Tiri v. Lucky Chances, Inc.

Filed 5/15/14
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

LOURDES TIRI,
Plaintiff and Respondent,
A136675
v.
LUCKY CHANCES, INC., (San Mateo County
Super. Ct. No. CIV514064)
Defendant and Appellant.

Several years after she was hired, Lourdes Tiri signed an agreement with her
employer, Lucky Chances, Inc., requiring disputes between them to be resolved by
arbitration. In one of the provisions, the parties agreed to delegate questions about the
enforceability of the agreement to the arbitrator, instead of a court. Tiri was subsequently
fired, and she filed a complaint in superior court for wrongful discharge. Lucky Chances
petitioned to compel arbitration, but the trial court denied the petition on the basis that the
arbitration agreement was unconscionable and therefore unenforceable.
Lucky Chances appeals the court’s order denying arbitration. We hold that the
trial court lacked the authority to rule on the enforceability of the agreement because the
parties’ delegation of this authority to the arbitrator was clear and is not revocable under
state law. Accordingly, we reverse.
I.
FACTUAL AND PROCEDURAL
BACKGROUND
More than three years after she was hired as a cook by Lucky Chances, a card-club
casino and restaurant in Colma, Tiri was asked and agreed to sign a mutual agreement to
arbitrate claims (the agreement). Five years later, Tiri was fired, allegedly while on

1
medical leave after undergoing heart surgery. Tiri brought this action for wrongful
discharge, and this appeal turns on whether the agreement precluded the trial court from
considering the validity of both the agreement and her underlying legal claims.
The parties dispute the circumstances surrounding Tiri’s signing the agreement.
According to Tiri, she was called to the human-resources department and given the
agreement “right there and then . . . to sign immediately.” She contends that the terms of
the agreement were not explained, and that she was not told that the terms were
negotiable, that her signature was optional, or that she could take the agreement and
review it before signing. She “felt [she] had to sign it as a condition of continued
employment with Lucky Chances,” and she believed that she would be fired if she did not
sign it. According to Lucky Chances’s human-resources manager, Tiri was never told
that the agreement was nonnegotiable, and Tiri never asked to change the agreement or to
negotiate its terms. Still, Lucky Chances does not specifically deny that Tiri was told to
sign the agreement immediately and was never informed that the terms could be
negotiated.
The agreement is a five-page, stand-alone document that is entitled, in blocked,
bold lettering, “MUTUAL AGREEMENT TO ARBITRATE CLAIMS.” It relates solely
to resolving claims between Tiri and Lucky Chances and provides that “any and all
differences and/or legal disputes” (except those related to workers’ compensation and
unemployment-insurance benefits) will be resolved “through the process of final and
binding arbitration.” The agreement further provides that any arbitration “shall be in
accordance with the current AAA [American Arbitration Association] Employment
Rules.” A copy of those rules was not attached to the agreement, although the agreement
identified a website where the rules could be found.
The agreement also includes an explicit provision that delegates to the arbitrator
issues regarding the agreement’s enforceability: “The Arbitrator, and not any federal,
state, or local court or agency, shall have the exclusive authority to resolve any dispute
relating to the interpretation, applicability, enforceability, or formation of this Agreement,
including, but not limited to, any claim that all or any part of this Agreement is void or

2
voidable.” This provision is central to the issues in this appeal, and we will refer to it as
the delegation clause.
After Tiri filed her complaint, Lucky Chances filed a petition to compel arbitration
arguing that the enforceability of the arbitration agreement is a question for the arbitrator,
not a court, under the express terms of the delegation clause. Tiri opposed the petition.
She argued that the arbitration agreement was unconscionable and that its
unconscionability was an issue properly resolved by the trial court.
The trial court issued a tentative ruling denying Lucky Chances’s petition, but the
ruling did not address the delegation clause. At the hearing on the petition, Lucky
Chances’s attorney argued that it was important for the court to rule on the threshold
issue of the delegation clause and that recent case law required the trial court to delegate
to the arbitrator the question whether the arbitration agreement was unconscionable. The
court asked about the presence of contractual consideration when an employer asks a
current employee to sign an arbitration agreement, and Lucky Chances’s attorney insisted
that the adequacy of consideration in this case was an issue for the arbitrator to decide, an
argument the court considered “rather circular.”
At the close of the hearing, the trial court adopted its tentative ruling and denied
the petition to compel arbitration. In doing so, it focused on the fact that the arbitration
agreement stated it would be governed by AAA rules but failed to attach those rules,
citing two cases that declined to enforce arbitration agreements under similar
circumstances: Zullo v. Superior Court (2011) 197 Cal.App.4th 477 and Fitz v. NCR
Corp. (2004) 118 Cal.App.4th 702. The court found that “the arbitration agreement is
both substantively and procedurally unconscionable and therefore unenforceable because
[Lucky Chances] presented the agreement to plaintiff on a ‘take it or leave it basis’ and
[Lucky Chances] failed to attach the AAA employment dispute resolution rules to the
arbitration agreement.” Lucky Chances timely appealed.

