Summary
In Morales, however, the provision at issue required arbitration of all claims related to the plaintiff's membership in the health club, not to the plaintiff's employment.
Summary of this case from Jones v. Halliburton Co.Opinion
NOT TO BE PUBLISHED
San Francisco County Super. Ct. No. CGC-06-459062
NEEDHAM, J.
Club One, Inc. (Club One) appeals from an order denying its petition to compel arbitration of claims asserted by respondent Michelle Morales (Morales). Club One contends that an arbitration clause in Morales’ membership agreement covered her claims, is not unconscionable, and should be enforced. We agree and will reverse the order and remand the matter for further proceedings consistent with this opinion.
I. FACTS AND PROCEDURAL HISTORY
A. THE MEMBERSHIP AGREEMENT AND ARBITRATION PROVISION
On September 24, 2003, Morales filled out and signed a membership agreement with Club One. The agreement consists of the front and back sides of a single sheet of paper. On the front of the document, under the boldfaced caption “Agreement,” Morales’ signature appears next to the following statement in boldface type: “I have read the terms of this agreement on the front and reverse of this document and agree to abide by these terms.”
The reverse of the document contains membership terms and conditions. Among them is a bolded heading, “Article II: Waiver of Claims; Arbitration.” Within article II is the arbitration clause, under the bolded heading “Section 2. Arbitration.” The clause states: “Member agrees to resolve any and all unasserted claims, disputes or controversies arising out of or relating to membership with Club One exclusively by final and binding arbitration using the American Arbitration Association’s (AAA) Commercial Arbitration Rules. This includes, but is not limited to, claims related to fee disputes, personal injury and any other claim which may be asserted under the law of contract and/or the law of tort and/or asserting a public policy or Constitutional claim. The laws of the state of California shall govern the dispute.”
The page of terms and conditions also includes two boxes for the member’s initials. One box, under the section entitled “Fees and Charges,” contains a blank line and the words “Member Initials if Smart Start.” The other box, at the bottom right hand corner under a section pertaining to amendments of rules and regulations, has a blank line and the words “Member Initials.” Neither box is near the arbitration provision. Morales did not initial either box.
B. THE ALLEGED SEXUAL ASSAULT
At Club One on December 28, 2004, Morales ordered two 90-minute full-body massages for Morales and her friend. She used her membership status to obtain a discounted rate.
After her massage, Morales complained to the club manager that the massage therapist, Angelo Ortega (Ortega), assaulted her sexually during the massage. The police were called and officers arrived, took statements, and began an investigation.
C. MORALES’S LAWSUIT
On December 22, 2006, Morales sued Club One and Ortega, alleging causes of action against both of them for assault and battery, negligence per se, intentional infliction of emotional distress, negligent infliction of emotional distress, and loss of consortium. In these claims, Morales essentially alleged that she suffered a sexual assault and battery by Ortega while he was working in the course and scope of his employment as a massage therapist for Club One. In a separate cause of action, Morales asserted that Club One was negligent in hiring, training, supervising, and retaining Ortega.
1. Allegations of the Complaint
Morales alleged that Club One assigned Ortega to perform her massage. In the massage room, Morales followed Ortega’s direction to disrobe and lie on a massage table under a sheet. As the massage progressed, Ortega pulled the sheet down, exposing Morales’ buttocks. Morales pulled the sheet back up. “ORTEGA then began to assault and improperly and unlawfully touch [Morales] in and about her breasts and in and about her . . . inner thighs and near her vaginal area . . . . At the same time, ORTEGA leaned over [Morales] and started to breathe heavily upon [Morales’] head and face . . . . ORTEGA then initiated conversation which, included various improper suggestive comments of an unwelcome sexual nature. [Morales] was shocked, bewildered and paralyzed with fear.” Morales broke out in tears while reporting the incident to Club One management, and Ortega left the premises. The police were called and a report was prepared. Ortega was later returned to San Quentin Prison, from which he was on parole.
The complaint further alleged that Ortega had no prior experience in massage therapy, had not completed massage therapy education as required by statute, had no massage license or certification, had not applied to the San Jose Police Department for a massage therapist permit, had an extensive criminal history including four felony convictions, and was on parole at the time of his hire by Club One. Club One allegedly failed to conduct any background or reference check on Ortega before allowing him to serve as a massage therapist.
