Liebrand v. Brinker Restaurant

Filed 6/18/08 Liebrand v. Brinker Restaurant CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from an order of the Superior Court of Orange County, Randell L. Wilkinson, Judge. Affirmed.

Jackson Lewis, Frank M. Liberatore, Scott C. Lacunza, and Nikki L. Wilson, for Defendants and Appellants.

Eisenberg & Associates, Michael B. Eisenberg and Joseph S. Socher, for Plaintiff and Respondent.

Jamie Liebrand worked as a food server at Chilis Restaurant in Irvine, California. She sued her employers for pregnancy discrimination, intentional infliction of emotional distress, and for the failure to provide pregnancy leave. She brought the action against her immediate supervisor, Chris Artaserse, as well as Chilis Inc., a Texas corporation; Brinker International, Inc., a Delaware corporation, Brinker International Payroll Co., L.P., and Brinker Restaurant Corporation, a Delaware corporation (collectively referred to as Brinker). The trial court denied Brinkers motion to compel arbitration, concluding it had failed to meet its burden of proving Liebrand agreed to arbitrate the employment dispute.

In addition, the court determined the arbitration agreement was void because it was both procedurally and substantively unconscionable. Specifically, the court concluded it was an adhesion contract that mandated arbitration take place in Texas and that Liebrand share the costs. The court noted these unconscionable terms were condemned by the Supreme Court in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz), four years before Liebrand was hired. It stated Brinkers failure to rewrite the agreement to eliminate the unconscionable provisions strikes me as getting pretty close to bad faith conduct on their part. I wont be a party to enforcing such an agreement here. The court stated it would not strike the unconscionable provisions because (1) there was more than one offensive provision, and (2) Armendariz also instructs us that employers would have no incentive to ever rewrite their arbitration agreements to eliminate such unconscionable provisions if the trial court was free to excise all the unconscionable provisions, once a demand for arbitration was made. (See Id. at p. 125.) We find no error in this record and affirm the order denying arbitration.

Facts

In her complaint, Liebrand stated she was hired as a waitress in November 2004. Over one year later, in January 2006, she advised her employer she was pregnant. She then experienced medical issues related to her pregnancy and required and requested leave and accommodation. She was terminated in March 2006 for taking pregnancy-related leave, for being pregnant and for her requests for more pregnancy leave. Her causes of action were based on violations of the Fair Employment and Housing Act (FEHA), specifically Government Code section 12940 et seq. (discrimination, harassment, and retaliation) and Government Code section 12945 et seq. (failure to provide pregnancy leave). She also alleged intentional infliction of emotional distress.

Brinker filed a motion to compel binding arbitration, or in the alternative, for an automatic stay of judicial proceedings pending the completion of arbitration proceedings. Brinker asserted Liebrand was hired in October 2004, and she executed an arbitration agreement on November 1, 2004. It quoted two paragraphs of the agreement, providing, The arbitration proceedings shall take place in Dallas, Texas in accordance with the national rules for resolution of Employment Disputes (National Rules) of the American Arbitration Association (AAA) in effect at the time that the demand for arbitration is made. It provided the parties would mutually agree on one arbitrator, who would coordinate and limit as appropriate all pre-arbitration discovery. The arbitrator was required to issue a written decision and award. The employee was entitled to representation by an attorney at her own expense, and [t]he costs and expenses of the arbitration shall be borne evenly by the parties, unless otherwise ordered by the arbitrator in the final, written decision.

In the motion, Brinker stated its counsel sent a letter to Liebrand in May 2007 requesting she dismiss her case and submit her claims to arbitration. She refused. One week later, Brinker offered to waive the provisions mandating arbitration in Texas, and the provision regarding splitting the costs. Liebrand did not respond to this offer.[1]

To support its motion, Brinker submitted the declaration of Ginger Hukill, a Brinker employee, who stated she looked in Liebrands employee file and found an arbitration agreement executed on November 1, 2004, and that appears to bear [Liebrands] signature. Brinkers attorney, Scott Lacunza, also submitted a declaration stating the document appears to bear Liebrands signature.

In addition, Lacunza attached to his declaration, as exhibit B, the letter he sent to Liebrand demanding arbitration. Exhibit B contains the letter plus two different arbitration agreements (one dated October 30, 2004, and the other dated November 1, 2004).

