Case Name:          Shiladitya DasGupta v. Super Micro Computer, Inc., et al.

Case Number:      1-14-CV-265380

This action involves employment harassment and discrimination claims.   As a preliminary matter, plaintiff Shiladitya DasGupta (“Plaintiff”) does not dispute that defendant Super Micro Computer, Inc.’s  (“Defendant”) has established (1) the existence of an agreement to arbitrate between the parties, (2) that the arbitration agreement covers the disputes herein, or (3) that Plaintiff refused to comply with Defendant’s demand to submit the claims to arbitration.  Rather, Plaintiff argues that the employment arbitration agreement at issue is unconscionable.

Plaintiff argues that the arbitration agreement at issue is procedurally unconscionable because it was offered on a “take it or leave it” basis.  Plaintiff argues that the arbitration agreement is substantively unconscionable because it denies the right to appeal the decision of the arbitrator.

“The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.”   (Armendariz v. Foundation Health Psychcare Services [“Armendariz”] (2000) 24 Cal.4th 83, 114 [internal citation and quotation marks omitted].)  “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.”  (Ibid.)  “In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.”  (Ibid.)

Plaintiff does not argue that the arbitration provisions of the employment contract were hidden or unknown.  Rather, Plaintiff’s argument concerning procedural unconscionability is based on language in Defendant’s employee handbook which states that “[a]ll employees are required to agree to arbitrate [d]isputes . . . as a condition of employment and of continued employment . . . ”  (See Exh. C to Decl. of Jenny Chan in Support of Deft.’s Motion to Compel Arbitration.)  Notwithstanding this express policy language, Defendant argues that Plaintiff has not made any evidentiary showing that the arbitration provisions were “set in stone, or incapable of negotiation.”  (See Deft.’s Reply Brief, p. 5:9-10.)  While it is true that Plaintiff did not submit a declaration to the effect that he attempted to and/or was thwarted from negotiating the requirement for arbitration, the fact that Defendant required employment disputes to be arbitrated as a condition of employment shows the adhesive nature of the arbitration agreement—and, thus, an element of procedural unconscionability.

With regard to substantive unconscionability, Plaintiff’s argument that the arbitration agreement fails to provide an opportunity for judicial relief and the right of appeal is contradicted by the express arbitration terms. (See Exh. C to Decl. of Jenny Chan in Support of Deft.’s Motion to Compel Arbitration, p. 4.)  Given the relatively modest showing of procedural unconscionability and the lack of appreciable substantive unconsionability, Plaintiff has not established that the arbitration agreement is void for unconscionability.

For the reasons discussed above, Defendant’s motion to compel arbitration and dismiss, or alternatively, stay action (“Motion to Compel”), is GRANTED.  The action is stayed pending arbitration.

The currently-scheduled case management conference (9-9-14 at 3:45 p.m.) is VACATED.  The matter is re-set for arbitration status review on March 5, 2015 at 10:30 a.m. in Department 5.