Reported / Citable
Background
J. Asencion Santana began working at a skilled nursing facility in December 2020. When Studebaker Health Care Center purchased the facility in January 2023 and became Santana’s employer, Studebaker required Santana to sign three arbitration-related documents as part of its onboarding process: a California Mutual Dispute Resolution Agreement, an Alternative Dispute Resolution Policy, and a related arbitration acknowledgment.
All three documents required arbitration of most disputes arising out of the employment relationship, with an exception for non-individual Private Attorneys General Act (PAGA) claims. The documents had some overlapping but not perfectly identical terms, and there were minor ambiguities in scope and procedural details across the three.
After his employment ended, Santana filed a wage-and-hour class action against Studebaker that included a cause of action under PAGA. Studebaker moved to compel arbitration of the individual claims. The trial court denied the motion, ruling that conflicts among the three arbitration documents meant there was no valid agreement to arbitrate, and alternatively that the agreement was unconscionable. Studebaker appealed.
The Court’s Holding
The Second District Court of Appeal, Division Seven, reversed. The court held that the three arbitration-related documents together formed a valid and enforceable agreement to arbitrate most of Santana’s employment disputes.
Under Civil Code section 1642 and California contract law, multiple documents executed at the same time and relating to the same matter must be construed together. While the three documents had minor variations in scope and procedural detail, they shared a clear common core: an agreement to arbitrate employment-related disputes (with the exception of non-individual PAGA claims). The minor ambiguities did not undermine the parties’ fundamental agreement to arbitrate. Where any ambiguity exists, courts apply ordinary principles of contract interpretation to give effect to the parties’ intent.
On unconscionability, the court found some procedural unconscionability because the agreement was a contract of adhesion presented as part of mandatory onboarding. Procedural unconscionability is common in employment arbitration agreements and does not by itself render them unenforceable. Substantive unconscionability requires terms so one-sided as to shock the conscience, and Studebaker’s agreement contained no such terms. The agreement was mutual, allowed the same claims to be brought by either party, included reasonable arbitration procedures, and did not impose unfair cost-shifting or other substantively oppressive terms.
The court remanded with directions to grant the motion to compel arbitration of the arbitrable claims, while preserving the carve-out for non-individual PAGA claims as the agreements provided.
Key Takeaways
- Multiple arbitration-related documents executed simultaneously as part of onboarding must be construed together under Civil Code section 1642, and minor ambiguities do not defeat the agreement to arbitrate when the parties’ fundamental intent is clear.
- Procedural unconscionability is common in employment arbitration agreements presented as conditions of hire and does not by itself render an agreement unenforceable.
- Substantive unconscionability requires showing terms that are so one-sided as to shock the conscience. Mutual arbitration provisions with reasonable procedures are typically enforceable.
- Carve-outs from arbitration for non-individual PAGA claims, common in California employment agreements after Viking River and Adolph, must be honored according to their terms.
- Trial courts that find ambiguities in arbitration documents should consider whether ordinary contract interpretation principles can resolve the ambiguity rather than refusing to enforce the agreement entirely.
Why It Matters
This decision is important for California employers and employment arbitration practice. Many employers use multiple onboarding documents that include arbitration provisions, and the resulting overlapping language can create ambiguities. The opinion confirms that those ambiguities, by themselves, do not defeat enforceability when the parties’ core agreement to arbitrate is clear.
For employer counsel, the case is a reminder to review onboarding packets for consistency among arbitration-related documents and to use a single, clear agreement where possible. For employee counsel, the opinion narrows the path to defeating motions to compel arbitration based on document conflicts and reinforces that procedural unconscionability arguments alone are unlikely to succeed. For trial courts, the decision provides clearer guidance on how to apply Civil Code section 1642 and unconscionability doctrine to multi-document arbitration agreements.