The California Arbitration Landscape After Cook
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Arbitration agreements remain a cornerstone of employers’ efforts to manage litigation risk, offering a private forum, a faster resolution timeline, and, critically, protection from group-wide liability. That protection, however, is only as good as an agreement’s enforceability.
At Grove, we monitor this body of law closely because the standards courts apply—and the specific contract language that satisfies those standards—continue to evolve. Just so, in 2024, California’s Second Appellate District in Cook v. USC, 102 Cal. App. 5th 312 (2024), reh'g denied (June 13, 2024), declined to enforce an arbitration agreement between the University of Southern California and one of its employees, finding that it was impermissibly broad in scope and duration.
The court deciding Cook identified three main problems with the arbitration agreement at issue:
- The agreement was overly broad, applying to “all claims, whether or not arising out of Employee’s University employment,” including, for example, “claims for personal, physical, or emotional injury, or for any tort.”
- It was non-mutual, binding the employee to arbitrate not only against the University but against “any of its related entities . . . or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise.”
- It was indefinite, continuing after the employee’s separation and revocable only by a writing signed by USC’s president.
Together, these features rendered the agreement substantively unconscionable, indefinitely requiring an employee-signatory to arbitrate all claims against USC, its agents, and its affiliates, and irrespective of whether the claims were related to the employment relationship. The court illustrated its point with a hypothetical: if enforced, the agreement would have allowed USC to compel arbitration of a claim arising from a botched surgery at a USC hospital fifteen years after an employee stopped working for the University.
Courts are still grappling with Cook’s reach, but this year, two decisions from California’s Courts of Appeal and one from the Ninth Circuit have started to clarify what matters most: how closely the language used ties to the employment relationship and the specific circumstances surrounding that relationship.
In February 2026, California’s Fifth Appellate District confronted arbitration language almost identical to Cook’s but came out the other way, enforcing the agreement. The agreement in Ayala-Ventura v. Superior Court required arbitration of “all claims . . . whether or not arising out of [the employee]’s employment or the termination of employment.” 119 Cal. App. 5th 241 (2026), review denied (June 17, 2026). But unlike in Cook, the agreement did not include a list of claims unrelated to the employment relationship. Invoking the rule that ambiguous contract language should be read to make the contract valid rather than void, the Ayala-Ventura court construed the agreement as reaching only employment-related claims. Moreover, the court added that even under a broader reading, the outcome might not change: unlike USC’s sprawling, decades-long reach in Cook, the employer in Ayala-Ventura provided only commercial janitorial services, making it “speculative at best” that unrelated claims would ever arise.
Four months later, though, California’s Third Appellate District confronted comparable language but affirmed the trial court’s decision not to enforce the agreement. Phan v. Knight Sacramento SU Inc,. 121 Cal. App. 5th 641 (2026). The Phan court's substantive unconscionability findings tracked Cook closely. First, it found the agreement pushed well beyond the employment relationship, requiring arbitration of “any and all claims which arise out of the employment context or any other interaction/relationship we had, have or may have in the future.” Second, it found the agreement was non-mutual, binding Phan to arbitrate claims against a long list of third-party beneficiaries without requiring those parties to arbitrate their claims against her. But even though the court affirmed the trial court in full (including the decision not to sever unconscionable terms), it also noted that Cook “neither expressly nor impliedly suggested that all broadly worded arbitration agreements are per se unconscionable.”
This clarification proved relevant just weeks later. In Cocom v. ABM Aviation, the Ninth Circuit reversed a district court that had relied on Cook to deny arbitration. 179 F.4th 1168 (9th Cir. 2026). The agreement in Cocom covered “any claim . . . including but not limited to claims arising and/or relating in any way to my hiring, my employment or association with, my compensation, and/or the end of my employment with, the Company.” The court applied a familiar principle of contract interpretation that general language (“any claim”) should be read in light of the specific examples that immediately follow it. Because every example on the list tied back to the employment relationship (unlike in Cook), the court held that they narrowed the general “any claim” language to reach only employment-related disputes. This distinction proved determinative. Because the agreement’s scope in Cocom was confined to the employment relationship, mutuality and duration concerns fell away too: employment-related claims naturally stop accruing when employment ends, removing the decades-later, unrelated-dispute risk that troubled the courts in Cook and Phan.
Where do these decisions leave us?
Three courts reached different results within months of each other, despite strikingly similar contract language. As the Ayala-Ventura court put it, “we reiterate the importance of context in determining unconscionability.” But despite the absence of any ‘magic language,’ a common thread runs through these cases: the more tightly an agreement's scope ties to the employment relationship, the more likely a court is to enforce it. Given this rapidly shifting interpretive landscape, and the fact that an unenforceable agreement forfeits all the protection arbitration is meant to provide, now is an essential time to review your arbitration agreements and related onboarding processes.