2. Club One’s Motion to Compel Arbitration
In January 2007, Club One filed a motion to compel arbitration and stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4. In its moving papers, Club One submitted a copy of the membership agreement and evidence that Morales had ordered and paid for her massage using her status as a Club One member. Club One also offered a copy of the San Jose Police Department report, which summarized statements Morales made to investigating officers regarding the incident.
Morales’ opposition papers argued that arbitration should not be compelled for numerous reasons, including that the agreement did not cover the incident and that the arbitration clause was unconscionable and thus unenforceable. Morales offered no declaration or other evidence of her own, but she objected to the San Jose Police Department incident report as hearsay.
3. Order Denying Motion to Compel Arbitration
After a hearing, the trial court denied Club One’s motion. In substance, the court concluded that Morales did not agree to the arbitration provision, and that the language of the arbitration agreement was not broad enough to cover the alleged sexual assault anyway: “And I have to accept the Plaintiff’s allegations as to the conduct that was at issue here. And to suggest somehow that a sexual massage was contemplated within the meaning of that language in my view is a stretch.” The court did not decide whether the arbitration provision was unconscionable.
The court filed its written order on April 19, 2007, and this appeal followed.
II. DISCUSSION
Club One contends: the membership agreement contained an arbitration clause; the arbitration clause was not unconscionable and was thus enforceable; and the arbitration clause was sufficiently broad in scope to cover the alleged sexual assault. After a brief review of the relevant legal principles and standard of review, we address each of Club One’s contentions, albeit in a different order, and then consider an additional issue for the benefit of the court and parties upon remand.
As mentioned, the trial court did not explicitly rule whether the arbitration clause was unconscionable. Because Morales raised the unconscionability issue in her opposition to Club One’s motion to compel arbitration, and because both parties address the issue on appeal and agree that we should consider it now, we will decide the issue in the interest of judicial efficiency. (See 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1212 (24 Hour Fitness).)
A. BACKGROUND AND STANDARD OF REVIEW
Code of Civil Procedure section 1281.2 generally mandates arbitration of all claims that are subject to an enforceable arbitration agreement. The statute reads in part: “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement . . . exists,” unless the petitioner waived the right to compel arbitration, grounds exist for revocation of the agreement, or a party to the arbitration agreement is also a party to a pending court action with a third party and conflicting rulings are possible. (Italics added; see Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
As expressed in these statutory terms, the issues before us are: (1) whether there is a written agreement to arbitrate; (2) whether the arbitration agreement covers the controversy; and (3) whether there is a ground for revocation of the agreement on the basis of unconscionability.
Neither party offered extrinsic evidence as to the formation of the membership agreement or the arbitration clause, the scope of the arbitration clause, or the issue of unconscionability. We therefore review these issues de novo. (See Turtle Ridge Media Group, Inc. v. Pacific Bell Directory (2006) 140 Cal.App.4th 828, 832-833; Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 851; Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 684; 24 Hour Fitness, supra, 66 Cal.App.4th at p. 1212.)
Although the parties did not submit extrinsic evidence pertaining to the arbitration clause, Club One offered evidence of the incident itself, as set forth in the report of the San Jose Police Department. Morales objected to the police report on the ground that it was inadmissible hearsay under Hoel v. Los Angeles (1955) 136 Cal.App.2d 295, 309. Club One contends that Morales’ statements in the report are admissible as admissions of an opposing party. (Evid. Code, § 1220; Lake v. Reed (1997) 16 Cal.4th 448, 461; see generally Rupf v. Yan (2000) 85 Cal.App.4th 411, 430, fn. 6.) Although the trial court did not expressly rule on the objection, in explaining its decision it referred instead to the allegations of the complaint. We need not decide the matter, because we would reach the same conclusion whether we considered Morales’ statements to the police or not.
In pursuing our analysis, we are mindful of the fundamental precepts of California arbitration law. “Private arbitration is a matter of agreement between the parties and is governed by contract law.” (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313.) The right to pursue claims in a judicial forum is a substantial right and one not lightly deemed waived. (Marsch v. Williams (1994) 23 Cal.App.4th 250, 254-255.) On the other hand, California has a strong public policy favoring arbitration of disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) Arbitration should generally be ordered unless it is clear that the arbitration clause is not susceptible of an interpretation that covers the dispute. (United Public Employees v. City and County of San Francisco (1997) 53 Cal.App.4th 1021, 1026; see Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97 (Armendariz).)
