Oto, L. L.C. v. Kho

447 P.3d 680, 251 Cal. Rptr. 3d 714, 8 Cal. 5th 111
CourtCalifornia Supreme Court
DecidedAugust 29, 2019
DocketS244630
StatusPublished
Cited by499 cases

This text of 447 P.3d 680 (Oto, L. L.C. v. Kho) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Oto, L. L.C. v. Kho, 447 P.3d 680, 251 Cal. Rptr. 3d 714, 8 Cal. 5th 111 (Cal. 2019).

Opinion

Opinion of the Court by Corrigan, J.

*117Here, we again consider the enforceability of an agreement requiring arbitration of wage disputes.

*118Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 121 Cal.Rptr.3d 58, 247 P.3d 130 ( Sonic I ) concluded that such arbitration agreements are categorically unconscionable because workers waive their statutory rights to a "Berman hearing" and related procedures designed to assist in the recovery of unpaid wages. (See Lab. Code, § 98 et seq. )1 Rather than invalidating the entire agreement, however, Sonic I held that while Berman protections could not be waived, any party dissatisfied with the Berman hearing's result could move the dispute to arbitration. ( Sonic I , at pp. 669, 675, 121 Cal.Rptr.3d 58, 247 P.3d 130.) The United States Supreme Court vacated that judgment and remanded for consideration in light of AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 ( Concepcion ). Thereafter, we determined Sonic I 's categorical rule of unconscionability was preempted by the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq. ). ( Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1146, 163 Cal.Rptr.3d 269, 311 P.3d 184 ( Sonic II ).) We held instead that an arbitration agreement is not categorically unconscionable solely because it entails a waiver of the Berman procedure. An agreement to arbitrate wage disputes can be enforceable so long as it provides an accessible and affordable **685process for resolving those disputes. ( Id . at p. 1146, 163 Cal.Rptr.3d 269, 311 P.3d 184.)

We originally granted review in this case to decide whether an arbitral scheme resembling civil litigation can constitute a sufficiently accessible and affordable process. Because the facts here involve an unusually high degree of procedural unconscionability, however, a definitive resolution of that specific question is unnecessary. Even if a litigation-like arbitration procedure may be an acceptable substitute for the Berman process in other circumstances, an employee may not be coerced or misled into accepting this trade. Considering the oppressive circumstances present here, we conclude the agreement was unconscionable, rendering it unenforceable.

I. BACKGROUND

The relevant facts are not in dispute. Ken Kho was hired as a service technician *720for One Toyota of Oakland (One Toyota) in January 2010.2 Three years later, a human resources "porter" approached Kho in his workstation and asked him to sign several documents. Kho was required to sign them immediately and return them to the porter, who waited in the workstation. It took Kho three or four minutes to sign them all. He had no opportunity to read them, nor were their contents explained. Kho's first language is Chinese. He was not given copies of the documents in either language. *119One document was titled "Comprehensive Agreement-Employment At-Will and Arbitration."3 As the Court of Appeal observed, "Notwithstanding its designation as a 'comprehensive' employment contract, the one and one-quarter page contract is merely an arbitration clause grafted onto an acknowledgment of at-will employment."

The contract's arbitration clause is contained in a dense, single-spaced paragraph, written in a very small typeface that fills almost an entire page.4 Subject to limited exceptions, nearly any employment-related claim made by either party must be submitted to binding arbitration. Class or collective proceedings are generally prohibited. Arbitrations must be conducted before a retired superior court judge, pursuant to the California Arbitration Act ( Code Civ. Proc., § 1280 et seq. ), with full discovery permitted (see Code Civ. Proc., § 1283.05 ). Furthermore, "[t]o the extent applicable in civil actions in California courts," the agreement requires adherence to "all rules of pleading (including the right of demurrer), all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on the pleadings, and judgment under Code of Civil Procedure Section 631.8."5 The allocation of arbitration costs is not addressed explicitly. Instead, the agreement refers to Code of Civil Procedure section 1284.2, which generally provides that parties to an arbitration must bear their own expenses. But the agreement also states that "controlling case law" or statutes will prevail **686over Code of Civil Procedure section 1284.2 if there is a conflict.

Kho's employment ended in April 2014. Several months later, he filed a complaint with the Labor Commissioner for unpaid wages. At a settlement conference before a deputy labor commissioner, One Toyota was represented by counsel; Kho appeared *721in propria persona. One Toyota contends its attorney demanded arbitration at the conference, presenting Kho with a copy of the signed arbitration agreement, but Kho and the Labor Commissioner *120dispute this account.

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Cite This Page — Counsel Stack

Bluebook (online)
447 P.3d 680, 251 Cal. Rptr. 3d 714, 8 Cal. 5th 111, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oto-l-lc-v-kho-cal-2019.