## Facts

- Lorrie Poublon worked for C.H. Robinson as an account manager in Los Angeles beginning in 2007.
- To receive an annual bonus, she signed a one-page Incentive Bonus Agreement containing a “Dispute Resolution” provision requiring mediation and, if unsuccessful, binding arbitration under specified rules.
- The provision permitted dispositive motions under the Rule 56 standard and limited discovery to relevant document exchange and three depositions per side absent a substantial showing of good cause.
- The agreement included a class/collective/representative-action waiver absent mutual agreement.
- The agreement also included an employer-favored judicial carve-out allowing the company (but not the employee) to seek judicial relief for certain claims.
- In 2012, Poublon filed a putative class action alleging California wage-and-hour violations based on alleged overtime misclassification.
- C.H. Robinson moved to stay the case, compel arbitration, and dismiss class and representative claims based on the waiver.

## Issues

1. Whether the dispute-resolution provision was unenforceable under California law due to procedural and/or substantive unconscionability.
2. If particular terms were unconscionable or invalid (including the employer-only judicial carve-out and any waiver of PAGA representative claims), whether those terms could be severed or limited while enforcing the remainder of the arbitration agreement.

## Decision

- The Ninth Circuit reversed the district court’s refusal to compel arbitration.
- The agreement was an adhesion contract, establishing some procedural unconscionability, but not enough to invalidate the clause absent a stronger showing of substantive unfairness.
- The employer-only judicial carve-out was substantively unconscionable for lack of mutuality and was unenforceable.
- The discovery limits, venue term, confidentiality provision, and sanctions provision were not substantively unconscionable.
- The representative-action waiver was enforceable as to non-PAGA claims, but could not bar PAGA representative claims; the waiver was limited accordingly.
- The unconscionable/invalid portions were severable, so arbitration was compelled with the carve-out removed and the waiver narrowed to exclude PAGA claims.

## Legal Principles

- Under California’s sliding-scale approach, an adhesion contract alone shows only a modest level of procedural unconscionability; invalidation generally requires meaningful substantive unconscionability.
- Arbitration provisions must be sufficiently mutual; an employer-only right to litigate selected claims may be substantively unconscionable.
- Streamlined arbitration discovery is permissible where it does not prevent fair presentation of claims and allows expansion for good cause.
- Class and collective-action waivers in employment arbitration agreements are generally enforceable, but pre-dispute waivers of PAGA representative claims are invalid under California public policy.
- California law favors severing discrete unlawful or unconscionable terms to preserve the parties’ principal agreement to arbitrate when the illegality does not permeate the contract.

## Conclusion

The Ninth Circuit required enforcement of the employment arbitration agreement, holding that only the employer-only judicial carve-out was substantively unconscionable and that any representative-action waiver could not eliminate PAGA claims; because the defects were discrete and severable, arbitration was compelled after severance and limitation.


Poublon v. C.H. Robinson Co., 846 F.3d 1251 (9th Cir. 2017)