Cook v. University of Southern California
An employment arbitration agreement that forces an employee to arbitrate every claim of any kind — even claims unrelated to the job — against the employer and a broad web of affiliated persons, forever, and without reciprocal obligation, is substantively unconscionable and too pervasively defective to be saved by severance.
Cook v. University of Southern California (2024) 102 Cal.App.5th 312
Arbitration
Unconscionability
Scope · duration · severance
In brief. USC required a staff employee to sign a standalone arbitration agreement that reached “all claims, whether or not arising out of” her employment, against USC and “its related entities … or … their officers, trustees, administrators, employees or agents,” that survived her employment indefinitely, and that gave USC’s affiliates the benefit of arbitration without any reciprocal obligation to her. After she sued for discrimination and harassment, USC moved to compel; the trial court refused, finding the agreement “permeated by unconscionability” and unseverable. The Court of Appeal affirmed: “An arbitration agreement of infinite duration requires an employee to arbitrate all claims against the employer, its agents, affiliates, and employees irrespective of whether they arise from the employment relationship. We hold such an arbitration agreement is unconscionable.” (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 316.) With three independent substantive defects — overbroad scope, infinite duration, and lack of mutuality — the trial court reasonably refused to sever. (Id. at pp. 321–330.)
By Jonathan J. Delshad
Founder & Editor-in-Chief
Facts
Pamela Cook sued the University of Southern California and two coworkers, asserting 18 causes of action “all of which arise from her employment with USC” — disparate treatment based on race, failure to accommodate health-related time-off requests, and retaliatory harassment after she reported the discrimination — and alleging she was “‘actually and/or constructively’ terminated” on August 24, 2021. (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 317.)
As a condition of employment, Cook had signed a standalone arbitration agreement in May 2021. Its scope was sweeping: it committed to arbitration “‘all claims, whether or not arising out of Employee’s University employment, remuneration or termination, that Employee may have against the University or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise; and all claims that the University may have against Employee.’” (Cook, supra, 102 Cal.App.5th at p. 317.) It also provided that it “‘shall survive the termination of Employee’s employment, and may only be revoked or modified in a written document that expressly refers to the “Agreement to Arbitrate Claims” and is signed by the President of the University.’” (Ibid.)
Procedural history
USC moved to compel all of Cook’s claims to arbitration, arguing the agreement was mutual and not one-sided. (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 318.) The trial court denied the motion, finding low procedural unconscionability (an adhesive, condition-of-employment agreement) but high substantive unconscionability on three grounds — broad scope, infinite duration, and lack of mutuality — and concluding the agreement was “‘permeated by unconscionability and cannot, in the interests of justice, be severed.’” (Id. at p. 319.) The court observed that, as written, the agreement would require Cook to arbitrate “‘for the rest of her life’” claims wholly unrelated to USC, and it declined to rewrite the agreement to make it mutual, which would give USC “‘the possible windfall of drafting an’” overreaching agreement and losing nothing by it. (Id. at pp. 318–319.) USC appealed. (Ibid.)
Issue
Whether an adhesive employment arbitration agreement is substantively unconscionable — and, if so, unseverable — where it (1) compels arbitration of all claims “whether or not” related to the employment, against the employer and a broad class of affiliated persons; (2) survives the employment indefinitely, terminable only by a writing signed by the university’s president; and (3) affords those affiliated persons the benefit of arbitration without any reciprocal obligation to the employee. (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 316, 320–330.)
Holding
The agreement is unconscionable and unenforceable, and the denial of arbitration is affirmed. Procedural unconscionability was low (adhesion), so the agreement would be enforced only if substantive unconscionability was high — and it was, for three independent reasons. (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 320–321.) The scope was unconscionably broad because it reached claims “‘whether or not arising out of’” the employment (id. at pp. 321, 324–325); the duration was unconscionable because the agreement “‘survive[d] the termination’” indefinitely and was not terminable at will (id. at pp. 324–326); and the agreement lacked mutuality because it conferred arbitration’s benefit on USC’s “related entities” without any reciprocal obligation to Cook (id. at pp. 326–328). With “three aspects of the agreement … unconscionable,” the trial court did not abuse its discretion in finding the agreement “permeated with unconscionability” and refusing to sever, since curing it “would require substantive rewriting … to contradict its plain language” and would hand USC “a windfall.” (Id. at pp. 328–330.)