The agreement dated October 30, 2004, is signed by Jamie Yankens. The first paragraph states Brinker makes available certain internal procedures for amicably resolving any complaints or disputes an employee may have, and if those methods prove unsuccessful then Brinker . . . has provided for the resolution of all disputes . . . through binding arbitration before a neutral arbitrator. The next three paragraphs outlined the rules and procedures to be followed during arbitration (including the forum selection clause and the cost-splitting provision). The concluding paragraph stated, I understand that if I should become employed by Brinker . . . such employment is conditioned upon this [a]greement and I understand that this [a]greement must be read and signed in order for me to be considered for employment with Brinker . . . .

The agreement dated November 1, 2004, contained identical language for the arbitration provisions, except it was missing the first introductory paragraph. However, the signature on this agreement looks much different from the October 2004 agreement. The first name appears to be Jamie, but the last name is illegible. This November agreement is also attached to Hukills declaration as evidence Liebrand agreed to arbitrate.

Exhibit C to Lacunzas declaration is a copy of Liebrands written response to Lacunzas arbitration demands. It states, In the event any arbitration agreements were signed by Liebrand they have been rescinded and are void due to lack of consideration and unconscionability.

Liebrand opposed the motion, arguing (1) she did not recall signing an arbitration agreement, (2) she rescinded any arbitration agreement she may have unwittingly signed, and (3) the agreement is void on account of unconscionability. In her supporting declaration, Liebrand stated, 2. At no time when I was applying to work for [Brinker] did anybody mention arbitration or dispute resolution to me. [] 3. I do not recall signing anything that mentioned arbitration or dispute resolution. If I did sign such a document, it was buried in the stack of documents that I was forced to sign before I could work for [Brinker]. [] 4. It was clear to me that if I did not sign these documents, I would not be allowed to work for [Brinker]. [] . . . [] 7. The documents were presented on a take it or leave it basis and I could not bargain for terms in any of the documents that I signed, and was forced to sign them or give[] up my job. Brinker filed a response and objected to each statement in Liebrands declaration.

In the courts minute order, the court denied the motion to compel arbitration due to Brinkers fail[ure] to carry [its] burden that [Liebrand] ever agreed to arbitrat[e] employment disputes. There is no evidence from [Brinker] that proves [Liebrand] ever signed the documents submitted. Those that have submitted declarations on the matter have simply said that the signature appears to be that of [Liebrand] without any foundation that they know [her] signature. If one looks at the signature on the documents submitted . . . it appears that they arent even signed by the same person. At the hearing, the court also noted the motion failed on the merits because the agreement was both procedurally and substantively unconscionable. It determined the agreement was procedurally unconscionable because Brinker is a large corporation and Liebrand was a food server. The court reasoned, And by the terms of the agreement, she had to sign the arbitration agreement to even be considered for employment. The court found the out-of-state forum and cost provisions to be substantively unconscionable. It asked Brinkers counsel why Brinker has not redone the agreement following the Supreme Courts decision in Armendariz. It found Brinkers failure to rewrite their agreement in compliance with California law as getting pretty close to bad faith conduct on their part. It determined striking the unconscionable provisions would not be appropriate in this case. Brinker appealed.

Discussion

Was There an Agreement to Arbitrate?

Brinker contends the court erred in denying its motion to compel arbitration and stay the proceedings because it properly established a valid arbitration agreement existed under the requirements of California Rules of Court, rule 3.1330. Brinker maintains it complied with the rules by simply attaching a copy of the agreement and there was no requirement it had to also authenticate or prove the validity of the document. We conclude Brinker satisfied its burden of showing the agreement existed because Liebrand failed to raise any evidentiary objections or deny it was her signature on the arbitration contract. However, this is a hollow victory for Brinker because the court properly deemed the contract unenforceable due to several unconscionable provisions (which will be discussed in the next section of this opinion).

We begin our analysis by reciting the established procedure for determination of a petition to compel arbitration. [W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcementeither

fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see 1281.2, subds. (a), (b))that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal).)

