Opinion
A150032
03-08-2018
AARON CASTRO, Plaintiff and Respondent, v. SBM SITE SERVICES, LLC, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(San Mateo County Super. Ct. No. 16CIV00083)
Before he began working for SBM Site Services (SBM), Aaron Castro signed an agreement requiring arbitration of disputes "arising out of or related to" his employment. About six months later, Castro signed a trade secret agreement which, among other things, prohibited Castro from using or disclosing SBM's trade secrets and confidential information without SBM's authorization. The trade secret agreement required disputes "arising out of" that agreement to be litigated in state or federal court in Sacramento County.
After his termination, plaintiff filed a lawsuit alleging SBM refused his request for time off and fired him in retaliation for seeking medical leave. SBM moved to compel arbitration pursuant to the arbitration agreement. The trial court denied the motion. It concluded the trade secret agreement rendered the arbitration agreement substantively unconscionable, and that the unconscionability could not be severed.
SBM appeals. It contends: (1) the arbitrator, not the trial court, must determine whether the arbitration agreement is enforceable; (2) the arbitration agreement is not unconscionable; and (3) any allegedly unconscionable provisions should have been severed. We reverse and remand for arbitration. We conclude the court—not the arbitrator—was charged with determining whether the arbitration agreement was enforceable. We also conclude the trade secret agreement did not render the arbitration agreement unconscionable. The arbitration agreement is therefore enforceable.
We deny SBM's request for judicial notice of the "most recent version" of the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (AAA rules). "Reviewing courts generally do not take judicial notice of evidence not presented to the trial court. . . . '[An] appellate court will consider only matters which were part of the record at the time the judgment was entered.' " (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.)
FACTUAL AND PROCEDURAL BACKGROUND
SBM is a janitorial and maintenance services company. On August 28, 2013—shortly before his first day of work at SBM—Castro signed the following one-page arbitration agreement, which provided in approximately 7-point font:
"To resolve employment disputes in an efficient and cost-effective manner, you and Company agree that any and all claims arising out of or related to your employment that could be filed in a court of law, including but not limited to, claims of unlawful harassment or discrimination, wrongful demotion, defamation, wrongful discharge, breach of contract or invasion of privacy, shall be submitted to final and binding arbitration, and not to any other forum. The arbitration process shall be initiated by delivering a written request for arbitration to the other party within the time limits that would apply to the filing of a civil complaint in court. A late request will be void. No claim should be submitted to arbitration without first attempting to resolve the matter informally and exhausting Company's internal procedures.
". . . The arbitrator shall conduct the arbitration in accordance with the procedures set forth in the most recent version of the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. However, no procedures of the American Arbitration Association shall invalidate the enforceability of this Agreement. Company shall pay all the costs that are unique to the arbitration forum. [¶] . . . [¶]
"This arbitration shall be the exclusive means of resolving any claim arising out of your employment, and no action will be filed in any court or other forum. However, nothing in this agreement will affect the National Labor Relations Board, Workers' Compensation Appeals Board, Unemployment Insurance Appeals Board, Department of Fair Employment and Housing or Equal Employment Opportunity Commission proceedings, petitions for judicial review of a decision issued after an administrative hearing or the ability of either party to seek injunctive relief in an appropriate court of law.
"If any court of competent Jurisdiction declares that any part of this arbitration agreement is illegal, invalid or unenforceable, such a declaration will not affect the legality, validity or enforceability of the remaining parts of the agreement, and the illegal, invalid or unenforceable part will no longer be part of this agreement.
"This agreement sets forth the entire agreement between the parties and supersedes any and all prior or contemporaneous agreements and understandings, whether written, oral or implied, pertaining to the subject matter of this agreement.
"THIS ARBITRATION AGREEMENT IS A WAIVER OF ALL RIGHTS TO A CIVIL JURY TRIAL FOR CLAIMS ARISING OUT OF YOUR EMPLOYMENT."
