Stoker v. Blue Origin, LLC

Facts

Blue Origin, “a space exploration company that develops rockets, engines, and spacecraft,” hired Craig Stoker in August 2020 as a senior director of program management. (Stoker v. Blue Origin, LLC (2026) ___ Cal.App.5th ___ [B344945] (slip opn. at p. 3).) As a condition of employment, Stoker signed an employee agreement whose section 6 required arbitration of most employment disputes. (Ibid.) The court described the arbitration provisions “in some detail,” and their breadth is central to the decision.

Section 6.1 swept broadly, applying “to any and all claims, disputes, or controversies between the Company and me,” with “Company” defined to include Blue Origin’s “parent, subsidiaries, affiliates, successors or assigns, as well as their current and former officers, directors, employees and agents.” (Stoker, supra, slip opn. at pp. 3–4.) It excluded a handful of claims — unemployment and workers’ compensation benefits, sexual-harassment/assault claims (unless the employee elected arbitration), claims federal law or a benefits plan forbade arbitrating, actions to confirm or vacate an award, and — critically — “claims for equitable relief alleging trade secret violations, trademark infringement, breach of fiduciary duty, breach of proprietary information or confidentiality obligations, and breach of non-solicitation agreements.” (Id. (slip opn. at pp. 4, 19).) Section 6.3 waived class and representative actions “on an individual basis only,” even for excluded claims litigated in court; section 6.4 waived the right to a jury trial, again even for claims that had to be tried in court; and section 7.6 designated the FAA as governing law. (Id. (slip opn. at pp. 4–6).)

Stoker was terminated in October 2022 “after making a series of complaints about the company’s safety practices,” and in November 2023 he sued for retaliation, sex/gender discrimination and harassment, failure to prevent discrimination and harassment, breach of contract, negligent hiring, wrongful termination, and intentional infliction of emotional distress. (Stoker, supra, slip opn. at p. 7.) Blue Origin moved to compel arbitration; Stoker opposed on two grounds — that the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA; 9 U.S.C. § 402) barred arbitration of his gender-harassment dispute, and that the agreement was procedurally and substantively unconscionable. (Id. (slip opn. at pp. 1–2, 7–8).)

Procedural history

The trial court denied the motion to compel on the EFAA ground alone. It found that the complaint — alleging Stoker’s safety concerns were dismissed because coworkers thought he should “‘man up’” — “sufficiently state[d] that [he] suffered discrimination because of his gender,” so the EFAA rendered the agreement unenforceable; the court “did not consider whether it was also unconscionable.” (Stoker v. Blue Origin, LLC (2026) ___ Cal.App.5th ___ [B344945] (slip opn. at pp. 7–8).) Blue Origin appealed the appealable order denying arbitration. (Id. (slip opn. at pp. 8–9); see Code Civ. Proc., § 1294, subd. (a).)

On appeal, Blue Origin argued the EFAA applies only to a “plausibly” pled sexual-harassment claim and that Stoker had not met that bar; Stoker countered that the EFAA requires only a “nonfrivolous” claim and that he satisfied either standard. (Stoker, supra, slip opn. at p. 8.) The Court of Appeal chose not to enter that debate. Because the evidence was undisputed, it exercised its discretion to decide unconscionability “in the first instance” (id. (slip opn. at p. 9 & fn. 1)), and it held: “the arbitration agreement is both substantively and procedurally unconscionable, and its unconscionable elements cannot be severed. … Because we so conclude, we do not consider whether the EFAA applies to this dispute.” (Id. (slip opn. at pp. 2, 8–9).) Review is de novo. (Id. (slip opn. at p. 9), citing Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 493.)

Issue

Whether an adhesive employment arbitration agreement that (1) sweeps in all claims of any kind against the employer and a wide array of affiliated persons, (2) exempts the claims the employer is most likely to bring, (3) waives the right to a jury trial even for claims tried in court, and (4) waives representative/PAGA claims, is unconscionable — and, if so, whether its unconscionable terms may be severed to enforce the balance of the agreement. (Stoker, supra, slip opn. at pp. 2, 14–15, 25–28.)

