Vasquez v. Greene Motors

Filed 4/23/13
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

GUSTAVO E. VASQUEZ, A134829
Plaintiff and Respondent,
(Solano County
v. Super. Ct. No. FCS038384)
GREENE MOTORS, INC. et al.,
ORDER MODIFYING OPINION
Defendants and Appellants. AND DENYING REHEARING

[NO CHANGE IN JUDGMENT]

THE COURT:
It is ordered that the opinion filed herein on March 27, 2013, be modified as
follows:
1. On page 26, replace existing footnote 20 with the following footnote:
20
We also reject two other arguments of Vasquez: (1) the contract is substantively
unconscionable because it requires him to give up the right to judicial
determination of certain statutory rights without requiring Greene and Honda to
give up similar rights of their own, and (2) the arbitration clause should not be
enforced because he did not expect to find it in the contract. As to the first,
putting aside Vasquez‘s failure to specify exactly what rights he has in mind that
Greene and Honda might sacrifice, a lack of unconscionability has never been held
to depend on this type of tit-for-tat exchange. As to the second, the Supreme
Court has not mentioned the ―reasonable expectations‖ test in evaluating the
enforceability of an arbitration clause since 1985, in Dryer v. Los Angeles Rams
(1985) 40 Cal.3d 406, 416, footnote 9. Even assuming this is an appropriate
standard, it cannot be said that the presence of an arbitration clause in a preprinted
consumer contract contravenes the ―reasonable‖ expectations of a consumer, given
the modern ubiquity of such clauses.
 There is no change in the judgment.
Respondent‘s petition for rehearing is denied.
Dated:

________________________________
Margulies, Acting P.J.

A134829
Vasquez v. Greene Motors, Inc.

2
Filed 3/27/13 (unmodified version)
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

GUSTAVO E. VASQUEZ,
Plaintiff and Respondent,
A134829
v.
GREENE MOTORS, INC., et al., (Solano County
Super. Ct. No. FCS038384)
Defendants and Appellants.

After plaintiff Gustavo E. Vasquez purchased a used car on credit from defendant
Greene Motors, Inc. (Greene), the vehicle‘s financing was assigned to defendant
American Honda Finance Corporation (Honda). When Vasquez later sued Greene and
Honda in connection with the terms of the financing, defendants petitioned the superior
court to compel arbitration of the matter under a clause in the sales agreement. Vasquez
opposed the petition on the ground the arbitration clause, contained on the back of a
complex, one-page, preprinted document, was procedurally and substantively
unconscionable. The trial court agreed and denied the petition to compel.
Because the arbitration agreement was imposed on Vasquez without the
opportunity for negotiation, and was therefore adhesive, we agree the transaction was
procedurally unconscionable. In light of the minimal level of procedural
unconscionability and the absence of significant substantive unconscionability, however,
we reverse the trial court‘s denial of the petition to compel.
 I. BACKGROUND
Vasquez sued Greene and Honda in a complaint filed August 18, 2011, alleging
causes of action under the Rees-Levering Automobile Sales Finance Act (Civ. Code,1
§ 2981 et seq.), the Consumers Legal Remedies Act (§ 1750 et seq.), and the unfair
competition law (Bus. & Prof. Code, § 17200 et seq.). The complaint alleged Vasquez
purchased a used vehicle on credit from Greene, a car dealership, on January 31, 2009,
executing a retail installment sale contract. Soon after, Greene contacted Vasquez, told
him it had been unable to find third party financing for the transaction, and asked him to
execute a second retail installment sales contract. This second contract (hereafter the
Contract) was on an identical form to the first but contained somewhat different financial
terms. The sales contract was eventually assigned to Honda.
Although the Contract was executed on February 2, 2009, Vasquez alleged,
Greene backdated it to January 31, 2009, the date of the original sale. According to the
complaint, the backdating caused the financing terms in the Contract to be inaccurate,
and ―[t]he actual annual percentage rate, based on a contract consummation date of the
final purchase contract, may have varied from the disclosed annual percentage rate by
more than Regulation Z [(12 C.F.R. § 226.1 (2013))] permits.‖ Based on the variance
created by the three-day discrepancy, Vasquez sought unspecified consequential and
general damages, restitution, punitive damages, interest, an injunction against future
similar conduct, and attorney fees.
Greene and Honda filed a petition to compel arbitration on the basis of an
arbitration clause contained in the Contract. Vasquez opposed the petition on grounds the
arbitration clause was unconscionable.
The Contract was a preprinted form that is apparently commonly used by vehicle
sellers in California.2 It is a single piece of paper, 26 inches long, with dense printing on
both sides. On the upper half of the front page, contained in a series of boxes, are
1
All further statutory references are to the Civil Code unless otherwise indicated.
2
The form, No. 553-CA-ARB, printed by the Reynolds and Reynolds Company,
is discussed in other appellate decisions involving car dealers and manufacturers.

2
provisions relating largely to the financial terms of sale, credit, and insurance. Many
contain blank spaces filled in by the seller for the particular transaction. The buyer is
required to sign the Contract in 10 different places. Four signed provisions concern the
purchase (or declining) of optional items, such as insurance and a service contract. The
remaining signed provisions are acknowledgments of various legal matters: the contract
can be amended in writing only, the buyer must obtain liability insurance, the seller is
relying on the buyer‘s representations, the seller may cancel if the agreement cannot be
assigned, and the buyer has certain legal remedies. Some of these signatures are required
by law. (See §§ 2982, subd. (h); 2984.1.) Above the final signature line, on the right-
hand side, is a statement in all capital letters acknowledging the buyer was given an
opportunity to ―take and review‖ the contract and has read ―BOTH SIDES‖ of it and
noting the presence of an arbitration clause ―ON THE REVERSE SIDE.‖
The reverse side, also dense with text, contains a number of provisions in separate
boxes, many dealing with typical ―boilerplate‖ legal matters, such as warranties,
applicable law, and buyer and seller remedies. None of the provisions on the back page
requires a buyer‘s signature. Toward the bottom of the page is the arbitration clause.
The entire text of the clause is outlined in a black border. In all capital letters and bold
type at the top is written, ―ARBITRATION CLAUSE [¶] PLEASE REVIEW—
IMPORTANT—AFFECTS YOUR LEGAL RIGHTS.‖ Immediately below, three
numbered provisions, also in all capital letters, inform the buyer either party may request
arbitration, this would prevent a court or class-wide proceeding, and it might limit
discovery. Below these, in smaller type, are the actual terms of the clause. Pursuant to
these terms, the arbitration may be conducted under the auspices of the National
Arbitration Forum or the American Arbitration Association (AAA), at the election of the
buyer, or by any other mutually agreeable organization; the initial arbitration will be
conducted by a single arbitrator; it will occur in the federal district of the buyer‘s
residence; the seller must advance up to $2,500 of the buyer‘s arbitration costs; the award
is binding unless it is $0 or more than $100,000 or includes injunctive relief, in which