Brinkers reliance on Condee v. Longwood Management Corp. (2001)

88 Cal.App.4th 215 (Condee), is misplaced. The case does not discuss the evidentiary burdens of the parties where the existence of a contract to arbitrate is contested (as described by the Supreme Court in Rosenthal, supra, 14 Cal.4th at p. 413), but rather addressed only the bare pleading requirements of a petition to arbitrate. The court in Condee held a petitioner is not required to authenticate the contract in the petition. The statute does not require the petitioner to introduce the agreement into evidence. A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreements existence, not an evidentiary determination of its validity. (Condee, supra, 88 Cal.App.4th at p. 219.) The moving party needs only to allege the existence of the contract and its terms, or to attach a copy of the contract. The alleged contract in Condee was not contested by an evidentiary objection. As noted by the court, although no evidence was ever introduced to verify the signatures authenticity, it was never challenged. (Id. at p. 218.)

Here, Liebrand argued she never entered into an arbitration agreement with her employer. In her declaration, Liebrand stated she could not recall signing any documents mentioning arbitration. We agree with the trial courts observation that the signatures on the October and the November agreements do not match, and there is no reason to assume either one appears to be Liebrands signature. However, Liebrand does not go so far as to actually challenge the signatures authenticity. Instead, she makes the excuse that if she did sign such a document, it was hidden in a stack of other employment-related documents, and her signature was a condition of her employment. In essence, Liebrand is raising the lack of mutual assent as her defense, not that the contract never existed.

Section 1281.2 requires the court to determine whether an agreement to arbitrate actually exists since a party cannot be compelled to arbitrate a matter she has not agreed to arbitrate. [Citations.] (Ramirez v. Superior Court (1980) 103 Cal.App.3d 746, 752.) [N]o agreement exists unless the parties signing the document act voluntarily and are aware of the nature of the document and have turned their attention to its provisions or reasonably should have turned their attention to its provisions. (Id. at p. 756, fn. 3.) In short, mutual assent is an essential element of an arbitration contract. (See Civ. Code, 1550, 1565.)

However, we find Liebrand failed to present sufficient evidence on this defense. The existence of mutual assent is determined by objective criteria, not by one partys subjective intent. The test is whether a reasonable person would, from the conduct of the parties, conclude that there was a mutual agreement. [Citations.] (Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001)

89 Cal.App.4th 1042, 1050-1051.) It is well established, 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. [Citations.] (Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163.) As Mr. Witkin states: Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it. If he cannot read, he should have it read or explained to him. [Citation.] This is not only the California but also the general rule. [Citation.] (Ibid.) We find no basis to hold Liebrand could avoid responsibility for her failure to read the documents she signed. She offered no excuse for not seeking an explanation of the contents of each document contained in the stack the day she was hired. (See Rosenthal, supra, 14 Cal.4th at p. 431.)

Were There Unconscionable Arbitration Provisions?

Liebrand asserted the agreement was procedurally unconscionable because it was adhesive and presented on a take-it-or-leave-it basis. She maintained it was substantively unconscionable because (1) it called for arbitration to take place in Dallas, Texas, and (2) it had a cost-splitting provision. On appeal, Brinker argues Liebrand failed to establish the provisions were procedurally or substantively unconscionable because the only evidence submitted was her objectionable, self-serving statements through a declaration. We disagree.

To briefly recapitulate the principles of unconscionability, the doctrine 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 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. [Citation.] (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 (Auto Stiegler), internal quotation marks omitted.)

In Armendariz, the Supreme Court laid out specific rules for the arbitration of an employees statutory rights. (Armendariz, supra, 24 Cal.4th at pp. 103-113.) An arbitration agreement that governs an employer-employee relationship may not limit statutorily imposed remedies in connection with statutory claims, and it must provide for discovery that is sufficient for the employee to adequately arbitrate those claims. (Id. at pp. 103-106.) The arbitration agreement must provide for a neutral arbitrator, and it must require an arbitrator presiding over a statutory claim to issue a written arbitration award which, at a minimum, discloses the essential findings and conclusions on which the award is based. (Id. at p. 107.) In addition, it is unlawful for an employer to require an employee to share the cost of arbitrating a statutory claim. (Id. at pp. 110-111.)

A. Procedural UnconscionabilityOppression

Brinker asserts Liebrand had the burden of proving Brinker had superior bargaining strength. It faults Liebrand for not offering more details in her declaration about why she believed the agreement was offered on a take-it-or-leave-it basis. Brinker asserts Liebrand was required to present evidence she made efforts to bargain for more arbitration rights, but was rejected. Brinker also maintains the court should have granted its objections to Liebrands declaration as admissible hearsay. We conclude there was sufficient evidence of oppression to conclude this was an adhesion contract.