3
 II.
DISCUSSION
In this appeal, we must decide whether the trial court properly denied Lucky
Chances’s petition to compel arbitration in light of the delegation clause, which gives the
arbitrator the authority to decide whether the arbitration agreement is enforceable. The
answer turns on whether the delegation clause is valid under state-law unconscionability
principles. We conclude that the trial court’s ruling must be reversed because, although
its implied finding that the delegation clause was procedurally unconscionable was
correct, its implied finding that the delegation clause was substantively unconscionable
was incorrect. As a result of our conclusion that the delegation clause is valid, we leave
to the arbitrator the question whether the arbitration agreement as a whole, or any of its
other severable provisions, is unconscionable.
A. The General Law Governing Arbitration Agreements.
Under both federal and state law, arbitration agreements are valid and enforceable,
unless they are revocable for reasons under state law that would render any contract
revocable. (9 U.S.C. § 2;1 Code Civ. Proc., § 1281;2 Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98 (Armendariz).) Reasons that would
render any contract revocable under state law include fraud, duress, and
unconscionability. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1142
(Sonic II); Armendariz, at p. 114; Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519,
1551-1552.)
A motion to compel arbitration is essentially a request for specific performance of
a contractual agreement. (Duffens v. Valenti (2008) 161 Cal.App.4th 434, 443.) The
party seeking to compel arbitration bears the burden of proving by a preponderance of the
evidence the existence of an arbitration agreement. (Rosenthal v. Great Western Fin.
Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal); § 1281.2.) The party opposing

1
Section 2 is part of the Federal Arbitration Act (FAA, 9 U.S.C. §§ 1-16).
2
Section 1281 is part of the California Arbitration Act (CAA, Code Civ. Proc.,
§ 1280 et seq.). All undesignated statutory references are to the Code of Civil Procedure.

4
the petition bears the burden of establishing a defense to the agreement’s enforcement by
a preponderance of the evidence. (Rosenthal, at p. 413; § 1281.2, subd. (b).) In
determining whether there is a duty to arbitrate, the trial court must, at least to some
extent, examine and construe the agreement. (Duffens, at p. 443.)
B. The Applicability of the Federal Arbitration Act Is Immaterial.
The parties dispute at length the applicability of the FAA, which governs only
arbitration agreements that are part of written contracts affecting interstate commerce.
(9 U.S.C. § 2.) But we conclude that the FAA’s applicability is immaterial because our
decision in this case would be the same under either the FAA or the CAA.
“In most important respects, the California statutory scheme on enforcement of
private arbitration agreements is similar to the [FAA]; the similarity is not surprising, as
the two share origins in the earlier statutes of New York and New Jersey.” (Rosenthal,
supra, 14 Cal.4th at p. 406.) In similar language, both the FAA and the CAA provide
that predispute arbitration agreements are valid, enforceable, and irrevocable, save upon
such grounds as exist for the revocation of any contract. (Ibid.)3 Thus, enforcing valid
arbitration agreements is favored under both state and federal law. (Armendariz, supra,
24 Cal.4th at pp. 97-98.)
“California courts often look to federal law when deciding arbitration issues under
state law.” (Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547, 553.)
They have specifically looked to the FAA when considering delegation clauses (ibid.)
and have long held that the rules governing these clauses are the same under both state
and federal law (post, § II.C.). (Ajamian v. CantorCO2E, L.P. (2012) 203 Cal.App.4th
771, 781, fn. 4 (Ajamian); Gilbert Street Developers, LLC v. La Quinta Homes, LLC

3
Section 2 of the FAA states, “A written provision in any . . . contract evidencing a
transaction involving commerce to settle by arbitration a controversy . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.”
Section 1281 states, “A written agreement to submit to arbitration an existing
controversy thereafter arising is valid, enforceable and irrevocable, save upon such
grounds as exist for the revocation of any contract.”

