Opinion
NOT TO BE PUBLISHED.
Appeal from an order of the Superior Court of Los Angeles County, No. BC368596, Paul Gutman, Judge.
Littler Mendelson, Henry D. Lederman and Lauren D. Hymes for Defendants and Appellants.
Winer, McKenna & Davis, Alexis S. McKenna and Kelli D. Burritt for Plaintiff and Respondent.
CHAVEZ, J.
Defendants and appellants Ralphs Grocery Company (Ralphs) and Victor Viquez (Viquez) (Ralphs and Viquez are referred to collectively as defendants) appeal from the trial court’s order denying their petition to compel arbitration of an action for sexual harassment and retaliation under the Fair Employment and Housing Act (Gov. Code, § 12940 et seq. (FEHA)) by plaintiff and respondent Cynthia Macias (plaintiff). We reverse the trial court’s order.
BACKGROUND
Plaintiff applied for a job with Ralphs on February 6, 2006. As part of the job application process, plaintiff completed and signed an employment application form that contained the following arbitration provision:
“MANDATORY FINAL & BINDING ARBITRATION: I acknowledge and understand that the Company has a Dispute Resolution Program that includes a Mediation and Binding Arbitration Policy (the ‘Policy’) applicable to all employees and applicants for employment (referred to individually as ‘Employee’ or collectively as ‘Employees’). I acknowledge, understand and agree that the Policy is incorporated into this Employment Application by reference as though it is set forth in full, that except for claims or disputes arising out of the terms and conditions of any applicable CBA (‘Excluded Disputes’) the Policy applies to any employment-related disputes that exist or arise between Employees and the Company or ‘Ralphs’ (as defined in the Policy) that would constitute cognizable claims or causes of action in a court or government agency under applicable law including individual statutory claims or disputes (‘Covered Disputes), that Covered Disputes are such claims or disputes that have to do with an Employee’s seeking, attempted, actual, or alleged employment with the Company or Ralphs (or any of them) other than Excluded Disputes and that the Policy requires that any Employee who wishes to initiate or participate in formal proceedings to resolve any Covered Disputes must submit the claims or disputes to final and binding arbitration in accordance with the Policy. I acknowledge, understand, and agree that (1) if any Covered Disputes exist or arise between me and the Company or Ralphs (or any of them), other than any Excluded Disputes, I am bound by the provisions, terms, and conditions of the Policy which provides for mediation and mandatory final and binding arbitration of any Covered Disputes, (2) I am and will hereafter be deemed and treated as an ‘Employee’ as defined in the Policy for the purposes thereof, (3) there are no judge or jury trials of any Covered Disputes permitted under the Policy, (4) I waive any right that I have or may have to a judge or jury trial of any Covered Disputes, (5) I waive any right that I have or may have to have any formal dispute resolution proceedings concerning any Covered Disputes take place in a local, state, or federal court or agency and to have such proceedings heard or presided over by an active local, state, or federal judge, judicial officer, or administrative officer, (6) all Covered Disputes must be heard, determined and resolved only by an Arbitrator through final and binding arbitration in accordance with the Policy, (7) the Company likewise agrees to mandatory final and binding arbitration of any Covered Disputes, whether initiated or participated in by me or by the Company, in accordance with the Policy, and (8) I have received a copy of the Policy or one has been made available to me through the Company’s Director of Personnel & Benefits, 1100 West Artesia Boulevard, Compton, CA 90220, Telephone (310) 884-4542 or (800) 272-8747, Fax (310) 884-2571, e-mail personnel@ralphs.com.”
Plaintiff initialed this provision and signed her name at the bottom of the page on which it appeared. At the time she completed the application form, plaintiff was not advised that the form contained an agreement to arbitrate, and she was not provided a copy of the “Mediation and Binding Arbitration Policy” (Arbitration Policy) referred to in the arbitration provision.
Plaintiff was hired and commenced her employment with Ralphs on February 16, 2006. Plaintiff alleges that shortly after she began working, Viquez sexually harassed her. She complained to a manager, who said he would refer the matter to the store manager.
