Velazquez v. Vander-Bend Manufacturing CA6

Filed 11/12/26 Velazquez v. Vander-Bend Manufacturing CA6 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIXTH APPELLATE DISTRICT LETICIA VALLEJO VELAZQUEZ, H053736 (Santa Clara County Plaintiff and Respondent, Super. Ct. No. 24CV444394) v. VANDER-BEND MANUFACTURING, INC., Defendant and Appellant. Leticia Vallejo Velazquez sued Vander-Bend Manufacturing, Inc., alleging wage and hour violations.1 When Vander-Bend petitioned to compel arbitration, the trial court declined, reasoning that any arbitration agreement between the parties was unconscionable. Because Vallejo did not show any substantive unconscionability in the alleged agreement, we will reverse the order and remand for further proceedings. I. BACKGROUND In her operative complaint, Vallejo alleged (for herself individually, for a putative class, and under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.)) that Vander-Bend failed to (1) pay all minimum wages; (2) pay all overtime wages; (3) provide rest periods or pay missed rest period premiums; (4) provide meal periods or pay missed meal period premiums; (5) maintain accurate employment records; (6) timely 1 We will refer to Vallejo using her first surname, consistent with her practice reflected by the record. pay wages during employment; (7) pay all wages earned and unpaid at separation; (8) indemnify all necessary business expenditures; and (9) furnish accurate itemized wage statements. Vander-Bend petitioned the trial court for an order (1) compelling Vallejo to arbitrate her individual claims, “including her individual [PAGA] claims”; (2) staying her representative PAGA claims; and (3) striking or dismissing her class allegations. In support of its petition, Vander-Bend produced an arbitration agreement that it alleged Vallejo had entered when she began her employment. The agreement provides, “[e]ither party may bring an action in court to compel arbitration under this Agreement,” and “neither party shall initiate or prosecute any lawsuit in any way related to any Arbitrable Claim.” “Arbitrable Claims” are defined as “[a]ny and all disputes between Employee … and [Vander-Bend] … arising out of or relating in any manner whatsoever to Employee’s employment, the termination of that employment, or this Agreement, including without limitation, the breach, termination, enforcement, interpretation or validity of this Agreement or the determination of the scope or applicability of this agreement to arbitrate any particular dispute …. Arbitrable Claims shall include, but are not limited to, claims for breach of contract (express or implied), tort of any kind, employment discrimination (including harassment) as well as all claims based on any federal, state, or local law, statute, or regulation including Title VII, the Age Discrimination in Employment Act, Americans with Disabilities Act, the California Fair Employment and Housing Act, the federal Fair Labor Standards Act, the California Labor Code, the federal Family and Medical Leave Act, the California Family Rights Act, and Section 17200 of the California Business and Professions Code.” The definition excludes only “any claim for which applicable law prohibits arbitration agreements (e.g., the federal Consumer Financial Protection Act).” The agreement includes the following class, collective, and representative action waiver: “The parties agree that all Arbitrable Claims must be resolved in arbitration 2 proceedings pertaining to [Vallejo] only, and claims pertaining to different employees must be heard in separate arbitration proceedings. No Arbitrable Claim may be brought as a class, collective, or representative action. The parties waive any right to assert or participate in any class, collective, or representative proceeding (in arbitration or otherwise) relating to any Arbitrable Claim, except to the extent this waiver is prohibited by law (e.g., for PAGA claims that cannot be waived under applicable law), and the arbitrator is prohibited from hearing any class, collective, or representative claims.”2 The arbitration “will be before a single neutral arbitrator … in accordance with the JAMS Employment Arbitration Rules and Procedures then in effect” applying “the same substantive law, … limitation periods and … remedies … that would apply if the claims were brought in a court.” “The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this agreement to arbitration, including, but not limited to any claim that all or any part of this agreement is void, waived or unconscionable and whether a particular claim is an Arbitrable Claim.” 2 The agreement was executed before the United States Supreme Court held that the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) preempts the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 insofar as the latter “precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662.) Vander-Bend invokes the FAA and Vallejo does not dispute Vander-Bend’s contention that the Federal Arbitration Act governs here. But state law continues to prohibit “ ‘wholesale waiver of PAGA claims.’ ” (Santana v. Studebaker Health Care Center, LLC (2026) 120 Cal.App.5th 1, 15; see also Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1114 [“Where a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA”]; LaCour v. Marshalls of CA, LLC (2025) 117 Cal.App.5th 505, 522.) No party has suggested that this provision should be interpreted as a waiver of PAGA claims or that its application to a PAGA claim would of itself bear on unconscionability. 