Filed 9/13/17 Pimpo v. Fitness International CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from an order of the Superior Court of San Diego County, Timothy B. Taylor, Judge. Affirmed.

Call & Jensen, Julie R. Trotter, William P. Cole and Melinda Evans for Defendant and Appellant.

Law Offices of Timothy A. Scott, Timothy A. Scott and Nicolas O. Lopez for Plaintiff and Respondent.

Cortney Pimpo filed a lawsuit against her former employer, Fitness International, LLC, alleging, inter alia, she was sexually harassed by a coworker. Fitness International filed a motion to compel arbitration. The superior court denied the motion. Fitness International contends the superior court erroneously concluded: (1) the arbitration agreement was unconscionable and (2) the motion could be denied under Code of Civil Procedure section 1281.2, subdivision (c).

We affirm. The arbitration agreement was contained in an employment application Pimpo submitted electronically. By its own terms, the application expired before Pimpo filed suit; thus, Fitness International could not rely on the arbitration agreement to compel arbitration. In addition, we agree with the superior court that the arbitration agreement was unconscionable. Therefore, the court properly denied Fitness International's motion for that reason as well.

FACTUAL AND PROCEDURAL BACKGROUND

Pimpo was an employee of Fitness International. She worked in a fitness center located in San Diego. Another Fitness International employee, Gabriel Flores, began to sexually harass Pimpo within a week of Pimpo beginning work. Pimpo reported Flores's actions to the operations manager, but the operations manager took no action despite admitting that other employees had made similar complaints about Flores.

Flores continued to create an unpleasant work environment for Pimpo. He regularly made degrading comments about female gym members' physical appearances. He "openly denigrate[d] and ogle[d] female gym members[.]" He indicated with which female gym members he wanted to have sex. Fitness International was aware of Flores's inappropriate conduct before Pimpo reported it.

Flores also continued to sexually harass Pimpo. For example, Flores made comments and disparaging remarks about Pimpo's body and appearance. He also physically assaulted Pimpo when he grabbed her by the hair, pulled her to his face, smelled her, tried to kiss her, and ultimately placed his tongue inside her ear.

Pimpo reported Flores's assault to an operations manager. The operations manager told Pimpo that Fitness International would investigate the issue and discuss its findings with her. However, no investigation was conducted and Fitness International moved Flores to a different location.

Ultimately, Pimpo filed suit in San Diego Superior Court against Fitness International and Flores, alleging causes of action for sexual harassment, failure to prevent sexual harassment, battery, violation of the Ralph Act (Civ. Code, § 51.7), and violation of the Bane Act (Civ. Code, § 52.1). In response, Fitness International filed a motion to compel arbitration.[1] Fitness International argued Pimpo's claims were subject to an arbitration agreement Pimpo electronically signed when she submitted her employment application.

In opposing the motion to compel arbitration, Pimpo asserted the employment application only lasted for 45 days, and thus, the arbitration agreement contained therein was not enforceable when Pimpo filed suit in superior court. Pimpo also contended that the arbitration agreement was unconscionable and that the court should not enforce the arbitration agreement to avoid conflicting rulings involving third parties as set forth in Code of Civil Procedure section 1281.2, subdivision (c). Finally, Pimpo maintained the arbitration agreement was unenforceable under Civil Code section 51.7.

After considering the pleadings and evidence as well as entertaining oral argument, the court denied the motion to compel arbitration, finding the arbitration agreement was unconscionable. The court also expressed concern about inconsistent rulings and denied the motion under Code of Civil Procedure section 1281.2, subdivision (c) as well.

Fitness International timely appealed the court's order denying the motion to compel arbitration.

