, a contract or provision will not be enforced if, considered in its context, it is unduly oppressive or “unconscionable.” Both are aspects of unconscionability.
Armendariz, supra, 24 Cal.4th at page 113.
Armendariz, supra, 24 Cal.4th at page 113.
Armendariz, supra, 24 Cal.4th at page 113.
Unconscionability consists of both a procedural and a substantive element. Procedural unconscionability focuses on “oppression” or “surprise” due to unequal bargaining power. Substantive unconscionability focuses on “overly harsh” or “one-sided” results. For a court to exercise its discretion to refuse to enforce an arbitration clause because of its unconscionability, both procedural and substantive unconscionability must be present. Both need not be present in the same degree, however, and a “sliding scale” applies to evaluate their relative importance. Pursuant to this sliding scale test, “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.”
Armendariz, supra, 24 Cal.4th at page 114.
B. The Arbitration Clause Is Procedurally Unconscionable.
The Release exhibits overwhelming earmarks of oppressiveness. It is not subject to dispute the employer drafted the Release of which the arbitration clause was a part; the Release was not subject to negotiation or bargaining; and the Release was presented as a “done deal,” and on a “take it or leave it” basis.
Except for the amount of severance pay, which was already inserted in each Release, the signature of the employee, and the date of execution, the respective Releases executed by Riegert, Friem and Paris, were identical in form. The employer executed the Release on the same date in each instance, which date was before the date on which the three employees executed their respective Releases.
In all three Releases, the signature of the employer on the signature line for the employer appears to be the same, and October 9, 2000, was typed in as the date of signing. As for the employees, although “2000” was typed in as the year of signing, the line for the month and date of signing was filled in by hand, and the date of signing was different for each of the three employees, i.e., October 10 for Riegert, October 11 for Paris, and October 12 for Friem. Respondents did not contest this evidence.
According to Riegert’s declaration, in order to receive severance pay in the amount of $7,670.00, Riegert was told to sign the contract, which was on a take it or leave it basis. Respondents did not dispute this evidence. The contract containing the arbitration clause was presented to Riegert, the weaker party in terms of bargaining power, with no opportunity to negotiate terms of that contract. Where a plaintiff “lacked equal bargaining power with respect to the arbitration agreement, which was presented on a take it or leave it basis” these circumstances demonstrate “a high degree of oppressiveness.”
Abramson v. Juniper Networks, Inc., supra, 115 Cal.App.4th at page 663.
Surprise is the second element relevant to procedural unconscionability. Whether surprise exists may be determined by examining the extent to which the supposedly agreed-upon terms of the bargain are “‘hidden in a prolix printed form drafted by the party seeking to enforce [the disputed terms].’ [Citation.]”
The arbitration clause here constitutes a “surprise” by this definition in the sense it was buried beneath other terms of the preprinted form Release totally unrelated to the subject of arbitration. (Abramson, supra, 115 Cal.App.4th at page 656.
As discussed above, the Release was a form document. The adjective “printed” may refer to a document produced by a printing press, which is defined as a “machine that produces printed copies (as of graphic images or letterpress).” This is not the import of “printed” in this context. Rather, “printed” signifies “preprinted.” To “preprint” is “to print and issue in advance of publication or delivery.” “Print,” as a verb, means in pertinent part “to write or hand-letter in . . . unjoined printed characters.” The subject Release was preprinted, namely printed in advance, before its delivery to Riegert and the other two employees.
Webster’s Third New International Dictionary (Unabridged, 1961), page 1803.
Webster’s, supra, at page 1791.
Webster’s, supra, at page 1803.
The contract, although not consisting of numerous pages, nonetheless was comprised of multiple paragraphs in single-space type. The contract’s terms and conditions were set forth in nine provisions, each of which were separately enumerated with Arabic numbers and separated from one another by additional spacing but not titled as to the subject of the numbered paragraph. The arbitration “clause” is actually a single sentence in the three sentence provision numbered 9 on the form. The other two sentences of the provision cover topics unrelated to arbitration.
The words of the arbitration clause were not italicized, underlined, set forth in bold face, or otherwise set apart from the remaining language in the paragraph of which it was a part. Rather, these words were in fact indistinguishable in format from the other words in that paragraph.
In contrast, provision 6 – which spans the first and second pages of the contract – consists of three separate paragraphs, each set apart from the others by additional spacing. Provision 6 advises the employee she or he is waiving the statutory protections otherwise provided by Civil Code section 1542. The purpose of the middle paragraph was to spell out in the precise language of the statute the statutory rights and benefits the employee agreed to waive. The all-capital lettering of its words causes the middle paragraph to stand out from the preceding and following paragraphs and from all other provisions of the document. Location of the middle paragraph at the very top of the second page further highlights this paragraph. When viewed in context, the all-capital lettering and prominent placement of the middle paragraph thus flags its significance, and the dominance of the middle paragraph serves to single it out from all other paragraphs of the contract, thus insuring the employee comprehends the full nature of the statutory rights she or he is surrendering by signing the document.
The arbitration clause (actually a single sentence), unlike the middle paragraph of provision 6, was neither prominent nor conspicuous. Moreover, no language in the contract leading up to the arbitration clause would have alerted the reader to anticipate its existence or otherwise indicate arbitration would be implicated. The two sentences immediately preceding the arbitration clause in fact served to distract the reader from its presence and significance by virtue of their dissimilar subjects. The initial sentence addressed the issue of the validity of the remainder of the contract in the event another part, term or provision of the contract were found to be illegal or invalid. The second sentence concerned the integrated nature of the contract and the need for any modification to be in writing and signed by all parties.
Additionally, the contract did not request Riegert initial the arbitration clause, nor was a line or space provided for initials by either party. Similarly, she was not asked to sign an acknowledgment her rights and responsibilities under the arbitration clause had been explained to her, in particular her loss of her constitutional right to a jury trial, or her right to appellate review, or to a decision consistent with controlling judicial interpretations of statutory or common law principles. Nor did respondents explain the existence and relevance of the arbitration clause to her.
See, e.g., Fitz v. NCR Corp., supra, 118 Cal.App.4th at pages 707, 721 (NCR’s “employee-dispute resolution policy, known as Addressing Concerns Together (ACT),” incorporated “arbitration rules that were not attached and require[d] the other party to go to another source in order to learn the full ramifications of the arbitration agreement”); Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406, 1407 (“inability to receive full relief is artfully hidden by merely referencing the Better Business Bureau arbitration rules, and not attaching those rules to the contract for the customer to review[,]” which forced the customer to go to another source to learn that the arbitration agreement curtailed his ability to receive full relief); Gutierrez v. Autowest, Inc., supra, 114 Cal.App.4th at pages 84, 89 (Gutierrez “never given or shown a copy of the arbitration rules of the American Arbitration Association (AAA), the designated arbitration provider” nor required to initial arbitration clause); Patterson v. ITT Consumer Financial Corp. (1993) 14 Cal.App.4th 1659, 1665 (at signing, “borrowers were not given a copy of the procedural rules of the National Arbitration Forum (NAF)—the rules were sent to the borrowers only once ITT had initiated a claim against them”); cf: Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466, 481 (where “clearly disclose[d]” procedural unconscionability based on “surprise” negated); Trend Homes, Inc. v. Superior Court (2005) 131 Cal.App.4th 950, 959-960 (not capable of being “overlooked” where provision “clearly written, entirely capitalized, and easily understood”; provision in bold print; and both parties “place their initials immediately below the provision”).