3
case either party can request a second arbitration before three arbitrators; and the use of
self-help remedies and small claims court is exempted.3
Vasquez submitted a declaration stating that at the closing of the purchase, he
―was presented with a stack of documents, and was simply told by the Dealership‘s
employee where to sign and/or initial each one. All of the documents (including the
purchase contracts) were pre-printed form documents. When I signed the documents, I
was not given an opportunity to read any of the documents, nor was I given an
opportunity to negotiate any of the pre-printed terms. [¶] . . . The documents were
presented to me on a take-it-or-leave-it basis, to either sign them or not buy the car. . . . I
had no reason to suspect that hidden on the back of the contracts that told me how much
the vehicle cost and how much my monthly payments would be was a section that
prohibited me from being able to sue the Dealership in court if I had a problem. [¶] . . .
[T]he Dealership did not ask me if I was willing to arbitrate any disputes with it, did not
tell me that there was an ‗arbitration clause‘ on the back side of the purchase contracts,
and I did not see any such clause before I signed the documents.‖
The trial court denied the petition to compel arbitration, relying on a since-
depublished opinion, Sanchez v. Valencia Holding Co., LLC (2011) 201 Cal.App.4th 74
(Sanchez), review granted March 21, 2012, S199119, in finding the arbitration clause
unconscionable by reason of ―adhesion, oppression, and surprise.‖4

3
For reasons of concision we have not quoted the entire clause, but we quote
specific challenged provisions when discussed in the next section.
4
The Supreme Court has also granted review of a second decision that, like
Sanchez, considered the same preprinted vehicle purchase contract addressed here.
(Goodridge v. KDF Automotive Group, Inc. (2012) 209 Cal.App.4th 325, review granted
and briefing deferred Dec. 19, 2012, S206153.) At the time of our writing, there are two
published decisions addressing the identical contract, Flores v. West Covina Auto Group,
LLC (2013) 212 Cal.App.4th 895 (Flores) and Natalini v. Import Motors, Inc. (2013)
213 Cal.App.4th 587 (Natalini). Both are the subject of currently unresolved petitions for
review in the Supreme Court. We do not directly address Flores and Natalini, but the
arguments raised in those decisions are essentially identical to the arguments addressed in
this decision.

4
 II. DISCUSSION
Greene and Honda contend the trial court erred in denying enforcement of the
arbitration clause on grounds of unconscionability.
A. Legal Background
Through enactment of a comprehensive statutory scheme regulating private
arbitration, the Legislature ―has expressed a ‗strong public policy in favor of arbitration
as a speedy and relatively inexpensive means of dispute resolution.‘ ‖ (Moncharsh v.
Heily & Blase (1992) 3 Cal.4th 1, 9.) ―The policy of [California‘s] law in recognizing
arbitration agreements and in providing by statute for their enforcement is to encourage
persons who wish to avoid delays incident to a civil action to obtain an adjustment of
their differences by a tribunal of their own choosing.‖ (Utah Const. Co. v. Western Pac.
Ry. Co. (1916) 174 Cal. 156, 159, disapproved on other grounds in Moncharsh v. Heily &
Blase (1992) 3 Cal.4th 1, 27.) Thus, California law establishes ―a presumption in favor
of arbitrability.‖ (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951,
971.)
When seeking to compel arbitration, the petitioner bears the burden of proving that
an agreement to arbitrate exists, while the opponent has the burden of proving the facts of
any defense to enforceability. (Chin v. Advanced Fresh Concepts Franchise Corp.
(2011) 194 Cal.App.4th 704, 708.) Notwithstanding the ―highly favored‖ status of
arbitration (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 189), an
agreement to arbitrate may be avoided on the same ―grounds as exist for the revocation of
any contract‖ (Code Civ. Proc., § 1281). The most commonly asserted ground for
refusing to enforce an arbitration agreement is the one asserted here, unconscionability.
―Unconscionability is ultimately a question of law, which we review de novo when no
meaningful factual disputes exist as to the evidence.‖ (Chin, at p. 708; see § 1670.5.)
― ‗[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

5
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 v. Foundation Health Psychcare Services,
Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).)
―Procedural unconscionability focuses on the elements of oppression and surprise.
[Citation.] Oppression occurs where there is an inequality of bargaining power which
results in a lack of real negotiation and an absence of meaningful choice.‖ (Lanigan v.
City of Los Angeles (2011) 199 Cal.App.4th 1020, 1035 (Lanigan).) The classic example
of oppression is the use of a contract of adhesion—a contract presented without the
option of negotiation, on a take-it-or-leave-it basis. ―The procedural element of an
unconscionable contract generally takes the form of a contract of adhesion, ‗ ―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.‖ ‘ ‖ (Little v.
Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 (Little).) Surprise is ― ‗a function of the
disappointed reasonable expectations of the weaker party‘ ‖ (Higgins v. Superior Court
(2006) 140 Cal.App.4th 1238, 1252) and ―results from misleading bargaining conduct or
other circumstances indicating that a party‘s consent was not an informed choice‖
(Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 980). Most often, ―[s]urprise
involves the extent to which the terms of the bargain are hidden in a verbose printed form
drafted by the party in a superior bargaining position.‖ (Lanigan, at p. 1035.)
―Substantive unconscionability pertains to the fairness of an agreement‘s actual
terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A
contract term is not substantively unconscionable when it merely gives one side a greater
benefit; rather, the term must be ‗so one-sided as to ―shock the conscience.‖ ‘ ‖

6
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012)
55 Cal.4th 223, 246 (Pinnacle).)
B. Procedural Unconscionability
There is little question the Contract is procedurally unconscionable under
California law. Absent unusual circumstances, a contract offered on a take-it-or-leave-it
basis is deemed adhesive, and a commercial transaction conditioned on a party‘s
acceptance of such a contract is deemed procedurally unconscionable. (Gentry v.
Superior Court (2007) 42 Cal.4th 443, 469 (Gentry).) As the Supreme Court noted in
Gentry, ―Ordinary contracts of adhesion, although they are indispensable facts of modern
life that are generally enforced [citation], contain a degree of procedural
unconscionability even without any notable surprises, and ‗bear within them the clear
danger of oppression and overreaching.‘ ‖ (Ibid., italics added.)5 Greene‘s use of a
preprinted contract, without offering Vasquez the opportunity to negotiate its terms,
qualified the transaction as procedurally unconscionable.6
It is generally said that a finding of procedural unconscionability depends on
inequality of ―bargaining power.‖ (E.g., Lona v. Citibank, N.A. (2011) 202 Cal.App.4th
89, 109 [adhesive contract procedurally unconscionable where one party has