B. ARBITRATION AGREEMENT
The first step in deciding a motion to compel arbitration is to determine whether the parties agreed to arbitrate their disputes. (Marcus & Millichap Real Estate Investment Brokerage Co. v. Hock Investment Co. (1998) 68 Cal.App.4th 83, 89 (Marcus & Millichap).) We apply general California contract law in this regard. (Ibid.)
There is no dispute that Morales’ membership agreement contains an arbitration clause. Nor is there any dispute that Morales executed the membership agreement by signing next to the words: “I have read the terms of this agreement on the front and reverse of this document and agree to abide by these terms.” The parties thus agreed to the written arbitration provision, and to arbitrate all claims within its scope.
The fact that Morales did not check the boxes on the reverse side of the membership agreement is not material to this particular issue. The box under the section entitled “Fees and Charges” is labeled “Member Initials if Smart Start.” This box is not near the arbitration provision and there is no indication it has anything to do with it.
The other box is located in the bottom right hand corner, under a section pertaining to amendments and after all the other text on the page, and is labeled “Member Initials.” The reasonable interpretation is that the box is there so that the member would confirm what the member already stated on the front—that he or she read the reverse of the form.
Morales’ failure to initial this box could mean that, contrary to her representation, she did not read the reverse of the form. However, a party cannot avoid an arbitration agreement by failing to read it. (24 Hour Fitness, supra, 66 Cal.App.4th at p. 1215; Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1674 [“ ‘Reasonable diligence requires the reading of a contract before signing it. A party cannot use his own lack of diligence to avoid an arbitration agreement.’ ”].)
Alternatively, the absence of initials on the back of the form could indicate that Morales read the back but did not notice, did not understand, or chose to ignore, the request for her initials. But it would not be reasonable to conclude that her failure to initial the box was effective to reject all the terms on that page or the arbitration clause in particular. The box did not refer to the arbitration clause and was not adjacent to it, and there is no other indication that the box had to be initialed for the arbitration clause to apply.
Morales’ reliance on Marcus & Millichap is accordingly misplaced. There, because a form contract required the parties to initial an arbitration provision in order for it to be effective, the failure of one party to initial the provision reflected a lack of mutual assent to arbitration. (Marcus & Millichap, supra, 68 Cal.App.4th at p. 91.) Here, by contrast, the arbitration provision is not conditioned on the initials of the parties. Under the circumstances, Morales’ failure to initial the boxes cannot reasonably be construed as an effective lack of assent to the arbitration clause.
Morales argues that the absence of her initials suggests that Morales was not shown the back of the agreement. However, Morales offers no declaration or other evidence that this was the case, she made no such allegation in her complaint, and such an inference is unreasonable given her representation that she read and agreed to the terms on the “front and reverse of this document.” (Italics added.) Her counsel asks rhetorically in the respondent’s brief, “How else to explain the lack of any initials on the underside when an obvious box and line for assent by initialization exists?” As we discuss in the text, there are several explanations, none of which assists Morales.
C. SCOPE OF THE ARBITRATION CLAUSE
Having found a written agreement to arbitrate, we next examine whether the arbitration agreement encompassed the controversy at hand.
Given the strong policy favoring arbitration, “doubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration.” (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323 [internal quotation marks and citation omitted].) Closer scrutiny may be required, however, when examining an adhesion contract: “Where an arbitration clause is part of a contract of adhesion, courts will carefully scrutinize the agreement to assure that the arbitration provisions fall within the reasonable expectations of the weaker, or ‘adhering’ party.” (Ericksen, supra, at p. 322, fn. 7; see Victoria v. Superior Court (1985) 40 Cal.3d 734, 744 (Victoria).) The parties agree that the Club One membership agreement is a contract of adhesion.
The arbitration provision applies to “any and all unasserted claims, disputes or controversies arising out of or relating to membership with Club One.” The word “membership” must be broadly construed, because the clause requires arbitration not only of fee disputes, but also of claims for personal injury, other torts and contract claims, and claims based on public policy and the Constitution. The alleged sexual assault and battery of Morales is a tort purportedly occurring during the performance of a service that Morales ordered and paid for through her Club One membership, on Club One premises, from an individual alleged to be a Club One employee acting within the scope of his employment. A Club One member could reasonably expect that she would have to arbitrate a claim based on the nature of the massage services she received through her Club One membership. The controversy is therefore one “arising out of” or “relating to” Morales’ “membership with Club One.”
In so ruling, by no means do we minimize the severity of Morales’ allegations or judge their merit; we merely determine the forum in which they should be heard. Further, the point is not whether a Club One member would expect a sexual assault, but whether, if such an assault occurred during a massage, it would be subject to the agreement to arbitrate.
