Procedural Unconscionability California
Procedural unconscionability focuses on "'"oppression"' or '"surprise"' due to unequal bargaining power." (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.)
Oppression "'arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party. ' " (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702 at p. 721.)
It "generally takes the form of an adhesion contract." (Id. at p. 713.) An adhesion contract is one in which a party with superior bargaining strength drafts the contract and presents it to the weaker party on a take it or leave it basis. (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174.)
"The adhesive nature of the contract will not always make it procedurally unconscionable. When bargaining power is not grossly unequal and reasonable alternatives exist, oppression typically inherent in adhesion contracts is minimal. " (Roman v. Superior Court (2009) 172 Cal.App.4th 1462 at p. 1470, fn. 2.)
The surprise component of procedural unconscionability "'"'involves the extent to which the terms of the bargain are hidden in a "prolix printed form" drafted by a party in a superior bargaining position.'"' " (Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466, 480.)
In Gentry v. Superior Court (2007) 42 Cal.4th 443, the court found an arbitration agreement was "not entirely free from procedural unconscionability" despite its inclusion of a 30-day opt out period, because its explanation of the advantages and disadvantages of arbitration was distorted. (Id. at p. 472.)
The agreement described the advantages and disadvantages of arbitration generally, without focusing on the specific provisions of the agreement in issue that were disadvantageous to the employee. (Id. at p. 471.)
Because of the one-sided description, employees reading the agreement might not have appreciated its unfavorable provisions and might have been discouraged from opting out by the pro-arbitration slant and the employer's obvious preference for arbitration. (Id. at pp. 470-471.)
In Kinney v. United Healthcare Services (1999) 70 Cal.App.4th 1322, the court noted that the surprise component of procedural unconscionability is found when "the terms to which the party supposedly agreed are hidden in a prolix printed form drafted by the party seeking to enforce them." (Id. at p. 1329.) It found the surprise component was satisfied.
The arbitration policy was contained in a handbook in a large three-ring binder, which the plaintiff was pressured to sign without having time to review it. The language of the policy was "so extensive as to render it difficult for a layperson to read and understand the parameters of the policy. This was particularly true regarding the unilateral nature of the arbitration obligation; after a statement of intent extolling the virtues of utilizing the arbitration process, the policy provided, in a fairly lengthy paragraph, that United was not required to pursue any claim of its own in an arbitration setting." (Id. at p. 1330.)
In Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal.App.4th 708, the court concluded surprise was present.
"The arbitration clause, though hidden 'in plain sight,' is nonetheless hidden for purposes of this analysis. It is only one of several provisions in a dense, single-spaced page at the end of the five-page employment application. While it appears to be in bold type, so are several other provisions; the typeface is quite small, and not otherwise distinguished from any of the other provisions of the employment application. There are no headings or other obvious indications that an applicant is giving up significant legal rights." (Fittante, supra, 105 Cal.App.4th at p. 723.)
The court in Higgins v. Superior Court (2006) 140 Cal.App.4th 1238 also found the surprise component satisfied. "The arbitration provision appears in one paragraph near the end of a lengthy, single-spaced document.... The respondents made no effort to highlight the presence of the arbitration provision in the Agreement. It was one of 12 numbered paragraphs in a section entitled 'MISCELLANEOUS.' In contrast to several other paragraphs, no text in the arbitration provision is highlighted. No words are printed in bold letters or larger font; nor are they capitalized. Although petitioners were required to place their initials in boxes adjacent to six other paragraphs, no box appeared next to the arbitration provision." (Id. at pp. 1252-1253.)
In Roman v. Superior Court (2009) 172 Cal.App.4th 1462, the court concluded surprise was not demonstrated.
"The arbitration provision was not buried in a lengthy employment agreement. Rather, it was contained on the last page of a seven-page employment application, underneath the heading 'Please Read Carefully, Initial Each Paragraph and Sign Below.' It was set forth in a separate, succinct (four-sentence) paragraph that Roman initialed, affirming she had seen it." (Roman, supra, 172 Cal.App.4th at p. 1471.)