5
A number of other decisions have also held the use of a nonnegotiable contract,
standing alone, to be sufficient to support a finding of procedural unconscionability. (See
Arguelles-Romero v. Superior Court (2010) 184 Cal.App.4th 825, 843; Dotson v. Amgen,
Inc., supra, 181 Cal.App.4th 975, 981; Szetela v. Discover Bank (2002) 97 Cal.App.4th
1094, 1100; Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 585.)
6
We have found only a small number of decisions in which a nonnegotiable
contract was found not to involve procedural unconscionability, generally involving
unusual circumstances. In Walnut Producers of California v. Diamond Foods, Inc.
(2010) 187 Cal.App.4th 634 (Walnut Producers), for example, not only were the parties
sophisticated businesspeople—walnut growers and a walnut processor—but the growers
were found, in effect, to have imposed the nonnegotiable contract on themselves through
their prior dealings with the processor. (Id. at p. 646.) Similarly unusual is Pinnacle,
supra, 55 Cal.4th 223. Although the Supreme Court found the use of a contract of
adhesion in the purchase of a condominium unit not procedurally unconscionable, it
relied on the unique nature of condominium sales, in which a contract of adhesion is, as a
practical matter, required by law. (Id. at pp. 247–248.)

7
―overwhelming bargaining power‖].) Greene and Honda argue Greene could not have
had superior bargaining power because Vasquez had many options for purchasing a
vehicle. In the transaction at issue, Vasquez was likely able to choose from among some
dozen vehicle manufacturers making hundreds of type of vehicles. Further, as a
consumer in a large urban area, he was able to choose from among several new car
dealerships for each brand and even more used car dealerships, effectively pitting dozens
of merchants against each other. As Greene and Honda suggest, it is by no means certain
Greene possessed the greater economic leverage in the negotiation of the vehicle
purchase.
Superior bargaining power, however, does not necessarily depend upon greater
economic leverage. An inequality of bargaining power existed here, not because of the
parties‘ relative economic leverage, but because of Greene‘s greater sophistication in the
nonfinancial aspects of the transaction. As a business devoted to selling vehicles, Greene
has the resources and motivation to study the aspects of law relating to that business, to
determine the most advantageous strategy for protecting those rights, and to embody
those conclusions in a preprinted contract. The ordinary consumer has neither the
resources nor the time, and often not the skill, to make the same determination. While a
typical consumer may be perfectly capable of negotiating the financial aspects of the
transaction—the vehicle type and features, the price, and the financing terms, if any—he
or she normally lacks the knowledge and experience to negotiate the remaining
contractual terms, even assuming such negotiation is possible. As a result, with respect
to these aspects of the transaction the seller has substantially greater bargaining power.
(See Reyes v. Liberman Broadcasting, Inc. (2012) 208 Cal.App.4th 1537, 1547 [―It is not
hard to see how informational asymmetry leads to unequal bargaining power; an
individual unaware of her rights is unlikely to vigorously bargain over those rights. An
unsophisticated party may unknowingly concede her rights without asking for
concessions, whereas a knowledgeable party may leverage her rights into a superior
bargaining position‖].)

8
 Given the widely differing levels of sophistication and interest normally present
when one party to a transaction presents another with a preprinted contract, courts must
retain the right to review such contracts to ensure the party with the greater sophistication
does not exploit ― ‗the clear danger of oppression and overreaching.‘ ‖ (Gentry, supra,
42 Cal.4th at p. 469.) As Gentry explained, the use of a take-it-or-leave-it contract is
deemed to constitute procedural unconscionability because ―a conclusion that a contract
contains no element of procedural unconscionability is tantamount to saying that, no
matter how one-sided the contract terms, a court will not disturb the contract . . . . [A]
court would have no basis under common law unconscionability analysis to scrutinize or
overturn even the most unfair or exculpatory of contractual terms.‖ (Id. at p. 470.)
C. Degree of Procedural Unconscionability
―[T]here are degrees of procedural unconscionability. At one end of the spectrum
are contracts that have been freely negotiated by roughly equal parties, in which there is
no procedural unconscionability. Although certain terms in these contracts may be
construed strictly, courts will not find these contracts substantively unconscionable, no
matter how one-sided the terms appear to be. [Citation.] Contracts of adhesion that
involve surprise or other sharp practices lie on the other end of the spectrum.‖ (Gentry,
supra, 42 Cal.4th at p. 469.)
Although we conclude a sufficient degree of procedural unconscionability is
present to trigger our examination of the terms of the Contract, we do not agree with
Vasquez that Greene‘s conduct demonstrates a high degree of procedural
unconscionability. This is legally significant because, as noted above, ―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.)
1. Oppression
We begin with the recognition that Greene‘s use of a preprinted, nonnegotiable
contract is common in the modern commercial world. As noted in Gentry, such contracts
are ―indispensable facts of modern life.‖ (Gentry, supra, 42 Cal.4th at p. 469.) They

9
have long been a feature of the purchase of insurance and high value goods, such as
vehicles and homes, but they have become ubiquitous as commerce has moved to the
Internet. It is virtually impossible to purchase or use software or acquire cellular
telephone and other telecommunications services without being required to execute
nonnegotiable licenses or other terms of purchase or use. When a transaction occurs over
the Internet, not only is the contract nonnegotiable, but there is not even a person with
whom to negotiate. Despite the negative connotations of the legal terms applied to the
use of take-it-or-leave-it contracts—―oppression,‖ ―adhesion,‖ and ―unconscionability‖—
the very ubiquity of the practice precludes a conclusion that the use of a nonnegotiable
contract, on its own, is in any way unethical. Indeed, given the substantial regulation of
many modern consumer transactions, a preprinted contract may be the merchant‘s only
means of ensuring its compliance with the law, and granting an employee the authority to
negotiate puts that compliance at risk.
Viewed in this light, we do not view Greene‘s conduct during the process of
contract execution, described by Vasquez in his declaration, as contributing to the
procedural unconscionability of the transaction. While Vasquez contends he was not
given the opportunity to read the contract, he does not claim Greene actively interfered
with its review. Vasquez does not, for example, state that he attempted to read the
Contract and was prevented from doing so, or asked to take the Contract to an attorney
for review and was refused the opportunity, or was presented with a contract in a
language he did not understand, or was told the sale was conditioned on his acceptance of
the contract without review. (See Samaniego v. Empire Today, LLC (2012)
205 Cal.App.4th 1138, 1145 [finding procedural unconscionability on these grounds].)
Nor did Greene attempt to coerce him into signing the contract by suggesting he could
get no better terms elsewhere. (See Lhotka v. Geographic Expeditions, Inc. (2010)
181 Cal.App.4th 816, 822, 824.) Similarly, he does not claim any affirmative
misrepresentations about the terms of the contract. (See Olsen v. Breeze, Inc. (1996)
48 Cal.App.4th 608, 622.) Rather, it appears the salesperson merely guided Vasquez
through the preprinted contract, seeking his signature in appropriate places, without, on