In May 2006, Bonnie Franco, Director of Employee Relations and Human Resources Administration for Ralphs, spoke with plaintiff by telephone. Franco subsequently sent plaintiff a letter dated May 1, 2006, stating that Ralphs was enclosing a “Notice of Dispute & Request for Resolution” form (Dispute Form) and a copy of the Arbitration Policy. The Dispute Form completed and signed by plaintiff contained an acknowledgment that a copy of the Arbitration Policy had been made available to her. Plaintiff submitted a declaration in the trial court stating that she did not receive a copy of the Arbitration Policy when she received the Dispute Form. Plaintiff alleges that after she complained about the sexual harassment, Ralphs retaliated against her by transferring her to another store and reducing her work hours.
The Dispute Form also contained an arbitration provision that Ralphs argued in the trial court below was a basis for compelling arbitration of plaintiff’s claims. Ralphs has abandoned this argument for purposes of this appeal.
On March 28, 2007, plaintiff filed a complaint alleging causes of action for sexual harassment, failure to take reasonable steps to prevent and correct discrimination and harassment, retaliation, intentional infliction of emotional distress, assault, battery, and declaratory relief. On June 21, 2007, defendants filed a motion to compel arbitration and to stay proceedings pending arbitration. After hearing argument from the parties, the trial court denied the motion on the grounds that the arbitration agreement was procedurally and substantively unconscionable. This appeal followed.
DISCUSSION
I. Applicable Law, Analytical Framework, and Standard of Review
The Arbitration Policy states that it is governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq. (FAA)). The FAA states that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (9 U.S.C. § 2.) Both the FAA and the California Arbitration Act (Code Civ. Proc., § 1280 et seq.) “express a strong public policy of enforcing arbitration agreements, including agreements to arbitrate statutory rights. [Citation.]” (Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 892 (Baker).)
The strong policy in favor of enforcing arbitration agreements, however, “does not arise until an enforceable agreement is established.” (Mitchell v. American Fair Credit Assn. (2002) 99 Cal.App.4th 1345, 1355.) “[T]he existence of a valid agreement to arbitrate is determined by reference to state law principles regarding the formation, revocation and enforceability of contracts generally. [Citations.]” (Kinney v. United Healthcare Servs. (1999) 70 Cal.App.4th 1322, 1327-1328.) Thus, although the FAA governs the interpretation of arbitration clauses, California law determines whether an enforceable agreement has been formed in the first instance. (Baker, supra, 159 Cal.App.4th at p. 893.)
“On appeal from the denial of a motion to compel arbitration, ‘we review the arbitration agreement de novo to determine whether it is legally enforceable, applying general principles of California contract law. [Citations.]’ [Citation.]” (Baker, supra, 159 Cal.App.4th at p. 892.) There are three steps in determining the validity, and hence, enforceability, of an arbitration agreement. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711 (Fitz).) “In deciding whether an agreement to arbitrate is enforceable, the first step in the analysis is to determine whether the agreement implicates public or private rights.” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 651-652 (Abramson).) “Public rights are those that affect ‘“society at large” rather than the individual’ and include . . . claims under FEHA. [Citations.] [¶] The second step is to apply the enforceability standards applicable to those rights.” (Fitz, supra, at pp. 711-712.) An arbitration agreement that encompasses unwaivable public rights must satisfy certain minimum requirements prescribed by the California Supreme Court in Armendariz v. Found. Health Psychcare Servs. (2000) 24 Cal.4th 83 (Armendariz). (Abramson, supra, at p. 652.)
When the plaintiff asserts private rights rather than (or in addition to) unwaivable public rights, the agreement to arbitrate those claims is tested only against standards for conscionability. (Abramson, supra, 115 Cal.App.4th at p. 652.) In Armendariz, the California Supreme Court outlined the standards for determining the conscionability of an agreement to arbitrate employment-related claims. (Armendariz, supra, 24 Cal.4th at pp. 114-121.) Whether an arbitration agreement is unconscionable is a question of law ordinarily subject to de novo review, unless factual issues bear on that determination. (Civ. Code, § 1670.5; Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466, 480.) To the extent the determination of unconscionability turned on the resolution of conflicting evidence or on factual inferences to be drawn from the evidence, we consider the evidence in the light most favorable to the trial court’s ruling and review the trial court’s factual findings under the substantial evidence standard. (Baker, supra, 159 Cal.App.4th at p. 892.)
If the arbitration provisions fail to meet the requirements set forth in Armendariz, “the third step is to determine whether the offending provisions can be excised from the agreement to arbitrate or whether the provisions so permeate the agreement as to render it void in its entirety. [Citations.]” (Fitz, supra, 118 Cal.App.4th at p. 712.) The trial court’s determination as to whether an unconscionable provision may be severed from an arbitration agreement is reviewed for abuse of discretion. (Armendariz, supra, 24 Cal.4th at p. 122; Murphy v. Check ‘N Go of California, Inc. (2007) 156 Cal.App.4th 138, 144.)