DISCUSSION

I

STANDARD OF REVIEW

Although Fitness International argues that the Federal Arbitration Act (FAA; 9 U.S.C. §§ 1-16) rather than California law governs its motion, the point is not of the moment. Code of Civil Procedure section 1281.2 governs motions to compel arbitration brought in California courts, without regard to whether California law or the FAA otherwise applies to the proposed arbitration. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 410 ["Because the California procedure for deciding motions to compel serves to further, rather than defeat, full and uniform effectuation of the federal law's objectives, the California law, rather than section 4 of the [FAA], is to be followed in California courts"].) Moreover, because the defense of unconscionability is generally applicable to contracts under California law, it remains an available defense to a petition to compel arbitration, even under the FAA. (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 86; see Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1142 ["We begin by noting that . . . unconscionability remains a valid defense to a petition to compel arbitration."].)

The standards we apply in this appeal are well settled. Generally, "[a] judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness." (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) Further, "[t]he doctrine of implied findings requires the appellate court to infer the trial court made all factual findings necessary to support the judgment." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58.) Thus, the burden is on Fitness International to affirmatively show error, even on issues where Pimpo had the burden of proof below. (Frank and Freedus v. Allstate Ins. Co. (1996) 45 Cal.App.4th 461, 474.)

"On appeal from the denial of a motion to compel arbitration, '[u]nconscionability findings are reviewed de novo if they are based on declarations that raise "no meaningful factual disputes." [Citation.] However, where an unconscionability determination "is based upon the trial court's resolution of conflicts in the evidence, or on the factual inferences which may be drawn therefrom, we consider the evidence in the light most favorable to the court's determination and review those aspects of the determination for substantial evidence." ' " (Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, 1144.)

Also, to the extent any of the arguments before us rely on the interpretation of a contract, we review the interpretation of a contract de novo unless the interpretation turns on the credibility of extrinsic evidence. (Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 843.)

B. Background

As part of an electronic application submitted through Fitness International's website, Pimpo signed an arbitration agreement. Fitness International would not have accepted Pimpo's application for employment if she did not agree to arbitration. The arbitration agreement stated, in part:

"[T]he Company and I mutually consent to the resolution by arbitration of all claims or controversies described below, past, present, or future, whether or not arising out of or related to my application, employment, or its termination, that the Company may have against me or that I may have against the Company, its officers, directors, employees or agents, including all parent, subsidiary and affiliated entities, as well as their successors and assigns."

The arbitration agreement also prohibited Pimpo from bringing or joining any class action against Fitness International. In addition, the arbitration agreement provided: "This Dispute Resolution Agreement and the Dispute Resolution Rules and Procedures affect your legal rights. You may wish to seek legal advice before signing this Dispute Resolution Agreement." The arbitration agreement also declared Pimpo could withdraw her consent to the arbitration agreement within seven days of signing it, but had to withdraw her application for employment to do so. However, the arbitration agreement stated that if Pimpo did not withdraw her consent to the arbitration agreement, she would be required to arbitrate all claims that she may have against the Company even if she never became a Fitness International employee.

Fitness International's dispute resolution rules and procedures (Rules and Procedures) reiterate the extremely broad scope of the arbitration agreement :

"Except as otherwise limited herein, any and all legal disputes, controversies or claims whether or not arising out of, or relating to, an employee's application or candidacy for employment, employment or cessation of employment with the Company, shall be settled exclusively by final and binding arbitration before a neutral, third-party Arbitrator selected in accordance with these Dispute Resolution Rules and Procedures. Arbitration shall apply to any and all such disputes, controversies or claims whether asserted against the Company and/or against any employee, officer, alleged agent, director, manager or affiliate company."

The Rules and Procedures dictated a limited discovery procedure in which each party served copies of all documents (except for privileged documents) on which it intended to rely in support of its claims or defenses. In addition, Pimpo was entitled to all nonprivileged documents in her personnel file if requested. Also, each party was permitted to propound one set of 30 interrogatories that may include a request for all documents a party relied upon to answer the interrogatories. And the parties were each permitted to take five depositions. The arbitrator could permit additional discovery if he or she was convinced a party showed a substantial need for the additional discovery and that discovery would not be overly burdensome or unduly delay conclusion of the arbitration.

Pimpo does not recall signing an arbitration agreement after Fitness International hired her. She requested a copy of the forms she was asked to sign from human resources, but was told there was no way to print or review them.