Holding

Reasoning

The unconscionability framework and the sliding scale. The court restated settled doctrine: unconscionability has procedural and substantive elements, both required but evaluated “‘on “a sliding scale,”’” so that “‘the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required,’” and vice versa. (Stoker v. Blue Origin, LLC (2026) ___ Cal.App.5th ___ [B344945] (slip opn. at pp. 9–11), quoting OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125.) “‘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.’” (Id. (slip opn. at p. 11).)

Procedural unconscionability: adhesion in the employment setting. Because Blue Origin offered no evidence that Stoker could have negotiated the terms — its recruiter told him the agreement contained “‘standard terms,’” that “‘everyone has to sign,’” and did not answer his questions — the court found the agreement a contract of adhesion. (Stoker, supra, slip opn. at pp. 13–14.) That a manager or highly compensated executive signed does not defeat adhesion. (Id. (slip opn. at pp. 12–13), citing Farrar v. Direct Commerce, Inc. (2017) 9 Cal.App.5th 1257 and Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519.) Adhesion alone “generally indicates only a low degree of procedural unconscionability,” but the potential for overreaching in employment “warrants close scrutiny of the contract’s terms.” (Id. (slip opn. at p. 14), quoting Ramirez, supra, 16 Cal.5th at p. 494.)

Substantive unconscionability (1): overbreadth — “all means all.” The agreement was not confined to employment claims; it reached “any and all claims … between the Company and me,” including against affiliates and their current and former employees. (Stoker, supra, slip opn. at pp. 15–17.) Following Cook v. University of Southern California (2024) 102 Cal.App.5th 312, the court reasoned that such breadth would apply “if Stoker were to be injured in an automobile accident with another Blue Origin employee years after his employment ended, or if his house were damaged by debris from a Blue Origin rocket.” (Id. (slip opn. at pp. 16–17).) Rejecting Blue Origin’s argument that “‘including, without limitation, claims arising out of … my employment’” narrowed the scope, the court answered: “Had Blue Origin intended to subject only employment-related claims to arbitration, it would have been a simple matter to say so. … [‘A]ll’ means all.” (Id. (slip opn. at pp. 17–18).)

Substantive unconscionability (2): lack of mutuality. Setting aside the exclusions compelled by law (workers’ compensation, unemployment, EFAA sexual-harassment claims, non-arbitrable federal claims, and award-confirmation actions), the only discretionary exclusion — paragraph (v) — carved out exactly the claims “most likely to be brought by an employer”: trade secrets, trademark, fiduciary duty, proprietary/confidentiality, and non-solicitation. (Stoker, supra, slip opn. at pp. 19–20.) Meanwhile, the claims “typically … initiated by an employee” were funneled into arbitration. That is the classic one-sided design condemned in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 117–121 and Ramirez: “a one-sided carveout for claims only [Blue Origin] would bring.” (Id. (slip opn. at pp. 18–21).)

Substantive unconscionability (3) and (4): the jury and representative waivers. The agreement waived the right to a jury trial even for claims “tried to the court,” and predispute jury-trial waivers are “contrary to California public policy and, thus, unenforceable.” (Stoker, supra, slip opn. at pp. 21–22, citing Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, 950, 961.) And its blanket waiver of “representative” actions swept in representative PAGA claims, which cannot be waived predispute: “‘a predispute categorical waiver of the right to bring a PAGA action is unenforceable.’” (Id. (slip opn. at pp. 22–23), quoting Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1117.) That Stoker pleaded no PAGA claim was “irrelevant,” because unconscionability is measured “‘at the time [the contract] was made.’” (Id. (slip opn. at pp. 22–23 & fn. 6), quoting Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1134.)