In February 2014, Castro signed a "Trade Secret Protection and Fair Competition Agreement (CA - Continued Employment)" (trade secret agreement). As relevant here, the trade secret agreement prohibited Castro from: (1) disclosing or using SBM's trade secrets and confidential information without SBM's authorization; (2) soliciting the sale of products or services competitive with those offered by SBM; (3) soliciting SBM employees from leaving the company; and (4) disparaging or defaming SBM. The trade secret agreement also required Castro to return SBM's property upon termination of Castro's employment.
The trade secret agreement contained an "Exclusive Jurisdiction" clause providing in relevant part: "Any and all lawsuits, legal actions or proceedings against either party arising out of this Agreement will be brought in California state court in Sacramento County or the California federal court of competent jurisdiction in Sacramento County, and each party shall submit to and except the exclusive jurisdiction of such court for the purpose of such suit, legal action or proceeding. Each party irrevocably waives any objection it may have . . . to this choice of venue and further waives any claim that any suit, legal action or proceeding brought in any such court has been brought in an inappropriate forum." Finally, the trade secret agreement included an integration clause providing: "This Agreement constitutes the entire understanding between [SBM] and [Castro] and supersedes all earlier representations and understandings, whether oral or written with respect to its subject matter."
Castro's Complaint and SBM's Motion to Compel Arbitration
In May 2015, SBM terminated Castro's employment. Castro filed a complaint against SBM alleging 12 causes of action, including claims under the Fair Employment Housing Act, California Family Rights Act, and the Unfair Competition Law, and for wrongful termination in violation of public policy. The gravamen of Castro's complaint was SBM refused his request for time off for a work-related injury and fired him in retaliation for seeking medical leave.
SBM moved to compel arbitration under the California Arbitration Act (Code Civ. Proc., § 1281 et seq.) and the Federal Arbitration Act (9 U.S.C. § 1 et seq.). SBM argued Castro "signed a binding and enforceable agreement to arbitrate 'any and all claims arising out of or related to [his] employment' " and that his claims came within the scope of the arbitration agreement. SBM also argued the arbitration agreement was not unconscionable and, in the alternative, that any unconscionable terms could be severed from that agreement.
In opposition, Castro claimed the trade secret agreement superseded and abrogated the arbitration agreement and, as a result, there was "no arbitration agreement." Castro also contended the trade secret and arbitration agreements were unconscionable, and urged the court to decline to sever the unconscionable terms. In a supporting declaration, Castro averred he was required to sign the arbitration and trade secret agreements, and that he had "no choice" in the wording, and no opportunity to "negotiate the terms." Castro also averred the arbitration agreement's small typeface made it "impossible to read."
SBM's reply urged the court to reject Castro's focus on the trade secret agreement. SBM argued that agreement did not modify or supersede the arbitration agreement, and that the trade secret agreement had "absolutely no bearing on the [a]rbitration [a]greement." In addition, SBM claimed Castro "ignore[d] the gateway question of what entity" should determine the enforceability of the arbitration agreement. As SBM explained, the arbitrator—not the court—should determine enforceability because the arbitration agreement incorporated the AAA rules, specifically Rule 6, which specifies " '[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement . . . [sic] power to determine the existence or validity of a contract of which an arbitration clause forms a part.' " Finally, SBM reiterated its arguments regarding unconscionability and severance.
Order Denying the Motion to Compel Arbitration
In a supplemental brief, SBM argued the arbitrator must decide the enforceability issue. As SBM explained: "Under both state and federal law, the court determines the enforceability of an arbitration agreement unless the parties agree otherwise pursuant to what is commonly referred to as a delegation clause. Accordingly, courts must defer 'questions of arbitrability' to the arbitrator where the parties have 'clearly and unmistakably' agreed that the arbitrator must decide those issues." SBM contended the arbitration agreement incorporated the AAA rules, which constituted an agreement that the arbitrator would decide enforceability.