Reasoning
The sliding scale, and the time-of-formation rule. The court applied the settled sliding-scale test — where procedural unconscionability is low, “only a high degree of substantive unconscionability would render the agreement unconscionable.” (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 321.) Crucially, it measured unconscionability “‘at the time [the contract is] made’” (Civ. Code, § 1670.5, subd. (a)), not as applied to the plaintiff’s particular claims — so USC could not save the agreement by pointing out that Cook’s actual claims happened to arise from her employment. (Id. at p. 321 & fn. 2.) (Decided weeks before the California Supreme Court’s Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, Cook drew on the then-pending Ramirez line; the high court’s subsequent decision confirmed both the sliding scale and the formation-time focus Cook applied.)
Scope: “whether or not arising out of” employment. The agreement’s plain language required Cook “to arbitrate claims that are unrelated to her employment with USC.” (Cook, supra, 102 Cal.App.5th at p. 321.) USC argued the clause should be read narrowly to avoid “absurd results,” but that argument, the court noted, effectively “concede[d] the scope of the agreement — as written — is unconscionably broad.” (Id. at p. 322.) Courts reject such saving constructions of one-sided terms. (Id. at pp. 321–322, citing Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138 and Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74.) The court distinguished USC’s authorities: Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231 “was concerned exclusively with the enforceability of a delegation clause,” and Roman v. Superior Court (2009) 172 Cal.App.4th 1462 involved a clause “expressly limited to claims arising from the employee’s job application and subsequent employment.” (Id. at pp. 322–323.) Had USC “been concerned about capturing termination or retaliation claims related to Cook’s employment, it simply could have limited the scope … to claims arising out of or relating to her employment,” and it was “difficult to see how it is justified to expect Cook … to give up the right to ever sue a USC employee in court for defamatory statements or other claims … completely unrelated” to her job. (Id. at p. 325.)
Duration: not terminable at will. The agreement “‘survive[d] the termination of Employee’s employment’” and could be revoked only by a writing “‘signed by the President of the University.’” (Cook, supra, 102 Cal.App.5th at pp. 324–325.) USC argued the agreement should be construed as terminable at will after a reasonable time under Reigelsperger v. Siller (2007) 40 Cal.4th 574 — an argument it had forfeited below and that failed on the merits. (Id. at pp. 325–326.) As in Zee Medical Distributor Assn., Inc. v. Zee Medical, Inc. (2000) 80 Cal.App.4th 1, the express survival-and-revocation clause was “an express term of duration,” showing “the parties did not contemplate that the arbitration agreement would be terminable at will.” (Id. at p. 326.) The court therefore held the indefinite duration substantively unconscionable. (Ibid.)
Mutuality: a one-sided benefit for USC’s affiliates. The agreement required Cook to arbitrate claims against USC’s “related entities” and their officers, employees, and agents, but did not obligate those affiliates to arbitrate their claims against Cook. (Cook, supra, 102 Cal.App.5th at pp. 326–327.) The vice was not that third parties received an ancillary benefit, but that the agreement “provides benefits to broad swaths of third party beneficiaries only in favor of USC without any showing of justification for this one-sided treatment.” (Id. at pp. 326–327.) USC’s invocation of Armendariz’s “‘modicum of bilaterality’” failed, because Cook, to compel a USC affiliate into arbitration, “would have to show they actually accepted a benefit under the agreement” — a burden “unlikely” to be met unless the affiliate first invoked the agreement itself. (Id. at pp. 327–328.) Because “‘unconscionability turns not only on a “one-sided” result, but also on an absence of “justification” for it,’” and USC offered none, the lack of mutuality was substantively unconscionable. (Id. at p. 328, quoting Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 117–118.)
Severance: three defects, a permeated purpose, and a windfall avoided. Reviewing for abuse of discretion, the court held severance properly denied. (Cook, supra, 102 Cal.App.5th at pp. 328–330.) An unconscionable term may be severed “‘unless the agreement is permeated by an unlawful purpose, or severance would require a court to augment the agreement with additional terms,’” and severance may be refused where there are multiple unconscionable provisions and “‘no single provision a court can strike.’” (Id. at pp. 328–329, quoting Penilla v. Westmont Corp. (2016) 3 Cal.App.5th 205, 223 and Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th 713, 738.) The trial court had expressly weighed the agreement’s “central purpose,” finding it “‘tainted with unconscionability’” because the purpose was to “‘arbitrate all possible disputes … for an indefinite period of time,’” with only USC able to compel arbitration of affiliate claims. (Id. at pp. 329–330.) Curing the defects “would require substantive rewriting … to contradict its plain language,” and would give USC “a windfall.” (Id. at p. 330.) “Such multiple defects indicate a systematic effort to impose arbitration on an employee … as an inferior forum that works to the employer’s advantage.” (Ibid., quoting Armendariz, supra, 24 Cal.4th at p. 124.)