II. Existence of Agreement to Arbitrate
Plaintiff contends no valid agreement to arbitrate was formed because she never consented to arbitration. “The right to arbitration depends on a contract. [Citations.] Accordingly, a party can be compelled to submit a dispute to arbitration only where he has agreed in writing to do so. [Citation.]” (Boys Club of San Fernando Valley, Inc. v. Fid. & Deposit Co. (1992) 6 Cal.App.4th 1266, 1271, fn. omitted.) In a motion to compel arbitration, “[t]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.]” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
Although defendants claim that plaintiff waived this argument on appeal by not asserting it in the trial court below, plaintiff’s opposition to the motion to compel arbitration clearly advances this argument.
“California contract law applies to determine whether the parties formed a valid agreement to arbitrate. [Citations.]” (Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 1170.) “Section 1550, subdivision 2, of the Civil Code establishes the rule that an essential component to a contract is the consent of the parties to the contract. [Citation.] Civil Code section 1565, subdivision 3 provides, ‘[t]he consent of the parties to a contract must be . . . [¶] . . . [¶] . . . [c]ommunicated by each to the other.’ [Citation.]” (Mitri, at p. 1170.)
Plaintiff claims she is not bound to arbitrate her claims because the arbitration provision in the employment application she signed did not validly incorporate by reference the terms of the Arbitration Policy. She relies on case law which holds that for the terms of another document to be incorporated by reference into a contract, “‘“the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.”’ [Citations.]” (Chan v. Drexel Burnham Lambert (1986) 178 Cal.App.3d 632, 641 (Chan), quoting Williams Constr. Co. v. Standard-Pacific Corp. (1967) 254 Cal.App.2d 442, 454; King v. Larsen Realty, Inc. (1981) 121 Cal.App.3d 349, 357 (King).) Those cases, however, are inapposite, because they concerned agreements that did not expressly provide for arbitration, but did so in a secondary document incorporated by reference. (Chan, supra, at p. 636 [plaintiff signed application form in which she agreed to abide by the rules of the NYSE; one of those rules required arbitration of employment-related claims]; King, supra, at p. 357 [applicant for membership in local real estate board signed form in which he agreed to abide by board’s bylaws, which imposed on members the duty to arbitrate].) Here, in contrast, the employment application signed by plaintiff contained an express agreement to arbitrate. The arbitration provision states: “I acknowledge, understand, and agree that . . . if any Covered Disputes exist or arise between me and the Company or Ralphs (or any of them), other than any Excluded Disputes, I am bound by the provisions, terms, and conditions of the Policy which provides for mediation and mandatory final and binding arbitration of any Covered Disputes . . . [and] all Covered Disputes must be heard, determined, and resolved only by an Arbitrator through final and binding arbitration in accordance with the Policy.” The arbitration provision defines “Covered Disputes” as “any employment-related disputes” that exist or arise between Ralphs and its employees, “including individual statutory claims or disputes.” Plaintiff signed an express agreement to arbitrate.
That the agreement incorporated by reference an Arbitration Policy containing additional terms not known or easily available to plaintiff does not invalidate its existence, nor does defendants’ failure to advise plaintiff that the employment application she signed and initialed contained an arbitration provision. “Failure to read or understand the arbitration clause is generally no defense to its enforcement. [Citation.]” (Chin, et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2007) ¶ 18:585, p. 18-63.) “Reasonable diligence requires the reading of a contract before signing it. A party cannot use [her] own lack of diligence to avoid an arbitration agreement. [Citation.]” (Rowland v. Painewebber Inc. (1992) 4 Cal.App.4th 279, 286, disapproved on another ground in Rosenthal v. Great W. Fin. Sec. Corp. (1996) 14 Cal.4th 394, 415-416.) An agreement to arbitrate was formed between the parties in this case.