Morales’ argument to the contrary is based on Victoria, supra, 40 Cal.3d 734. There, a patient at Kaiser Foundation Hospitals (Kaiser) alleged that a hospital orderly had repeatedly sexually assaulted, raped and sodomized her while she was recovering from brain surgery. (Id. at p. 737.) She sued Kaiser for negligent infliction of emotional distress and negligent selection, employment, retention and supervision of the employee. (Ibid.) Kaiser sought to compel arbitration under a provision requiring arbitration of “ ‘[a]ny claim arising from alleged violation of a legal duty incident to this Agreement,’ ” if asserted by a member “ ‘[o]n account of death, mental disturbance or bodily injury arising from rendition or failure to render services under this Agreement, irrespective of the legal theory upon which the claim is asserted . . . .’ ” (Id. at p. 738, italics omitted.) Kaiser argued that its employment of the orderly and the plaintiff’s resulting injuries arose out of its rendition of hospital services. (Id. at p. 742.)
The Court of Appeal in Victoria ruled that the employee’s alleged misconduct was “entirely outside the scope of his employment” and “had nothing to do with providing, or failing to provide, services.” (Victoria, supra, 40 Cal.3d at p. 745.) As the court observed: “He is not accused of negligently failing to empty a bedpan. He is accused of the sexual assault and rape of petitioner.” (Ibid.) Because the parties would not have contemplated a rape during the plaintiff’s hospitalization, the court concluded, they could not have agreed that such an attack would be within the scope of the arbitration provision. (Ibid.)
Victoria is distinguishable from the matter at hand. In the first place, Club One’s arbitration clause is broader than the arbitration provision in Victoria, since the clause in Victoria applied only to claims “ ‘arising from alleged violation of a legal duty incident to this Agreement’ ” if asserted on account of “ ‘death, mental disturbance or bodily injury arising from rendition or failure to render services under this Agreement’ ” (Victoria, supra, 40 Cal.3d at p. 738, some italics omitted), while Club One’s arbitration provision applies to “claims, disputes or controversies arising out of or relating to membership with Club One.” (Italics added.)
In addition, the allegations in the respective cases are different. In Victoria it was alleged that an orderly repeatedly raped and sodomized a patient after a medical operation; here it was alleged that a massage therapist performed the massage in an inappropriate manner. While the court in Victoria found that the orderly’s conduct was not within the scope of his employment, Morales alleged that Ortega’s misconduct was within the scope of his employment. Based on these allegations, and in light of the difference in the breadth of the respective arbitration clauses, we decline to extend Victoria to the matter before us.
D. UNCONSCIONABILITY
Because the arbitration agreement encompasses the parties’ controversy, arbitration is mandatory unless certain statutory exceptions apply. (§ 1281.2.) One such exception, argued by Morales here and in the trial court, is that the arbitration provision is unconscionable. As the party opposing arbitration, Morales has the burden of proving unconscionability. (Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1099.)
Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability. (Armendariz, supra, 24 Cal.4th at p. 114; 24 Hour Fitness, supra, 66 Cal.App.4th at pp. 1212-1213; Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1530-1531.) Both components must be present, but not in the same degree; by the use of a sliding scale, a greater showing of procedural or substantive unconscionability will require less of a showing of the other to invalidate the claim. (Armendariz, supra, at p. 114.)
1. Procedural Unconscionability
Procedural unconscionability focuses on the oppression that arises from unequal bargaining power and the surprise to the weaker party that results usually from hidden terms. (See Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1252 (Higgins) [referring to oppression and surprise, which is a function of the disappointed reasonable expectations of the weaker party]; 24 Hour Fitness, supra, 66 Cal.App.4th at p. 1213 [referring to unequal bargaining positions and hidden terms].)
As mentioned, the parties agree that the Club One membership agreement is an adhesion contract, because it is on a standardized form, imposed and drafted by a party of superior bargaining strength, leaving the potential member with only the option of adhering to the contract or rejecting it. (24 Hour Fitness, supra, 66 Cal.App.4th at p. 1213; see Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 694.) The adhesive nature of a contract is the starting point for our analysis, but additional factors of unconscionability must be found before the provision may be deemed unenforceable. (Armendariz, supra, 24 Cal.4th at p. 113; Higgins, supra, 140 Cal.App.4th at p. 1248.)