The adhesive nature of the contract, the inconspicuous placement of the arbitration clause, which was in the same type as the rest of the contract, specifically the preceding two sentences of provision 9, of which it was a part, and the absence of any attempt to call Riegert’s attention to the arbitration clause by requiring her to initial it or to sign her name to acknowledge its presence, that she had read it, or that it had been explained to her, are among the many factors making this arbitration clause procedurally unconscionable.
Gutierrez v. Autowest, Inc., supra, 114 Cal.App.4th at page 89.
Another indicia of unconscionability arises from the recital in the arbitration clause all disputes arising out of or relating to the contract would be settled by arbitration in accordance with the Employment Dispute Rules of the American Arbitration Association. No copy of those rules was attached to the agreement. Respondents do not claim they provided Riegert with a copy prior to or contemporaneously upon her execution of the Release.
See, e.g., Harper v. Ultimo (2003) 113 Cal.App.4th at page 1406; Patterson v. ITT Consumer Financial Corp., supra, 14 Cal.App.4th at pages 1665-1666 (California customers unknowingly agreed to arbitrate only in Minnesota not provided a copy of undisclosed procedural rules, and had to make prepayment of substantial fees before process could be initiated).
Petitioners much later lodged with the trial court in connection with their petition to compel arbitration a copy of the “National Rules for the Resolution of Employment Disputes (Including Mediation and Arbitration Rules)”, “[a]s Amended and Effective on January 1, 2001[,]” of the American Arbitration Association [AAA; AAA Employment Dispute Rules]. This was far too late to afford Riegert any warning of what it meant to sign a document containing a single sentence committing any claims she might have to decision in an undefined forum called “arbitration.” What she would have found had those AAA rules been given to her would have provided some warning of all the ordinary constitutional and procedural rights she would surrender by signing the agreement. But since those rules were not supplied to her they merely add further surprise and unconscionability after the fact.
These rules require arbitration by AAA arbitrators and thus remove the matter from trial in civil court and deprive the plaintiff of the right to trial by a jury. Although these rules provide for discovery “by way of deposition, interrogatory, document production, or otherwise,” such discovery is solely a matter within the arbitrator’s discretion rather than pursuant to statutory discovery safeguards.
Additionally, these rules provide: “No judicial proceeding by a party relating to the subject matter of the arbitration shall be deemed a waiver of the party’s right to arbitrate”; “The arbitrator’s award shall be final and binding. Judicial review shall be limited, as provided by law”; and “Parties to these procedures shall be deemed to have consented . . . judgment upon the arbitration award may be entered in any federal or state court having jurisdiction”
These rules require payment of administrative fees based on the amount of the claim; a daily hearing fee payable by each party in the amount of $150 for a single arbitrator or $250 for a multi-arbitrator panel; and payment of compensation for the arbitrator(s). The fees do not cover the cost of “the rental of the hearing rooms, which are available on a rental basis.” These rules also authorize the arbitrator to allocate fees, expenses, and compensation among the parties as the arbitrator determines is appropriate but do not provide guidelines for the arbitrator’s exercise of discretion.
The failure to explain these significant financial costs and altered procedural rights that accompany arbitration by AAA Employment Dispute Rules, as compared with trial in civil court, constituted both surprise and oppression and further caused procedural unconscionability.
We note our Supreme Court in Armendariz “conclude[d] . . . when 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 . . . the employee would not be required to bear if he or she were free to bring the action in court. This rule will ensure . . . employees bringing FEHA claims will not be deterred by costs grater than the usual costs incurred during litigation, costs that are essentially imposed on an employee by the employer.” (Armendariz, supra, 24 Cal.4th at pages 110-111.)
Although the majority does not dispute the existence of these indicia of procedural unconscionability, they make no independent finding on whether the arbitration clause is procedurally unconscionable, which is an issue this court must resolve de novo. Rather, the majority simply relies on the trial court’s factual findings in support of its conclusions the Release “‘was not significantly adhesive’ and was not obtained by duress” (maj. opn. above, p. 18) and without addressing whether these findings are supported by substantial evidence. In any event, the lack of duress and absence of adhesiveness as to the Release do not foreclose a finding the arbitration clause concealed within the Release is itself unconscionable, and thus, unenforceable.
See, e.g., Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 574-575 (adhesive nature of agreement simply “a minimal degree of procedural unconscionability”).
“[W]hether the arbitration clause . . . is characterized as an adhesion contract or not, the question of the enforceability of the clause remains, for even an adhesion contract may be enforceable. (Armendariz […], supra, 24 Cal.4th at p. 113; Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 819-820.) But no contract, whether adhesive or otherwise, will be enforced if it is unconscionable. (Graham v. Scissor-Tail, Inc., supra, 28 Cal.3d at p. 820.)” As demonstrated above, that this arbitration clause is procedurally unconscionable cannot be gainsaid.
Villa Milano Homeowners Ass’n v. Il Davorge, supra, 84 Cal.App.4th at page 828.
C. This Arbitration Clause Is Substantively Unconscionable.
As a preliminary matter, I disagree with the majority conclusion Riegert forfeited any claim the arbitration clause is substantively unconscionable. As the majority points out, Riegert’s counsel did not address the substantive factor of unconscionability in a brief, and when asked directly at oral argument, he did not address any indicia of substantive unconscionability. The law is well settled the appellate court may exercise its discretion to deem forfeited any issue or argument not raised before the trial court. Nonetheless, an exception (which is applicable here) exists where the issue or argument does not involve new or different facts and legal theory.
See People v. Lewis (2006) 39 Cal.4th 970, 990.
While Riegert’s attorney may not have mentioned specifically “substantive unconscionability” he did raise below and on appeal the issue of the arbitration clause’s unconscionability. The trial court had before it the arbitration clause and the AAA Employment Dispute Rules pursuant to which arbitration would be conducted. A plain reading of both, each of which is clear, unambiguous, and unequivocal, establishes the substantive component of unconscionability. As the majority acknowledges, “unconscionability is a question of law for the court.” As a matter of law, the arbitration clause in the Release contains enough substantive unconscionability to make this single sentence arbitration clause unenforceable against this unwarned and unsuspecting employee.
Although courts “have defined substantive unconscionability in various ways, it traditionally involves contract terms that are so one-sided as to ‘shock the conscience,’ or that impose harsh or oppressive terms.” The denial of the constitutional right to a jury trial and the right to pursue claims in a judicial forum, for example, are substantial rights. Although these rights can be waived, the party waiving such rights must do so voluntarily, after being informed of the existence of these rights. Failure to disclose to Riegert she was waiving her constitutional right to jury trial where nothing suggests she gained any substantial benefit (other than a possible expedited resolution) from giving up that constitutional right constitutes substantive unconscionability. So is her unknowing waiver of the right to appeal or to have her rights determined according to the statutory and common law as those legal principles have been determined by binding judicial interpretation rather than being at the mercy of the personal inclinations of an arbitrator who is not subject to judicial oversight as to any factual findings or legal conclusions, including “an error of law apparent on the face of the award that causes substantial injustice[.]”
