Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC368886, Mark V. Mooney, Judge.
Fisher & Phillips LLP, Christopher C. Hoffman, Jeffrey R. Thurrell and Lonnie D. Giamela for Defendants and Appellants.
Law Offices of Mark Weidmann P.C., Mark Weidmann and Lee Franck for Plaintiff and Respondent.
KRIEGLER, J.
Defendants and appellants Champion Chevrolet, Inc. and Champion Chevrolet LLC (collectively referred to as Champion) appeal from an order denying their motion to compel arbitration in favor of plaintiff and respondent Carlos Campos in this employment discrimination case. Champion contends Campos signed an enforceable arbitration agreement as part of his application for employment. Campos argues the agreement failed to provide the minimum requirements for judicial review under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 91 (Armendariz) and was procedurally and substantively unconscionable. Contrary to the ruling of the trial court, we hold that the arbitration agreement met the requirements for judicial review stated in Armendariz and no substantive unconscionability has been shown. We reverse with directions to grant the motion to compel arbitration.
FACTS AND PROCEDURAL BACKGROUND
Campos began working for Champion in January 2006. On January 17, 2006, Campos signed an arbitration agreement, entitled “Auto Nation Applicant’s Agreement,” requiring binding arbitration of all disputes arising out of the employment context, including discrimination and harassment claims.
Rules of arbitration were provided as follows: “In addition to requirements imposed by law, any arbitrator herein shall be a retired state or federal court judge, or licensed attorney with arbitration experience, as mutually agreed to by the parties, and shall be subject to disqualification on the same grounds as would apply to a judge of a court of relevant jurisdiction. The arbitrator shall follow controlling law and issue a decision in writing within 45 days of the arbitration hearing with a supporting opinion based on applicable law. At either party’s election, such decision and supporting opinion may be appealed to another arbitrator (‘Appellate Arbitrator’), who shall be chosen in the same manner as described above. The Appellate Arbitrator shall apply to the underlying decision and opinion the same standard for review of civil cases as an appellate court in the relevant jurisdiction and issue a decision in writing with a supporting opinion based on such review and applicable law. The Appellate Arbitrator’s decision shall be final, binding and conclusive on the parties and may be entered in any court of competent jurisdiction.”
In addition, the arbitration was to be conducted under the Federal Arbitration Act (FAA) “in conformity with the procedures set forth in the applicable statutes.” The agreement contained a severability provision stating that in the event a provision was declared void or unenforceable, it was to be severed or modified by the arbitrator or the court and the remainder of the agreement would be enforceable. In capital letters, the agreement stated: “If you have any questions regarding this agreement, please ask a company representative before signing.”
Campos ceased his employment on April 18, 2006. On April 2, 2007, Campos filed a complaint against Champion and a person of unknown last name alleging harassment and discrimination. Champion filed a motion to compel arbitration and stay the proceedings. Campos opposed the motion on the grounds that the agreement failed to meet minimum requirements to be enforceable as set forth in Armendariz and was procedurally and substantively unconscionable. After a hearing on June 12, 2007, the trial court denied the motion to compel. Champion filed a motion for reconsideration, which the trial court denied. Champion filed a timely notice of appeal.
DISCUSSION
Standard of Review
We conduct de novo review of the denial of a motion to compel arbitration on the grounds that the agreement is unenforceable. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 710.)
Armendariz Requirement for Judicial Review
Champion contends the arbitration agreement meets the minimum requirements set forth in Armendariz. Campos argues the agreement fails to provide for judicial review as described in Armendariz. Campos is incorrect.
California and federal laws favor enforcement of valid arbitration agreements. (Armendariz, supra, 24 Cal.4th at p. 97.) The Armendariz court explained that one of the minimum requirements of a valid arbitration agreement is that “an arbitrator in a [case under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.)] must issue a written arbitration decision that will reveal, however briefly, the essential findings and conclusions on which the award is based,” in order to allow judicial review sufficient to ensure an arbitrator complied with the requirements of a statute. (Armendariz, supra, 24 Cal.4th at pp. 106-107.) In other words, the agreement’s arbitration provisions must require “a written decision that will permit a limited form of judicial review.” (Id. at p. 91.)