Castro disagreed. According to Castro, the agreement's reference to the AAA rules—without describing the rules or attaching them to the arbitration agreement—was not "enough to show that the parties agreed to 'delegate' the gateway question to an arbitrator." Castro also claimed Rule 6 did not provide "that the arbitrator has the sole or exclusive power" to determine the enforceability issue.
Following a hearing, the court denied SBM's motion to compel arbitration. First, the court concluded SBM did not establish, "by 'clear and unmistakable' evidence, that the parties intended to delegate the issue of arbitrability to the arbitrator." The court noted it was tasked with determining two " 'gateway' issues: (1) whether there is an arbitration agreement between the parties, and (2) whether the agreement covers the dispute. [Citation.] However, these gateway issues can be expressly delegated to the arbitrator where the parties 'clearly and unmistakably provide otherwise.' [Citation.] In such a case, a court's inquiry is limited to whether the assertion of arbitrability is wholly groundless. [Citation.]"
The court determined the arbitration agreement did "not specifically provide for the arbitrator to determine if the arbitration agreement is enforceable." It considered Rule 6, which "purportedly states that '[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.' " According to the court, SBM's failure to provide the court with copy of the AAA rules provided basis to reject the argument. Nevertheless, the court analyzed the argument and rejected it on the merits. Relying principally on Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771 (Ajamian), the court determined the arbitration agreement did not evidence a clear and unmistakable intent to delegate the enforceability issue to the arbitrator.
Next, the court determined the trade secret agreement did not supersede the arbitration agreement. As the court explained, the trade secret agreement pertained to "trade secret protection and confidential matters, and specifies that it is the entire understanding between the parties 'with respect to its subject matter.' Thus, . . . it does not supersede the arbitration agreement with respect to [Castro]'s claims since [those] claims do not involve any of the claims that are the subject matter of the trade secret agreement."
The court, however, determined the trade secret agreement rendered the arbitration agreement unconscionable. According to the court: "Procedurally, both the arbitration agreement and trade secret agreement were presented to [Castro] on a take-it-or-leave-it basis, with no opportunity to negotiate the terms or to consult an attorney. [¶] Further, by requiring [Castro] to enter into the trade secret agreement, the arbitration agreement became one-sided and no longer mutual, which supports a finding of substantive unconscionability here. The arbitration agreement alone provided for a mutuality of obligation as both parties were required to submit to binding arbitration any employment related disputes. By requiring Plaintiff to thereafter sign the trade secret agreement, [SBM] materially changed the terms such that the result led to a one-sided agreement. Specifically, the trade secret agreement permits [SBM] to now pursue certain claims in court that would previously have been arbitrated. Although [SBM] contends that the trade secret agreement also permits the employee to pursue any claims under the trade secret agreement in court, this argument is unpersuasive as any claims under the trade secret agreement are disputes likely to be initiated by the employer." The court determined the unconscionability issue could not be resolved through severance and that "the arbitration agreement is unconscionable in light of the trade secret agreement."
DISCUSSION
"A petition to compel arbitration is simply a suit in equity seeking specific performance of a contract. [Citation.] The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement, while the party opposing the petition bears the burden of establishing a defense to the agreement's enforcement. [Citation.] [¶] When conflicting extrinsic evidence was not offered below, we apply a de novo, or independent, standard of review on appeal from a trial court's determination of whether an arbitration agreement applies to a particular controversy." (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 890 (Aanderud).)
Because the essential facts are undisputed, we independently review the court's conclusions regarding delegation and unconscionability. (Aanderud, supra, 13 Cal.App.5th at p. 890; Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th 713, 722.) " ' "In keeping with California's strong public policy in favor of arbitration, any doubts regarding the validity of an arbitration agreement are resolved in favor of arbitration." ' " (Farrar v. Direct Commerce, Inc. (2017) 9 Cal.App.5th 1257, 1266 (Farrar).)
I.