The document itself indicates it was a contract of adhesion, and that Liebrands signature was a condition of employment. The last paragraph above Liebrands signature states: I understand that if I should become employed by Brinker

. . . or its related companies, such employment is conditioned upon this Agreement and that this Agreement must be read and signed in order for me to be considered for employment . . . .

Second, in her declaration, Liebrand attested she had no bargaining power over the terms of her employment as a food server. She stated the arbitration agreement was likely buried in the stack of documents that [she] was forced to sign before [she] could work for [Brinker]. She explained, It was clear to me that if I did not sign these documents, I would not be allowed to work for [Brinker]. Liebrand also stated, The documents were presented on a take-it-or-leave-it basis and I could not bargain for terms in any of the documents that I signed, and [I] was forced to sign them or give[] up my job.

[I]n the case of preemployment arbitration contracts, 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.) It is clear in the present case that the corporation owning a worldwide chain of Chilis Restaurants imposed on its food server an oppressive and adhesive arbitration agreement.

Where an adhesive contract is oppressive, surprise need not be shown. [Citation.] (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281 (Nyulassy).) And, as for Brinkers assertion Liebrands declaration should not have been considered, the argument is waived. The record shows Brinker made written objections, but did not renew these objections at the hearing. The court did not expressly rule on the objections. Under Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 670,[2] and City of Long Beach v. Farmers & Merchants Bank (2000) 81 Cal.App.4th 780, 784, Brinkers objections may be treated as waived.

B. Substantive UnconscionabilityCost-Splitting Provision

The arbitration agreement provided, The costs and expenses of the arbitration shall be borne equally by the parties, unless otherwise awarded by the arbitrator in the final, written decision. Eight years ago the California Supreme Court decided, the 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. (Armendariz, supra, 24 Cal.4th at pp. 110-111.) In Auto Stiegler, the Supreme Court extended the rule limiting employee costs to nonstatutory claims, explaining that the principle that arbitration costs may prevent arbitration claimants from effectively pursuing their public rights would apply with equal force to Tameny [v.Atlantic Richfield Co. (1980) 27 Cal.3d 167, 178] claims as to FEHA claims or to federal statutory claims. (Auto Stiegler, supra, 29 Cal.4th at p. 1080.) Liebrand made several FEHA claims relating to pregnancy discrimination. As noted by the trial court, Liebrand was hired four years after the California Supreme Court deemed cost-splitting provisions a violation of California law.

Brinker argues this provision should not render the agreement unconscionable because it has offered to pay the fees and costs of arbitration. As we will discuss in more detail below, the court did not abuse its discretion in refusing to sever the cost-splitting provision. Moreover, whether an employer is willing, now that the employment relationship has ended, to allow the arbitration provision to be mutually applicable, or to encompass the full range of remedies, does not change the fact that the arbitration agreement as written is unconscionable and contrary to public policy. Such a willingness can be seen, at most, as an offer to modify the contract; an offer that was never accepted. No existing rule of contract law permits a party to resuscitate a legally defective contract merely by offering to change it. [Citation.] (Armendariz, supra,

24 Cal.4th at p. 125.)

C. Substantive UnconscionabilityForum Selection Requiring Arbitration in Texas

Both arbitration agreements provide, The arbitration proceedings shall take place in Dallas, Texas. Liebrands complaint alleged Brinker is comprised of Delaware corporations, all with the principal addresses in Dallas, Texas. It is undisputed, Liebrand was hired to work as a waitress at Chilis Restaurant located in Irvine, California.

[F]orum selection clauses are valid and should be given effect unless enforcement of the clause would be unreasonable. (Intershop Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 196, citing Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495-96.) However, if the place and manner restrictions of a forum selection provision are unduly oppressive (Bolter v. Superior Court (2001) 87 Cal.App.4th 900, 909-910), or have the effect of shielding the stronger party from liability (Comb v. PayPal, Inc. (N.D. Cal. 2002) 218 F.Supp.2d 1165, 1177 (Comb)), then the forum selection provision is unconscionable.