The arbitration agreement in this case clearly requires both the arbitrator and the appellate arbitrator to issue written decisions, in conformance with the requirements of Armendariz, allowing for judicial review of the decision in the limited manner provided by law.
The presence of a second level of review in the arbitration agreement, applying rules similar to those applicable on appeal, does not run afoul of Armendariz. In Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 330, footnote 9 (Cummings), the court upheld a second level of appellate review which is indistinguishable from that in this case, “so long as there is no dollar amount threshold for invoking it (which would make it almost exclusively an employer remedy).” We agree with the Cummings court.
Finally, we note that Campos is incorrect in arguing that there is a complete absence of judicial review over any arbitration award under the language of the employment agreement. If grounds exist to vacate an arbitration award, it may be challenged in the trial court pursuant to the Code of Civil Procedure section 1286.2. (Ovitz v. Schulman (2005) 133 Cal.App.4th 830, 849-853 [FAA does not preempt Code of Civil Procedure section 1286.2’s procedural grounds for setting aside an arbitration award]; Siegel v. Prudential Ins. Co. of America (1998) 67 Cal.App.4th 1270, 1272 [“We conclude the present effort to vacate the award [under the FAA] is subject to judicial review pursuant to California's arbitration statute, Code of Civil Procedure section 1286.2.”].)
Substantive Unconscionability
Champion contends the trial court erred by ruling that the agreement was enforceable as unconscionable. Campos maintains the agreement is substantively unconscionable for the same reason that it failed to meet the minimum standards of Armendariz. Campos has not shown any substantive unconscionability.
“As [Civil Code] section 1670.5, subdivision (a) states: ‘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.’” (Armendariz, supra, 24 Cal.4th at p. 114.)
“‘[U]nconscionability has both a “procedural” and a “substantive” element,’ the former focusing on ‘“oppression’” or ‘“surprise’” due to unequal bargaining power, the latter on ‘“overly harsh’” or ‘“one-sided”’ results. [Citation.] ‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ [Citation.] But they need not be present in the same degree. ‘Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.’ [Citations.] In other words, 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 p. 114.)
As discussed above, the arbitration agreement in this case meets the minimum requirement to allow for judicial review as set forth in Armendariz. The agreement allows either party to appeal an unfavorable award to a second arbitrator. The appeal provision is not substantively unconscionable; it is entirely bilateral and benefits both parties to the agreement.
Campos’s reliance on Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064 is misplaced. In Little, the Supreme Court found a provision of an arbitration agreement that allowed either party to appeal an award exceeding $50,000 to a second arbitrator was unconscionable, because it favored the defendant company. It was unlikely that an award would exceed $50,000 and still be so low that the plaintiff would want to appeal. “Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided. One such form, as in Armendariz, is the arbitration agreement's lack of a ‘“modicum of bilaterality,”’ wherein the employee’s claims against the employer, but not the employer’s claims against the employee, are subject to arbitration. (Armendariz, supra, 24 Cal.4th at p. 119.) Another kind of substantively unconscionable provision occurs when the party imposing arbitration mandates a post-arbitration proceeding, either judicial or arbitral, wholly or largely to its benefit at the expense of the party on which the arbitration is imposed.” (Little v. Auto Stiegler, Inc., supra, 29 Cal.4th at pp. 1071-1072.)
The arbitration agreement in this case meets the minimum standards set forth in Armendariz. The appeal provision is not one-sided, nor does it benefit the employer at the expense of the employee. The trial court erred in denying Champion’s motion to compel arbitration.
DISPOSITION
The order denying the motion to compel arbitration is reversed. The trial court is directed to enter a new and different order granting the motion to compel arbitration. Appellants Champion Chevrolet, Inc. and Champion Chevrolet LLC are awarded their costs on appeal.
We concur: TURNER, P. J., ARMSTRONG, J.