C. Analysis

Under both federal and state law the " 'threshold question presented by a petition to compel arbitration is whether there exists an agreement to arbitrate.' " (Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396, italics omitted; see Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653 [the right to compel arbitration rests on the existence of a valid agreement to arbitrate].) In addressing this question, Fitness International begins with a faulty premise. It argues that the arbitration agreement at issue was signed by Pimpo when she completed her new hire paperwork. Indeed, Fitness International makes this representation no fewer than nine times in its opening brief. It also repeats this argument in its reply brief. We do not find support for Fitness International's position in the record. At best, there was a factual dispute before the superior court whether the subject arbitration agreement was from Pimpo's employment application or her new hire paperwork. However, to the extent this was a disputed issue of fact below, the court resolved this issue by finding that Fitness International was seeking to "compel arbitration pursuant to a detailed agreement that [Pimpo] signed during the application process." Because the court made this factual finding, on appeal, Fitness International must argue that the court's finding is not supported by substantial evidence. But it makes no such argument. Instead, it merely proclaims it moved to compel arbitration under an agreement that Pimpo signed as part of her new hire paperwork. We determine there is no support for this assertion in the record. As such, Fitness International's contention that it moved to compel arbitration under an agreement Pimpo signed after she was hired borders on a misrepresentation to this court.

In addition, Fitness International's position is belied by its own motion. In its memorandum of points and authorities in support of its motion to compel arbitration, Fitness International claimed it "entered into a binding Dispute Resolution Agreement . . . when [Pimpo] submitted her employment application." Fitness International later reiterated this point, "On or about July 9, 2015, as part of her application for employment with Fitness International, [Pimpo] received the Fitness International, LLC Dispute Resolution Agreement. See Exhibit 1 to Declaration of Mindy Stokesberry . . . . [Pimpo] also affixed her signature to the Agreement."

In her declaration, Stokesberry, the vice president of human resources for Fitness International, echoed that the subject arbitration agreement was submitted with Pimpo's application. Stokesberry declared, "As part of the application process, Ms. Pimpo was required to review and agree to the Arbitration Agreement included in the Employment Application. She applied for a job with [Fitness International] on July 9, 2015." Stokesberry also explained the application and new hire process:

"The application and on-boarding process is six steps. The first step is to complete the application. The second step requires the applicant to affix his or her electronic signature to the application. In doing so, the applicant consents to the use of an electronic signature to record agreeing to the terms of the application. The third step requires the applicant to sign the Arbitration Agreement included in the application. The application cannot be submitted if the applicant does not agree to the Arbitration Agreement. Every field must be completed. Without acceptance of the Arbitration Agreement, the application cannot be submitted into the system. Once the Arbitration Agreement has been signed, the applicant must submit the application. That is the fourth step. The fifth step requires the manager to hire the applicant. Sixth and finally, the new hire completes all the new-hire paperwork, including a W-4, I-9, and various other documentation."

In describing the application and new hire process, Stokesberry did not state that Pimpo signed a new arbitration agreement. She also did not state when Fitness International hired Pimpo. Instead, she admitted that Pimpo signed an arbitration agreement as part of her application process when she applied on July 9, 2015. The arbitration agreement submitted with Fitness International's motion to compel arbitration and attached to Stokesberry's declaration as exhibit 1 is dated July 9, 2015. Based on Stokesberry's declaration and the arbitration agreement attached to her declaration, it is apparent the arbitration agreement Fitness International submitted in support of its motion to compel arbitration is the same one that Pimpo signed when she submitted her application. There is no other arbitration agreement in the record.

In addition, Pimpo's declaration also supports the superior court's finding that the arbitration agreement at issue was the one she signed when she applied for her position at Fitness International. Pimpo admitted to signing the arbitration agreement when she applied for her position, but did not recall signing another agreement after she was hired.

