Severing Unconscionable Arbitration Provisions: Poublon v. C.H. Robinson Co.

By Joel M. Grossman

Joel M. Grossman is a mediator and arbitrator with JAMS in Los Angeles. He has been selected five times as one of the Top Neutrals in California by the Daily Journal. For more information please contact: www.grossmanmediation.com.

Plaintiffs often respond to motions to compel arbitration by attacking the validity of one or more provisions of the arbitration agreement. This challenge can raise the following questions: first, is one or more provisions of the arbitration agreement unconscionable and therefore unenforceable; and second, if so, can the unenforceable provision be severed by the court, with the balance of the arbitration agreement upheld? These two interrelated questions are the subject of the recent Ninth Circuit case of Poublon v. C.H. Robinson Company.¹ Applying California case law, the court deemed two provisions unenforceable but nevertheless overruled the district court and held that the improper provisions could be severed, and the balance of the arbitration agreement enforced.

As the court explained, a party opposing a motion to compel arbitration must show that the arbitration agreement is both procedurally and substantively unconscionable.² There is a sliding scale, so that the more substantive unconscionability exists, the less procedural unconscionability is required, and vice versa.³ Beginning with procedural unconscionability, the court noted that the arbitration agreement, which was incorporated in an incentive bonus plan, was adhesive, but that a contract of adhesion is not automatically procedurally unconscionable. The plaintiff claimed that the agreement to arbitrate also was procedurally unconscionable because it referenced AAA arbitration rules, but did not attach the rules to the arbitration agreement. An additional procedural objection was unique to the case and is not discussed here.