However, Remand Was Ordered To See If Severance Could Allow Arbitration To Proceed.
In Foster v. Liberty Military Housing Holdings, LLC, Case No. D085268 (4th Dist., Div. 1 Mar. 4, 2026; posted Mar. 5, 2026) (unpublished), an employment agreement had an arbitration clause with the following fees and costs provisions: “If required by law applicable to the dispute, Company will pay the arbitrator’s fees. If applicable law imposes no such requirement, the arbitrator’s fees will be divided equally between you and Company. “[¶] Unless contrary to applicable law in a specific matter arising hereunder, upon completion of the arbitration, the losing party will pay all costs that have not been paid by either party, and will reimburse the prevailing party for all costs paid by the prevailing party in association with the arbitration. “[¶] Upon completion of the arbitration, the arbitrator may, if lawful, apportion the costs and attorneys’ fees between you and Company in such manner as the arbitrator deems reasonable and appropriate.”
The appellate court found these provisions to be substantively unconscionable, chilling an employee’s decision to pursue claims for fear of exposure to fees and costs, even where such awards can only be ordered where claims are frivolous/without foundation. It also found that the qualifying language in the provisions was insufficient to cure the infirmities, citing Lou v. Ma Laboratories, Inc., 2013 WL 2156316, at *5 (N.D. Cal. May 17, 2013) and Assaad v. American Nat. Ins. Co., 2010 WL 5416841, at *6 (N.D. Cal. Dec. 23, 2010). However, the panel did remand to see if severance of the unconscionable provisions (including others) was a possible remedy to allow arbitration to proceed.