10
his or her own initiative, pausing to allow Vasquez to read. It has never been held that
merchants have an obligation to ―sit beside‖ a customer ―and force them to read (and ask
if they understand) every provision‖ in a contract. (Mission Viejo Emergency Medical
Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1156 (Mission Viejo)
[insurance policy not unconscionable]; see Robison v. City of Manteca (2000)
78 Cal.App.4th 452, 459 [no procedural unconscionability where plaintiff presented with
contract open to signature page but not prevented from reading it].)7
Importantly, this was a consumer contract, not an employment contract. Although
it is sometimes said the same unconscionability standards apply to all contracts (Walnut
Producers, supra, 187 Cal.App.4th 634, 644), an exception must be made for
employment contracts. The Supreme Court has recognized that adhesion contracts of
employment are particularly likely to be found to feature procedural unconscionability
because of the critical importance of the employment relationship. (E.g., Sonic-
Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 686, judgment vacated and case
remanded (2011) ___ U.S. ___ [132 S.Ct. 496] [―contract terms imposed as a condition
of employment are particularly prone to procedural unconscionability‖]; Armendariz,
supra, 24 Cal.4th at p. 115; Ajamian v. CantorCO2E, L.P. (2012) 203 Cal.App.4th 771,
796.) Because of the importance of the employment relationship, burdens of disclosure
and informed consent are placed on employers seeking to impose arbitration agreements
that have not been imposed outside that relationship. Conversely, conduct found
objectionable in the employment context does not carry the same stigma in an ordinary
consumer transaction.

7
The claim Vasquez was not provided an opportunity to read the Contract is
particularly unpersuasive here, since he signed the first sales contract three days before
signing the identical contract that is the subject of his action. As a practical matter, he
had three days to review the Contract before he signed it. If he did not review the
Contract, it is because he chose not to. Our holding of no ―surprise‖ would, however,
remain the same even if Vasquez had not been given the contract in advance.

11
 2. Surprise
Nor do we agree with Vasquez that the arbitration clause was tainted by
―surprise.‖ Vasquez argues surprise on the basis of the densely packed nature of the
contract, the placement of the arbitration provision on the reverse side of the contract
from the signature page, the failure to require him to sign or initial the arbitration
provision, and Greene‘s failure to bring the clause to his attention.
We decline to find surprise merely on the basis of the length or layout of the
agreement. The use of a single, unusually long page with writing on both sides was,
arguably, dictated by state law, which requires a vehicle installment sale contract to ―be
printed in type no smaller than 6-point‖ and ―contain in a single document all of the
agreements of the buyer and seller with respect to the total cost and the terms of payment
for the motor vehicle.‖ (§ 2981.9.) The vehicle sales industry has traditionally
interpreted ―single document‖ to mean ―single sheet of paper.‖ (See
92 Ops.Cal.Atty.Gen. 97, 100 (2009).)8 While perhaps not conclusive, Greene‘s
attempted compliance with a specific state statute on the format of the agreement
certainly argues against a finding of procedural unconscionability on that ground.
(Pinnacle, supra, 55 Cal.4th at pp. 247–248.) In any event, there is no reason to think a
multi-sheet document would have been more easily understood. On the contrary, use of a
multi-sheet document would have made it easier to ―bury‖ the clause.9

8
In an opinion issued at the end of 2009, after the Contract was signed, the
Attorney General took issue with this requirement. Although noting the industry‘s long-
standing interpretation of the statute as requiring a single-sheet document, the Attorney
General opined, ―While a single-sheet document, which forecloses the possibility of
pages becoming detached, may serve these objectives [of the statute] well, the single
document rule does not require that the document consist of only one sheet of paper.‖
(92 Ops.Cal.Atty.Gen. 97, 100, supra.) We need not rule on the requirements of the
statute and note only that Greene‘s interpretation is plausible and consistent with industry
practice.
9
Vasquez argues the use of a two-page document would have made the clause
more evident, citing Crippen v. Central Valley RV Outlet (2004) 124 Cal.App.4th 1159,
1165. Crippen, however, did not address the impact of the state‘s vehicle sales
regulatory statutes. Vasquez also argues the arbitration clause could have been placed in

12
 While the Contract is certainly busy and long, with a welter of provisions, this
appears in large part to be a result of the highly regulated nature of the transaction. Many
of the provisions are affirmatively required by state and federal law, which closely
regulate the terms of vehicle installment sales contracts. The Automobile Sales Finance
Act contains detailed requirements for the disclosures in such contracts. (See generally
92 Ops.Cal.Atty.Gen. 97, 97–98, supra.) Section 2982 alone requires over 40 different
disclosures. Various provisions specify the exact text, type size, and even type color for
some and require at least two disclosures to be acknowledged by the buyer‘s signature.
(See §§ 2982, subds. (h), (r); 2984.1.)10 Other terms are prohibited. (§ 2983.7.)11 A
wholly separate federal regulation, Regulation Z (12 C.F.R. § 226.1 (2013)), must also be
satisfied. (Thompson v. 10,000 RV Sales, Inc. (2005) 130 Cal.App.4th 950, 966.) As a
result, the seller has only limited discretion in the content and composition of the
contract. In this case, the printer of the document has made an apparent effort to enhance
the comprehensibility of the document by grouping provisions together in separate,
black-outlined boxes, breaking up the monotony of the presentation, and using titles in
large, all-capitalized letters describing the subject matter of the provisions. Vasquez does
not suggest Greene could have made the Contract shorter and less complex without
compromising its legal substance. He does not, for example, contend that any of the
provisions were unnecessary, let alone inserted into the agreement merely for the purpose

a separate agreement consistent with state law because it does not concern ―the total cost
and the terms of payment for the motor vehicle.‖ (§ 2981.9.) This is by no means self-
evident, and the seller who placed the clause in a separate document would be risking the
enforceability of the sale. In any event, there is no guarantee placing the clause in a
separate document would have made it more evident.
10
Section 2982, subdivision (h) requires the buyer to acknowledge in writing a
provision stating (1) unfair business practices may be referred to law enforcement
authorities and (2) the terms of the contract cannot be changed by the seller unilaterally
after signing. Section 2984.1 requires the buyer to acknowledge in writing the legal
obligation to obtain vehicle insurance.
11
Section 2983.7 prohibits, among other provisions, clauses that waive a legal
defense of the buyer, waive a right of action to recover for the seller‘s illegal acts, grant
certain powers of attorney, and allow the seller to sue in an inconvenient county.