3  The agreement provided for severance of unenforceable terms: “If any court or arbitrator of competent jurisdiction determines that any term of this Agreement renders the Agreement unenforceable, void or unconscionable for any reason, the parties agree that such court or arbitrator shall modify such term (or if necessary delete such term) to the minimum extent necessary to make the Agreement enforceable consistent with applicable law, and all remaining terms and provisions of this Agreement shall continue in full force and effect.” Although Vander-Bend contended that the agreement delegated questions of scope and enforceability to the arbitrator, Vander-Bend argued in its petition that the agreement was enforceable and squarely applied to Vallejo’s claims. Vallejo opposed the petition to compel arbitration of her claims. Her principal contention was that the arbitration agreement and delegation clause were unconscionable.3 She argued that the agreement was procedurally unconscionable because she was required to sign it as part of a rushed onboarding of several employees, and the agreement was only available in English.4 She argued that the agreement was 3 Vallejo neither conceded nor disputed that she signed an arbitration agreement during onboarding. In opposing Vander-Bend’s petition, Vallejo noted that Vander-Bend bore the burden of proof on the issue and declared that she did not recall “signing any specific document labeled as an arbitration agreement”: “[D]ocuments were presented to [her] quickly, with no meaningful explanation, and [she was] told to sign them as part of the hiring process.” 4 Vallejo represented that she only “speak[s] Spanish” (in her declarations) and that she does not read “English fluently” (in her brief). Vander-Bend submitted (1) a declaration from the employee who handled her onboarding stating that during her employment he regularly communicated with Vallejo in English, (2) e-mail correspondence including short messages in English from Vallejo, and (3) a performance review and timecards, both in English, that Vallejo signed. Vander-Bend also submitted declarations asserting that its practice would have been to have Spanish-speaking employees orally translate the document and to allow a monolingual Spanish-speaking employee to defer signing the agreement. The employee who handled onboarding 4 substantively unconscionable because it lacked mutuality—requiring her to “arbitrate claims against a broad array of parties, while those same parties are not required to arbitrate any claims they may have against” her. Specifically, she asserted that the listed arbitrable claims are “claims that an employee may bring against an employer, not the other way around.” By extension, Vallejo contended that the delegation clause is unconscionable for the same reasons as the agreement as a whole. Denying the motion, the trial court did not decide whether Vander-Bend had produced a valid arbitration agreement. Rather, the court ruled that the agreement, even if otherwise valid, was unenforceable because it was unconscionable.5 The court found “a significant amount” of procedural unconscionability because Vander-Bend directed Vallejo to sign the agreement as part of her mandatory employment contract but presented it only in English, without any offer of translation or effort to ensure she understood it. The court also found “a significant amount” of substantive unconscionability because the agreement was overbroad and lacked mutuality. The overbreadth the court found was in the requirement to arbitrate claims “ ‘relating in any manner whatsoever to [Vallejo’s] employment’ ”; the lack of mutuality was exemplified in the listed examples of arbitrable claims. Vander-Bend timely appealed. II. DISCUSSION Vander-Bend challenges only the trial court’s determination that the agreement is unconscionable, abandoning its former reliance on the delegation clause. (See Barrera v. declared that he watched Vallejo sign various agreements and she did not request more information. 5 The order does not mention the delegation clause. By deciding that the agreement was unconscionable, however, the trial court necessarily rejected Vander-Bend’s contention that the agreement’s enforceability was reserved for the arbitrator. 5 Apple American Group LLC (2023) 95 Cal.App.5th 63, 75, fn. 3 [holding that party forfeited contractual right to delegation by submitting matter to the court].) Although we would deferentially review the trial court’s factual findings on procedural unconscionability, Vallejo has not shown any terms of the agreement to be substantively unconscionable, nor have we discerned any manifest unfairness in the agreement’s terms. “Both procedural and substantive elements must be present to conclude a term is unconscionable,” even if “these required elements need not be present to the same degree.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 493 (Ramirez).) We accordingly will reverse the order denying Vander-Bend’s petition and remand for the trial court to address remaining issues the petition presents. A. Substantive Unconscionability Vallejo, as “[t]he party resisting … arbitration[,] … has the burden to establish unconscionability.” (Ramirez, supra, 16 Cal.5th at p. 492.) “ ‘A contract is unconscionable if one of the parties lacked a meaningful choice in deciding whether to agree and the contract contains terms that are unreasonably favorable to the other party.’ ” (Ibid., italics added.) While the procedural aspect of unconscionability looks to “the circumstances of contract formation,” substantive unconscionability “considers ‘the fairness of an agreement’s actual terms’ [citation], focusing on whether the contract will create unfair or one-sided results [citation].” (Id. at p. 493.) “ ‘Although procedural unconscionability alone does not invalidate a contract, its existence requires courts to closely scrutinize the substantive terms “to ensure they are not manifestly unfair or one-sided.” ’ ” (Fuentes v. Empire Nissan, Inc. (2026) 19 Cal.5th 93, 103 (Fuentes).) We will assume that substantial evidence supports the trial court’s factual findings about procedural unconscionability. But because the substantive terms of the agreement are undisputed, the trial court’s ruling on substantive unconscionability “is based entirely on an interpretation of law” that we review de novo. (Ramirez, supra, 16 Cal.5th at p. 493.) 