Severance: the Ramirez refinement, and why the agreement could not be salvaged. Under Civil Code section 1670.5, subdivision (a), a court facing an unconscionable term may refuse enforcement, sever the term, or limit its application. (Stoker, supra, slip opn. at p. 24.) Armendariz identified two factors against severance — multiple unconscionable provisions (signaling a “systematic effort” to impose an inferior forum) and non-mutuality that leaves “no single provision a court can strike.” (Id. (slip opn. at pp. 24–25).) Ramirez reaffirmed those factors and added that, even if a contract could be cured, a court must ask “‘whether … enforcing the balance of the contract would [not] be in the interests of justice,’” considering whether severance “‘would function to condone an illegal scheme,’” the deterrent effect of each option, and the number of unlawful terms. (Id. (slip opn. at pp. 25–26), quoting Ramirez, supra, 16 Cal.5th at pp. 516–517.) Applying that framework, the court found section 6.1’s overbreadth curable “only by adding language,” which courts may not do (Armendariz, 24 Cal.4th at p. 125), and found that making the agreement mutual would force into arbitration claims the parties never agreed to arbitrate — impermissible “rewrit[ing]” of the contract, as the on-remand decision in Ramirez v. Charter Communications, Inc. (2025) 108 Cal.App.5th 1297, 1306 had held. (Id. (slip opn. at pp. 26–27).) And in any event, with “at least four unconscionable elements,” the defects reflected “‘a systematic effort … to secure a forum that works to the stronger party’s advantage,’” so severance “‘would not further the interests of justice.’” (Id. (slip opn. at pp. 27–28), quoting Ramirez, supra, 16 Cal.5th at pp. 516–517 and Ramirez (2025) 108 Cal.App.5th at p. 1307.) The agreement’s own severance clause did not change the result, because “‘the parties … cannot divest a trial court of its discretion under Civil Code section 1670.5 by including such a … clause.’” (Id. (slip opn. at pp. 26, 28).)

Significance

Stoker is an early, forceful application of the California Supreme Court’s 2024 severance framework in Ramirez v. Charter Communications, and it is a useful companion to two decisions the site already covers — Ramirez itself and its on-remand sequel — as well as to Cook v. University of Southern California, on which the overbreadth analysis turns. The decision’s value lies in how mechanically it ties the number and nature of the defects to the severance outcome: where an agreement contains several unconscionable terms and its overbreadth or non-mutuality can be fixed only by adding or rewriting language, a court will not sever, both because it lacks power to reform and because doing so would reward employers for one-sided drafting. It is a concrete answer to the recurring employer argument that a lone severance clause plus a court’s editing pen can rescue any agreement.

Two boundaries keep the holding honest. First, the court did not decide the EFAA question — it affirmed on unconscionability and “d[id] not consider whether the EFAA applies.” (Stoker, supra, slip opn. at pp. 2, 8–9.) The opinion therefore says nothing authoritative about the disputed EFAA pleading standard (“plausible” versus “nonfrivolous”) that the parties briefed. Second, the court acknowledged that the jury-trial and representative-waiver provisions, standing alone, “arguably … could be severed”; it was the combination of those defects with the incurable overbreadth and non-mutuality of section 6.1 that doomed the agreement. (Id. (slip opn. at pp. 26–28).) A cleaner agreement with a single, severable flaw would not necessarily meet the same fate.

Key quotes

“Had Blue Origin intended to subject only employment-related claims to arbitration, it would have been a simple matter to say so. … Suffice it to say, ‘all’ means all.” (Stoker v. Blue Origin, LLC (2026) ___ Cal.App.5th ___ [B344945] (slip opn. at p. 18).)

“Here, there are at least four unconscionable elements of the arbitration agreement drafted by Blue Origin and imposed on Stoker as a condition of employment. We decline to incentivize employers to draft one-sided arbitration agreements by modifying this agreement ‘“to include the bilateral terms the employer should have included in the first place.”’” (Stoker, supra, slip opn. at p. 28.)

“[W]e decline to permit the severance clause to dictate the outcome when, as here, severance of the unconscionable provisions would not further the interests of justice.” (Stoker, supra, slip opn. at p. 28.)

Read the full opinion (CourtListener) →

Practice pointer

Open questions

By resolving the appeal on unconscionability, the court left the EFAA questions the parties actually litigated unanswered — most notably the standard for when a complaint states a “sexual harassment dispute” under 9 U.S.C. section 402: whether it must be “plausibly” pled, as Blue Origin urged, or only “nonfrivolous,” as Stoker contended. (Stoker v. Blue Origin, LLC (2026) ___ Cal.App.5th ___ [B344945] (slip opn. at pp. 8–9).) That question — increasingly important as EFAA defenses proliferate in California harassment cases — remains open in this district. The opinion also does not decide how the analysis would come out on a narrower agreement: the court flagged that the jury-trial and representative-waiver provisions “arguably … could be severed” on their own (id. (slip opn. at p. 26)), so whether an otherwise-mutual, employment-limited agreement with only one such waiver would survive is left for another case. Finally, because this is a recent published decision, its citability should be independently confirmed before reliance — the ordinary caution below applies with particular force.