13
of creating prolixity to disguise the arbitration clause. Given the legally complex nature
of the transaction, we decline to find procedural unconscionability solely on the basis of
the complexity of the sales contract.
More importantly, despite the complexity of the sales contract, the arbitration
provision is obvious upon even a cursory read. Vasquez argues the clause is hidden
because it is placed on the back of the document, but in a contract containing only two
pages, a provision does not become hidden merely by being placed on the back. A
consumer can be expected to turn the contract over. We are reluctant to cast all
provisions on the back into the shadow of unconscionability, particularly because, under
state law, placing all provisions on the front arguably would have required a single, 52-
inch sheet of paper. (§ 2981.9.) Further, the fact of the writing on the reverse side is
hardly hidden. The face page of the document contains an acknowledgment above the
signature line that the purchaser has read ―BOTH SIDES OF THIS CONTRACT,
INCLUDING THE ARBITRATION CLAUSE ON THE REVERSE SIDE, BEFORE
SIGNING BELOW.‖12
When the document is flipped, the arbitration clause occupies the bottom third of
the page, in a box outlined in black. In all capitals and bold, at the top, it states:
―ARBITRATION CLAUSE [¶] PLEASE REVIEW—IMPORTANT—AFFECTS
YOUR LEGAL RIGHTS.‖ Directly underneath, again in all capitals, it states,
―EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US
DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.‖ There
is no attempt to hide or disguise the clause, and the most important legal element of the
clause, the waiver of court proceedings, is plainly and prominently stated. Many
decisions have found no surprise when an arbitration clause is captioned in large, bold

12
Vasquez notes that because this provision is on the right-hand side of the page,
it is not located directly above the signature line for the buyer; rather, it is above the
adjacent signature line for a ―Co-buyer.‖ We are not persuaded the provision is
significantly less visible to a buyer merely because it is placed a couple inches to the right
of center.

14
type and presented in type no smaller than the remainder of the contract. In Pinnacle, the
Supreme Court recently found no surprise when ―the arbitration provisions . . . appear in
a separate article under a bold, capitalized, and underlined caption titled ‗ARTICLE
XVIII CONSTRUCTION DISPUTES,‘ and within a separate section with the bold and
underlined title, ‗Section 18.3. Resolution of Construction Disputes by Arbitration.‘ The
provision . . . describing the waivers of jury trial and right to appeal, are set forth in
separate subsections of section 18.3, with the latter appearing in bold and capital letters.
. . . Additionally, the recitals on page 2 . . . state, in capital letters, that article XVIII of
the declaration ‗refers to mandatory procedures for the resolution of construction defect
disputes, including the waiver of the right to a jury trial for such disputes.‘ ‖ (Pinnacle,
supra, 55 Cal.4th at p. 247, fn. 12.)13 The presentation of the arbitration clause in the
Contract is not materially different from this.
When applied to a complex contract such as this, particularly one in which certain
of the disclosures are required by statute, Vasquez‘s argument places the merchant in a

13
Other cases have come to a similar conclusion. (See Bigler v. Harker School
(2013) 213 Cal.App.4th 727, 737 [no surprise where arbitration clause ―located at the top
of the second page in a two-page document with the heading ‗Arbitration‘ in
boldfaced font‖]; Mission Viejo, supra, 197 Cal.App.4th at p. 1150, 1156 [no surprise
where arbitration clause ―clear and conspicuous‖ with a title in capital letters]; Walnut
Producers, supra, 187 Cal.App.4th at p. 647 [no surprise where arbitration clause in same
size type as remainder under a heading ― ‗Dispute Resolution‘ ‖]; Parada v. Superior
Court (2009) 176 Cal.App.4th 1554, 1571 (Parada) [no surprise where arbitration
provisions have headings in bold describing their substance]; Gatton v. T-Mobile USA,
Inc. (2007) 152 Cal.App.4th 571, 582 [no surprise where arbitration provision not
disguised or hidden and disclosed in a sticker on the box]; Greenbriar Homes
Communities, Inc. v. Superior Court (2004) 117 Cal.App.4th 337, 345, disapproved on
other grounds in Tarrant Bell Property, LLC v. Superior Court (2011) 51 Cal.4th 538,
545, fn. 5 [no procedural unconscionability when provision written in same sized font as
the remainder and easily understood]; compare Samaniego v. Empire Today, LLC, supra,
205 Cal.App.4th at p. 1146 [surprise found where arbitration clause neither flagged by an
individual heading nor required to be initialed]; Gutierrez v. Autowest, Inc. (2003) 114
Cal.App.4th 77, 89 (Gutierrez) [surprise found where arbitration clause ―particularly
inconspicuous, printed in eight-point typeface on the opposite side of the signature
page‖].)

15
proverbial ―Catch-22.‖ Any attempt to make one clause more conspicuous inevitably
makes every other clause less conspicuous. By attempting to avoid an argument of
―surprise‖ with respect to one provision, the merchant risks having the same argument
made with respect to any other provision not given more prominent treatment. Placing
the arbitration agreement next to the signature line, for example, would have forced other,
equally or more important provisions into a subsidiary role. Placing it on the front page
would have forced some other provision to the back. All provisions could have been
placed on the front page of the document, of course, but the effort would have required a
52-inch contract. Ultimately, the merchant has no choice but to make compromises
regarding the placement and relative importance of contractual provisions. We are
satisfied the Contract represents a good faith effort to make the consumer aware of the
various significant provisions of the agreement.
Nor do we find surprise from Vasquez‘s failure to read the Contract and his
consequent ignorance of the presence of the arbitration clause. While we realize there is
authority to the contrary (see Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1290–1291
(Bruni) and cases cited therein), we find ourselves in disagreement with the reasoning of
these cases. The ordinary rule of contract law is, ― ‗in the absence of fraud, overreaching
or excusable neglect, that one who signs an instrument may not avoid the impact of its
terms on the ground that he failed to read the instrument before signing it.‘ ‖ (Stewart v.
Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1588.) This principle has been
applied by the Supreme Court in the context of at least one contract of adhesion. (Casey
v. Proctor (1963) 59 Cal.2d 97, 104–105 [plaintiff‘s failure to read preprinted release
does not excuse enforcement]; see also Pinnacle, supra, 55 Cal.4th at p. 236 [―An
arbitration clause within a contract may be binding on a party even if the party never
actually read the clause‖].)
In Bruni, the court declined to apply this ordinary rule, holding ―failure to read the
contract helps ‗establish actual surprise,‘ ‖ on the theory a contract of adhesion involves
― ‗ ―overreaching‖ ‘ ‖ or ― ‗ ―imposition.‖ ‘ ‖ (Bruni, supra, 160 Cal.App.4th at p. 1291.)
As discussed above, however, in modern consumer transactions the mere use of a

