An appellate court in California held that an employment arbitration agreement that invokes second-level arbitral appellate review does not violate the requirements for judicial review set forth in Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000), as long as both levels of arbitration produce a reasoned award and there is no money threshold that determines the right to second-level appellate review.

In Campos v. Champion Chevrolet, Inc., No. B202202, 2008 WL 2814629 (Cal. Ct. App. July 23, 2008), Campos began working for Champion and signed an arbitration agreement that required binding arbitration of all disputes arising out of the employment context. Campos later sued Champion for harassment and discrimination.

Champion moved to compel arbitration pursuant to the arbitration agreement. Campos opposed, arguing that the agreement failed to meet the minimum requirements set forth in Armendariz and was procedurally and substantively unconscionable. The trial court denied the motion to compel arbitration, and Champion appealed.

On appeal, the Court reversed the trial court and compelled arbitration, holding that the arbitration agreement met the minimum requirements of Armendariz. Armendariz held that one of the minimum requirements of a valid arbitration agreement is that its provisions require a written decision that will permit a limited form of judicial review. The Court then held that the "arbitration agreement in this case clearly requires both the arbitrator and the appellate arbitrator to issue written decisions, in conformance with the requirements of Armendariz, allowing for judicial review of the decision in the limited manner provided by law."

Furthermore, the Court held that the presence of a second level of review in the arbitration agreement does not violate Armendariz as long as "there is no dollar amount threshold for invoking it, which would make it almost exclusively an employer remedy."

Campos also argued that the arbitration agreement was substantively unconscionable because its appeal provisions favored the employer. The Court rejected the argument, holding that "[t]he agreement allows either party to appeal an unfavorable award to a second arbitrator. The appeal provision is not substantively unconscionable; it is entirely bilateral and benefits both parties to the agreement." Consequently, the Court reversed the trial court and granted Champion's motion to compel arbitration.