24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1213.
Villa Milano Homeowners Assn. v. Il Davorge, supra, 84 Cal.App.4th at page 829.
See Trend Homes, Inc. v. Superior Court, supra, 131 Cal.App.4th at page 960 (contract provision expressly stating, in bold print above the parties’ initials, each party waived all rights to a jury trial not unconscionable).
See Pardee Construction Co. v. Superior Court (2002) 100 Cal.App.4th 1081, 1091-1092.
Moncharsh v. Heily & Blase, supra, 3 Cal.4th at pages 11, 33.
In addition to these fundamental forms of substantive unconscionability, a review of the discovery and cost aspects of the AAA Employment Dispute Rules reveal arbitration pursuant to these rules also would result in substantive unconscionability.
(1) Discovery Inadequacies Substantively Unconscionable.
The Armendariz court held “adequate discovery is indispensable for the vindication of FEHA claims” and inferred “when 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. [Citation.]”
Armendariz, supra, 24 Cal.4th at page 106.
The California Arbitration Act (CAA; Code Civ. Proc. § 1280 et seq.) affords parties essentially the same discovery “rights, remedies, and procedures . . . as if the subject matter of the arbitration were pending before a superior court . . . .” The Armendariz court concluded: “Adequate provisions for discovery are set forth in the CAA at Code of Civil Procedure section 1283.05, subdivision (a).[]”
Code of Civil Procedure section 1283.05, subdivision (a).
Armendariz, supra, 24 Cal.4th at page 105. All further section references are to the Code of Civil Procedure unless otherwise indicated.
Although the court further concluded “parties incorporating the CAA into their arbitration agreement are also permitted to agree to something less than the full panoply of discovery provided in . . . section 1283.05[,]” the court admonished the parties nonetheless “are at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses . . .”
Armendariz, supra, 24 Cal.4th at pages 105-106.
Armendariz, supra, 24 Cal.4th at pages 105-106.
“All of the provisions of Section 1283.05 shall be conclusively deemed to be incorporated into, made a part of, and shall be applicable to, every agreement to arbitrate any dispute, controversy, or issue arising out of or resulting from any injury to, or death of, a person caused by the wrongful act or neglect of another.” ( § 1283.1, subd. (a), italics added.)
“Under all other factual scenarios, section 1283.05 is applicable where agreed upon by the arbitrating parties: “Only if the parties by their agreement so provide, may the provisions of Section 1283.05 be incorporated into, made a part of, or made applicable to, any other arbitration agreement.” ( § 1283.1, subd. (b), italics added.)
Our Supreme Court has yet to decide whether such “injury to . . . person” solely signifies “bodily injury” or whether this phrase also includes incorporeal injuries, e.g., emotional and/or mental harm. The court specifically declined to determine whether a FEHA violation claim constitutes an “injury to . . . a person[.]”
Armendariz, supra, 24 Cal.4th at page 105.
The majority writes: “The Armendariz Court strongly suggested . . .a FEHA discrimination claim is properly considered an ‘injury to… a person’ within the meaning of” [section 1283.05, subdivision (a)].” (Italics added.) (Maj. opn. above, p. 22.) I disagree. The court took no such position. Rather, the court expressly admonished “[t]he scope of this provision is not before us.”
Armendariz, supra, 24 Cal.4th at page 105.
Additionally, the majority’s reliance is misplaced on Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976 as authority for its conclusion “the discovery procedures in . . . section 1283.[0]5 . . . are fully incorporated into the arbitration provision in the [Release], overcoming any claim of substantive unconscionability on this ground.” (Maj. opn above, p. 22.)
Research does not disclose any published case holding a personal injury arising from a FEHA violation constitutes an “injury to . . . person” under subdivision (a) of section 1283.1. Bihun does not so hold.
A contrary conclusion is not compelled simply because our Supreme Court inadvertently misspoke when it “note[d] Bihun was a “case [which] has held that a FEHA sexual harassment claim is considered an ‘injury to . . . a person’ within the meaning of . . . section 1283.1, subdivision (a). [Citations.]” This statement is simply dictum unsupported by any analysis.
Armendariz, supra, 24 Cal.4th at page 105, italics added.
As our Supreme Court explained: “The absence of any analysis renders this dictum unpersuasive. (See People v. Mendoza (2000) 23 Cal.4th 896, 915 [“‘we must view with caution seemingly categorical directives not essential to earlier decisions and be guided by this dictum only to the extent it remains analytically persuasive’”].)
Golden Gateway Center v. Golden Gateway Tenants Assn. (2001) 26 Cal.4th 1013, 1029; see also, Santisas v. Goodin (1998) 17 Cal.4th 599, 620 (A decision “not authority for everything said in . . . opinion but only ‘for the points actually involved and actually decided’.”).
The Bihun decision, of which I was the lead author, did hold a FEHA sexual harassment claim is an injury to a person. In this regard, the Bihun court pointed out: “‘“An injury is personal when it impairs the well-being or the mental or physical health of the victim”.’ [Citations.] It is beyond dispute sexual harassment in the workplace has this effect.” The court, however, did not conclude every sexually harassed employee necessarily suffers all of these different types of injuries, nor did the court mention section 1283.1.
Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 1005.
Bihun v. AT&T Information Systems, Inc., supra, 13 Cal.App.4th at page 1005, italics added.
No issue concerning section 1283.1, subdivision (a), was in fact before the court in Bihun. “As is well established, a case is authority only for a proposition actually considered and decided therein. [Citations.]” “Language used in any opinion is of course to be understood in the light of the facts and the issue then before the court, and an opinion is not authority for a proposition not therein considered.” Bihun thus is not authority for the proposition a FEHA violation injury is an “injury to . . . person” within the meaning of subdivision (a) of section 1283.1.
In re Chavez (2003) 30 Cal.4th 643, 656.
Ginns v. Savage (1964) 61 Cal.2d 520, 524, footnote 2; italics added.
Moreover, after noting Bihun, the Armendariz court directed: “[B]ut see Holmes v. General Dynamics Corp (1993) 17 Cal.App.4th 1418, 1436-1437 (contractual wrongful termination action held not be a ‘personal injury’ within the meaning of Civ. Code, § 3291.)” The Holmes court concluded: “A wrongful termination claim primarily involves the infringement of property rights, not personal injury. [Citation.]”
Armendariz, supra, 24 Cal.4th at page 105.
Holmes v. General Dynamics Corp, supra, 17 Cal.App.4th at pages 1436-1437.
In short, Bihun provides no authority for the majority’s conclusion the discovery provisions of section 1283.05 are automatically applicable to arbitration of this FEHA claim, unless and until our Supreme Court approves Bihun’s conclusion a FEHA violation results in personal (not economic) injury and holds such personal injury constitutes an “injury to . . . person” under subdivision (a) of section 1283.1.
Aside from its mistaken reliance on Bihun, the majority offers no authority, specifically case or statutory, or analysis in support of its conclusion the discovery provisions of section 1283.05 automatically apply to arbitration under the Release, because a FEHA violation injury constitutes an “injury to . . . person” under section 1283. 1, subdivision (a). While some FEHA violations, such as sexual harassment, may indeed qualify as an “injury to . . . person,” others such as “retaliatory discharge (or failure to hire” are difficult to so classify.