16
preprinted form cannot fairly be characterized as either overreaching or imposition.
More important, to find surprise on the basis of a consumer‘s declared failure to read a
contract—in this case, in spite of his written affirmation that he had, in fact, read the
contract and three days‘ possession of an identical form prior to signing—discourages
diligence by penalizing the consumer who admits to reviewing a preprinted contract. It
risks making an arbitration clause enforceable against one consumer and not another
merely because the first consumer was diligent. In this way, Vasquez‘s argument
subverts the very premise of contract law, that ― ‗ ―[i]t is the objective intent, as
evidenced by the words of the contract, rather than the subjective intent of one of the
parties, that controls interpretation.‖ ‘ ‖ (See Mission Viejo, supra, 197 Cal.App.4th at
pp. 1154–1155.)14
Finally, Vasquez contends Greene acted unconscionably in failing to present him
with a copy of the AAA rules. The arbitration clause does not, however, require the use
of any particular arbitration organization. It proposes two default organizations at the
choice of the buyer and permits any other organization by agreement of the parties.
Accordingly, presentation of the rules of any particular organization would be premature
and could be viewed as coercive. In any event, Vasquez cites us to no decisions in which
this requirement has been applied outside the context of employment contracts, which, as
noted, are subject to more stringent requirements of procedural unconscionability. We
decline to extend it outside that unique context.
D. Substantive Unconscionability
Vasquez contends several aspects of the arbitration clause make it substantively
unconscionable, including the provisions governing the request for a second arbitration,
the cost advance provision, the exclusion of self-help remedies, and the class action
waiver.

14
For similar reasons, we reach the same conclusion with respect to Vasquez‘s
claim it was unconscionable for the Greene employee who supervised the signing not to
bring the arbitration clause to his attention. (See Mission Viejo, supra, 197 Cal.App.4th
at p. 1154.)

17
 Greene and Honda argue the standard for substantive unconscionability in
California is inconsistent, since some decisions have struck down arbitration clauses if
their provisions are found ―one-sided,‖ while other decisions have applied a facially more
tolerant standard by declining to invalidate provisions unless they ―shock the
conscience.‖ The Supreme Court appears to have reconciled these two standards in its
most recent pronouncement on the standard for substantive unconscionability, Pinnacle.
In that case, the court initially noted, ―Substantive unconscionability pertains to the
fairness of an agreement‘s actual terms and to assessments of whether they are overly
harsh or one-sided.‖ (Pinnacle, supra, 55 Cal.4th at p. 246.) It then added the
qualification, ―A contract term is not substantively unconscionable when it merely gives
one side a greater benefit; rather, the term must be ‗so one-sided as to ―shock the
conscience.‖ ‘ ‖ (Ibid.) Accordingly, one-sidedness, standing alone, is not sufficient to
qualify an arbitration clause as substantively unconscionable.
The Supreme Court‘s seminal decision in Armendariz is helpful in giving a
functional meaning to the inherently subjective ―shock the conscience‖ standard.
Discussing prior authority, the court noted, ―We conclude that Stirlen [v. Supercuts, Inc.
(1997) 51 Cal.App.4th 1519] and Kinney [v. United HealthCare Services, Inc. (1999)
70 Cal.App.4th 1322] are correct in requiring [a] ‗modicum of bilaterality‘ in an
arbitration agreement. Given the disadvantages that may exist for plaintiffs arbitrating
disputes, it is unfairly one-sided for an employer with superior bargaining power to
impose arbitration on the employee as plaintiff but not to accept such limitations when it
seeks to prosecute a claim against the employee, without at least some reasonable
justification for such one-sidedness based on ‗business realities.‘ As has been recognized
‗ ―unconscionability turns not only on a ‗one-sided‘ result, but also on an absence of
‗justification‘ for it.‖ ‘ [Citation.] If the arbitration system established by the employer
is indeed fair, then the employer as well as the employee should be willing to submit
claims to arbitration. Without reasonable justification for this lack of mutuality,
arbitration appears less as a forum for neutral dispute resolution and more as a means of
maximizing employer advantage. Arbitration was not intended for this purpose.‖

18
(Armendariz, supra, 24 Cal.4th at pp. 117–118.) The court returned to the ―justification‖
issue later in the decision, noting in its holding, ―We emphasize that if an employer does
have reasonable justification for the arrangement—i.e., a justification grounded in
something other than the employer‘s desire to maximize its advantage based on the
perceived superiority of the judicial forum—such an agreement would not be
unconscionable.‖ (Id. at p. 120.) In other words, substantive unconscionability adheres
only if a one-sided provision has no objective justification other than to tilt the arbitration
scales in the favor of the clause‘s author. It is the attempt to make the arbitration
proceeding something other than a fair forum that ―shocks the conscience.‖
From that perspective, we review the various aspects of the clause cited by
Vasquez as unfair.
1. Costs of Arbitration
Vasquez contends it is substantively unconscionable to require him to pay his own
costs of arbitration. Although the Contract provides that Greene must advance the first
$2,500 of the buyer‘s arbitration costs, the buyer is responsible for costs above this
amount, and the advance may be recovered by Greene in the arbitrator‘s award.15
Vasquez has failed to carry his burden of creating the factual record necessary to prevail
on this claim.
In Gutierrez, supra, 114 Cal.App.4th 77, the court held ―where a consumer enters
into an adhesive contract that mandates arbitration, it is unconscionable to condition that
process on the consumer posting fees he or she cannot pay.‖ (Id. at p. 89, fn. omitted.)
Outside of employment claims, however, neither Gutierrez nor any other California
decision has found that an arbitration clause requiring a plaintiff to pay arbitration costs is

15
The agreement provides: ―We will advance your filing, administration, service
or case management fee and your arbitrator or hearing fee all up to a maximum of $2500,
which may be reimbursed by decision of the arbitrator at the arbitrator‘s discretion. Each
party shall be responsible for its own attorney, expert and other fees, unless awarded by
the arbitrator under applicable law.‖