5
(2009) 174 Cal.App.4th 1185, 1190-1191; Ontiveros v. DHL Express (USA), Inc. (2008)
164 Cal.App.4th 494, 503 (Ontiveros).)
In Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 72 (Rent-A-Center),
the United States Supreme Court extended a rule established in Prima Paint Corp. v.
Flood & Conklin Mfg. Co. (1967) 388 U.S. 395, 403-404 (Prima Paint). Under Prima
Paint, a party’s challenge to an employment contract that contains a severable arbitration
clause does not invalidate the arbitration agreement, and therefore the arbitrator, and not
a court, must consider any challenge to the employment contract as a whole. (Rent-A-
Center, at p. 71.) Rent-A-Center extended this rule to situations, like the one here, where
the contract at issue is itself an arbitration agreement (instead of a broader employment
contract as in Prima Paint) that contains a delegation clause. The court held that in such
a case, a party’s challenge to the arbitration agreement does not invalidate the delegation
clause, and therefore the arbitrator, and not a court, must consider any challenge to the
arbitration agreement as a whole. (Rent-A-Center, at p. 71.) Stated another way, Rent-A-
Center acknowledges that while courts may consider enforceability challenges specific to
delegation clauses, the arbitrator is to consider challenges to the arbitration agreement as
a whole. (Id. at p. 73.)
Although Rent-A-Center was decided under the FAA, we agree with Lucky
Chances that its holding applies under the CAA as well. (Cf. Sonic-Calabasas A., Inc. v.
Moreno (2011) 51 Cal.4th 659, 688, fn. 12 (Sonic I) [not necessary to decide whether
Rent-A-Center’s holding applies to actions brought in state courts], overruled on another
ground by Sonic II, supra, 57 Cal.4th at p. 1124; Knight et al., Cal. Practice Guide:
Alternative Dispute Resolution (The Rutter Group 2012) ¶ 5:150.4, p. 5-109 [unclear
whether California courts will apply Rent-A-Center].) In extending Prima Paint’s
holding, Rent-A-Center relied on section 1281’s federal counterpart, section 2 of the
FAA. (561 U.S. at p. 70, citing Buckeye Check Cashing, Inc. v. Cardegna (2006)
546 U.S. 440, 444-446, Prima Paint, supra, 388 U.S. 395.) And Prima Paint’s
severability analysis is already applied in cases governed by the CAA. (Ericksen,

6
Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312,
322).
Because section 1281 and section 2 of the FAA are interpreted the same under
controlling precedent, it makes no difference to the outcome of this case if one but not the
other applies. Thus, we need not resolve the parties’ dispute whether the agreement
sufficiently affects interstate commerce to support the application of the FAA.
C. Clauses in Arbitration Agreements that Delegate Enforcement Issues to an
Arbitrator Are Effective When They Are Clear and Not Revocable Under State
Law.
Parties to an arbitration agreement may agree to delegate to the arbitrator, instead
of a court, questions regarding the enforceability of the agreement. (Freeman v. State
Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 480.) They “can agree to arbitrate
almost any dispute—even a dispute over whether the underlying dispute is subject to
arbitration.” (Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1286 (Bruni).) The
delegation clause here was such an agreement, and we turn to consider its validity.4
There are two prerequisites for a delegation clause to be effective. First, the
language of the clause must be clear and unmistakable. (Rent-A-Center, supra, 561 U.S.
at p. 70, fn. 1.) Second, the delegation must not be revocable under state contract

4
The threshold issue of whether the proper entity to consider the validity of a
delegation clause should be a court or the arbitrator was resolved in Rent-A-Center: “If a
party challenges the validity . . . of the precise agreement to arbitrate at issue, the . . .
court must consider the challenge before ordering compliance with that agreement. . . .”
(561 U.S. at p. 74.) Here, Lucky Chances does not challenge the court’s authority to
determine the validity of the delegation clause.
Because the court must consider the validity of the delegation clause before
considering the validity of the rest of the arbitration agreement, we disagree with the
suggestion in Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th
704, 711 that an appellate court can avoid deciding whether a delegation clause is
unconscionable by ruling that all of the remaining provisions are conscionable. In such a
case, the ruling that the other provisions are conscionable assumes that a court, and not
the arbitrator, has the authority to determine their enforceability. This assumption was
precisely the issue that the Chin court supposedly avoided, but did not actually avoid,
when it declined to rule on the delegation clause and concluded that the challenged terms
of the arbitration agreement as a whole were conscionable. (Id. at pp. 711-715.)