Alternatively, the majority posits: “There appears to be no meaningful difference between the scope of discovery approved in Armendariz and that authorized by the AAA [E]mployment [D]ispute [R]ules, certainly not the role of the arbitrator in controlling the extent of actual discovery permitted.” I disagree.
In Armendariz, the parties incorporated by reference the CAA and thereby the discovery provisions of section 1283.05. Unlike Armendariz, the arbitration clause here neither incorporated by reference the CAA itself, nor did it incorporate by reference its specific discovery provisions under section 1283.05. The issue presented is whether the discovery provisions of the AAA Employment Dispute Rules comports with Armendariz’s requirement of procedures necessary to afford “adequate discovery” for arbitrating parties and with due process, i.e., fair discovery. It does not.
Armendariz, supra, 24 Cal.4th at pages 104-105.
Rule 7 of the Employment Dispute Rules provided: “The arbitrator shall have the authority to order such discovery, by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.” (Italics added.)
On its face and as read plainly, Rule 7 fails to afford arbitrating parties with sufficient safeguards to compel discovery (e.g., monetary, preclusion, or deemed admitted sanctions) and to protect any party against another party’s misuse of discovery as a bully bludgeon (e.g., burdensome, oppressive, harassing due to repetitive questions, irrelevant questions, questions invading protected privacy and other rights/privileges). For these reasons, Rule 7 of the AAA Employment Dispute Rules fails to ensure adequate and fair discovery, and thus, arbitration pursuant solely to AAA Employment Dispute Rules is substantively inadequate.
(2) Unexpected Costs Substantively Unconscionable.
Another source of substantive unconscionability is found in the distribution of costs under provisions of the AAA Employment Dispute Resolution Rules which TPIR’s arbitration “sentence” imposed. As the majority acknowledges, unconscionability is determined as of the time the contract is made, not as of the time a court or arbitrator makes adjustments in the terms of the arbitration agreement. Riegert stated in her declaration she was dependent on her paycheck to live at the time she executed her Release. This evidence of her limited ability to pay, the imposition of fees and costs to arbitrate the claim, by comparison to the much lower fees of litigating a civil court case, and to the absence of any liability for payment of compensation of a civil trial judge, cost of the courtroom use, and hearing fee, makes the arbitration clause substantively unconscionable.
Gutierrez v. Autowest, Inc., supra, 114 Cal.App.4th at page 91, citing Civil Code section 1670.5. It is thus inconsequential the trial court subsequently ordered Barker, Fremantle, and TPIR to pay the compensation due the arbitrator.
Gutierrez, supra, 114 Cal.App.4th at page 89.
Although the AAA Employment Dispute Rules refer to the possibility the arbitrator may defer or reduce administrative fees in the event of a party’s extreme hardship, this provision is discretionary and not mandatory, only defers or reduces fees rather than eliminating them, and only applies to administrative fees and not to the arbitrator’s compensation and to other costs which the award may impose on the claimant. Moreover, with regard to this reduction or deferring of administrative fees, “[t]he record contains no showing of how this process is begun . . . or what criteria are utilized to decide if fees should be reduced or deferred.” As in Gutierrez, to the extent the AAA Employment Dispute Rules create a procedure to ensure affordable fees, it is ineffective. This omission likewise makes the arbitration clause substantively unconscionable.
Gutierrez, supra, 114 Cal.App.4th at page 92.
Gutierrez, supra, 114 Cal.App.4th at page 92.
I disagree with the majority’s position allocation of costs does not amount to substantive unconscionability for the reason, at the outset in executing the Release, TPIR and Riegert impliedly agreed TPIR, as employer, would bear all arbitration costs. This position is not supported by the record, finds no support in Armendariz, supra, and is contrary to established contract principles.
No implied agreement to allocate costs may be inferred where, as here, an express agreement to allocate costs exists. Again, as the majority acknowledges: “It is . . . correct unconscionability is determined as of the time the contract is made.” (Maj. opn. above, p. 23.)
As executed, TPIR and Riegert agreed to arbitrate pursuant to the AAA Employment Dispute Rules. These rules expressly covered the subjects of costs that would be incurred, the allocation of costs, and the unfettered discretion of the arbitrator to reallocate certain costs. Neither the Release, nor its arbitration clause contained any other express provision regarding cost allocation. At the Release’s inception, the parties thus expressly agreed costs would be allocated pursuant to the AAA Employment Dispute Rules.
In Armendariz the arbitration agreement incorporated the CAA. The arbitration agreement did not contain any provision addressing costs, including their allocation. Pursuant to section 1284.2 of the CAA, “[u]nless the arbitration agreement provides otherwise or the parties to the arbitration otherwise agree, each party to the arbitration shall pay his pro rata share of the expenses and fees of the neutral arbitrator, together with other expenses of the arbitration incurred or approved by the neutral arbitrator . . . .”
Armendariz, supra, 24 Cal.4th at page 92.
Section 1284.2; see Armendariz, supra, 24 Cal.4th at page 107, italics added.
This was the factual context in which the Armendariz court concluded the default provisions of section 1284.2 do not displace the implicit prohibition against an employee being “compelled to pay large arbitration costs as a condition of pursuing a [FEHA] discrimination claim[,]” e.g., compelling employees “to resolve their antidiscrimination claims in a forum in which they must pay for what is the equivalent of the judge’s time and the rental of the courtroom.”
Armendariz, supra, 24 Cal.4th at page 112.
Armendariz, contrary to the majority’s position, does not stand for the proposition in a FEHA case, each and every mandatory employment arbitration clause shall be interpreted as containing, from its inception, an implied agreement the employer shall bear all arbitration costs.
Rather, the import of Armendariz is thus: (1) “[A] mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obliges the employer to pay all types of costs that are unique to arbitration”; (2) Courts will infer the employer in a FEHA case impliedly agreed to pay arbitration costs where the agreement does not address costs; and (3) “The absence of specific provisions on arbitration costs would therefore not be grounds for denying the enforcement of an arbitration agreement. [Citation.]”
Armendariz, supra, 24 Cal.4th at page 113.
That an employer impliedly is obligated to pay all arbitration costs is a poignant point for finding the arbitration clause here substantively unconscionable. TPIR, the employer and drafter of the Release containing the arbitration clause, knew or is deemed to have been aware of our Supreme Court’s Armendariz decision, which was filed on August 24, 2000, at the time TPIR executed the Release and presented the Release to Riegert on October 9, 2000.
The Release executed by Riegert on October 10, 2000, however, did not contain any recital to the effect TPIR, as employer, would bear all arbitration costs, as mandated by Armendariz. Rather, the Release arbitration clause provided arbitration would be pursuant to the AAA Employment Dispute Rules, which expressly and particularly described: the costs that would be incurred; how such costs would be allocated, specifically and impermissibly providing certain costs would be borne equally by the parties; and particular costs (also impermissibly) could be re-allocated at the unbridled discretion of the arbitrator.
That “[t]he absence of specific provisions on arbitration costs” would not bar enforcement of the arbitration clause is a point factually inapplicable here. As discussed above, the subject arbitration clause incorporated by reference the express provisions on arbitration costs as delineated in the AAA Employment Dispute Rules.