III. Compliance With Armendariz
In Armendariz, our Supreme Court held that an agreement to arbitrate FEHA claims must satisfy the following minimum requirements: (1) it must provide for a neutral arbitrator; (2) it must allow adequate discovery; (3) it must provide all types of relief otherwise available in court; (4) it must require a written arbitration award that permits limited judicial review; and (5) it must require the employer to pay the arbitrator’s fees and all costs unique to arbitration. (Armendariz, supra, 24 Cal.4th at pp. 100-103.) Plaintiff contends the cost provision and the provision governing selection of an arbitrator in the Arbitration Policy are inconsistent with Armendariz.
Plaintiff does not contend the arbitration agreement fails to satisfy the Armendariz requirements for adequate discovery, relief otherwise available in a judicial forum, and a written arbitration award subject to judicial review.
A. Cost Provision
Paragraph 10 of the Arbitration Policy states:
“Each party to the arbitration will pay the fees for his, her or its own attorneys, subject to any remedies to which that party may later be entitled under applicable law. Ralphs (or any of them who are parties to the arbitration proceedings) in all cases where required by settled and controlling legal authority will pay up to all of the Qualified Arbitrator’s and arbitration fees, as apportioned by the Qualified Arbitrator at the outset of the arbitration proceedings in accordance with such legal authority and after the parties have received notice and an opportunity to be heard on the subject. In all instances in which there is a dispute over the apportionment of the Qualified Arbitrator’s or arbitration fees, such dispute is a Covered Dispute under this Arbitration Policy which must be resolved only by the Qualified Arbitrator. In the event settled and controlling legal authority does not require that one party or another bear a greater share of the Qualified Arbitrator’s or arbitration fees, such fees will be apportioned equally between each set of the adverse parties. If there is any dispute regarding the identification of settled and controlling legal authority, decisions of the United States Supreme Court shall be deemed controlling over any decision of any state or lower federal court.”
In Armendariz, our Supreme Court concluded that “when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court. This rule will ensure that employees bringing FEHA claims will not be deterred by costs greater than the usual costs incurred during litigation, costs that are essentially imposed on an employee by the employer.” (Armendariz, supra, 24 Cal.4th at pp. 110-111.) The court further stated that arbitration costs associated with a FEHA case should be apportioned to the employer at the outset of the arbitration, in order to avoid creating “a sense of risk and uncertainty among employees that could discourage the arbitration of meritorious claims.” (Id. at p. 111.)
Paragraph 10 of the Arbitration Policy complies with these requirements. It obligates Ralphs, “in all cases where required by settled and controlling legal authority” to “pay up to all of the Qualified Arbitrator’s and arbitration fees, as apportioned by the Qualified Arbitrator at the outset of the arbitration proceedings.”
The cost provision at issue here differs from that invalidated by Division Four of this court in O’Hare v. Municipal Resource Consultants (2003) 107 Cal.App.4th 267. The employment arbitration agreement considered in O’Hare required the parties to bear equally the arbitrator’s compensation and the expenses of arbitration “‘unless they agree otherwise, or unless the law provides otherwise.’” (Id. at pp. 279-280, fn. omitted.) The court in O’Hare concluded that the provision “clearly contravenes Armendariz,” rejecting an express acknowledgment by the employer in its motion to compel arbitration that it “was ‘prepared to pay such costs,’” as “an after-the-fact expression of willingness by the employer to amend the arbitration provision to bring it into conformity with law.” (O’Hare, at p. 280.) Unlike the cost provision in O’Hare, paragraph 10 of the Arbitration Policy complies with Armendariz by requiring Ralphs to bear “up to all” of the arbitrator’s fees at the outset of the arbitration “in all cases where required by settled and controlling legal authority.”
B. Neutral Arbitrator
Plaintiff contends paragraph 7 of the Arbitration Policy unreasonably limits the pool of potential arbitrators by excluding two well-known and reputable arbitration providers, the American Arbitration Association (AAA), and the Judicial Arbitration and Mediation Service (JAMS). The provision governing selection of the arbitrator provides in part:
Plaintiff contends the provision agreement governing selection of an arbitrator is substantively unconscionable. Because her argument also raises an issue concerning compliance with the Armendariz requirement for a neutral arbitrator, we address this argument within the framework of that case as well. Plaintiff’s argument concerning substantive unconscionability is addressed below.
“Unless the parties agree otherwise, the ‘Qualified Arbitrator’ must be a retired state or federal judge (excluding retired administrative law judges and hearing officers) from the state jurisdiction or federal judicial district in which the Covered Dispute(s) arose or will be arbitrated, and neither the American Arbitration Association (‘AAA’) nor the Judicial Arbitration & Mediation Service (‘JAMS’) will be permitted to administer any arbitration held under or pursuant to this Arbitration Policy. Ralphs and each Employee participating in any arbitration as described in this Arbitration Policy will select and appoint a Qualified Arbitrator by mutual agreement.”
