Summary
The Ninth Circuit reversed the district court’s refusal to enforce a mutual arbitration agreement between Robert Cocom and ABM Aviation, Inc., and remanded for further proceedings. The court held that the agreement’s employment-related scope, duration, and treatment of third parties did not render it substantively unconscionable, distinguishing California decisions including Cook and Stoker. The court further held that any potentially unconscionable provisions could be severed and therefore did not reach procedural unconscionability.
Topics
Practice areas
Questions Presented
- Whether the Mutual Arbitration Agreement's definition of covered claims was limited to employment-related disputes or instead extended to claims unrelated to employment.
- Whether the agreement's scope, duration, alleged lack of mutuality, and bar on giving arbitration awards preclusive or precedential effect were substantively unconscionable.
- Whether any potentially unconscionable waivers of representative PAGA actions or public injunctive relief could be severed.
- Whether the arbitration agreement was enforceable notwithstanding the district court's procedural-unconscionability findings.
Holdings
- The agreement is limited to employment-related disputes. Its general language, including 'including but not limited to,' is narrowed by the specific employment-related claims enumerated in the agreement and by the context of the AAA employment arbitration rules.
- The employment-related scope of the Mutual Arbitration Agreement is not substantively unconscionable.
- The agreement's duration is not indefinite and is not substantively unconscionable.
- The inclusion of ABM's affiliates, officers, directors, employees, clients, and vendors does not render the agreement substantively unconscionable for lack of mutuality.
- The MAA's provision barring the use of arbitration awards for preclusive or precedential effect is not substantively unconscionable.
- Even assuming the representative-PAGA and public-injunctive-relief waivers are substantively unconscionable, they are severable and do not prevent enforcement of the arbitration agreement.
- Cocom's unconscionability defense fails, and ABM may enforce the Mutual Arbitration Agreement; because the absence of substantive unconscionability is dispositive, the court did not reach procedural unconscionability.
Key quotations
““Including, but not limited to” is a phrase of enlargement but not necessarily a phrase without limits.” (12-13)
“Because the MAA’s more limited scope inherently limits the agreement’s duration, the MAA’s duration is not indefinite and not substantively unconscionable.” (17-18)
“The parties’ “central purpose” in agreeing to the MAA was to arbitrate employment-related claims.” (20-21)
Factual background
ABM provides commercial janitorial services to airports, and Robert Cocom worked for ABM as an airport janitor from August 2020 through June 2024. When hired, Cocom signed a three-page Mutual Arbitration Agreement requiring arbitration as the exclusive remedy for employment-related covered claims, including wage-and-hour claims, and waiving class, collective, and representative proceedings. The agreement also contained provisions concerning PAGA and public-injunctive-relief waivers, preclusive or precedential effect of arbitration awards, and severability.
Procedural history
Cocom filed a putative wage-and-hour class action in California state court against his former employer. ABM removed the action to federal court under the Class Action Fairness Act and moved to compel arbitration under the parties' Mutual Arbitration Agreement and to strike the class claims. The district court denied the motion, finding the agreement procedurally and substantively unconscionable and declining to sever the offending provisions. The Ninth Circuit reversed and remanded.
Remand instructions
Remand for further proceedings consistent with the opinion, including reconducting the severability analysis as to the waivers of representative PAGA actions and public injunctive relief and enforcing the arbitration agreement after severing any provision determined to be unconscionable.