Additionally, as the majority admonishes: Courts should not “‘inject an inappropriate level of judicial subjectivity into the analysis’” and “‘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.’ [Citation.]” This is and should be the law.
Armendariz reaffirmed the principle courts are not empowered to reform a contract “by augmenting it with additional terms. Civil Code section 1670.5 does not authorize such reformation by augmentation, nor does the arbitration statute. [S]ection 1281.2 authorizes the court to refuse arbitration if grounds for revocation exist, not to reform the agreement to make it lawful. Nor do courts have any such power under their inherent limited authority to reform contracts. (See Kolani v. Gluska (1998) 64 Cal.App.4th 402, 407-408 [power to reform limited to instances in which parties make mistakes, not to correct illegal provisions]; see also Getty v. Getty (1986) 187 Cal.App.3d 1159, 1178-1179.)
Armendariz, supra, 24 Cal.4th at page 125.
Courts thus are forbidden to insert, or in this instance substitute, a provision in a contract that contradicts or nullifies a provision expressly agreed to by the parties. This is the impermissible result the majority endorses. I therefore disagree with the majority’s conclusion the arbitration clause was “valid and enforceable once the provision for arbitration costs—assuming it was unconscionable in the first place—was modified to require TPIR and the other employer parties to pay all costs.”
Also fatally flawed is the majority’s companion conclusion: “This implied agreement found by the trial court is in no way inconsistent with the AAA rules, which expressly provide the parties may structure their own agreement as to arbitration costs different from the default equal-sharing provision [of the AAA rules].” (Maj. opn. above, fn. 11 at p. 23.) Here the one sentence clause expressly provided the parties were to abide by these rules and they did not agree otherwise.
D. The Combination Of Procedural And Substantive Unconscionability In This Case Renders The Arbitration “Clause” Unenforceable.
In the context of judging whether a pre-dispute arbitration clause is enforceable, “procedural unconscionability” refers to unfairness in the circumstances producing a party’s purported agreement to arbitrate future disputes with the other party to the contract. “Substantive unconscionability,” on the other hand, refers to disadvantages that party will face if the dispute is arbitrated rather than heard by a judge or jury. Those disadvantages may take several forms – for instance, the unavailability of a remedy in arbitration which would be available in a court proceeding, imposition of a higher cost or the deprivation of some important procedural advantage in the arbitration forum, or the existence of an undue advantage the party seeking to compel arbitration would enjoy in arbitration which it would not have in a judicial proceeding.
As pointed out earlier, a sliding scale is employed in weighing whether arbitration should be imposed on an unwilling party. The greater the procedural unconscionability, that is, the more onerous the circumstances leading to the party signing the agreement containing the arbitration clause, the less onerous the disadvantages arbitration impose on that party must be to constitute substantive unconscionability.
Armendariz, supra, 24 Cal.4th at page 114.
In my view, the arbitration “clause” here was so procedurally unconscionable as to require little or no substantive unconscionability to invalidate the provision. This was not merely the common situation of an adhesion contract pressuring an employee into agreeing to an arbitration clause she knew was there and a knowing if unwelcome surrender of her constitutional right to jury, and her statutory rights to appeal, and to a decision adhering to the law not to the inclinations of the arbitrator. No, this was an arbitration “clause” so inconspicuous it was likely to avoid the employee’s notice, and certainly to conceal its significance to the employee’s rights, which it succeeded in doing here. The “clause” was so brief it failed to advise Riegert she possessed a right to jury trial she was surrendering or that she would lose other important procedural rights by signing the agreement. As pointed out above, not only was the clause not highlighted by a separate heading, an individual paragraph, its own signature line, or even by font size or color, it was not called to Riegert’s attention orally or otherwise.
While it may be implicit in the word “arbitration” that the employee’s future disputes will not be heard by a jury, but by an “arbitrator,” this term does not convey the fact the employee had a guaranteed constitutional right to have a jury decide whether the employer violated her rights – a constitutional right she is surrendering for less than $7,000 (even accepting the unlikely assumption the release of all past causes of action is worth nothing). Nor is it implicit in the term “arbitration” (at least the form defined in the AAA rules not supplied to Riegert) that it carries with it deprivation of a host of fundamental procedural rights the employee would have enjoyed in the courts, among them, the right to appeal, or to have the arbitrator decide her case consistent with the law, or to only make factual findings against the employee if they are supported by substantial evidence, and the like. When a single word is freighted with so many unforeseen and unforeseeable consequences, and inflicts so many disadvantages on the employee, at the very least the law must insist the employer highlights the fact this is a most serious decision and one the employee should investigate thoroughly and ponder carefully.
Not only did TPIR conceal the arbitration “clause,” it affirmatively misled the employees, including Riegert, into believing the arbitration provision did not involve the waiver of any significant legal rights. The agreement devoted three full paragraphs to informing the employee precisely what she was surrendering when a much less significant right was involved, the statutory right provided in Civil Code section 1542. To guarantee TPIR’s employees understood exactly what they were giving up by signing the agreement one of the three paragraphs presented the exact language of the statutory right involved in “all caps.” This would lead the average person to assume the agreement would include a similar warning if a consent to arbitration implicated a surrender of any significant constitutional or procedural rights. Furthermore, respondents did not even attach the AAA arbitration rules referred to in the single sentence “clause” that were to substitute for all the substantive rights to jury trial, to appeal, to receive a decision according with the law and the like, Riegert was waiving (without warning or knowledge) if she signed the agreement
For these reasons, Riegert’s surrender of her substantive constitutional and procedural rights was not a knowing and voluntary waiver of those rights and thus in itself constituted a form of substantive unconscionability. She was forced into a forum where she lacked the right to jury trial, to effectively appeal an unfavorable decision, to insist the arbitrator adhere to the established substantive law, or to findings supported by substantive evidence. More importantly, she was forced into that forum without any warning she possessed a guaranteed constitutional right to the jury trial, or even that she was destined to lose those other fundamental procedural rights. Instead, respondents did everything they could to minimize these serious consequences and indeed to mislead Riegert into thinking the agreement to arbitration was no big thing. How wrong that was in this case.
Furthermore, this unknowing acceptance of arbitration likewise placed Riegert involuntarily in a forum where she was at a substantive disadvantage vis-à-vis the employer, yet again a form of substantive unconscionability. As our Supreme Court has explained: “Various studies show that arbitration is advantageous to employers not only because it reduces the costs of litigation, but also because it reduces the size of the award that an employee is likely to get, particularly if the employer is a ‘repeat player’ in the arbitration system. [Citation.] It is perhaps for this reason that it is almost invariably the employer who seeks to compel arbitration. [Citation.]”
Armendariz, supra, 24 Cal.4th at page 115.
I am unwilling to encourage employers to bury arbitration clauses as single sentences not highlighted in any way in their contracts with employees, and without explaining the consequences in any way, and to imply nothing significant is at stake in the decision to arbitrate -- as this court is by upholding this single-sentence “clause” and the resulting arbitration.
