Court of Appeal addresses conscionability of arbitration agreements incorporating JAMS rules: Vo v. Technology Credit Union

In Vo v. Technology Credit Union,           Cal.App.5th           (Feb. 6, 2025), the Court of Appeal (Sixth Appellate District) held that an arbitration agreement incorporating JAMS rules was not substantively unconscionable because Rule 17(b) authorizes non-party discovery.

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Plaintiff contracted COVID-19 while employed at Defendant and developed long-term health issues. Defendant terminated Plaintiff, and he sued alleging various FEHA causes of action. Defendant moved to compel arbitration, but the trial court denied the motion, finding the arbitration agreement impermissibly failed to incorporate a California Arbitration Act provision allowing third-party discovery. Defendant appealed.

The Court of Appeal reversed the denial of the motion to compel. While the court upheld the denial of Defendant’s request for judicial notice of the JAMS rules incorporated into the agreement, it took judicial notice of those rules itself. Following Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, the court found a minimal degree of procedural unconscionability but no substantive unconscionability,  because Rule 17(b) of the JAMS rules “provide[s] the arbitrator the authority to make available additional nonparty discovery”. Notably, the court disapproved of the contrary holding in Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360 that “the terms of Rule 17 did not authorize discovery from nonparties.” The court reasoned that Aixtron‘s holding was based on an impermissible assumption that third parties might refuse to comply with an arbitrator’s discovery order, an assumption Ramirez precludes.

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