7
defenses such as fraud, duress, or unconscionability. (Id. at p. 68; Sonic II, supra,
57 Cal.4th at pp. 1142-1143.) We examine both of these prerequisites in connection with
the delegation clause here.
The requirement that the language of the delegation clause be clear is
straightforward. The law presumes that a delegation to an arbitrator of enforceability
issues is ineffective absent clear and unmistakable evidence that the parties intended such
a delegation. (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944-945
(First Options); Ontiveros, supra, 164 Cal.App.4th at p. 503.) In First Options, the court
observed that the question of who should determine such a challenge “is rather arcane,”
and “[a] party often might not focus upon that question or upon the significance of having
arbitrators decide the scope of their own powers.” (First Options, at p. 945.)
Accordingly, the court determined that a party seeking to enforce a delegation clause
must show that it was clear and unmistakable, and silence or ambiguity will be deemed
insufficient. (Id. at pp. 944-945; see also Rent-A-Center, supra, 561 U.S. at pp. 65, 70,
fn. 1.)
Lucky Chances has demonstrated that the delegation clause here is clear and
unmistakable. The clause states unambiguously that “[t]he Arbitrator, and not any
federal, state, or local court or agency, shall have the exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability, or formation of this
Agreement. . . .” This language indicates an intent to delegate all issues to an arbitrator,
including issues of enforceability, and Tiri concedes as much. (Rent-A-Center, supra,
561 U.S. at p. 70, fn. 1 [party challenging an identically worded delegation clause
conceded language was clear]; see also Gilbert Street Developers, LLC v. La Quinta
Homes, LLC, supra, 174 Cal.App.4th at p. 1192 [“An easy case [establishing delegation]
is obviously when there is explicit language in the actual signed document to that

8
effect.”].) We see no reason to disagree with the parties’ tacit understanding that the
delegation clause here was clear.5
The second requirement for a delegation clause to be effective is that it cannot be
revocable on state-law grounds such as fraud, duress, or unconscionability. (Sonic II,
supra, 57 Cal.4th at pp. 1142-1143.) Here, the only ground the trial court relied upon in
determining that the arbitration agreement, and impliedly the delegation clause, was
unenforceable was its finding of unconscionability. In reviewing a finding of
unconscionability, we apply a de novo standard of review when, as here, there is no
disputed extrinsic evidence. (Bruni, supra, 160 Cal.App.4th at pp. 1282-1283.)
“[T]he core concern of unconscionability doctrine is the ‘ “ ‘absence of
meaningful choice on the part of one of the parties together with contract terms which are
unreasonably favorable to the other party.’ ” ’ ” (Sonic II, supra, 57 Cal.4th at p. 1145.)
The doctrine is meant to ensure that contracts, particularly contracts of adhesion, do not
impose terms that are overly harsh, unduly oppressive, so one-sided as to shock the
conscience, or unfairly one-sided.6 (Ibid.)

5
In light of our conclusion that the delegation clause is clear and unmistakable, we
need not address Lucky Chances’s alternative argument that the agreement shows that the
parties intended to delegate enforceability issues to the arbitrator because the agreement
adopts AAA arbitration rules, which, at least in their current iteration, permit the
arbitrator to decide these questions. (AAA Employment Arb. Rules and Mediation
Procs., Rule 6(a).) On this issue, Division Five of this court has expressed doubts that a
simple adoption in an employment arbitration agreement of such rules would constitute a
sufficient indication of the parties’ intent to delegate all enforceability issues to the
arbitrator. (Ajamian, supra, 203 Cal.App.4th at pp. 788-790.)
6
In a case currently pending before the California Supreme Court, the court
requested supplemental briefing on the appropriate standard for determining whether a
contract or contract term is substantively unconscionable. (Sanchez v. Valencia Holding
Co., rev. granted Mar. 21, 2012, S199119, and suppl. briefing ordered Feb. 19, 2014.)
Sanchez is one of several cases currently pending before the Supreme Court regarding the
enforceability of arbitration agreements. (E.g., Compton v. Superior Court, rev. granted
June 12, 2013, S210261 [briefing deferred pending disposition of Sanchez]; Mayers v.
Volt Management, rev. granted June 13, 2012, S200709 [same]; Baltazar v. Forever 21,
rev. granted Mar. 20, 2013, S208345 [whether arbitration agreement unconscionable for
lack of mutuality]; Leos v. Darden Restaurants, rev. granted Sept. 11, 2013, S212511