In sum, arbitration pursuant to the AAA Employment Dispute Rules as the agreed manner of dispute resolution was both a surprise and a shock to Riegert. Without warning of any kind in the document or by other means, she made an unknowing as well as involuntary waiver of valuable substantive rights, at least one of them a constitutional right, as well as agreeing when signing the agreement to payment of arbitration costs and to disadvantageous discovery constraints. The arbitration clause was unconscionable, both procedurally and substantively and in many ways, and thus unenforceable. Accordingly, in my view, the matter should never have been sent to arbitration, and the trial court erred in confirming the resulting arbitration award. If in the majority, I would reverse the judgment confirming the award and remand for the court to conduct further proceedings on the merits and in the judicial forum as to all of Riegert’s causes of action.
II. Riegert’s Claims Accruing On October 19 Are Not Arbitrable.
Riegert, as employee, and TPIR, as employer, entered into a Separation Agreement and General Release (Release) that contained this arbitration “clause”: “All disputes arising out of or relating to this [Release] will be submitted to final and binding arbitration. . . .” Assuming this arbitration clause is not unconscionable, the next issue is: Are Riegert’s claims “disputes arising out of or relating to this [Release]?” The answer is no. The Release clearly and unequivocally only pertains to those claims Riegert “may have or claim to have had, arising at any time in the past to and including the date this [Release] was executed[.]” As even respondents conceded at oral argument, the Release was executed on October 10, 2000, the day Riegert signed the Release. Riegert’s claims did not accrue until on and after October 19, 2000, the date she was terminated. The inescapable conclusion is Riegert’s claims arising from her alleged wrongful termination and the failure to hire or rehire her fall outside the arbitration clause. Accordingly, because Riegert’s claims should never have been arbitrated, the trial court erred in confirming the arbitration award.
As Riegert contends, even if the Release were valid, the Release, by its terms, only covered claims “arising at any time in the past to and including the date this [Release] was executed[,]” which was on October 10, 2000, and thus, her causes of action, which accrued after this cut-off date, were not subject to arbitration. Based on my review of the record and applicable law, I conclude Riegert’s contention is both meritorious and dispositive as to Riegert’s claims arising from her alleged wrongful termination and the alleged wrongful failure to hire or rehire her. The cut-off date for claims subject to the Release, and thus, the arbitration agreement, was October 10, 2000, the date Riegert executed the Release. October 19, 2000, was the date Riegert’s wrongful termination claim accrued, because this was the date she was terminated. Her claim for wrongful refusal to hire or rehire her necessarily could not have accrued earlier than the date she was terminated and in fact did not accrue until October 20, 2000, when she was not hired or rehired. It is manifestly clear these claims, which were submitted to arbitration, were not covered by the arbitration clause, and thus, were not subject to arbitration.
Riegert argues petitioners concealed their July 2000 decision to fire her when Fremantle took over production of the Show on October 20, 2000; they falsely promised on September 19, 2000 Riegert would have “job security”; they “misrepresented the purpose of the Release by promoting it as a document the employee had to sign in order to receive a bonus [severance pay]”; they omitted to discuss “the content of the Release with Riegert or advise her to seek legal advice before signing it”; specifically, they never “told Riegert that, by signing the Release, she was releasing her claims against [Petitioners], waiving her [s]tatutory and [c]onstitutional rights, including the right to a jury trial”; they hid the arbitration agreement “in the severability clause” of the Release, which arbitration agreement “no one discussed . . . with Riegert”; and “after her workday [on October 19, 2000], Riegert was [simply] told no[t] to come to work the next day.
The majority’s contrary conclusion arises from its misplaced focus on the general phrase “[a]ll disputes” in the arbitration clause, which provides: “All disputes arising out of or relating to this [Release] will be submitted to final and binding arbitration [.]” The arbitration clause admittedly encompasses matters relating to the Release that might involve dates beyond the October 10, 2000 cut-off date for Riegert’s subject claims, such as whether the Release was executed on October 10, 2000, or some later date.
The majority posits: “Paragraph 1 [of the Release] expressly defines the scope of the [Release] and thus the arbitration clause, stating Riegert will be laid off on or about October 19, 2000 and the intent of the agreement is to settle and resolve any differences or disputes that have or may have arisen between TPIR and Riegert ‘[i]n connection therewith’ -- that is, in connection with the October 19, 2000 termination. [fn.]” (Maj. opn. above, p. 26)
A plain reading of Paragraph 1 in the context of Paragraph 4 contradicts the majority’s position that October 19, 2000, rather than October 10, 2000, the undisputed date of the Release’s execution, is the cut-off date for claims, as contrasted with other matters, that are subject to arbitration.
Paragraph 1 provides in pertinent part: “Employer [TPIR] will cease producing ‘The Price Is Right’ on or about October 19, 2000, at which time Employee will be laid off. In connection therewith, Employer seeks to settle and resolve any differences and/or disputes that have or may have arisen between Employer and Employee [Riegert].” (Italics added.)
Paragraph 4 provides in pertinent part: “[E]mployee [Riegert] hereby releases Employer [and enumerated others] from any and all claims, rights, causes of action, and potential suits, known or unknown, which Employee may have or claim to have had, arising at any time in the past to and including the date this [Release] was executed…, including those arising out of or in any way connected with Employee’s employment, or termination from Employer.” (Italics added.)
The clear import of the above quoted language is the Release only pertains to those claims, etc., “arising at any time in the past to and including the date this [Release] was executed[,]” which was October 10, 2000, which date is not contested. It is also undisputed Riegert was not terminated until October 19, 2000. Riegert’s claims did not accrue until October 19, 2000, the date of termination. A fortiori, the claim based on the alleged failure to hire (or rehire) Riegert did not arise until after she was terminated. Thus, no “dispute” or “claim,” etc. based on Riegert’s alleged wrongful termination or non-hiring (rehiring) arose within the cut-off date, which was October 10, 2000, the date the Release was executed.
See, e.g., Romano v. Rockwell Internat. Inc. (1996) 14 Cal.4th 479, 483-484 (wrongful termination cases, whether arising in contract or tort or based on FEHA violations, accrue on date employment actually terminated).
A. Applicable Legal Principles And Standard Of Review.
Arbitration agreements rely on the parties’ voluntary submission of disputes for resolution in a non-judicial forum. “California law, like federal law, favors enforcement of valid arbitration agreements. [Citation.]” Nonetheless, “[t]here is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate. [Citation.]”
Armendariz, supra, 24 Cal.4th at page 115; Fitz, supra, 118 Cal.App.4th at page 711.
Armendariz, supra, 24 Cal.4th at page 97.
Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.
“Certain basic principles of contract interpretation are applicable. First, ‘the policy favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate.’ [Citations.] In addition, ‘[h]owever broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract.’ [Citation.] [¶] Finally, ambiguities in standard form contracts are to be construed against the drafter. [Citations.] This court must apply these basic principles to determine whether the petitioner’s causes of action fall within the scope of the arbitration clause.”
Victoria v. Superior Court (1985) 40 Cal.3d 734, 739.
Moreover, “[u]nder statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs its interpretation. [Citation.] Such intent is to be inferred, if possible, solely from the written provisions of the contract. [Citations.] The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ controls judicial interpretation unless ‘used by the parties in a technical sense, or unless a special meaning is given to them by usage.’ [Citations.] If the meaning a layperson would ascribe to the language of a contract . . . is clear and unambiguous, a court will apply that meaning. [Citations.]”
Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 666-667; accord, Buss v. Superior Court (1997) 16 Cal.4th 35, 62 (dis. opn. of Kennard J.); cf. Appalachian Ins. Co. v. McDonnell Douglas Corp. (1989) 214 Cal.App.3d 1, 12 (“Extrinsic evidence may be introduced when the terms of the contract are ambiguous.”).
In passing on a petition to compel arbitration of a particular controversy pursuant to an arbitration agreement (Code Civ. Proc. § 1281.2), “it is the trial court that determines if there is a duty to arbitrate the particular controversy which has arisen between the parties. [Citation.] In performing its duty to determine if the parties have agreed to arbitrate that type of controversy, the court is necessarily required ‘to examine and, to a limited extent, construe the underlying agreement.’ (Ibid.)” “The interpretation of a written instrument such as a contract is a question of law which we review de novo. Where the facts are not in dispute, the issue is one of law and the appellate court is therefore free to draw its own conclusions of law from the undisputed facts. [Citations.]” In contrast, the reviewing court does not apply the de novo standard where “[t]he proper interpretation of the parties’ written agreement turns not only on the language of the agreement but on the proper resolution of conflicting extrinsic evidence and upon an evaluation of witness credibility. In these circumstances, we are bound by the trial court’s construction of the agreement if it is reasonably susceptible to that interpretation. [Citations.]”
United Transportation Union v. Southern Cal. Rapid Transit Distr. (1992) 7 Cal.App.4th 804, 808; cf. Fidelity & Cas. Co. v. Dennis (1964) 229 Cal.App.2d 541, 543 (“It is well settled that parties may, if they wish, agree to submit to arbitration the issue of arbitrability itself.”).
Lincoln National Life Ins. Co. v. State Bd. of Equalization (1994) 30 Cal.App.4th 1411, 1416.
Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 134.
B. October 10, 2000 Was The Final Date For Arbitrable Claims.
The trial court and respondents focused on October 19, 2000, the date set forth in the Release for Riegert’s termination and the date of her actual termination, as the operative date. They were correct in one sense but not for purposes of determining whether the arbitration clause applied to Riegert’s causes of action. True, October 19, 2000, was the date Riegert’s claims and causes of action against TPIR arose, because this was the date she was terminated. It does not follow, however, all claims arising from her termination were embraced by the arbitration clause simply because the Release provided October 19, 2000 was the date Riegert was to be laid off.
On October 10, 2000, Riegert, as employee, signed the Release, which TPIR, as employer, had prepared and signed the previous day. The Release contained this arbitration clause: “All disputes arising out of or relating to this [Release] will be submitted to final and binding arbitration pursuant to the Employment Dispute rules of the [AAA].”
The Release provided Riegert would be “laid off effective October 19, 2000,” and TPIR agreed to pay her $7,670.00 as severance pay, which amount was in addition to her “final paycheck[.]”
In return, Riegert agreed to release TPIR, the Estate of Mark Goodson, Mark Goodson Productions and Price Productions “and each and every of the foregoing’s partners, officers, directors, shareholders, agents, employees, heirs, parents, attorneys, trustees, administrators, executors, representatives, legal predecessors, successors (including Pearson Television, Inc. [Pearson]), assigns, companies, affiliates, related organizations and related employee benefit plans” from liability for certain matters.
The Release in Paragraph 4 expressly provided its coverage extended up to and only included: “any and all claims, rights, causes of action, and potential suits [collectively, claims], known or unknown, which [Riegert] may have or claim to have had, arising at any time in the past to and including the date this [Release] was executed, . . . including those arising out of or in any way connected with [Riegert]’s employment with, or termination from [TPIR].” (Italics added.)
“Execute” is a transitive verb of multiple meanings, including: (1) “To carry out; put into effect: execute a law”; (2) “To make valid, as by signing: execute a deed”; and (3) “To perform or carry out what is required by: execute a will[.]”
The American Heritage Dictionary (2d College Ed. 1982), italics original.
In this instance, the Release itself clarifies “execute” in this context signifies “signing” the Release. The Release provides Riegert would be paid her severance pay “on the later of (i) the date which this [Release] is fully executed or (ii) October 20, 2000[,]” the day after she was to be laid off. The Release also quoted section 1542 of the Civil Code, which provides: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” (Italics added.) The Release further provided: “This [Release] will become effective upon [Riegert]’s signature of the [Release].”
A plain reading of the explicit and unambiguous language of the Release thus leads to this inevitable conclusion: October 10, 2000, the date Riegert signed the Release containing the arbitration clause, is the definitive date for determining whether a particular claim is subject to arbitration.
A contrary conclusion is not compelled by a construction of other, ambiguous, and broader language in the Release to establish the cut-off date as October 19 rather than October 10 for the purpose of finding an arbitrable claim. Paragraph 9 of the Release provides “[a]ll disputes arising out of or relating to this [Release] will be submitted to final and binding arbitration. . . . ” (Italics added.) Paragraph 1 provides in pertinent part: “[TPIR] will cease producing [the Show] on or about October 19, 2000, at which time [Riegert] will be laid off. In connection therewith, [TPIR] seeks to settle and resolve any differences and/or disputes that have or may have arising between [TPIR] and [Riegert].”
Initially, we point out the above-quoted language from Paragraph 4 expressly and specifically addressing the particular claims to be released necessarily trumps the above-quoted general language from Paragraph 9 to the extent the phrase “[a]ll disputes” may be interpreted as signifying “all claims.”
See, e.g., Hetherington v. State Personnel Bd. (1978) 82 Cal.App.3d 582, 593 (“A specific provision relating to a particular subject will govern in respect to that subject, as against a general provision, although the latter, standing alone, would be broad enough to include the subject to which the more particular provision relates.”).
Additionally, to the extent the above-quoted ambiguous language in Paragraphs 1 and 9 might be interpreted as rendering the cut-off date in Paragraph 4 nugatory, namely, substituting October 19 rather than October 10 as the controlling date, such ambiguity must be construed against TPIR, the drafter of the Release and the party in a far superior bargaining position. The trial court thus erred in ruling all claims accruing on or before October 19, 2000, were subject to arbitration.
Federal National Mortgage Assn. v. Bugna (1997) 57 Cal.App.4th 529, 535 (“When ambiguities exist they are construed against the drafter of the instrument.”).
C. Claims Accruing On Or After October 19 Are Not Arbitrable.
I conclude Riegert’s claims arising from her alleged wrongful termination or the wrongful failure to hire or rehire her, none of which arose prior to October 19, 2000, fell outside the scope of the arbitration clause, which only applied to claims arising on October 10, 2000, or before.
In wrongful termination cases, whether based on theories of contract, tort, and/or violations of FEHA, the plaintiffs’ claims do not accrue until the date their employment is actually terminated, rather than on the date they may be unequivocally informed their employment will be terminated.