SBM Did Not Establish by "Clear and Unmistakable Evidence" the Parties Intended to
Delegate the Enforceability Issue to the Arbitrator
SBM contends the arbitration agreement delegates the enforceability issue to the arbitrator, and as a result, the court erred by deciding that issue. We disagree.
" '[C]ourts presume that the parties intend courts, not arbitrators, to decide . . . disputes about "arbitrability," . . . such as "whether the parties are bound by a given arbitration clause," or "whether an arbitration clause in a concededly binding contract applies to a particular type of controversy." ' [Citation.] However, 'parties can agree to arbitrate "gateway" questions of "arbitrability," such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.' [Citation.] [¶] 'Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, . . . so the question "who has the primary power to decide arbitrability" turns upon what the parties agreed about that matter.' [Citations.] 'Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance under the FAA [citation], the "[p]arties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions regarding the enforceability of the agreement." ' [Citation.] The examination of who has the primary power to determine arbitrability is conducted, at least initially, through the prism of state law." (Aanderud, supra, 13 Cal.App.5th at pp. 891-892; see also Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 244 (Sandquist).)
SBM's reliance on federal law is not persuasive. In Sandquist, supra, 1 Cal.5th at page 248, our high court analyzed the delegation issue "as a matter of state contract law."
"There are two prerequisites for a delegation clause to be effective." (Aanderud, supra, 13 Cal.App.5th at p. 892.) First, "it must be shown by 'clear and unmistakable' evidence that the parties intended to delegate the issue to the arbitrator." (Ajamian, supra, 203 Cal.App.4th at p. 781.) "The 'clear and unmistakable' test reflects a 'heightened standard of proof' that reverses the typical presumption in favor of the arbitration of disputes." (Aanderud, at p. 892.) This is so "because the question of who would decide the unconscionability of an arbitration provision is not one that the parties would likely focus upon in contracting, and the default expectancy is that the court would decide the matter. [Citation.] Thus, . . . a contract's silence or ambiguity about the arbitrator's power in this regard cannot satisfy the clear and unmistakable evidence standard." (Ajamian, at p. 782.)
An express provision directing the arbitrator to determine the enforceability issue "constitute[s] clear and unmistakable evidence." (See, e.g., Aanderud, supra, 13 Cal.App.5th at p. 892 [explicit language in arbitration agreement was evidence the parties intended to "arbitrate arbitrability"]; Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 79-80 [contract contained "express agreement" to have the arbitrator decide arbitrability]; see also Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1560 [delegation clause providing "[t]he arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement" was clear and unmistakable]; Ajamian, supra, 203 Cal.App.4th at p. 786 [suggesting "express language" that "the arbitrator shall decide questions of the enforceability of the arbitration provision" would constitute clear and unmistakable evidence].)
Here, the arbitration agreement contains no such express language. Instead, it provides: "The arbitrator shall conduct the arbitration in accordance with the procedures set forth in the most recent version of the" AAA rules. An "arbitration provision's reference to, or incorporation of, arbitration rules that give the arbitrator the power or responsibility to decide issues of arbitrability may constitute clear and unmistakable evidence the parties intended the arbitrator to decide those issues." (Aanderud, supra, 13 Cal.App.5th at p. 892, italics added.) Assuming for the sake of argument the arbitration agreement's reference to the AAA rules is some indication of an intent to delegate the enforceability issue to the arbitrator, it is not clear and unmistakable evidence.
Two cases—Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110 and Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547—held a commercial arbitration contract's proviso that the arbitration would be conducted pursuant to specified arbitration rules constituted clear and unmistakable evidence the parties agreed to have the arbitrator determine the scope of the arbitration agreement. (See Ajamian, supra, 203 Cal.App.4th at p. 789.) Rodriguez and Dream Theater are of limited value here because this case does not involve a commercial arbitration agreement, nor a dispute regarding the scope of the arbitration agreement.
