Appellate arbitral review provision held substantively unconscionable, but severable

On February 4, 2021, a state court of appeals panel held in Alvarez v. Altamed Health Services Corp. that an arbitration agreement's appellate arbitral review provision was substantively unconscionable because it favored the employer. While the provision in question provided that either party could seek appellate review of an initial arbitration award by a second arbitrator, in practice, only the employer was likely do so, thus "unilaterally adding costs and time to the arbitration proceeding by seeking this review and thereby maximizing the employer's status as the better resourced party."

However, the court held the appellate arbitral review provision severable as the employee failed to establish any other instance of substantive unconscionability. The court rejected the employee's arguments that the employer's failure to provide a Spanish translation of the arbitration agreement (where the employee preferred, but did not require, the translation) and failure to attach the AAA rules (absent a challenge to a specific AAA rule) were substantively unconscionable. Consequently, the court held the arbitration agreement to be enforceable, reversing the trial court's order. So, in addition to providing guidance on appellate arbitral review provisions, this is a nice case to keep in your back pocket when an employee throws everything but the kitchen sink in opposition to your motion to compel arbitration.