J. Asencion Santana began working at a skilled nursing facility in December 2020. Studebaker Health Care Center, LLC purchased the facility in January 2023 and became his employer. As part of its onboarding process, Studebaker required Santana to sign three arbitration-related documents — a California Mutual Dispute Resolution Agreement, an Alternative Dispute Resolution Policy, and an Agreement to Be Bound by Alternative Dispute Resolution Policy — each covering wage-and-hour and other employment disputes and each including a class action waiver that carved out non-individual PAGA claims. After leaving Studebaker roughly a year later, Santana filed a wage-and-hour class action in Los Angeles County Superior Court alleging failures to pay minimum wage and overtime, provide meal and rest periods, reimburse expenses, furnish accurate wage statements, and pay wages at discharge, along with a PAGA cause of action and an unfair business practices claim.
The trial court denied Studebaker's motion to compel arbitration on two grounds: that conflicts among the three documents and related agreements showed no mutual assent to material terms, and that the agreement was unconscionable. The court found a high degree of procedural unconscionability, ruled that a wholesale PAGA waiver provision in one document was substantively unconscionable, concluded the FAA did not apply, and declined to sever the offending provisions.
The Second Appellate District, Division Seven reversed on both grounds. On formation, the court held that the purported conflicts either did not exist or created only ambiguity — not the kind of fatal uncertainty that voids a contract. The FAA applicability language was plain and consistent across the documents. Differing arbitrator-selection procedures presupposed agreement to arbitrate and could be resolved by the court under Code of Civil Procedure section 1281.6 if the parties could not agree. The one genuinely conflicting provision — a capitalized clause in the ADR agreement that constituted a wholesale waiver of the right to bring a PAGA action — was severable under severance clauses in the ADR Policy and the California ADR agreement, and did not negate the parties' unmistakable intent to arbitrate employment disputes.
On unconscionability, the court held the agreement carried only the low level of procedural unconscionability typical of adhesion contracts in the employment context, not the high level the trial court found. The court distinguished Olvera v. El Pollo Loco, Inc., which involved deceptive bilingual materials, noting no comparable deception here. On substantive unconscionability, the court held the trial court should have severed the sole unenforceable wholesale PAGA waiver provision rather than voiding the entire agreement, and that because the FAA applies, Viking River Cruises, Inc. v. Moriana and Adolph v. Uber Technologies, Inc. required enforcement of the individual PAGA arbitration provision, with the non-individual PAGA claim to be stayed pending arbitration. The court further held that the confidentiality agreement — which allowed Studebaker to seek equitable relief in court for breaches — did not render the overall arbitration scheme one-sided. Unlike the agreements found unconscionable in Silva v. Cross Country Healthcare, Inc. and Alberto v. Cambrian Homecare, Studebaker's confidentiality agreement did not require Santana to concede irreparable harm, did not guarantee injunctive relief without a showing, and did not waive the bond requirement.
The court directed the trial court to enter a new order granting the motion to compel arbitration. Studebaker was awarded its costs on appeal. The opinion, initially filed April 7, 2026, was certified for publication April 22, 2026. Acting Presiding Justice Segal authored the opinion, joined by Justices Feuer and Stone.