Ajamian supports our conclusion. There, an employment agreement provided all disputes arising out of the agreement would be resolved by arbitration conducted pursuant to the rules of the National Association of Securities Dealers (NASD) or "the American Arbitration Association or any other alternative dispute resolution organization." (Ajamian, supra, 203 Cal.App.4th at p. 777.) The trial court denied the petition to compel arbitration and defendants appealed, arguing the arbitration panel should have decided whether the arbitration clause was unconscionable. (Id. at p. 775.) To support their argument, defendants relied on the agreement's reference to the AAA rules, which "state that the arbitrator has the power to determine issues of his or her own jurisdiction." (Id. at p. 788.) We rejected this argument, holding: While "the incorporation of AAA rules into an agreement might be sufficient indication of the parties' intent in other contexts, we seriously question how it provides clear and unmistakable evidence that an employer and an employee intended to submit the issue of the unconscionability of the arbitration provision to the arbitrator, as opposed to the court. There are many reasons for stating that the arbitration will proceed by particular rules, and doing so does not indicate that the parties' motivation was to announce who would decide threshold issues of enforceability." (Id. at p. 790.)
We explained that "the reference to AAA rules does not give an employee, confronted with an agreement she is asked to sign in order to obtain or keep employment, much of a clue that she is giving up her usual right to have the court decide whether the arbitration provision is enforceable. Assuming that an employee reads the arbitration provision in the proposed agreement, notes that disputes will be resolved by arbitration according to AAA rules, and even has the wherewithal and diligence to track down those rules, examine them, and focus on the particular rule to which appellants now point, the rule merely states that the arbitrator shall have 'the power' to determine issues of its own jurisdiction, including the existence, scope and validity of the arbitration agreement. This tells the reader almost nothing, since a court also has power to decide such issues, and nothing in the AAA rules states that the AAA arbitrator, as opposed to the court, shall determine those threshold issues, or has exclusive authority to do so, particularly if litigation has already been commenced." (Ajamian, supra, 203 Cal.App.4th at p. 790.)
We also noted the employment agreement "did not mandate that AAA rules would necessarily apply. Instead, the arbitration clause stated that the arbitration would be held according to NASD rules, AAA rules, or the rules of 'any other alternative dispute resolution organization' selected by [the defendant] in its sole discretion." (Ajamian, supra, 203 Cal.App.4th at p. 791.)
Ajamian's reasoning applies here. SBM does not contend Castro received a copy of the AAA rules when he signed the arbitration agreement, nor that the rules were known to Castro or easily available to him at the time he signed the contract. (The AAA rules were not before the trial court and are not part of the appellate record.) As in Ajamian, we doubt the arbitration agreement's reference to the AAA rules gave Castro "much of a clue" he was agreeing to have the arbitrator decide the enforceability issue. (Ajamian, supra, 203 Cal.App.4th at p. 790.) Furthermore, the fact that one of the AAA rules apparently authorizes the arbitrator to decide enforceability issues does not mean that only the arbitrator has such authority, nor that the parties were actually agreeing the enforceability issue would be presented to the arbitrator rather than to the court. (Id. at pp. 790-791.) As in Ajamian, we conclude the "mere possibility" that SBM might, in the future, require application of the AAA rules does not show that Castro clearly and unmistakably assented to submit the enforceability issue to the arbitrator. (Id. at p. 791.)
Moreover, other language in the arbitration agreement creates "an ambiguity that renders the totality of the evidence on the issue neither clear nor unmistakable." (Ajamian, supra, 203 Cal.App.4th at p. 792.) The arbitration agreement's severability provision provides: "If any court of competent jurisdiction declares that any part of this arbitration agreement is illegal, invalid or unenforceable, such a declaration will not affect the legality, validity or enforceability of the remaining parts of the agreement, and the illegal, invalid or unenforceable part will no longer be part of this agreement." Where—as here—"one contractual provision indicates that the enforceability of an arbitration provision is to be decided by the arbitrator, but another provision indicates that the court might also find provisions in the contract unenforceable, there is no clear and unmistakable delegation of authority to the arbitrator." (Ibid.; see Sandquist, supra, 1 Cal.5th at pp. 247-248 [construing ambiguity in an employment agreement's arbitration provision against drafter].)