9
 The “analysis begins with an inquiry into whether the contract is one of adhesion.
[Citation.] ‘The term [contract of adhesion] signifies a standardized contract, which,
imposed and drafted by the party of superior bargaining strength, relegates to the
subscribing party only the opportunity to adhere to the contract or reject it.’ [Citation.] If
the contract is adhesive, the court must then determine whether ‘other factors are present
which, under established legal rules—legislative or judicial—operate to render it
[unenforceable].’ ” (Armendariz, supra, 24 Cal.4th at p. 113.) “ ‘[U]nconscionability
has both a “procedural” and a “substantive” element,’ the former focusing on
‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on ‘ “overly
harsh” ’ or ‘ “one-sided” ’ results. [Citation.] ‘The prevailing view is that [procedural
and substantive unconscionability] must both be present in order for a court to exercise its
discretion to refuse to enforce a contract or clause under the doctrine of
unconscionability.’ [Citation.] But they need not be present in the same degree. . . .
[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.” (Id. at p. 114.) “[B]y the use of a sliding scale, a greater showing of
procedural or substantive unconscionability will require less of a showing of the other to
invalidate the claim.” (Ajamian, supra, 203 Cal.App.4th at p. 795.) The party opposing
arbitration has the burden of proving unconscionability. (Szetela v. Discover Bank (2002)
97 Cal.App.4th 1094, 1099.)
Rent-A-Center involved an employment arbitration agreement’s delegation clause
that was worded identically to the one here. (Rent-A-Center, supra, 561 U.S. at p. 70.)

[briefing deferred pending disposition of Baltazar]; Iskanian v. CLS Transportation of
Los Angeles, rev. granted Sept. 19, 2012, S204032 [validity of class-action waivers in
context of labor-law rights].)

10
Although the court declined to rule squarely on the conscionability of the clause,7 it
provided a framework for considering the question. It explained that while there must be
clear and unmistakable evidence that the parties intended to delegate arbitrability issues
to an arbitrator, there is no requirement that conscionability also be “clear and
unmistakable.” (Id. at p. 70, fn. 1.) Importantly, it further explained that any claim of
unconscionability must be specific to the delegation clause. (Id. at p. 73.) In providing
an example of such a claim, the court stated that the employee’s contention that a
discovery limitation in the arbitration agreement was substantively unconscionable would
have had to be specifically directed at the delegation clause. In the court’s words, the
employee “would have had to argue that the limitation upon the number of depositions
causes the arbitration of his claim that the Agreement is unenforceable to be
unconscionable.” (Ibid.) The court acknowledged that this “would be, of course, a much
more difficult argument to sustain than the argument that the same limitation renders
arbitration of [the employee’s] factbound employment-discrimination claim
unconscionable.” (Ibid.)
With this framework in mind, we apply state conscionability principles to examine
whether Tiri sustained her burden of establishing that the delegation clause is
unconscionable.

7
The employee in Rent-A-Center, supra, 561 U.S. p. 63 did not challenge the
delegation clause in the lower courts and instead argued that two other provisions—one
about fee sharing and another about discovery—rendered the arbitration agreement as a
whole unconscionable under state law. (Id. at pp. 63, 73.) The Supreme Court concluded
that the delegation clause was presumptively valid since it had not been challenged
below. (Id. at pp. 72-73.)

11
 1. The Delegation Clause Is Part of a Contract of Adhesion.
Tiri contends, as she did below, that the delegation clause is part of a contract of
adhesion. (Murphy v. Check ’N Go of California, Inc. (2007) 156 Cal.App.4th 138, 144-
145 (Murphy).) We agree. The delegation clause was drafted by Lucky Chances and
presented to Tiri on a take-it-or-leave-it basis, and Tiri stated that she was worried she
would lose her job if she refused to sign it. (Bruni, supra, 160 Cal.App.4th at p. 1282.)
In the employment context, “the economic pressure exerted by employers on all but the
most sought-after employees may be particularly acute, for the arbitration agreement
stands between the employee and necessary employment, and few employees are in a
position to refuse a job because of an arbitration requirement.” (Armendariz, supra,
24 Cal.4th at p. 115.)
The statements by Lucky Chances’s human-resources manager that Tiri was never
told that the agreement was nonnegotiable and that Tiri never proposed changes fell far
short of demonstrating an arms-length bargaining transaction. Tellingly, the manager did
not say that the agreement was actually negotiable, that Lucky Chances offered to
negotiate, or that Lucky Chances would have considered proposed changes. Under these
circumstances, we have no difficulty concluding that the arbitration agreement was a
contract of adhesion. (Murphy, supra, 156 Cal.App.4th at p. 144.)8
2. The Delegation Clause Is Procedurally Unconscionable.
The procedural element of unconscionability, as mentioned above, focuses on two
factors: oppression and surprise. (Zullo v. Superior Court, supra, 197 Cal.App.4th at

8
California courts have held that provisions in contracts of adhesion will not be
enforced when they violate the “reasonable expectations” of the weaker party. (Bruni,
supra, 160 Cal.App.4th at p. 1289.) As noted in Bruni, it “is not entirely clear whether
this principle is a subspecies of the doctrine of unconscionability or a separate doctrine.”
(Ibid.) Here, we need not resolve whether the principle is a separate doctrine because,
even if it is, Tiri has not argued the point. In any event, the unreasonableness of
expecting the weaker party to understand the “rather arcane” meaning of a delegation
clause was a factor in requiring delegation clauses to be clear and unmistakable (First
Options, supra, 514 U.S. at p. 945), and this requirement, as we have already concluded,
was satisfied here.