6  As in the trial court, Vallejo argues overbreadth and lack of mutuality in the definition of arbitrable claims makes the agreement substantively unconscionable. But her arguments cannot be reconciled with the plain language of the agreement. The agreement is mutual and limited to claims “relating”—“in any manner whatsoever”—to Vallejo’s employment, the termination of her employment, or the agreement itself. (See Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1249 [agreement to arbitrate “ ‘any claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination of Employee’ ” was a “clear … mutual[] agree[ment] to arbitrate all employment-related claims”].) The inclusion of a nonexhaustive and illustrative list of arbitrable claims covered by the agreement does not alter the agreement’s substance. (Ibid.; see also Vo v. Technology Credit Union (2025) 108 Cal.App.5th 632, 644–645.) Simply, the agreement provides a mutual obligation to arbitrate claims related to Vallejo’s employment. (Cf. Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 120 [identifying lack of mutuality in agreement to arbitrate only employee claims for wrongful termination]; Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1528–1529, 1536–1542 [lack of mutuality in arbitration clause that gave “employer more rights and greater remedies than would otherwise be available” while depriving “employees of significant rights and remedies they would normally enjoy”]; Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1332 [“unilateral obligation to arbitrate is unconscionable”].) Vallejo’s attempt to distinguish Baltazar is unpersuasive. Vallejo contends that the language in Baltazar—requiring arbitration of claims “ ‘in any way related to’ ” employment (Baltazar, supra, 62 Cal.4th at p. 1249)—is properly tailored, whereas the language here—requiring arbitration of claims related “in any manner whatsoever” to employment is overbroad. We see no substantive difference between “in any way related” and “relating in any manner whatsoever.” In both cases, the agreement is limited to claims related to the employment relationship. 7  Separately, Vallejo argues that even if an illustrative list does not alter the substantive terms of the agreement, it will have the “practical effect” of leaving employees unaware that they can compel Vander-Bend to arbitrate claims it may bring against them.6 This contention—that employees will not understand the list to be merely illustrative—does not sound in substantive unconscionability. Vallejo relies on inapposite authority—Cook v. University of Southern California (2024) 102 Cal.App.5th 312 and Stoker v. Blue Origin, LLC (2026) 120 Cal.App.5th 91. In Cook, the arbitration agreement between the university and its employee was unconscionable because (1) it expressly required the employee to arbitrate “ ‘all claims, whether or not arising out of … employment’ ” (Cook, at pp. 321, 325); (2) its termination required written agreement of the employee and the university president (id. at p. 326); and (3) the employee’s obligation to arbitrate her claims against the university or its “ ‘related entities’ ” was not mutual because these related entities had no obligation to arbitrate their claims against her (id. at pp. 326, 328). In Stoker, the arbitration agreement similarly applied to “any claim that might arise at any time” without limitation to the employment relationship, except that it excluded certain claims that were more likely to be brought by an employer—“[c]laims for trade secret violations, trademark infringement, breach of fiduciary duty, breach of proprietary information, confidentiality obligations, and nonsolicitation agreements.” (Stoker, at pp. 108, 110.) The arbitration agreement here has no analogous asymmetry that would make it manifestly unfair or one-sided.7 6 Arguing that the illustrative list “consist[s] almost entirely of claims typically brought by employees against employers” and omits “claims relating to the protection of business interests … [and] misuse of confidential information,” Vallejo does not address the list’s inclusion of tort and contractual claims. 7 The agreement here provides that it “shall survive the termination of [Vallejo’s] employment.” Vallejo has not challenged this term. 8 B. Reversal and Remand The absence of substantive unconscionability requires reversal because the trial court, like Vallejo, relied exclusively on unconscionability to deny Vander-Bend’s petition, and procedural unconscionability alone will not suffice. Because Vallejo did not establish unconscionability and considering the balance of the record, there is a reasonable probability that a result more favorable to Vander-Bend would have been reached in the absence of the error. (See generally Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800.) Even so, we decline Vander-Bend’s urging to direct the trial court to grant its petition. It is “[t]he party seeking arbitration [who] bears the burden of proving the existence of an arbitration agreement.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236; see also Herzog v. Superior Court (2024) 101 Cal.App.5th 1280, 1293 [explaining that mutual assent “ ‘ “is essential to the existence of a contract” ’ ”].) As we have noted, Vallejo did not concede the existence of an arbitration agreement, and in relying on unconscionability, the trial court expressly bypassed the threshold question of whether Vander-Bend had shown the parties’ mutual assent to the arbitration agreement. Because Vander-Bend on appeal has briefed only the issue of unconscionability, we will permit the trial court to resolve any remaining issues on remand. (See Fuentes, supra, 19 Cal.5th at p. 114.) III. DISPOSITION The September 9, 2025 order denying Vander-Bend’s motion to compel arbitration is reversed. 9  LIE, Acting P. J. WE CONCUR: WILSON, J. BROMBERG, J. Vallejo Velazquez v. Vander-Bend Manufacturing, Inc. H053736