Numerous cases support our conclusion. (See Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 240 [agreement pointing "in two directions" did not clearly and unmistakably delegate enforceability issue to the arbitrator]; Peleg v. Neiman Marcus Group, Inc. (2012) 204 Cal.App.4th 1425, 1444-1445 [inconsistency between "delegation and severability provisions indicate[d] the parties did not clearly and unmistakably delegate enforceability questions to the arbitrator"]; Hartley v. Superior Court (2011) 196 Cal.App.4th 1249, 1257-1258 [read together, arbitration and severability provisions did "not meet the heightened standard that must be satisfied to vary from the general rule that the court decides the gateway issue of arbitrability"].)
We conclude the arbitration agreement's reference to the AAA rules does not constitute "clear and unmistakable" evidence the parties intended to delegate the enforceability issue to the arbitrator. Thus, whether the arbitration agreement was enforceable was for the court to decide. Having reached this result, we need not analyze the second delegation factor, i.e. whether the delegation clause is revocable under state contract defenses to enforcement. (See Aanderud, supra, 13 Cal.App.5th at p. 892.)
II.
The Arbitration Agreement is Not Unconscionable, and the Trade Secret Agreement Does
Not Preclude Enforcing the Arbitration Agreement
Next, SBM contends the trade secret agreement "does not prevent enforcement of the arbitration agreement." We agree.
"Unconscionability consists of both procedural and substantive elements. The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] . . . [¶] Both procedural unconscionability and substantive unconscionability must be shown, but 'they need not be present in the same degree' and are evaluated on ' "a sliding scale." ' [Citation.] '[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.' " (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246-247.) As the party opposing arbitration, Castro bears the burden of proving unconscionability. (Id. at p. 247; Ajamian, supra, 203 Cal.App.4th at p. 795.)
The court determined the arbitration and trade secret agreements were procedurally unconscionable because they were presented to Castro "on a take-it-or-leave-it basis, with no opportunity to negotiate the terms or to consult an attorney." We conclude the adhesive nature of the arbitration agreement is "sufficient to establish some degree of procedural unconscionability," (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915), but that this record contains "no evidence of 'oppression' or 'sharp practices' on the part of [CBM]." (Farrar, supra, 9 Cal.App.5th at p. 1269 [no surprise where, among other things, plaintiff knew of arbitration agreement before commencing work]; Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 249 (Nguyen) [failure to attach AAA rules did not increase procedural unconscionability].)
For these same reasons, the trade secret agreement also exhibits a low level of procedural unconscionability. (See O'Donoghue v. Superior Court (2013) 219 Cal.App.4th 245, 258-259 [low level of procedural unconscionability where elements of surprise and oppression were absent].)
Because the arbitration agreement presents at most a modest degree of procedural unconscionability, it remains " ' "enforceable unless the degree of substantive unconscionability is high." ' " (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1470.) "Under the sliding-scale approach, [Castro] is obligated to make a strong showing of substantive unconscionability to render the arbitration provision unenforceable." (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 181.) He cannot. The trial court suggested the arbitration agreement—by itself—was not substantively unconscionable, noting it "provided for a mutuality of obligation as both parties were required to submit to binding arbitration any employment-related disputes." Castro does not contend otherwise—he does not argue the arbitration agreement, standing alone, is substantively unconscionable, nor does he challenge particular provisions of the arbitration agreement. "Failure to brief [an] issue constitutes a waiver or abandonment of the issue on appeal." (Behr v. Redmond (2011) 193 Cal.App.4th 517, 538; see Farrar, supra, 9 Cal.App.5th at p. 1269, fn. 2.) As a result, Castro has not demonstrated the arbitration agreement—standing alone—is substantively unconscionable.