12
p. 484.) “ ‘ “Oppression” arises from an inequality of bargaining power which results in
no real negotiation and ‘an absence of meaningful choice.’ [Citations.] ‘Surprise’
involves the extent to which the supposedly agreed-upon terms of the bargain are hidden
in the prolix printed form drafted by the party seeking to enforce the disputed terms.” ’ ”
(Ibid.)
For the same reasons that we conclude the delegation clause is part of a contract of
adhesion, we agree with the trial court’s implied finding that the delegation clause is
procedurally unconscionable. Again, the clause was presented along with the rest of the
agreement on a take-it-or-leave-it basis. (Ajamian, supra, 203 Cal.App.4th at p. 794,
fn. 11 [delegation clause procedurally unconscionable where presented on take-it-or-
leave-it basis].) Although, as we have already determined, the delegation clause was
clear and unmistakable, the issue of delegating arbitrability questions to an arbitrator is a
“rather arcane” issue upon which parties likely do not focus. (First Options, supra,
514 U.S. at p. 945.) Tiri was an unsophisticated party who was presented with the
agreement containing the clause years after being hired by Lucky Chances, and was given
little time to review it. The arcane nature of the clause, Tiri’s lack of sophistication, and
the failure of Lucky Chances to provide adequate time to review the agreement all add to
the oppression and surprise of the delegation clause in this case.9

9
The parties disagree whether the failure to provide Tiri with a copy of the AAA rules
supports a determination that the arbitration agreement as a whole was procedurally
unconscionable, an issue that has been analyzed by several Courts of Appeal, which have
reached different conclusions. (E.g., Samaniego v. Empire Today, LLC (2012)
205 Cal.App.4th 1138, 1146 [failure to provide copy of arbitration rules supported finding of
procedural unconscionability]; Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th
387, 393 [same]; Zullo v. Superior Court, supra, 197 Cal.App.4th at pp. 485-486 [same];
Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406 [requiring employee independently to
find and research obscure rules referenced in an arbitration agreement is oppressive]; but see
Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 691-692 [failure to
attach AAA rules to arbitration agreement did not render the agreement procedurally
unconscionable, because rules were easily accessible on the Internet and plaintiff did not lack
means or capacity to retrieve them]; Peng v. First Republic Bank (2013) 219 Cal.App.4th
1462, 1466, 1472 [failure to attach AAA rules, standing alone, insufficient grounds to find
procedural unconscionability in employment case where employee had 25 days to consider

13
 3. The Delegation Clause Is Not Substantively Unconscionable.
Although we conclude that the delegation clause is a contract of adhesion and
procedurally unconscionable, we conclude that it is nonetheless valid because it is not
substantively unconscionable. The delegation clause is not overly harsh, and does not
sanction one-sided results. (Armendariz, supra, 24 Cal.4th at p. 114.) “[A]n arbitration
agreement imposed in an adhesive context lacks basic fairness and mutuality if it requires
one party, but not the other, to arbitrate all claims arising out of the same transaction or
occurrence or series of transactions or occurrences.” (Id. at p. 120.) The delegation
clause here does not lack mutuality because Tiri and Lucky Chances are bound by it
equally.
In denying Tiri’s petition to compel arbitration, the trial court relied on Zullo v.
Superior Court, supra, 197 Cal.App.4th 477 and Fitz v. NCR Corp., supra,
118 Cal.App.4th 702 in finding that the arbitration agreement as a whole was
unconscionable. But neither of these cases provides a persuasive basis for concluding
that the delegation clause is substantively unconscionable. Both Zullo and Fitz reviewed
employment arbitration agreements and concluded that they were substantively
unconscionable because they lacked mutuality. In Zullo, the court found that the
agreement lacked mutuality in two ways. First, the agreement applied to “any” dispute
arising out of a termination. (Zullo, supra, at p. 486.) According to the Zullo court, this
unfairly favored the employer because termination disputes “ ‘are virtually certain to be
filed against, not by [the employer],’ ” but the agreement included no corresponding
provision requiring the employer to arbitrate the types of claims that it might bring
against the employee. (Ibid.) Mutuality was lacking, in other words, because arbitration

employment offer that included arbitration agreement].) We need not resolve whether the
failure to attach the AAA rules supports a finding of procedural unconscionability of the
delegation clause because we find that it is procedurally unconscionable for other reasons.
We leave to the arbitrator the determination of whether the failure to attach the AAA rules
supports a finding that the agreement as a whole, or any of its other severable provisions, is
unenforceable as a result of both procedural and substantive unconscionability. (Post,
§ II.C.3.)