See, e.g., Romano v. Rockwell Internat. Inc., supra, 14 Cal.4th at pages 483-484 (statute of limitations begins to run on date employment terminated, not on date employee informed his employment would be terminated); Colores v. Board of Trustees (2003) 105 Cal.App.4th 1293, 1320 (holding “for purposes of filing a tort claim for wrongful termination, the cause of action accrues when the employment is actually terminated”); see generally, Howard Jarvis Taxpayers Ass’n v. City of La Habra (2001) 25 Cal.4th 809, 815 (“‘Generally, a cause of action accrues and the statute of limitation begins to run when a suit may be maintained. [Citations.] “Ordinarily this is when the wrongful act is done and the obligation or the liability arises, but it does not “accrue until the party owning it is entitled to begin and prosecute an action thereon.” [Citation.] In other words, “[a] cause of action accrues ‘upon the occurrence of the last element essential to the cause of action. [Citations.]’ [Citation.]”)
In this case, the announced date and actual date of termination were the same. The Release provided Riegert would be “laid off effective October 19, 2000[.]” Riegert was actually “laid off” on October 19, 2000, which was not the date she was handed the agreement nor the date it was executed, i.e., the date she signed it. October 19, 2000 thus is both the date when Riegert was terminated and when her claims for wrongful termination arose. Similarly, Riegert’s claim for failure to hire or rehire also fell outside the scope of the arbitration agreement. At a minimum, such claim could not arise until after she was terminated by TPIR on October 19. Moreover, in their opening brief, respondents assert “it was undisputed that . . . Fremantle made the decision not to hire Riegert in July 2000, and informed her of the decision on October 19, 2000. . . .” But they did not fail to hire or rehire her until October 20, 2000, so that cause of action also was not covered by the arbitration clause.
“The term ‘layoff’ is not generally defined. However, at least one industry defines the term. . . . (See e.g., Lab.Code, § 201.5 (in the motion picture industry, ‘“layoff” means the termination of employment of an employee where the employee retains eligibility for reemployment with the employer’.) . . . . In other contexts, courts reason a layoff due to a reduction in force may, on proper showing, constitute the basis for a common law tort or statutory claim of discriminatory termination. (See e.g., O’Mary v. Mitsubishi Electronics America, Inc. (1997) 59 Cal.App.4th 563, 579-580 . . . [noting an economically necessary lay-off due to reduction in force may violate anti-discrimination laws if the layoff is based on illegal criteria].)” (Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 45, fn 7.)
Riegert’s claims arising from her alleged wrongful termination and the wrongful refusal to hire or rehire her, all of which arose after the cut-off date for arbitrable claims, therefore were not subject to arbitration pursuant to the arbitration clause in the Release.
For this alternative but sufficient reason, I conclude the trial court erred in ordering to arbitration Riegert’s claims which accrued on October 19 and October 20, 2000 – even assuming the arbitration clause itself were not unconscionable. For the same reason, the court erred in confirming the award, and the matter should be remanded with directions to vacate the award.
III. Even Assuming The Arbitration Clause Is Not Unconscionable And Embraced Claims Based On TPIR’s October 19 Termination Of Riegert, It Did Not Apply To Fremantle’s October 20 Failure To Hire Or Rehire Riegert.
A third alternative rationale supports a partial reversal rather than a complete reversal of the trial court’s order confirming the arbitration award. Specifically, it supports reversal of the trial court’s order, which came late in the proceedings in that court, consigning Riegert’s claim against the Fremantle respondents to join the claims against TPIR to be decided in arbitration. This again rests on an interpretation of the contract. The same principles of contract interpretation and especially those pertaining to interpretation of arbitration clauses as were discussed above apply here.
See pages 1-4, above.
In its very first sentence, the Release defines this agreement as being made between the employer, “TPIR, LCC” and the employee,” Linda Riegert.” In the first numbered paragraph, the Release states its purpose is to “settle and resolve any differences and/or disputes that have or may have arisen between Employer [e.g., TPIR, LCC] and Employee [e.g., Riegert].” There is no mention it is intended to settle or resolve any future disputes that have not already arisen or potentially arisen out of past conduct (even future disputes involving TPIR). Nor is there mention it is intended to settle or resolve any disputes, past or future, between a future employer (such as Fremantle) and Riegert. Provisions of the contract which conceivably conflict with this definition of the scope of the contract and the parties and conduct to which it relates can only introduce ambiguity. Any such ambiguity, if there were any, would have to be construed against the party who drafted the contract and any other party whose claim depends on that contract drafter.
Federal National Mortgage Assn. v. Bugna, supra, 57 Cal.App.4th at page 535 (“When ambiguities exist they are construed against the drafter of the instrument.”).
As discussed in the previous section, numbered paragraph 4 once again only mentions “claims, rights, causes of action, and potential suits” Riegert “may have or claim to have had, arising any time in the past” up to “the date this Release was executed.” The date of execution, as explained earlier, was October 10, when Riegert signed the Release. So, once again the subject of the agreement clearly does not relate to future conduct by a different entity, that is, Fremantle, which took over the responsibilities TPIR had been discharging. Because, at the maximum, the arbitration “clause” in TPIR’s agreement with Riegert is co-extensive with the scope of that agreement, it cannot apply to Fremantle’s failure to hire or rehire which occurred on October 20, 2000, conduct clearly beyond the subject matter and the time frame of that agreement, i.e., the Release.
In my view, the trial court therefore erred in ordering the arbitrator hear the cause of action based on Fremantle’s failure to hire or rehire Riegert. Accordingly, at a minimum I would reverse the trial court’s confirmation of that portion of the arbitrator’s award.
The majority challenges October 20, 2000 as the date Riegert’s claim against Fremantle arose and reasons: “[I]t was undisputed Pearson [Fremantle’s predecessor] had made the decision not to hire Riegert in July 2000 and informed her of the decision on October 19, 2000. . . . . In terms of timing, therefore, all of the conduct underlying Riegert’s claims occurred no later than October 19, 2000; and any tortuous or unlawful element to that decision falls within the broad scope of the [Release]’s arbitration provision.”
It is unclear how Pearson’s undisclosed decision in July 2000 not to hire Riegert is relevant. Riegert was not terminated until October 19, 2000. Similarly irrelevant was Fremantle’s announcement to her that same day of its intent not to hire (or rehire) her, namely, on October 20, 2000. At most, this announced intent might be characterized as an anticipatory non-hiring (or non-rehiring) of Riegert. It is well-established a wrongful termination case does not accrue until the employee is actually terminated and not when the employer makes the decision to terminate that employee. Similarly, Riegert’s claim against Fremantle for not hiring (or rehiring) her did not arise until October 20, 2000, when Fremantle in fact did not hire (rehire) Riegert. Whether Fremantle, or its predecessor Pearson, decided not to hire Riegert before October 20, 2000 is irrelevant to the issue of when Riegert’s claim against Fremantle for failing to hire (or rehire) Riegert arose. Accordingly, it was error to order this cause of action arbitration pursuant to the arbitration clause of this agreement even were that clause not unconscionable.
See Romano v. Rockwell Internat. Inc., supra, 14 Cal.4th at pages 483-484 (wrongful termination cases, whether arising in contract or tort or based on FEHA violations, accrue on date employment actually terminated, not date on which employee unequivocally informed his employment will be terminated).
Because these alternative grounds apply to all of Riegert’s causes of action I need not address here whether arbitration was proper as to non-signatories to the Release.