The foregoing provision does not contravene the Armendariz requirement for a neutral arbitrator. Although it limits the pool of potential arbitrators to retired state or federal judges in the jurisdiction where the dispute arose, there is nothing one-sided or unfair about this limitation. Plaintiff does not argue that such persons would not be neutral decision makers. Plaintiff’s only complaint is that the agreement appears to preclude the selection of arbitrators affiliated with JAMS or AAA. Neither Armendariz nor any other case holds that affiliation with either of those organizations is necessary to ensure the neutrality of an arbitrator. Moreover, Ralphs concedes that the Arbitration Policy does not preclude the selection of arbitrators affiliated with AAA or JAMS, but “merely excludes the administration of arbitration by AAA and JAMS.” Paragraph 7 satisfies the requirement for a neutral arbitrator.
IV. Unconscionability
The doctrine of unconscionability has a substantive and a procedural element. (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 (Little); Armendariz, supra, 24 Cal.4th at p. 114.) Although both elements must be present in order for a court to refuse to enforce a contract as unconscionable, “they need not be present in the same degree.” (Armendariz, at p. 114.) Courts apply a sliding scale: the greater the degree of one type of unconscionability, the lesser of the other is required in order to render the contract unenforceable. (Ibid.; Kinney v. United Healthcare Servs., supra, 70 Cal.App.4th at p. 1329.) Whether an agreement is unconscionable depends on the circumstances at the time it was made. (Abramson, supra, 115 Cal.App.4th at p. 655.)
The trial court found that the arbitration agreement was procedurally and substantively unconscionable. Although substantial evidence supports the finding of procedural unconscionability, the finding of substantive unconscionability is not supported by the record.
A. Procedural Unconscionability
“‘“Procedural unconsionability” concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.]’ [Citation.] The relevant factors are oppression and surprise. [Citations.]” (Abramson, supra, 115 Cal.App.4th at p. 656.)
“‘The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party. [Citations.]’ [Citation.]” (Abramson, supra, 115 Cal.App.4th at p. 656 .) It generally takes the form of a contract of adhesion (Little, supra, 29 Cal.4th at p. 1071), a “standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates the subscribing party only the opportunity to adhere to the contract or reject it. [Citation.]” (Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 694.) “‘“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. [Citations.]’ [Citation.]” (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532, fn. omitted.)
The oppression component of procedural unconscionability was present in this case. Ralphs and its affiliated companies possess considerably more bargaining power than their employees or applicants for employment. The agreement to arbitrate signed by plaintiff was included in an application form that is a prerequisite to employment. Plaintiff submitted a declaration stating that she was told to complete the entire form in order to be considered for employment, that no one advised her that the application contained an arbitration provision, and that no one negotiated the terms of the agreement with her. “When the weaker party is presented the clause and told to ‘take it or leave it’ without the opportunity for meaningful negotiation, oppression, and therefore procedural unconscionability, are present. [Citation.]” (Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1100.)
The surprise component of procedural unconscionability was also present. The arbitration agreement incorporates by reference an Arbitration Policy that Ralphs did not provide to plaintiff during the employment application process. Plaintiff did not receive a copy of the Arbitration Policy until after she complained of sexual harassment by a coworker. That the arbitration agreement in the Ralphs employment application contained an acknowledgment stating that a copy of the Arbitration Policy “has been made available” to the applicant through the company’s personnel director by telephone, fax or e-mail, does not eliminate the element of surprise, as it placed the onus of obtaining the Arbitration Policy on plaintiff before she completed and signed the employment application. (See Fitz, supra, 118 Cal.App.4th at pp. 722-723 [surprise element of procedural unconscionability present when employer sent employees brochure explaining arbitration policy, but not a copy of the policy itself]; Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406 [elements of surprise and oppression present when arbitration rules not attached to contract and “customer is forced to go to another source to find out the full import of what he or she is about to sign – and must go to that effort prior to signing”]; see also Chin, et al., Cal. Practice Guide: Employment Litigation, supra, ¶ 18:649.5, p. 18-74 [arbitration agreements that incorporate by reference rules of arbitration “may be procedurally unconscionable if the employee is not provided a copy of the rules in advance, because the employee is forced to go to another source to learn the full ramifications of the arbitration agreement”].) There was substantial evidence of procedural unconscionability.