14
was required for disputes that the employee was likely to initiate but not for disputes that
the employer was likely to initiate. Second, the agreement unfairly favored the employer
because it required the employee, but not the employer, to respond to any
communications about arbitration proceedings within 10 days or forfeit the claim.10 (Id.
at p. 487.) In Fitz, the court found that the agreement lacked mutuality because it
imposed a two-deposition limit on the employee (but not the employer) in wrongful-
termination claims and, as with the agreement in Zullo, it failed to require the employer
to arbitrate other types of disputes. (Fitz, supra, at pp. 717-725.) Thus, in both cases the
agreement left the employee more bound by arbitration than the employer.
In contrast, the delegation clause here does not lack mutuality because Tiri and
Lucky Chances are bound by it equally. The agreement requires arbitration for “any and
all differences and/or legal disputes” (whether by or against the employee or employer).
This mutuality is nearly unqualified, and it is far more than the “ ‘modicum of
bilaterality’ ” required by our state Supreme Court in employment arbitration agreements.
(Armendariz, supra, 24 Cal.4th at p. 117.) We can find nothing in the delegation clause
upon which to conclude that it lacks mutuality or is otherwise unreasonably favorable to
Lucky Chances.
Tiri argues at length that various provisions of the arbitration agreement are
substantively unconscionable, but her arguments are not specific to the delegation clause
as required under Rent-A-Center. (Rent-A-Center, supra, 561 U.S. at p. 73.) For
example, she argues that the agreement’s confidentiality clause is substantively
unconscionable because it could give Lucky Chances an advantage on her underlying
claims for wrongful discharge by preventing her from contacting other employees and
accessing information that is available to Lucky Chances. (Davis v. O’Melveny & Myers

10
Zullo also noted, without deciding, that a provision in the arbitration agreement
preventing the tolling of the limitations period “might also contribute to substantive
unconscionability.” (Zullo v. Superior Court, supra, 197 Cal.App.4th at p. 487, fn. 4.)

15
(9th Cir. 2007) 485 F.3d 1066, 1078 (Davis).)11 But she does not assert and demonstrate
that the confidentiality clause as applied to the delegation clause renders that clause
unconscionable by impeding her ability to arbitrate whether the arbitration agreement as a
whole is unconscionable. (Rent-A-Center, supra, at p. 73.)
We are mindful that two decisions from this district, Ontiveros and Murphy,
declined to enforce delegation clauses in employment arbitration contracts of adhesion on
unconscionability grounds even though, like the delegation clause here, the clauses were
explicit and clear. (Ontiveros, supra, 164 Cal.App.4th 494; Murphy, supra,
156 Cal.App.4th 138.) But these holdings have been undermined by the more recent
United States Supreme Court decisions in Rent-A-Center and AT&T Mobility LLC v.
Concepcion (2011) 563 U.S. ___, 131 S.Ct. 1740 (Concepcion). Rent-A-Center held that
delegation clauses are valid absent a challenge specific to the delegation clause (561 U.S.
at pp. 73-74), and Concepcion held that courts may not issue categorical rulings that
interfere with fundamental aspects of arbitration (131 S.Ct. at p. 1748).
We discuss how each of these cases has undermined the holdings in Murphy and
Ontiveros, and we begin with Rent-A-Center. In Murphy and Ontiveros, two substantive
unconscionability concerns were identified with delegation clauses in employment
arbitration contracts of adhesion. The first was a lack of mutuality because the agreement
was “ ‘entirely one sided because [the employer] cannot be expected to claim that it
drafted an unconscionable agreement.’ ” (Ontiveros, supra, 164 Cal.App.4th at p. 504.)
In other words, the concern was that if arbitrators get to decide enforcement issues,
employees will be more caught up in arbitration processes than employers because they
are far more likely to bring enforcement challenges. The second was that allowing
arbitrators to decide enforceability issues is unfair because arbitrators could be invested
in the outcome: “In such situations, in which one party tends to be a repeat player, the

