Background
Robert Cocom worked as an airport janitor for ABM Aviation, Inc. from August 2020 to June 2024. Upon hiring, he signed a three-page Mutual Arbitration Agreement (MAA) requiring arbitration of all “Covered Claims” — defined as claims arising out of or relating to his hiring, employment, compensation, or separation — and including a class and representative action waiver. In August 2024, Cocom filed a putative wage and hour class action in California state court. ABM removed the case to the Central District of California and moved to compel arbitration.
The district court denied ABM’s motion, finding the MAA both procedurally and substantively unconscionable. Relying heavily on Cook v. University of Southern California, 321 Cal. Rptr. 3d 336 (Cal. Ct. App. 2024), the district court read the MAA’s “including but not limited to” language as rendering its scope unlimited — covering any conceivable claim, not just employment-related ones. From that premise, the court found the MAA’s duration indefinitely long and its third-party provisions lacking mutuality, and also found the public injunctive relief waiver unlawful. Concluding that the agreement was so thoroughly tainted with illegality that severance was inappropriate, the district court refused to enforce the MAA in its entirety. ABM appealed.
The Ninth Circuit reviewed the denial of the motion to compel arbitration de novo and the severability ruling for abuse of discretion.
The Court’s Holding
The Ninth Circuit reversed, holding that the MAA’s challenged provisions are distinguishable from those found unconscionable in Cook and that the district court erred by mechanically applying Cook’s analysis. Applying the doctrine of ejusdem generis, the panel concluded that the MAA’s general terms — “all disputes” and “any claim” — are narrowed by the surrounding enumeration of employment-specific claims such as wages, overtime, meal and rest breaks, and wrongful termination. Unlike the agreement in Cook, the MAA contains no language explicitly covering claims unrelated to employment, and its incorporation of the AAA Employment Arbitration Rules further confirms its employment-limited scope. Because the MAA is limited to employment-related disputes, the court held its duration is not indefinite (employment claims stop accruing once the employment relationship ends) and its third-party provisions do not create an unconscionable lack of mutuality.
The panel further held that the MAA’s bar on using arbitration awards for preclusive or precedential effect is not unconscionable because it merely restates California’s default rule on nonmutual collateral estoppel in private arbitrations. As for the PAGA representative-action waiver and the public injunctive relief waiver, the court declined to decide whether either was substantively unconscionable, holding instead that both would be severable under California law in any event: the central purpose of the MAA is to arbitrate employment claims, the waivers are collateral to that purpose, severance would require no augmentation of the agreement’s terms, and the MAA’s express severability clause reflects the parties’ intent to preserve the agreement where possible.
Because Cocom failed to establish substantive unconscionability as to the MAA’s core provisions, and any remaining potentially unconscionable provisions were severable, his unconscionability defense failed in its entirety. The court did not reach the question of procedural unconscionability, as substantive unconscionability is a necessary element of the defense and its absence was dispositive.
Key Takeaways
- An arbitration agreement that covers only employment-related disputes is distinguishable from Cook v. USC: the doctrine of ejusdem generis can limit facially broad “any claim” language when the enumerated examples are all employment-specific.
- An employment-limited scope inherently constrains an arbitration agreement’s duration and mutuality concerns — claims stop accruing at the end of the employment relationship, and third-party enforcement rights are limited to employment-related matters.
- Restating California’s default rule on the non-preclusive effect of private arbitration awards does not render an arbitration agreement unconscionable.
- PAGA representative-action waivers and public injunctive relief waivers, even if unconscionable, are collateral to an employment arbitration agreement’s core purpose and are properly severable rather than grounds to void the entire agreement.
Why It Matters
This decision provides important guidance for employers drafting arbitration agreements in California: an agreement carefully scoped to employment-related disputes — and supported by employment-specific arbitration rules — is far less vulnerable to unconscionability challenges than a broadly worded agreement covering any conceivable claim. The panel’s application of ejusdem generis and its reliance on Ayala-Ventura v. Superior Court signal that California’s Cook line of cases, while significant, does not categorically bar enforcement of employment arbitration agreements.
For litigants and practitioners, the decision also reinforces that California’s unconscionability defense has a high bar when an agreement’s scope is genuinely limited: courts should use contract interpretation principles to favor legality over invalidation, and express severability clauses carry real weight when evaluating whether the entire agreement must fall. The ruling may make it harder for plaintiffs in the Ninth Circuit to defeat employment arbitration agreements in wage and hour class actions by invoking Cook where the agreement at issue does not cover claims unrelated to employment.