In its reply in support of its motion to compel arbitration, Fitness International argued that Pimpo "submitted a separate, different agreement that was part of the pre-employment application process. . . . Fitness International is not moving to compel arbitration pursuant to this other agreement, and its terms do not apply." Fitness International made this argument to avoid the 45-day limitation period found in the application. However, Fitness International does not point to any evidence before the superior court of any arbitration agreement other than the one attached to Stokesberry's declaration as exhibit 1. That arbitration agreement is dated July 9, 2015, the same day Pimpo applied for a position at Fitness International. There is no evidence in the record regarding the date Pimpo was hired by Fitness International. There is no evidence that Pimpo signed a second arbitration agreement after Fitness International hired her. At most, Stokesberry stated that she gathered Pimpo's new hire paperwork from her personnel file, which contained Fitness International's "standard Dispute Resolution Agreement." That agreement was attached as exhibit 1 to Stokesberry's declaration and is dated July 9, 2015. The existence of that agreement in Pimpo's personnel file did not establish that Pimpo executed a second arbitration agreement after she was hired. Notably, Stokesberry did not declare that she witnessed Pimpo execute an arbitration agreement with her new hire paperwork.

Against this backdrop, we are satisfied that substantial evidence supports the superior court's finding that Fitness International moved to compel arbitration based on the arbitration agreement Pimpo signed when she applied for a positon with Fitness International. Fitness International's claim that it moved to compel arbitration based on when Pimpo signed her new hire paperwork is not supported by any evidence in the record.[2]

The arbitration agreement on which Fitness International relies to compel arbitration was part of Pimpo's application. That application specifically states that it will be "considered active for a period of time not to exceed 45 days." Pimpo therefore maintains that the plain language of the arbitration agreement contained in the application indicated that the application only lasted 45 days. Because Pimpo signed the arbitration agreement on July 9, 2015, it would not have been valid when she filed suit in superior court nearly nine months later.

Fitness International does not take issue with Pimpo's interpretation of the 45-day active period of the application. Nevertheless, Fitness International argues the 45-day limit is irrelevant because it is not part of the arbitration agreement Pimpo signed as part of her new hire paperwork. As we discuss above, there is no evidence in the record that Pimpo signed a second arbitration agreement. The only arbitration agreement before us is dated the same day Pimpo applied for a job with Fitness International (July 9, 2015). Pimpo signed that arbitration agreement for the purpose of submitting an application for employment with Fitness International. In other words, the arbitration agreement was part of the application. When the application expired by its own terms on August 23, 2015, so too did the arbitration agreement contained within it. As such, when Pimpo filed suit on April 4, 2016, her claims were not subject to any valid arbitration agreement. Therefore, Fitness International had no agreement by which to compel arbitration. On this ground alone, we would affirm the superior court's order.

Additionally, we agree with the superior court that the arbitration agreement contained in the employment application is unconscionable. Unconscionability as it pertains to contracts has both a procedural and a substantive element. Procedural unconscionability focuses on oppression or surprise due to unequal bargaining power. A substantively unconscionable agreement is overly harsh or one-sided. Both procedural and substantive unconscionability must be present—although not necessarily in the same degree—to allow a court to refuse to enforce a contract. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243-1244.) " '[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.' " (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910.) "The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement." (Id. at p. 912.)

Because the arbitration agreement is contained in a contract of adhesion, one presented on a take it or leave it basis, the agreement is by definition procedurally unconscionable. (See Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1100.) As the superior court noted, the arbitration agreement was included in Pimpo's employment application. Further, Fitness International's vice-president of human resources admitted the company would not accept any application unless the applicant agreed to the arbitration agreement.

The court also found other indicia of procedural unconscionability. Pimpo used Fitness International's website to apply for a position. She declared that she "needed a job because [she] needed money to help support [her] family" and she "did not have extra money to have attorneys review the terms and conditions of employment applications." Pimpo also stated that it "would have never occurred to [her] to" have an attorney review "every employment application that [she] was submitting—especially when [she] was merely submitting applications instead of being offered a job." We conclude the superior court's finding of procedural unconscionability is supported by substantial evidence.[3]

"[A] finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided." (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469.) Here, we agree with the superior court that the arbitration agreement was substantially unconscionable.