11
Davis was overruled on another ground in Ferguson v. Corinthian Colleges, Inc.
(9th Cir. 2013) 733 F.3d 928, 933-934.

16
arbitrator has a unique self-interest in deciding that a dispute is arbitrable.” (Id. at
p. 505.)
But these concerns, as reasonable as they are, are virtually always present with
delegation clauses in employment arbitration agreements. To conclude that they signify
substantive unconscionability would be tantamount to concluding that delegation clauses
in employment arbitration agreements are categorically unenforceable. Such a
conclusion would conflict with Rent-A-Center’s indication that delegation clauses in
employment agreements are enforceable so long as they are clear and unmistakable.
(Rent-A-Center, supra, 561 U.S. at p. 72; see also First Options, supra, 514 U.S. at
pp. 944-945.) We conclude that the inescapable import of Rent-A-Center is that clear
delegation clauses in employment arbitration agreements are substantively
unconscionable only if they impose unfair or one-sided burdens that are different from
the clauses’ inherent features and consequences. Here, Tiri has failed to demonstrate that
the delegation clause imposes any such burdens.
Not only does Rent-A-Center undermine the holdings in Murphy and Ontiveros,
but so does Concepcion. In Concepcion, the United States Supreme Court reviewed the
California Supreme Court’s ruling in Discover Bank v. Superior Court (2005) 36 Cal.4th
148. In Discover Bank, the California Supreme Court held that class-arbitration waivers
in consumer contracts were unenforceable under state-law unconscionability principles.
(Id. at pp. 153, 162.) Concepcion held that Discover Bank’s holding interfered with the
FAA’s goal of ensuring the enforcement of arbitration agreements according to their
terms. (Concepcion, supra, 131 S.Ct. at pp. 1748-1750.) The Supreme Court held that,
regardless of their policy justifications, state judicial rulings12 cannot invalidate

12
The FAA preempts both state judicial rulings and legislation disfavoring
arbitration. (Concepcion, supra, 131 S.Ct. at p. 1747.) Concepcion analyzed a
categorical judicial ruling (ibid.), as we do here. Our analysis under the CAA would be
different in a case involving state legislation because the CAA, being a state statute,
“obviously does not prevent our Legislature from selectively prohibiting arbitration in
certain areas.” (Armendariz, supra, 24 Cal.4th at p. 98.)

17
arbitration agreements on state-law defenses pertaining “only to arbitration or that derive
their meaning from the fact that an agreement to arbitrate is at issue.” (Id. at p. 1746.)
Our state Supreme Court provided guidance on Concepcion in Sonic II, which was
decided on remand from the United States Supreme Court after the high court vacated
Sonic I, supra, 51 Cal.4th 659 for reconsideration in light of Concepcion. In Sonic II, the
court concluded that state rulings “even when facially nondiscriminatory, must not
disfavor arbitration as applied by imposing procedural requirements that ‘interfere[] with
fundamental attributes of arbitration.’ ” (Sonic II, supra, 57 Cal.4th at p. 1143, original
italics.) To deny enforcing a delegation clause without identifying an unfair term—
different from the features and consequences inherent with such a clause—would
interfere with “the overarching purpose of the FAA . . . to ensure the enforcement of
arbitration agreements according to their terms so as to facilitate streamlined
proceedings,” and would “interfere[] with fundamental attributes of arbitration and thus
create[] a scheme inconsistent with the FAA.” (Concepcion, supra, 131 S.Ct. at p. 1748;
see also Armendariz, supra, 24 Cal.4th at pp. 97-98 [Legislature and state courts hold
friendly view toward arbitration process].) In short, we decline to follow Ontiveros and
Murphy in light of Rent-A-Center and Concepcion.
The delegation clause here is clear and unmistakable, and it is not revocable under
state unconscionability principles. Tiri has identified no aspect of the clause that would
overcome Rent-A-Center’s assumption of validity or allow us to prevent its enforcement
under Concepcion. Thus, she has failed to sustain her burden of demonstrating by a
preponderance of the evidence that the delegation clause is unenforceable. (Rosenthal,
supra, 14 Cal.4th 394 at p. 413.)
Having determined that the delegation clause was valid, we conclude that the trial
court’s denial of Lucky Chances’s petition to compel arbitration was improper. Thus, it
will be for the arbitrator to consider the conscionability of the agreement as a whole and
its other severable provisions.

18
 III.
DISPOSITION
The order denying appellant’s petition to compel arbitration is reversed. Each side
shall bear its own costs on appeal.

_________________________
Humes, J.

We concur:

_________________________
Ruvolo, P.J.

_________________________
Reardon, J.

19
Trial Court: San Mateo County Superior Court

Trial Judge: Honorable Joseph C. Scott

Counsel for Appellant: Tyler M. Paetkau

Counsel for Respondent Allan A. Villanueva

20