The court determined the trade secret agreement did not supersede the arbitration agreement because Castro's claims did "not involve any of the claims that are the subject matter of the trade secret agreement." But then the court concluded the arbitration agreement was unconscionable "in light of" the trade secret agreement, because it allowed SBM to "pursue certain claims in court that would previously have been arbitrated" under the arbitration agreement. This second conclusion was erroneous. The trade secret agreement has no bearing on the resolution of Castro's claims against SBM. It is a separate document, which does not pertain to any of the claims alleged in Castro's complaint. The trade secret agreement does not incorporate the arbitration agreement by reference, nor expressly limit the scope of that agreement. (See, e.g. Fillpoint, LLC v. Maas (2012) 208 Cal.App.4th 1170, 1181 [where agreements referenced each other, they should have "be[en] read together as an integrated agreement"]; Farrar, supra, 9 Cal.App.5th at pp. 1261, 1263, 1272 [arbitration agreement contained "express exception for 'any claim' based on" a separate confidentiality agreement].)
As stated above, the court determined the trade secret agreement authorized SBM to "pursue certain claims in court that would previously have been arbitrated" and that trade secret disputes are "likely to be initiated by the employer." The court seems to have concluded the trade secret agreement exhibited a lack of mutuality, but this conclusion overlooks the plain language of that agreement, which provides "[a]ny and all" disputes "arising out of" the trade secret agreement will be litigated in state or federal court in Sacramento County. The trade secret agreement created a mutual obligation to litigate. (See Nguyen, supra, 4 Cal.App.5th at p. 253 [rejecting lack of mutuality argument and concluding "arbitration clause did not contain . . . language reserving to defendant the right to pursue legal remedies"].)
Castro repeatedly claims the arbitration agreement and trade secret agreement must be "read together." He also contends the trade secret agreement "unfairly changed" and "modifie[d]" the arbitration agreement. We reject these conclusory arguments because they are unsupported by reasoned argument or authority. " 'When an issue is unsupported by pertinent or cognizable legal argument it may be deemed abandoned and discussion by the reviewing court is unnecessary.' [Citation.] 'Issues do not have a life of their own: if they are not raised or supported by argument or citation to authority, [they are] waived.' " (Okorie v. Los Angeles Unified School Dist. (2017) 14 Cal.App.5th 574, 600; Dabney v. Dabney (2002) 104 Cal.App.4th 379, 384.)
Castro, for example, does not discuss basic principles of contract interpretation, nor does he argue the two agreements should be "taken together" under Civil Code section 1642 because they relate "to the same matters, between the same parties, and made as parts of substantially one transaction."
The trade secret agreement does not affect the enforceability of the arbitration agreement: it does not render the arbitration agreement substantively unconscionable. As a result, Castro has failed to satisfy his burden to establish the arbitration agreement is unenforceable. As we have stated, and " ' "[i]n keeping with California's strong public policy in favor of arbitration, any doubts regarding the validity of an arbitration agreement are resolved in favor of arbitration." ' " (Farrar, supra, 9 Cal.App.5th at p. 1266.) Applying this policy here, we must reverse the court's order denying the motion to compel arbitration.
Even if we assume for the sake of argument the two agreements should be read together as a single document, or that the trade secret agreement somehow modified the arbitration agreement, rendering the arbitration agreement substantively unconscionable, we would conclude the court erred by declining to sever the allegedly unconscionable provision or provisions of the trade secret agreement. (See Farrar, supra, 9 Cal.App.5th at p. 1275 [unconscionable provision was severable from remainder of arbitration agreement and trial court erred by declining to sever].)
DISPOSITION
The order denying SBM's motion to compel arbitration is reversed. The case is remanded with directions to grant the motion and order arbitration. Each party is to bear its own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
/s/_________
Jones, P. J. We concur: /s/_________
Needham, J. /s/_________
Bruiniers, J.