Reported / Citable
Background
Jazmin Ayala-Ventura worked as a janitor for CCS Facility Services-Fresno Inc. from June 2021 to March 2022. As part of her onboarding, she electronically signed a five-page mutual arbitration agreement that covered all claims, both employment and non-employment related, between her and the company, with limited exceptions for workers’ compensation, unemployment, and certain injunctive relief. The agreement also included a class, collective, and representative action waiver.
Ayala-Ventura later filed a putative class action complaint alleging various wage-and-hour violations and unfair business practices. CCS moved to compel individual arbitration and dismiss the class claims. The trial court granted the motion. Ayala-Ventura sought review by appeal, and the Court of Appeal converted the matter to a writ petition because of uncertainty about appealability.
On the merits, Ayala-Ventura argued that the arbitration agreement was unconscionable because it was overbroad, lacked mutuality, and was indefinite in duration. She also argued that the trial court was bound by stare decisis to follow Cook v. University of Southern California, a Second District decision that held a similar arbitration agreement unconscionable, and that the trial court had erred by distinguishing Cook on grounds she described as trivial.
The Court’s Holding
The Fifth District Court of Appeal denied the writ petition. The court held that the agreement was not procedurally unconscionable to a degree that would justify refusal to enforce it. While the agreement was a contract of adhesion presented through an electronic onboarding system, employees were able to review the document in English or Spanish and were required to scroll through it before agreeing. There was no evidence of overwhelming pressure, surprise, or hidden terms.
On substantive unconscionability, the court rejected Ayala-Ventura’s arguments. The agreement covered all claims of both parties, providing meaningful mutuality. The exceptions, including for injunctive relief, were not so one-sided as to render the agreement substantively unconscionable, particularly because they applied to both employer and employee. The agreement’s duration, while open-ended, was tied to the existence of an employment relationship and did not impose unlimited obligations on the employee for unrelated future disputes.
On the stare decisis issue, the court engaged with Cook v. University of Southern California, which had reached the opposite result on a similar agreement. The court agreed with Ayala-Ventura that one of the factual distinctions the trial court drew, the employer’s allegedly inconsistent positions in Cook, was not a material distinction. But the court itself, sitting in a different appellate district, was not bound by Cook and concluded that other features of the case before it materially differed from Cook. The court reaffirmed the rule from Cuccia v. Superior Court that trial courts must follow binding California Court of Appeal precedent unless they articulate a meaningful factual or legal distinction, and recommended that trial courts that decline to follow such precedent explain their reasoning carefully on the record.
Key Takeaways
- Mutual employment arbitration agreements that cover all claims and apply to both parties are generally enforceable in California, even when presented through electronic onboarding systems.
- Carve-outs for workers’ compensation, unemployment, and injunctive relief that apply to both parties do not, by themselves, render an arbitration agreement substantively unconscionable.
- Cook v. University of Southern California is not categorically binding outside the Second District; trial courts in other districts may distinguish it on factually significant grounds, though they should explain their reasoning.
- When trial courts decline to follow binding precedent from another Court of Appeal, they should make a record explaining why the case is distinguishable or why the binding opinion should be revisited.
- Class, collective, and representative action waivers within otherwise enforceable arbitration agreements remain effective for claims that fall within their scope, subject to PAGA and similar carve-outs.
Why It Matters
This decision is one of the most direct engagements yet with Cook v. University of Southern California, which has been heavily cited by employee-side practitioners. By distinguishing Cook on its facts and refusing to find the arbitration agreement unconscionable, the Fifth District provides employers with another data point in support of broad mutual arbitration agreements. Employers should still review their agreements for genuine mutuality and should consider how they would defend against unconscionability arguments rooted in Cook and similar opinions.
The opinion is also a useful reminder of the dynamics of stare decisis among California Courts of Appeal. Trial courts must generally follow Court of Appeal precedent, but where there is no in-district authority on point, they have discretion to choose among published opinions of other districts based on persuasive analysis. When they decline to follow a binding-looking authority, they should articulate the basis for the distinction.