19
per se unconscionable.16 Instead, in Gutierrez and Parada, supra, 176 Cal.App.4th 1554,
the courts held that the substantive unconscionability of provisions in consumer
(Gutierrez) and financial (Parada) agreements requiring the claimant to pay his or her
own arbitration costs must be evaluated on a ―case-by-case basis,‖ with the outcome
dependent on the ability of the claimant to pay, the anticipated costs of the arbitration,
and the amount at issue in the arbitration. (Gutierrez, at pp. 97–98; Parada, at pp. 1580–
1581.) The consumer has the burden of demonstrating the clause unconscionable on
these grounds, necessarily by submitting evidence on the relevant issues. (Gutierrez, at
p. 97.)
The United States Supreme Court has similarly declined to find an arbitration
clause invalid on grounds of expense when the plaintiff failed to provide evidence he or
she could not afford the arbitration, holding: ―To invalidate the agreement on that basis
would . . . . conflict with our prior holdings that the party resisting arbitration bears the
burden of proving that the claims at issue are unsuitable for arbitration. [Citations.] We
have held that the party seeking to avoid arbitration bears the burden of establishing that
Congress intended to preclude arbitration of the statutory claims at issue. [Citations.]
Similarly, we believe that where, as here, a party seeks to invalidate an arbitration
agreement on the ground that arbitration would be prohibitively expensive, that party
bears the burden of showing the likelihood of incurring such costs.‖ (Green Tree
Financial Corp.-Ala. v. Randolph (2000) 531 U.S. 79, 91–92.)
Our Legislature has also stopped short of declaring arbitration clauses in a
consumer contract invalid solely because they require a consumer to bear his or her own
costs of arbitration. Code of Civil Procedure section 1284.3, subdivision (a) proscribes
arbitration clauses ―requiring that a consumer who is a party to the arbitration pay the
fees and costs incurred by an opposing party if the consumer does not prevail in the

16
In Armendariz and Little, the Supreme Court required employers to pay the
costs of arbitration in certain statutory employment cases. The court declined to extend
that rule outside the employment context in Boghos v. Certain Underwriters at Lloyd’s of
London (2005) 36 Cal.4th 495, 507–508.

20
arbitration.‖ (Italics added.) It does not, however, invalidate an arbitration clause that
requires the consumer to bear his or her own fees.
Accordingly, to demonstrate substantive unconscionability on grounds of
affordability, Vasquez was required to submit evidence of his own financial resources,
the reasonably anticipated cost of this particular arbitration, and the amount of the
potential award. Because Vasquez provided no evidence of indigence, let alone the likely
cost and value of his proposed arbitration, he failed to carry his evidentiary burden in
demonstrating substantive unconscionability on this ground.
2. “Appeal” Rights
On several grounds, Vasquez challenges the ―appeal‖ provision of the arbitration
clause, which permits either party to request a second arbitration before three arbitrators
if the first arbitration, conducted before a single arbitrator, results in injunctive relief or
an award of $0 or more than $100,000.17 Vasquez first argues the $100,000 threshold is
one-sided because the buyer is far more likely than the seller to receive an award of that
size.
The argument fails to consider the full scope of the clause, which contains two
thresholds for an appeal, not one. The first is an award of $0—the equivalent of a
defense verdict. As a result, a party can request a new arbitration if it seeks an award in
arbitration and is denied a recovery. Given the limited range of affirmative claims
available to a seller, this provision is likely to be used more often by buyers. The
provision allowing appeal of an award in excess of $100,000 is presumably of more value
to sellers, but that value is likely limited, since only the most expensive vehicles have a
replacement cost in excess of $100,000. In any event, the clause as a whole is not one-

17
The precise language of the clause is as follows: ―The arbitrator‘s award shall
be final and binding on all parties, except that in the event the arbitrator‘s award for a
party is $0 or against a party is in excess of $100,000, or includes an award of injunctive
relief against a party, that party may request a new arbitration under the rules of the
arbitration organization by a three-arbitrator panel. The appealing party requesting a new
arbitration shall be responsible for the filing fee and other arbitration costs subject to a
final determination by the arbitrators of a fair apportionment of costs.‖

21
sided because this appeal right is balanced by the corresponding right to a second
arbitration in the event of an award of $0. This balance distinguishes the clause from the
provision found unconscionable in Little, supra, 29 Cal.4th 1064, which permitted only
the appeal of an award in excess of $50,000. (Id. at p. 1070.) Little struck down the
provision because it was ―asymmetrical,‖ allowing appeals of awards against the
employer but rarely allowing an appeal to the employee. (Id. at p. 1073.) Because it
allows the appeal of a ―defense‖ award, the sales contract is not similarly asymmetrical.
Vasquez also argues the appeal provisions are unfair because they permit a second
arbitration if injunctive relief is granted but not if such relief is requested but denied. We
agree with Vasquez this provision will be of primary benefit to the seller, which seems
more likely to be the subject of injunctive relief. Yet we find the allowance of an appeal
in the event of injunctive relief to be justified by ― ‗business realities.‘ ‖ (Armendariz,
supra, 24 Cal.4th at p. 117.) Depending on its nature, injunctive relief could have a
substantial, continuing effect on a business. As Greene and Honda argue, it could ―force
the dealership to change its actions with respect to future customers and future sales.‖
Given the potential significance of this result for a seller‘s business, it is proper to
preserve the right to challenge such an award.
While it is true the clause does not allow an equivalent appeal to a claimant denied
injunctive relief, the one-sided impact of the provision is mitigated by the claimant‘s right
to appeal a $0 award. In most cases in which injunctive relief is requested and denied, a
monetary award will also be denied, triggering the right to request a second arbitration.
As discussed above, a provision is not substantively unconscionable merely because it is
―one-sided‖; it must be so one-sided as to shock the conscious. Because a claimant
denied injunctive relief will, as a practical matter, ordinarily be entitled to request a
second arbitration, the actual one-sidedness of this aspect of the appeal provision is
sufficiently minimal that it cannot be said to shock the conscience.
Vasquez next challenges the requirement in this provision that the appealing party
pay the costs of the second arbitration, pending possible reallocation by the arbitrators.
On its face, the provision is even-handed, since it applies equally to buyers and sellers.

22
Further, it has two possible justifications. First, by requiring a substantial initial
investment, it discourages disappointed parties from appealing, thereby promoting the
efficiency and finality of the arbitration process. Second, and potentially more important,
it mitigates the adverse financial impact of the appeal provision for the nonappealing
party by requiring a party demanding a second arbitration initially to cover the associated
costs.18 This is a distinct benefit to a buyer if the seller requests a second arbitration,
since the buyer will not be required to pay the upfront costs of defending his or her award
from the first arbitration.
In challenging the requirement, Vasquez relies heavily on Gutierrez, but that
decision is distinguishable in two important ways. First, as discussed above, Gutierrez
did not purport to invalidate all arbitration clauses that required a nondrafting party to pay
arbitration fees. Rather, Gutierrez was, in effect, an ―as applied‖ decision; the arbitration
clause was held to be substantively unconscionable as to the particular plaintiffs because
they provided affirmative evidence they could not afford to arbitrate. (Gutierrez, supra,
114 Cal.App.4th at pp. 85 [plaintiffs submitted evidence of ―their monthly net income
and expenses and their savings‖], 90 [calculating expected fees].) Because Vasquez has
provided no similar evidence, we have no evidentiary basis for finding he cannot afford a
second arbitration.
Second, Gutierrez concerned the fees for an initial arbitration. The provision
attacked by Vasquez concerns a second arbitration brought for the purpose of challenging
the result of an initial arbitration. The equities are quite different in that situation, since
the party required to bear the costs has already had a hearing and received a decision with
respect to his or her claim. The imposition of upfront costs therefore does not deny an
arbitral forum to the party, but only the opportunity for a second bite at the apple.
Because an ―ordinary‖ arbitration clause merely provides the very limited review
available in a judicial forum (Code Civ. Proc., § 1286.2; Haworth v. Superior Court

18
If not for the provision allowing later reallocation, this provision would arguably
be invalid under Code of Civil Procedure section 1284.3, subdivision (a), which
precludes a consumer from being required to pay an opposing party‘s expenses.