B. Substantive Unconscionability
Substantive unconscionability focuses on the terms of the agreement and whether those terms are “overly harsh” or “one-sided.” (Armendariz, supra, 24 Cal.4th at p. 114.) “‘[T]he paramount consideration in assessing [substantive] conscionability is mutuality.’ [Citation.]” (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281.) Plaintiff contends the following provisions of the Arbitration Policy are substantively unconscionable: paragraph 7, governing selection of arbitrators; paragraph 8, prohibiting arbitration of class actions; paragraph 9, shortening the statute of limitations for all claims to one year; paragraph 10, governing payment of arbitration fees; and the confidentiality provisions of paragraph 11. We requested supplemental briefing as to whether paragraph 13 of the Arbitration Policy, governing modifications, was substantively unconscionable, and, if so, whether that provision was severable. As we discuss, neither paragraph 13 nor any of the provisions identified by plaintiff present grounds for precluding enforcement of the agreement to arbitrate in this case.
1. Selection of Arbitrator
There is nothing “overly harsh” or “one-sided” about the provision of the Arbitration Policy governing the selection of arbitrators. Paragraph 7 of the Arbitration Policy allows both parties to participate in the selection of an arbitrator from among retired state and federal judges in the jurisdiction where the dispute arose. That provision is not substantively unconscionable.
2. Class Action Exclusion
Plaintiff contends paragraph 8 of the Arbitration Policy, which prohibits arbitration of claims on a class action basis or in a representative capacity, is substantively unconscionable. The substantive conscionability of this provision is not at issue in this case, however, because plaintiff does not assert or seek to assert any class action or representative claims. (See West v. Henderson (1991) 227 Cal.App.3d 1578, 1588 (West) [refusing to consider conscionability of a contract term in the context of a hypothetical situation]; see also Abramson, supra, 115 Cal.App.4th at p. 655 [whether an agreement is unconscionable depends on the circumstances at the time it was made].) A determination on the substantive conscionability of the class action provision must await those circumstances in which class or representative claims are alleged. Courts do not render advisory opinions, and must address actual, not hypothetical controversies. (Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 622 (Olsen).)
Paragraph 8 of the Arbitration Policy provides in part:
3. Statute of Limitations
Plaintiff claims that paragraph 9 of the Arbitration Policy is substantively unconscionable because it restricts the limitations period for FEHA claims to one year and potentially bars application of the continuing violations doctrine by employees seeking redress for FEHA violations outside the one-year period. Paragraph 9 provides in part: “In the event that the applicable statute of limitations period as provided under governing law is longer than one year, and is of the type that can be shortened by contractual agreement, the Company and Employees agree that the applicable statute of limitations period is shortened to one year.”
Paragraph 9 is inapplicable to plaintiff’s claims, which were brought within the one-year limitations period prescribed by the Arbitration Policy. That limitations period, moreover, is the same under FEHA. Before filing an action for harassment or retaliation under FEHA, an employee must file an administrative complaint with the Department of Fair Employment and Housing (DFEH) within one year of the allegedly illegal employment action. (Gov. Code, § 12960.) In general, a DFEH complaint only reaches unlawful acts that occurred within the one-year limitations period before the DFEH complaint was filed. (Gov. Code, § 12960, subd. (d).) In Soltani v. W. & S. Life Ins. Co. (9th Cir. 2001) 258 F.3d 1038, the Ninth Circuit held that a similar six-month contractual limitation provision for Title VII claims was not substantively unconscionable under California law, because, among other reasons, “(1) Title VII has a similar six-month limitations period for discrimination claims [citation]; (2) the Labor Management Relations Act requires breach of duty claims to be brought within six months [citation]; and (3) a party may waive a plea of the statute of limitations as a defense and may likewise waive a portion of the time granted in a statute of limitations [citation].” (Soltani, at p. 1044.)
Plaintiff did not seek to assert claims for any alleged unlawful acts that occurred outside the one-year limitations period. Accordingly, neither paragraph 9 nor the continuing violations doctrine applies in this case. (See West, supra, 227 Cal.App.3d at p. 1588; Olsen., supra, 48 Cal.App.4th at p. 622.)