"The substantive element looks to the actual terms of the parties' agreement to 'ensure[ ] that contracts, particularly contracts of adhesion, do not impose terms that have been variously described as " ' "overly harsh" ' " [citation], " 'unduly oppressive' " [citation], " 'so one-sided as to "shock the conscience" ' " [citation], or "unfairly one-sided[.]" ' [Citation.] These formulations 'all mean the same thing.' [Citation.] Substantive unconscionability ' "is concerned not with 'a simple old-fashioned bad bargain' [citation], but with terms that are 'unreasonably favorable to the more powerful party[.]' " ' [Citation.] 'The substantive component of unconscionability looks to whether the contract allocates the risks of the bargain in an objectively unreasonable or unexpected manner.' [Citation.] While private arbitration may resolve disputes faster and cheaper than judicial proceedings, it ' "may also become an instrument of injustice imposed on a 'take it or leave it' basis." ' [Citation.] ' "The courts must distinguish the former from the latter, to ensure that private arbitration systems resolve disputes not only with speed and economy but also with fairness." ' " (Magno v. College Network, Inc. (2016) 1 Cal.App.5th 277, 287-288.)

The superior court found substantive unconscionability based on the arbitration agreement's unfairness. Specifically, the court noted the arbitration provision required Pimpo to give up her right to jury trial, forever, on all potential claims, even those unrelated to the application or her employment, not only against Fitness International, but also against all its officers, directors, employees, agents, affiliates, entities, and successors. We read the scope of the arbitration agreement as did the superior court. The arbitration agreement clearly states that "the Company [Fitness International] and [Pimpo] mutually consent to the resolution by arbitration of all claims or controversies described below, past, present, or future, whether or not arising out of or related to my application, employment, or its termination, that the Company may have against [Pimpo] or that [Pimpo] may have against the Company, its officers, directors, employees or agents, including all parent, subsidiary and affiliated entities, as well as their successors and assigns." Further, the arbitration agreement purports to bind Pimpo to arbitrate "all claims" "whether or not [she] become[s] employed by [Fitness International]."

We find the arbitration agreement's scope incredible. It would apply to any claim. For example, if Pimpo was in a car accident with a Fitness International employee, any claims she would have against the employee would be subject to the arbitration agreement. Even if Pimpo was a Fitness International gym member and hurt herself on some workout equipment or was assaulted by a Fitness International employee, her claims would fall under the arbitration agreement. If Pimpo came into a Fitness International office for an interview and injured herself slipping on a negligently maintained staircase, any claims arising out of her slip and fall would have to be arbitrated under the arbitration agreement. Such an arrangement shocks the conscience. The scope of this arbitration clause is without comparison. Indeed, none of the cases cited by the parties addressed any arbitration provision with such a broad scope.

Fitness International does not address the overbreadth of the arbitration agreement in its opening brief. In its reply brief, however, Fitness International claims the scope "is limited to issues related to Pimpo's 'candidacy for employment (including its terms or compensation, or the cessation of employment.' " To this end, Fitness International urges us to read two separate sections of the arbitration agreement together. The first section states, in part: "The Company and [Pimpo] mutually consent to the resolution of all claims or controversies described below . . . whether or not arising out of or related to my application, employment, or its termination . . . ." The second section, which is two paragraphs after the first part in the agreement, provides: "I understand that if I do file a lawsuit regarding a dispute arising out of or relating to my candidacy for employment, employment (including its terms or compensation), or the cessation of employment, the Company may use this Agreement to request the court to dismiss the lawsuit and require me instead to use arbitration . . . ." Fitness International argues the second section limits the scope of the first section to only claims related to or arising out of Pimpo's employment. We disagree. Such an interpretation renders the phrase "whether or not arising out of or related to [Pimpo's] application, employment, or its termination" superfluous. (See Brandwein v. Butler (2013) 218 Cal.App.4th 1485, 1507 ["when interpreting a contract, we strive to interpret the parties' agreement to give effect to all of a contract's terms, and to avoid interpretations that render any portion superfluous, void or inexplicable"].)