In Bolter v. Superior Court, supra, 87 Cal.App.4th at page 909, a different panel of this court determined that to assess the reasonableness of the place and manner provisions in the arbitration clause, we must take into account the respective circumstances of the parties. In that case, this court reasoned the place and manner restrictions were unconscionable where small Mom and Pop franchisees located in California were required to travel to Utah to arbitrate their claims against an international carpet cleaning franchisor. (Ibid.) We conclude the forum selection provision was unreasonable and unduly oppressive because the remote forum would work severe hardship upon the franchisees and would unfairly benefit the franchisor by effectively precluding the franchisees from asserting any claims against it. (Ibid., see also Comb, supra, 218 F.Supp.2d at p. 1177 [[l]imiting venue to PayPals backyard appears to be yet one more means by which the arbitration clause serves to shield PayPal from liability instead of providing a neutral forum in which to arbitrate disputes]; Armendariz, supra, 24 Cal.4th at p. 118 [cannot structure an arbitration provision to effectively preclude the other party from pursuing its claims because [a]rbitration was not intended for this purpose].)

Here, requiring a California waitress to travel from California to Texas and retain counsel there to arbitrate her FEHA claims arising out of employment in California do not serve the goals of arbitration. Rather, this forum selection provision appears to be aimed at discouraging lower-wage employees like Liebrand from pursuing possibly legitimate claims against Brinker because of the great expense involved in traveling out of state to pursue her claim. Although Liebrand did not present specific evidence of economic hardship, her employment status as a food server was sufficient to establish the exorbitant costs of pursuing her claims in Texas would be prohibitive.

Was the Court Required to Sever the Unconscionable Provisions?

Arbitration agreements that fail to meet conscionability standards, or those that violate public policy, nevertheless may be enforced if the objectionable terms can be severed. [Citations.] [] With respect to unconscionable agreements, the Legislature expressly and directly recognizes judicial discretion to sever objectionable provisions. The governing statute provides: If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (Civ. Code, 1670.5, subd. (a).) (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 658 (Abramson).)

The statutory authority for severing contract provisions that impermissibly burden public rights is less direct but equally authoritative. By statute, a contract must have a lawful object. (Civ. Code, 1550, 1596.) Furthermore, a law established for a public reason cannot be contravened by a private agreement. (Civ. Code, 3513.) A contract that contravenes public policy thus is illegal. [Citations.] Severance of such illegal provisions is contemplated by statute: Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest. (Civ. Code, 1599.) Under the foregoing statutory authority, courts may enforce contracts that illegally contravene public rights, so long as the objectionable provisions can be severed. [Citations.] (Abramson, supra, 115 Cal.App.4th at p. 658.)

Two reasons for severing or restricting illegal terms rather than voiding the entire contract appear implicit in case law. The first is to prevent parties from gaining undeserved benefit or suffering undeserved detriment as a result of voiding the entire agreementparticularly when there has been full or partial performance of the contract. [Citations.] Second, more generally, the doctrine of severance attempts to conserve a contractual relationship if to do so would not be condoning an illegal scheme. [Citations.] [Citation.] [] In determining whether to void the entire contract or merely sever objectionable terms, the overarching question for the court is whether severance serves the interests of justice. [Citation.] (Abramson, supra, 115 Cal.App.4th at p. 659.)

The Supreme Court identified several factors to be considered by the trial court when deciding the question of severability. (Armendariz, supra, 24 Cal.4th

at pp. 124-125.) Each relates to whether the contract is permeated by unconscionability or illegality. In simple terms, courts will not sever when the good cannot be separated from the bad, or rather the bad enters into and permeates the whole contract, so that none of it can be said to be good. . . . [Citations.] (Abramson, supra, 115 Cal.App.4th

at p. 659.)

Courts are to look to the various purposes of the contract. If the central purpose of the contract is tainted with illegality, then the contract as a whole cannot be enforced. If the illegality is collateral to the main purpose of the contract, and the illegal provision can be extirpated from the contract by means of severance or restriction, then such severance and restriction are appropriate. (Armendariz, supra, 24 Cal.4th

at p. 124.)

In Armendariz, the court found two facts weighed against severance of the unlawful provisions, stating, First, the arbitration agreement contains more than one unlawful provision; it has both an unlawful damages provision and an unconscionably unilateral arbitration clause. Such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employers advantage. In other words, given the multiple unlawful provision, the trial court did not abuse its discretion in concluding that the arbitration agreement is permeated by an unlawful purpose. [Citation.] (Armendariz, supra, 24 Cal.4th at p. 124, fn. omitted.)