4. Costs
The costs provision of the Arbitration Policy is not substantively unconscionable. As discussed, it obligates Ralphs to “pay up to all of the Qualified Arbitrator’s and arbitration fees” at the outset of the arbitration “where required by settled and controlling legal authority.” In cases where controlling legal authority does not require one party to bear a greater share of the arbitration costs, the Arbitration Policy applies bilaterally by apportioning the arbitration fees equally between the parties.
5. Confidentiality
Plaintiff challenges the confidentiality provisions of paragraph 11, which states that “[e]xcept and only to the extent it may be required by applicable law, the parties and the Qualified Arbitrator shall maintain the existence, content and outcome of any arbitration proceedings held pursuant to this Arbitration Policy in the strictest confidence and shall not disclose the same without the prior written consent of the parties.” She claims this provision, although facially neutral, is overly broad and substantively unconscionable, citing federal case law in support of her position. (Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126, 1151-1152 (Ting); see also Davis v. O’Melveny & Myers (9th Cir. 2007) 485 F.3d 1066, 1078-1079 (O’Melveny).)
Neither Ting nor O’Melveny is binding authority on issues of California law. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 299 [decisions of the federal courts interpreting California law are not binding on California courts].) Both cases, moreover, are distinguishable. The confidentiality provision at issue in Ting affected “seven million Californians” in a class action against AT&T (Ting, supra, 319 F.3d at p. 1152), and the provision in O’Melveny was much broader in scope, prohibiting “even mention to anyone ‘not directly involved in the mediation or arbitration’ of ‘the content of the pleadings, papers, orders, hearings, trials, or awards in the arbitration’ or even ‘the existence of a controversy and the fact that there is a mediation or an arbitration proceeding.’” (O’Melveny, supra, 485 F.3d at p. 1078.) The O’Melveny court concluded that “[a]n inability to mention even the existence of a claim to current or former O’Melveny employees would handicap if not stifle an employee’s ability to investigate and engage in discovery.” (Ibid.) These concerns are not present here.
California courts, moreover, have applied a different standard, concluding that a confidentiality provision in an arbitration agreement is not substantively unconscionable, even if it favors one side, “if the advantage is completely collateral to the issues surrounding a fair resolution of the dispute.” (Woodside Homes of Cal., Inc. v. Superior Court (2003) 107 Cal.App.4th 723, 732, fn. 11.) Plaintiff failed to establish how the confidentiality provision precludes the fair resolution of her claims.
6. Modification
Paragraph 13 of the Arbitration Policy provides in part: “This Arbitration Policy may not be modified except in writing, or as otherwise expressly permitted or required by this Arbitration Policy or controlling law. The submission of an application for employment, acceptance of employment or continuation of employment with the Company by an Employee after notice of this Arbitration Policy is deemed the Employee’s acceptance of this Arbitration Policy, binding both Ralphs and the Employee. No signature by an Employee or the Company is required for this Arbitration Policy to apply to Covered Disputes.”
Although we requested supplemental briefing on the substantive unconscionability of this provision, we have concluded that no issue of substantive conscionability is presented for our review, because neither party claims that Ralphs sought to modify the terms of the Arbitration Policy. We therefore do not address this issue. (See West, supra, 227 Cal.App.3d at p. 1588; Olsen, supra, 48 Cal.App.4th at p. 622.)
DISPOSITION
The order denying the petition to compel arbitration is reversed. The parties will bear their respective costs on appeal.
We concur: DOI TODD, Acting P.J., ASHMANN-GERST, J.
“[T]here is no right or authority for any Covered Dispute(s) to be heard or arbitrated on a class or collective action basis, as a private attorney general, or on bases involving claims or disputes brought in a representative capacity on behalf of the general public, of other Ralphs employees (or any of them), or of other persons or entities alleged to have common claims. The individual Covered Disputes of any party bound by this Arbitration Policy are subject to this Arbitration Policy. Any class or collective action brought by any person (whether an Employee bound by this Arbitration Policy or not) or entity in a representative capacity on behalf of or for the benefit of (in whole or in part) any person or entity bound by this Arbitration Policy is designated as a ‘Representative Action’ in this Arbitration Policy. Any individual Covered Dispute(s) seeking a remedy pursuant to or under the authority of a Representative Action are governed by and subject to this Arbitration Policy. . . . [T]here are no judge or jury trials and there are no class or collective actions or Representative Actions permitted under this Arbitration Policy.” (Original emphasis.)