Bakersfield Coll. v. Cal. Cmty. Coll. Athletic Ass'n

41 Cal.App.5th 753

254 Cal.Rptr.3d 470

BAKERSFIELD COLLEGE et al., Plaintiffs and Appellants,

v.CALIFORNIA COMMUNITY COLLEGE ATHLETIC ASSOCIATION et al., Defendants and Respondents.

C085099

Court of Appeal, Third District, California.

Filed October 31, 2019

Foster Employment Law and Maloney Employment Law and C. Christine Maloney, Oakland, for Plaintiffs and Appellants.

Matheny Sears Linkert & Jaime and Ronald E. Enabnit, Sacramento, for Defendant and Respondent California Community College Athletic Association.

Clousespaniac Attorneys and Richard R. Clouse and Erin A. Halas, Rancho Cucamonga, for Defendant and Respondent Southern California Football Association.

Robie, Acting P. J.

In this case, we are asked to determine the enforceability of an arbitration agreement under the law of unconscionability.

"Unconscionability consists of both procedural and substantive elements. [Citation.] Procedural unconscionability ‘addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power.’ [Citation.] ‘Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.’ [Citation.] Both elements must be present for a court to refuse to enforce an arbitration agreement. [Citation.] However, the elements do not need to be present in the same degree and are evaluated on a ‘ " ‘sliding scale.’ " ’ [Citation.] ‘ " ‘[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ " ’ [Citation.] ‘The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.’ " ( Magno v. The College Network, Inc. (2016) 1 Cal.App.5th 277, 284-285, 204 Cal.Rptr.3d 829.)

Defendant California Community College Athletic Association (Athletic Association) administers intercollegiate athletics for the California community college system. The parties agree that, as a condition of participating in the intercollegiate football league, plaintiff Bakersfield College (the College) agreed to be bound by the Athletic Association's bylaws and constitution, including a provision requiring the College to resolve any sanctions and penalty disputes by binding arbitration. Instead of proceeding through binding arbitration to challenge the sanctions and penalty decisions issued by the Athletic Association and codefendant the Southern California Football Association (the Football Association) (collectively defendants) against the College, the College and coplaintiffs Jeffrey Chudy¹ and the Kern Community College District² (collectively plaintiffs) elected to file civil litigation. Plaintiffs argued they were excused from pursuing binding arbitration because the arbitration provision was unconscionable.

The trial court said the "issue [wa]s close," but ultimately, after severing the one-sided attorney fees subsections, found the arbitration provision was not unconscionable. The trial court, therefore, found plaintiffs' litigation was barred by the failure to exhaust their administrative remedies.

We agree with the trial court that this was a close case but conclude the arbitration provision was unconscionable. Accordingly, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

IThe Contract

The Football Association is a football conference organized under the Athletic Association's constitution and bylaws to regulate intercollegiate football competition among 37 California community colleges within its geographic boundaries. Pursuant to the Athletic Association's constitution, the Football Association, as a conference, or its conference commissioner may impose sanctions on the Athletic Association's member colleges. The College is one such member college.

Each member college is required to follow and is subject to the Athletic Association's constitution and bylaws. As is pertinent here, article 7 of the Athletic Association's constitution sets forth an appeals process. The appeals process applies to an appeal defined as "a written request by the college president requesting a review of an inferior body's interpretation of the rules and/or the enforcement of a penalty." The process starts with a ruling by a conference commissioner, who is "responsible for the first level interpretation, ruling, and enforcement of th[e] Constitution and Bylaws ." "The conference commissioner shall interpret and rule on the provisions of the Constitution and Bylaws for colleges, students, college administrators, and employees of member schools in his/her conference."

An appeal from a conference commissioner's ruling flows as follows: first to the conference appeals board (here, the Football Association), then to the Athletic Association appeals board, then to the Athletic Association board, and finally to binding arbitration before a three-person panel. The appeals are generally decided based on the original materials submitted at the first level of appeal and no additional materials may be provided at the next level of appeal.

The binding arbitration provision provides a panel shall be established to "include approximately twelve individuals who are familiar with the California Community Colleges, their procedures, their intercollegiate athletic programs and the [Athletic Association]." The panel members are appointed for three-year terms in a rotating manner.

The panel members shall be nominated by the Athletic Association's executive and the executive director of the Community College League of California (the League). Member colleges may also nominate a person to serve on the panel and "shall have a reasonable voice in the selection of the persons appointed to the Panel." The Athletic Association's executive director and the League's executive director "shall make the final decision regarding appointment."

When a college wishes to pursue binding arbitration, it must submit the arbitration request in writing to the Athletic Association's executive director within five working days of the Athletic Association board's denial of an appeal. At the same time, the college must give written notice of the "facts and issues to be determined" in arbitration. A party to the arbitration has the right to be represented by an attorney at any proceeding or hearing; "[h]owever, to minimize the expense and to encourage cooperation and collegiality, it is desired that the services of legal counsel not be over-utilized."

Within five working days after receiving a request for arbitration, the Athletic Association's executive director shall present a list of panel members to the Athletic Association board and the president of the appealing college. The Athletic Association board and the president of the appealing college shall thereafter agree to three panelists to preside over the arbitration within five working days. If the appealing college does not timely participate, the Athletic Association board shall appoint the panelists.

The selected arbitration panel shall meet to hear the appeal no later than 18 working days after the panel selects a chair. "The colleges agree that they have waived the right to a testimonial hearing, to present evidence, and to cross-examine witnesses at the arbitration hearing." The arbitration panel has sole discretion to determine whether to hold a hearing, call for testimony, or receive evidence.

The arbitration panel's decision "shall be final and binding on the parties. There will be no further appeals and no court proceeding." "[I]f an appealing college does not prevail in its arbitration, the three (3)-member Arbitration Panel shall be authorized to award costs and fees against the college in favor of the [Athletic Association]." Further, "[i]f a college does not exhaust its rights under the stated appellate process, including binding arbitration, and instead commences litigation, it shall be liable for [the Athletic Association's] fees and costs of that litigation, unless the college is the prevailing party."

IIThe Litigation

In May 2013, defendants sanctioned and penalized the College for several violations of the Athletic Association's bylaws because the College had provided football players with meals and access to work and housing opportunities not available to other students. The College filed an appeal of the decisions and proceeded through the first three steps of the appeals process. Its appeal was denied by the Football Association appeals board, the Athletic Association appeals board, and the Athletic Association board.

After its appeal was denied by the Athletic Association appeals board and before it appealed to the Athletic Association board, the College requested a copy of the 12-member arbitration panel master list. The Athletic Association denied the request because it does not disclose the list to any member college until there is a demand for arbitration.

The College did not pursue binding arbitration and plaintiffs instead filed a petition for writ of mandate and complaint for breach of contract, violation of the fair procedure doctrine, and injunctive relief.

Plaintiffs thereafter filed a motion for judgment on the writ of mandate. In their opposition, defendants argued, among other things, that plaintiffs had failed to exhaust their administrative remedies by foregoing the binding arbitration process. Plaintiffs maintained they were excused from proceeding through binding arbitration because the arbitration provision was unconscionable. The trial court disagreed; plaintiffs appeal.

DISCUSSION

"The determination of arbitrability is a legal question subject to de novo review. [Citation.] We will uphold the trial court's resolution of disputed facts if supported by substantial evidence. [Citation.] Where, however, there is no disputed extrinsic evidence considered by the trial court,...