Second, the court found the contract permeated by unconscionability because, there is no single provision a court can strike or restrict in order to remove the unconscionable taint from the agreement. Rather, the court would have to, in effect, reform the contract, not through severance or restriction, but by augmenting it with additional terms. (Armendariz, supra, 24 Cal.4th at pp. 124-125.) It noted courts do not have the statutory authority to cure illegality by reformation or augmentation. (Id. at p. 125.) The taint of illegality cannot be removed through severance or restriction then the court must void the entire agreement. (Ibid.)

The trial court in this case reasonably concluded Brinkers arbitration agreement was so permeated by unconscionability it could not be enforced. As in Armendariz, Brinkers preemployment arbitration agreement contained more than one unlawful provision. The trial court observed it was surprising a large sophisticated corporation hiring California workers would continue to include illegal cost-splitting provisions in its agreements. We agree, and note Armendariz was decided in 2000 and the agreement upon which Brinker relies was executed in late 2004.That the provision was included, in addition to an unduly oppressive forum selection clause, indicates the central purpose of the arbitration was an unlawful attempt by Brinker to gain an unfair advantage over Liebrand.

Brinker argues the case is analogous to Bolter, supra, 87 Cal.App.4th at pages 910-911. We disagree. In Bolter, the trial court upheld the agreement entered into between a franchisor and a franchisee mandating arbitration of their dispute take place in Texas. We determined the forum selection clause was unconscionable, but because we did not find the requirement of arbitration alone to be unduly unfair, this one offense clause could be stricken, removing the unconscionable taint from the agreement. (Ibid.) This case is distinguishable for a number of reasons.

First, Bolter did not involve employment law. As stated above, in California adhesive preemployment arbitration agreements must contain certain safeguards to protect the rights of unsophisticated employees. (See Armendariz, supra, 24 Cal.4th at pp. 103-113.)

Second, Bolter involved an agreement drafted prior to Armendariz. It is undisputed Brinker drafted its agreement after Armendariz and failed to conform its agreement to established California law.

Third, unlike Bolter, the case before us involved more than one unconscionable term. Brinker argues the two provisions both concern the payment of forum costs, and as such, they constitute one integrated and severable term. Not surprisingly, Brinker fails to provide any supporting legal authority for this contention. Perhaps if the illegal provisions related to the exact same costs, the argument would have merit. But these provisions impose different kinds of burdens on the employee. Sharing the costs of an arbitrator is different from the added costs associated with litigating a claim out of state. Moreover, having to litigate a claim out of state adds a degree of difficulty, time, and effort on the employee, but not the employer (having its headquarters located in Dallas, Texas). It is the cumulative effect of these unconscionable provisions that serves to discourage low-wage employees from bringing lawsuits against their Texas-based employer. It cannot be said the court abused its discretion in finding both provisions tainted the entire contract.

On a final note, we agree with the trial courts observation that Brinkers failure to ensure its preemployment arbitration agreements complied with California law is troubling.[3] Although Brinkers operations are located out of state, it presumably employs hundreds of food servers in its California Chilis Restaurants. We note Brinker waited until after Liebrand rejected its request to arbitrate before offering to waive the offensive terms. Severance and then enforcement of the agreement would only serve to unduly reward Brinker for conduct that likely falls somewhere between negligence and bad faith. As noted by the court in Armendariz, An employer will not be deterred from routinely inserting . . . a deliberately illegal clause into the arbitration agreements it mandates for its employees if it knows that the worst penalty for such illegality is the severance of the clause after the employee has litigated the matter. (Armendariz, supra, 24 Cal.4th at pp. 124-125, fn. 13.) The trial court reasonably concluded the interests of justice do not warrant enforcement of the arbitration agreement in this case. We find no abuse of discretion.

Disposition

The order denying the motion to compel arbitration is affirmed. The Respondent shall recover her costs on appeal.

OLEARY, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

FYBEL, J.

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[1] At oral argument in this case, Brinkers counsel claimed Brinker offered to waive these provisions at the same time it demanded arbitration, suggesting Brinker did not intend to wait and see if Liebrand would submit to unconscionable terms. This contention is belied by the record.

[2]Ann M. v. Pacific Plaza Shopping Center, supra, 6 Cal.4th 666, was superseded by statute on other grounds as stated in Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767-768.)

[3] There was no suspicion of bad faith in the Bolter case. Likewise, in McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 101-102, the court severed an illegal cost-spitting provision found in an employment contract. The court noted there was only one unconscionable provision and the employee failed to prove the existence of additional substantive unconscionable provisions or that the agreement was permeated with unfairness.