23
(2010) 50 Cal.4th 372, 380), the provision confers a significant benefit on unsuccessful
claimants who feel strongly enough about their claims to risk the expense of a second
arbitration. Making the claimant pay the initial costs to gain this benefit is not an
unreasonable trade and is, of course, balanced by the same obligation on the part of a
seller appealing an award in excess of $100,000.
Given the justifications and equities discussed above, we do not find the
requirement to pay initially all costs of an appellate arbitration to be so one-sided as to
shock the conscience. While recognizing the provision might be invalid on a case-by-
case basis, for which we have no evidentiary support here, we cannot say requiring an
appealing party initially to bear the expense of a second arbitration is per se
unconscionable.
3. Exempting Self-help and Small Claims
Vasquez next challenges the arbitration clause‘s exemption of the remedy of
repossession and of disputes within the jurisdictional amount of the small claims court.19
Vasquez argues this provision is one-sided, but that is by no means obvious.
Certainly the exemption of repossession is made only for the benefit of the seller, the
only party that can take advantage of the remedy. Exempting small claims, however,
would appear to balance this provision by benefitting buyers at least as much as sellers,
since many buyers‘ disputes will have a relatively small monetary value. While it is true,
as Vasquez points out, that some sellers‘ claims for nonpayment could be pursued in
small claims, we have no basis, in the absence of actual evidence, for presuming sellers
would use small claims court proportionately more than buyers.
Yet even if this exemption did tend to benefit the seller, there is a plain and
sufficient justification for carving out these remedies that has nothing to do with creating
an unfair forum for dispute resolution. Arbitration is intended as a substitute for judicial

19
The clause states: ―You and we retain any rights to self-help remedies, such as
repossession. You and we retain the right to seek remedies in small claims court for
disputes or claims within that court‘s jurisdiction, unless such action is transferred,
removed or appealed to a different court.‖

24
proceedings. (Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P.
(2008) 44 Cal.4th 528, 539 [―The policy in favor of enforcing arbitration agreements
[citation] is based on the assumption that ‗parties have elected to use [arbitration] as an
alternative to the judicial process‘ ‖].) Repossession and other self-help remedies by
definition operate outside such proceedings. Repossession, governed by statute in
California (Bus. & Prof. Code, § 7500 et seq.; Civ. Code, § 2983.2 et seq.), is intended to
provide an expeditious remedy for nonpayment, avoiding the time and expense of judicial
proceedings. Exempting it from arbitration preserves this efficiency. To bring
repossession inside the dispute resolution system by, presumably, requiring a seller to
arbitrate its right to repossess would frustrate the purpose of its statutory exclusion from
judicial proceedings. In this way, the clause merely preserves the status quo; a buyer
who has no right to litigate prior to repossession also has no right to arbitrate.
The same considerations support the exclusion of small claims matters. Those,
too, are exempted from full judicial process as a means of achieving efficiency and
avoiding unnecessary expense. To bring them within the arbitration process would risk
frustrating those objectives. Indeed, a clause that purported to require arbitration of small
claims matters might well be attacked as unconscionable precisely because it thwarted
their efficient resolution.
4. Class Waiver and Arbitration of “Public” Claims
Finally, Vasquez argues the waiver of class action rights and the requirement to
arbitrate ―public‖ claims, such as the statutory violations alleged here, are impermissible.
(See Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover Bank); Cruz v.
PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303.) Both arguments have been
foreclosed by the United States Supreme Court‘s decision in AT&T Mobility, LLC v.
Concepcion (2011) 131 S.Ct. 1740 (Concepcion), which found preemption by the Federal
Arbitration Act (9 U.S.C. § 1 et seq.). (See Phillips v. Sprint PCS (2012)
209 Cal.App.4th 758, 769; Nelsen v. Legacy Partners Residential, Inc. (2012) 207

25
Cal.App.4th 1115, 1136–1137.)20 Although Concepcion expressly considered only
Discover Bank‘s judicially created ban on class action waivers as unconscionable, the
same rationale would require a finding of preemption of the statutory ban on class action
waivers in section 1751, which is similarly based on public policy.
E. Enforcement of the Arbitration Clause
As discussed above, ―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.) While
we find the Contract to be procedurally unconscionable, we also conclude it was only
minimally so, given the absence of evidence of ―surprise or other sharp practices.‖
(Gentry, supra, 42 Cal.4th 443, 469.) As a result, a substantial degree of substantive
unconscionability would be required to defeat enforcement of the clause. In the above
discussion, the only suggestion of substantive unconscionability we found was the failure
of the clause to permit an ―appeal‖ arbitration in the event a buyer sought and was denied
injunctive relief. Because this asymmetry is mitigated by the provision permitting a
second arbitration if a buyer is denied a monetary recovery, we conclude it did not rise to
the level of substantive unconscionability. Accordingly, there is no basis for declining to
enforce the parties‘ agreement to arbitrate.
Because we find minimal unconscionability, we do not address Greene and
Honda‘s arguments regarding severability and the purported bias in California law
against the enforcement of arbitration agreements.

20
We also reject Vasquez‘s argument that the contract is substantively
unconscionable because it requires Vasquez to give up the right to judicial determination
of certain statutory rights without requiring Greene and Honda to give up similar rights of
their own. Putting aside Vasquez‘s failure to specify exactly what rights he has in mind
that Greene and Honda might sacrifice, a lack of unconscionability has never been held to
depend on this type of tit-for-tat exchange.

26
 III. DISPOSITION
The trial court‘s order denying the petition to compel arbitration is reversed. The
matter is remanded to the trial court for entry of an appropriate order directing arbitration
under the terms of the sales contract.

_________________________
Margulies, Acting P.J.

We concur:

_________________________
Dondero, J.

_________________________
Banke, J.

27
Trial Court: Solano County Superior Court

Trial Judge: Hon. Robert S. Bowers

Counsel:

Toschi, Sidran, Collins & Doyle, David R. Sidran and Thomas M. Crowell for
Defendants and Appellants.

Rosner, Barry & Babbitt, Hallen D. Rosner, Christopher P. Barry and Angela J. Smith for
Plaintiff and Respondent.

28