©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 85 Limited value of opt-out procedures. Some employers have sought to eliminate problems with substantively unconscionable arbitration agreements by eliminating procedural unconscionability. They have sought to do this by proposing written arbitration agreements that employees can reject simply by opting out of the agreement within a reasonable time, such as 30 days, so that the resulting agreement, even if deemed substantively unconscionable, could nevertheless be enforceable because it is not procedurally unconscionable. But then came the California Supreme Court’s 2007 decision in Gentry v. Superior Court (Circuit City Stores, Inc.).44 Gentry decided that even an easily understood one-page opt-out form may be insufficient to avoid a finding of procedural unconscionability. Thus, Gentry, disagreeing with the Court of Appeal and with two Ninth Circuit cases,45 refused to accept that Circuit City’s arbitration program—which permitted employees to opt out of the program within 30 days of written notice and even advised that employees could consult an attorney about the opt-out decision—was free of procedural unconscionability. Gentry reasoned that the opt-out form gave employees a “highly distorted picture of the arbitration Circuit City was offering[,]” such that only “a legally sophisticated party” would have understood the relative advantages of judicial litigation; also, Gentry speculated that employees “likely” “felt at least some pressure not to opt out of the arbitration agreement.”46 A dissenting opinion argued that there were no grounds to find that Circuit City had unfairly coerced or induced employees not to opt out of the arbitration program.47 Second-guessing presentations of arbitration agreements. Contracting parties often incorporate other documents by reference, a practice that is enforceable so long as the documents are readily available. This permissible contractual practice of incorporation by reference should be appropriate in arbitration agreements as well as other agreements, as the FAA would forbid any special rule that disfavors arbitration agreements. And so it is that throughout most of America an arbitration agreement will mention rules of arbitration that a party can easily find on the internet. Although the Court of Appeal once held that an arbitration clause in a mandatory employment agreement was procedurally unconscionable because the employer had failed to provide the employee with a complete copy of the arbitration rules,48 the California Supreme Court then clarified the point that a mere failure to attach arbitration rules does not itself make an arbitration agreement unconscionable; rather, a failure to attach the rules will call for closer scrutiny of the “artfully hidden” rules to see if they are substantively unconscionable.49 Another decision found procedural unconscionability where the employer failed to give the employee enough time to review the agreement or have it reviewed by legal counsel, and failed to give the employee a copy of the signed agreement.50 The risk of procedural unconscionability looms large when the employee lacks English skills and receives only an English version of the arbitration agreement. In a 2016 non-employment case with implications for employment arbitration agreements, the Court of Appeal found procedural unconscionability where an arbitration agreement was presented in English to renters of mobile home spaces who did not understand English.51 And a 2019 employment case found procedural unconscionability where the employee was not fluent enough in English to fully understand documents written in English and had to sign them “on the spot” to get a job.52 A Ninth Circuit opinion, applying California law, found procedural unconscionability where the employer, having presented the arbitration agreement on a “take it or leave it” basis, also failed to provide the actual terms of the arbitration policy to the employee until three weeks after she had agreed to be bound by it as a condition of employment.53 In 2019 the California Supreme Court, in OTO L.L.C. v. Kho,54 held that an arbitration agreement was unenforceable as to a wage claim because the employer put the agreement in 8.5 point font and pressured the employee to sign it, and because the agreement’s litigation-like arbitral procedures were unduly complex
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