Significance
Cook is now the leading Court of Appeal authority on two distinct substantive-unconscionability vices in employment arbitration agreements: an overbroad scope that reaches beyond the employment relationship, and an infinite duration that binds the employee for life. Its central move is doctrinally important — unconscionability is judged at the time of contracting, so an employer cannot rehabilitate an agreement that is one-sided or overbroad on its face by observing that the plaintiff’s actual claims happen to fall within a permissible core. The decision quickly became a fixture of the post-Armendariz landscape: the Supreme Court’s Ramirez confirmed the framework Cook applied, and the recent decision in Stoker v. Blue Origin, LLC (2026) built its overbreadth analysis directly on Cook, using the same vivid illustrations — that such a clause would reach a car accident or an unrelated tort years after the employment ended.
The opinion’s limits are worth stating precisely. Cook does not hold that any survival clause or any reference to affiliates is fatal; the vice was the combination of a scope untethered from the employment, an indefinite term terminable only by the university president, and a benefit to affiliates with no reciprocity — none justified. And its severance holding is a discretion holding: the Court of Appeal affirmed because the trial court “could have reasonably concluded” the agreement was permeated by unconscionability, not because severance is categorically unavailable whenever multiple defects exist. The practical lesson for both sides is that the number and character of the defects, and the absence of any single strikeable provision, drive the severance outcome.
Key quotes
“An arbitration agreement of infinite duration requires an employee to arbitrate all claims against the employer, its agents, affiliates, and employees irrespective of whether they arise from the employment relationship. We hold such an arbitration agreement is unconscionable.” (Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 316.)
“It is difficult to see how it is justified to expect Cook — as a condition of her employment at the university — to give up the right to ever sue a USC employee in court for defamatory statements or other claims that are completely unrelated to Cook’s employment.” (Cook, supra, 102 Cal.App.5th at p. 325.)
“Such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer’s advantage.” (Cook, supra, 102 Cal.App.5th at p. 330, quoting Armendariz, supra, 24 Cal.4th at p. 124.)
Practice pointer
For plaintiff-side counsel opposing a motion to compel, Cook supplies two facial attacks that do not depend on how the client’s particular claims arose. First, scrutinize the scope: if the agreement reaches claims “whether or not” related to the employment, or against a broad class of affiliates, argue it is substantively unconscionable as written — and press the point that unconscionability is judged at formation, so the employer cannot narrow it after the fact or rely on the coincidence that your client’s claims are employment-related. Second, examine duration and revocation: a clause that survives termination and can be revoked only by the employer’s executive (here, the university president) supports an infinite-duration argument, and resist any “terminable at will after a reasonable time” gloss where the agreement contains an express survival term. Third, probe mutuality as to affiliates: a one-sided benefit to the employer’s “related entities,” with no reciprocal obligation and no stated justification, is a classic Armendariz defect. Stack the defects, because on severance the trial court’s discretion is reviewed deferentially and “multiple defects” with “no single provision a court can strike” support a refusal to sever and enforce the remainder. For defense counsel, the drafting lesson is direct: limit the scope to claims arising out of or relating to the employment, avoid perpetual-survival language, and make affiliate coverage genuinely reciprocal — or risk losing the entire agreement rather than a single clause.
Open questions
Because it affirmed on substantive unconscionability and the permeation finding, Cook did not need to decide how any one defect would fare in isolation — whether, for example, an otherwise-limited agreement with only a survival clause, or only an affiliate-coverage clause, would be unconscionable standing alone. The decision also leaves the severance question where Armendariz and the abuse-of-discretion standard leave it: Cook holds that a trial court “could have reasonably concluded” this agreement was unseverable, not that severance must always be denied when multiple defects appear, so the outer boundary between a curable and an incurable agreement remains fact-specific. Finally, Cook predates the Supreme Court’s Ramirez and its on-remand sequel; while later decisions such as Stoker v. Blue Origin have folded Cook’s overbreadth analysis into the Ramirez framework, the precise weight courts will give scope and duration defects within Ramirez’s “interests of justice” severance inquiry will continue to develop.