Moreover, Fitness International's proposed interpretation would require us to ignore similarly broad language found in the company's Rules and Procedures:

"Except as otherwise limited herein, any and all legal disputes, controversies or claims whether or not arising out of, or relating to, an employee's application or candidacy for employment, employment or cessation of employment with the Company, shall be settled exclusively by final and binding arbitration before a neutral, third-party Arbitrator selected in accordance with these Dispute Resolution Rules and Procedures. Arbitration shall apply to any and all such disputes, controversies or claims whether asserted against the Company and/or against any employee, officer, alleged agent, director, manager or affiliate company."

Simply put, had Fitness International intended to have applicants arbitrate disputes relating to their application or employment, it could have written a provision that is tailored to that purpose. It did not do so. Instead, the subject arbitration agreement is sufficiently broad to cover all claims, even if they do not relate to an applicant's application or employment.

Fitness International argues the arbitration agreement imposes a "completely mutual obligation to arbitrate claims." It points out that the arbitration agreement defines " 'Company' " as Fitness International and "its employees, agents, officers, related companies, affiliates and all persons acting by and through them." Yet, the arbitration agreement is not as clear as Fitness International proclaims.

In the first line of the arbitration agreement, Fitness International, LLC is defined as the "Company." In the next paragraph, the arbitration agreement purports to redefine the term "Company." Thus, it states: "I recognize that differences possibly may arise between me and Fitness International LLC including its employees, agents, officers, related companies, affiliates and all persons acting by and through them (hereafter the 'Company') during the application process or my employment with the Company." However, later in the same paragraph, the arbitration agreement does not appear to include such a broad definition of Company. To wit:

"Therefore, the Company and I mutually consent to the resolution by arbitration of all claims or controversies described below, past, present, or future, whether or not arising out of or related to my application, employment, or its termination, that the Company may have against me or that I may have against the Company, its officers, directors, employees or agents, including all parent, subsidiary and affiliated entities, as well as their successors and assigns."

If the arbitration agreement defined Company to include Fitness International's "employees, agents, officers, related companies, affiliates, and all persons acting by and through them," it is puzzling why the agreement would then list the Company as separate from its officers, directors, employees, agents, parents, subsidiaries, and affiliates.[4] Fitness International offers no explanation for this ambiguity. And neither party offers any extrinsic evidence to resolve this ambiguity. Because it claims the arbitration agreement, which it drafted, is not substantially unconscionable based on this ambiguity, we resolve the ambiguity against Fitness International. (See Rainer Credit Co. v. Western Alliance Corp. (1985) 171 Cal.App.3d 255, 263-264.) As it is unclear whether the arbitration agreement requires any of Fitness International's employees, officers, agents, directors, managers, parents, subsidiaries, or affiliates to arbitrate their claims against Pimpo, but Pimpo must arbitrate her claims against them, the agreement is not mutual. This lack of mutuality also renders the arbitration agreement substantively unconscionable. (See Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1537-1539.)

The superior court additionally found the arbitration clause substantively unconscionable because of its limits on discovery. Specifically, the court was troubled that it did not allow for requesting the production of documents. Instead, it provided for a limited number of interrogatories (a single set of 30), " 'which may include a request for all documents on which the responding party relies in support of its answers to the interrogatories.' " The court noted "[t]his restriction permits the employer defending a [Fair Employment and Housing Act] harassment case to shield internal documents from the discovery process."

We observe the arbitration agreement also requires the parties to provide non-privileged documents on which they rely in support of their claims or defenses. In addition, the agreement instructs each party that, throughout discovery, it "shall provide the opposing party with any and all documents relevant to any claim or defense." And, if upon request, an employee is entitled to a copy of all nonprivileged documents in the employee's personnel file. The parties also make take up to five depositions and may request additional discovery from the arbitrator upon a showing of "substantial need," but only if the arbitrator "finds that such additional discovery is not overly burdensome, and will not unduly delay conclusion of the arbitration."

