Moreno

Filed 10/17/

IN THE SUPREME COURT OF CALIFORNIA

SONIC-CALABASAS A, INC., )

) Plaintiff and Appellant, ) ) S174475 v. ) ) Ct.App. 2/4 B204902

FRANK MORENO, )

) Los Angeles County Defendant and Respondent. ) Super. Ct. No. BS107161 ____________________________________)

In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 (Sonic I), we held as a categorical rule that it is contrary to public policy and unconscionable for an employer to require an employee, as a condition of employment, to waive the right to a Berman hearing, a dispute resolution forum established by the Legislature to assist employees in recovering wages owed. We further held that our rule prohibiting waiver of a Berman hearing does not discriminate against arbitration agreements and is therefore not preempted by the Federal Arbitration Act (FAA). We did not invalidate the arbitration agreement at issue. Instead, we held that if one of the parties is dissatisfied with the result of the Berman hearing, it can move to arbitrate the wage dispute consistent…

In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 669 [ 121 Cal.Rptr.3d 58 , 247 P.3d 130 ] (Sonic I), a bare four-to-three majority of this court held that the arbitration provision here at issue is both contrary to our state’s public policy and unconscionable—and therefore unenforceable—to the extent it precludes Frank Moreno from pursuing an administrative hearing—-known as a “Berman hearing”— before submitting his claim for vacation pay to arbitration. I agree with the majority’s conclusion that the Federal Arbitration Act (FAA) ( 9 U.S.C. § 1 et seq.) preempts" Sonic /’ s public policy rationale. However, I disagree with the majority’s decision to remand this case on the issue of unconscionability. As I explain below, we should reject Moreno’s unconscionability claim for two reasons: (1) he forfeited it by failing to raise and pursue it below and (2) he has not met, and cannot meet, his burden of showing unconscionability. I also disagree with the majority’s advisory opinion regarding the unconscionability principles the trial court should apply on remand. In my view, those principles are both contrary to state law and invalid under—and thus preempted by—the FAA. I…

In Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 [ 121 Cal.Rptr.3d 58 , 247 P.3d 130 ] (Sonic I), we held as a categorical rule that it is contrary to public policy and unconscionable for an employer to require an employee, as a condition of employment, to waive the right to a Berman hearing, a dispute resolution forum established by the Legislature to assist employees in recovering wages owed. We further held that our rule prohibiting waiver of a Berman hearing does not discriminate against arbitration agreements and is therefore not preempted by the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.). We did not invalidate the arbitration agreement at issue. Instead, we held that if one of the parties is dissatisfied with the result of the Berman hearing, it can move to arbitrate the wage dispute consistent with the arbitration agreement, just as a dissatisfied party can obtain a trial in court without such an agreement.

The United States Supreme Court granted certiorari in this case, vacated the judgment, and remanded the case to this court for consideration in light of AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [ 179 L.Ed.2d 742 , 131 S.Ct. 1740 ]…

I concur in the result and much of the analysis in the majority opinion, but I disagree with its failure to articulate a clear standard for assessing the unconscionability of arbitration terms in employment agreements.

The majority refers to several formulations but does not settle on a test for unconscionability. It describes an analysis in which the trial court weighs the Berman advantages waived against the benefits of arbitration to decide if the agreement is “unreasonably one-sided.” (Maj. opn., ante, at pp. 1146, 1157.) Justice Chin characterizes this approach as interest weighing and criticizes it as insufficiently deferential to arbitration. Whereas the majority would remand for the trial court to determine unconscionability, Justice Chin would have us decide here that the agreement is not unconscionable.

I agree with Justice Chin that the proper test for determining unconscionability here is whether the terms are “ ‘so one-sided as to “shock the conscience.” ’ ” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246 [ 145 Cal.Rptr.3d 514 , 282 P.3d 1217 ].) Courts are not free to alter terms to which the contracting parties…