Such factors are not present here. The membership agreement consists of just two pages. Nearly all of the contract terms are on the page that contains the arbitration clause. While all of the terms are in small print, the arbitration clause is entitled “Arbitration” in boldface type. In addition, Morales signed the “Agreement” next to the acknowledgement that she “read the terms of this agreement on the front and reverse of this document and agree to abide by these terms.”
Furthermore, Morales presents no evidence that she was surprised by the provision. Instead, she argues that the arbitration clause appeared on the back of the agreement amidst other conditions, and while the heading is in boldface, the actual provision is in standard type, in contrast to a waiver of liability provision that is set forth entirely in boldface. In addition, she argues, the provision was ambiguous because it referred to “unasserted claims,” massage is not clearly a service “arising out of or relating to membership with Club One” because it is also offered to nonmembers, and the AAA arbitration rules were not provided to her and are unsuitable for this type of dispute.
Morales adds that the absence of her initials in the boxes confirms that the provision is procedurally unconscionable, because “[Morales] undoubtedly would have initialized the terms and conditions if any effort had been made by the drafter to draw her attention to these terms.” From this Morales apparently concedes that she would have had no problem with the arbitration clause if she had seen it, thus establishing that no prejudice arose from her alleged failure to see the clause or initial the box. Morales also contends it would be unfair to compel arbitration of her claims because, if Morales’ friend had been attacked, she, having not signed the membership agreement, would not be compelled to submit to arbitration. The point, however, is that Morales did sign the agreement.
Morales’ arguments are unpersuasive. The reasonable interpretation of “unasserted claims” is that the arbitration agreement pertains only to claims that have not been asserted by the time the membership agreement was signed. Her massage was a service “arising out of or relating to membership with Club One,” since she obtained it (at a discount) through her membership. Although Morales might not have understood the details of AAA arbitration rules—a matter of which there is no evidence—she was apprised that her claims would be arbitrated. In our view, even if there is some ambiguity or shortcoming in the language of the arbitration clause, none of the matters raised by Morales renders the provision unconscionable.
Morales’ reliance on Higgins, supra, 140 Cal.App.4th 1238, is unavailing. In Higgins, the plaintiffs were five siblings (aged 21, 19, 17, 16 and 14), who had lost both of their parents shortly before entering into a contract with the defendant corporations in the television industry. (Id. at pp. 1241-1242.) The contract contained “24 single-spaced pages and 72 numbered paragraphs,” with several more pages of exhibits attached. (Id. at p. 1242.) Within the last section of the agreement, which was entitled “MISCELLANEOUS” and included 12-untitled paragraphs, lurked an arbitration provision. (Id. at pp. 1242-1243.) The oldest of the signatories asserted that he did not even know what an arbitration agreement was, and he did not understand its significance or the legal consequences that could flow from signing it. (Id. at p. 1245.)
The appellate court in Higgins found that the arbitration provision was procedurally unconscionable, despite an advisement on the first page to read the entire agreement and an acknowledgement at the end of the document that the signatories had done so. (Higgins, supra, 140 Cal.App.4th at pp. 1252-1253.) While such language is relevant to the inquiry of unconscionability, the court noted, it did not defeat the otherwise strong showing of procedural unconscionability, demonstrated by facts such as “the arbitration provision appears in one paragraph near the end of a lengthy, single-spaced document,” the “television defendants knew petitioners were young and unsophisticated, and had recently lost both parents,” and the defendants “made no effort to highlight the presence of the arbitration provision in the Agreement,” in that “[i]t was one of 12 numbered paragraphs in a section entitled ‘MISCELLANEOUS’ ” and no words were printed in bold letters, larger font, or capitals. (Id. at pp. 1252-1253.)
The matter before us is vastly different. While the contract in Higgins was 24 pages, the membership agreement here was two pages. While the arbitration provision in Higgins was hidden amidst a 12-paragraph section entitled “MISCELLANEOUS” without boldface, the arbitration clause here appeared under the bolded heading “Arbitration.” Furthermore, while the signatory in Higgins did not even know what an arbitration agreement was and the defendants knew that the signatories were young and unsophisticated, Morales presents no such evidence in this case or, as mentioned, any evidence whatsoever that she was surprised by the arbitration provision. The party opposing arbitration has the “evidentiary burden” of proving facts necessary to establish unconscionability. (Higgins, supra, 140 Cal.App.4th at p. 1249, italics added.) Given these circumstances, Morales’ representation that she read and agreed to the terms of the contract is more significant than the similar language in Higgins, and Higgins does not support Morales’ assertion of procedural unconscionability.