Fitness International maintains the court erred in finding the arbitration clause substantively unconscionable based on its limited discovery procedure because a similar discovery procedure was approved in Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398 (Sanchez). We do not share Fitness International's broad reading of that case.

In Sanchez, the plaintiff sued the defendant employer for claims arising out of his employment. In response to the complaint, the defendant moved to compel arbitration. The superior court denied the motion, finding the arbitration agreement unconscionable. The defendant appealed. (Sanchez, supra, 224 Cal.App.4th at p. 401.) On appeal, among other issues, the court addressed the limits the subject arbitration agreement placed on discovery. (Id. at p. 404.)

The arbitration agreement in Sanchez provided for the disclosure of relevant documents and production of the plaintiff's personnel file upon request. In addition, each party was under a continuing obligation to supplement its initial document disclosure and was allowed to serve 20 interrogatories and take three depositions. The agreement also permitted a party, after a showing of " 'substantial need,' " to request additional discovery, which the arbitrator could allow if he or she determined the additional discovery was " 'not unduly burdensome and will not unduly delay the conclusion of the arbitration.' " (Sanchez, supra, 224 Cal.App.4th at p. 404.) In determining the limits on discovery did not render the arbitration agreement substantively unconscionable, the appellate court noted that the plaintiff did not make a showing how the limitation "would prevent him from vindicating his rights in his particular case." (Ibid.) Instead, the plaintiff merely argued that granting the arbitrator the discretion to determine whether there was a substantial need for additional discovery was insufficient because that standard was too stringent. The appellate court did not agree that the "substantial need" standard was too daunting to meet or otherwise prevented the plaintiff from maintaining his claims. Again, the court emphasized that the plaintiff made no showing how the discovery limitations in the arbitration agreement impacted his ability to vindicate his rights. (Id. at p. 405.)

In contrast to the plaintiff in Sanchez, here Pimpo challenges a specific discovery limitation, namely the lack of any permitted request for production. The superior court agreed with Pimpo, finding the lack of request for production would shield certain Fitness International internal documents from production. Fitness International does not explain why the court was incorrect in making this finding. Instead, it just cites to Sanchez, supra, 224 Cal.App.4th 398, arguing that case approves of the discovery limitations at issue here. For the reasons we explain above, it does not. The appellate court did not specifically address the lack of a request for production contained in the subject arbitration agreement. Accordingly, Fitness International's reliance on Sanchez is misplaced.

Moreover, like the superior court here, we have concerns that the lack of a request for production as part of the discovery procedure allowed under the arbitration agreement renders the agreement substantively unconscionable. Instead of being able to ask for documents, Pimpo is left to the discretion of Fitness International to determine that a document is relevant to one of her claims. This is especially troublesome in the instant matter where Pimpo alleges that Fitness International was aware of Flores's conduct and previous harassment activities. Therefore, Pimpo would necessarily need any internal documents that bear on this issue as well as Flores's personnel file and perhaps portions of other employees' personnel files if those employees claimed Flores harassed them. Perhaps gym members have submitted written complaints about Flores or otherwise complained about Flores, which caused a Fitness International employee to document the complaint. Pimpo would need those documents as well. These are but a few categories of documents to which Pimpo would be entitled. Undoubtedly, there are many others that we could list. We lack confidence that the initial disclosure provided in the arbitration agreement would cause Fitness International to produce such documents. Further, considering the arbitration agreement's massive scope, there is an even greater need for robust discovery under this arbitration agreement. The limited discovery procedures required by the arbitration agreement here thus render the agreement substantially unconscionable.

In summary, the superior court did not err in finding the arbitration agreement unconscionable.[5]

DISPOSITION

The order is affirmed. Pimpo is entitled to her costs on appeal.

HUFFMAN, J.

WE CONCUR:

BENKE, Acting P. J.

O'ROURKE, J.