2. Substantive Unconscionability
Even if we were to conclude that the arbitration clause had some degree of procedural unconscionability as part of an adhesion contract, Morales must prove substantive unconscionability. (Armendariz, supra, 24 Cal.4th at p. 114.) Substantive unconscionability arises when a contract is so one-sided that it “ ‘shock[s] the conscience’ ” or it imposes harsh or oppressive terms. (24 Hour Fitness, supra, 66 Cal.App.4th at p. 1213.)
Morales contends that the arbitration agreement is one-sided because it requires only Morales to arbitrate claims. (See Armendariz, supra, 24 Cal.4th at p. 117 [arbitration agreement is unconscionable if it lacks a “modicum of bilaterality”]; Higgins, supra, 140 Cal.App.4th at pp. 1253-1254 [substantive unconscionability where arbitration provision required only petitioners to arbitrate and deprived only petitioners of appellate review, and required AAA arbitration by which the parties would bear costs equally].) We disagree.
The Club One arbitration clause provides that the member agrees to arbitrate “any and all unasserted claims, disputes or controversies arising out of or related to membership.” As Morales urges, this could mean that Morales agrees that the claims she initiated would be arbitrated, while Club One is not bound to arbitrate its own claims. But it could also mean that Morales agrees with Club One that all claims, no matter who initiated them, would be arbitrated. (Cf. Higgins, supra, 140 Cal.App.4th at pp. 1253-1254.) Given this ambiguity, the arbitration clause would have to be interpreted against Club One as the drafter, and in view of the policy favoring arbitration, to impose a mutual obligation to arbitrate all claims within its scope. (See Civ. Code, § 3541 [“An interpretation which gives effect is preferred to one which makes void.”]; Civ. Code, § 1643 [if possible without violating the parties’ unambiguous intent, a contract is interpreted so as to make it “lawful, operative, definite, reasonable, and capable of being carried into effect”].) Indeed, Club One represents that this is how its arbitration agreement should be interpreted. With this construction, the clause is not one-sided.
Morales also argues that the arbitration provision compels her to incur expenses beyond what she would incur if her claim were litigated in court. (Armendariz, supra, 24 Cal.4th at pp. 110-111 [“arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court” (italics omitted)]; Higgins, supra, 140 Cal.App.4th at p. 1254 [finding use of AAA rules requiring that costs be equally borne by the parties a contributing factor to substantive unconscionability].) Specifically, Morales argues that under the AAA commercial rules she would likely incur minimum fees of $2,000 to $4,000 plus fees for the cost of the arbitrator and administrative services. Morales provides no evidence in support of her position, or any evidence that her overall litigation costs in arbitration would likely be more than they would be if the matter proceeded in court. To the contrary, one of the reasons that public policy favors arbitration is that it usually provides a more efficient and cost-effective means of resolving disputes.
On balance, because the burden of proof on the unconscionability issue rests on Morales, Morales failed to submit any evidence extrinsic to the membership agreement itself, and the case on which Morales relies is so readily distinguishable from the matter at hand, we conclude that Morales has failed to establish that the arbitration provision is unconscionable.
E. REMAND TO THE TRIAL COURT
Because there was an enforceable written arbitration agreement encompassing the type of wrongdoing alleged by Morales, we will reverse the trial court’s order denying Club One’s motion to compel arbitration. For the guidance of the trial court and the parties upon remand, we discuss one more issue.
Subdivision (c) of section 1281.2 provides that arbitration may not be compelled where “[a] party to the arbitration agreement is also a party to a pending court action . . . with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (See Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 393 [“Section 1281.2(c) addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.”].) Section 1281.2, subdivision (c) may apply here because Morales also sued Ortega, who is not a signatory to the arbitration agreement and has not moved to compel arbitration. (Cf. Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1284-1285; 24 Hour Fitness, supra, 66 Cal.App.4th at p. 1210.)
Section 1281.2 reads in part: “If the court determines that a party to the arbitration is also a party to litigation in a pending court action . . . with a third party as set forth under subdivision (c) herein, the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.”
On remand, therefore, the trial court should consider whether section 1281.2, subdivision (c) applies and, if so, how to proceed pursuant to section 1281.2.
III. DISPOSITION
The order is reversed and the matter remanded to the trial court for further proceedings consistent with this opinion. Appellant shall recover its costs on appeal.
We concur. JONES, P. J., SIMONS, J.