Carmax Auto Superstores California LLC v. Hernandez (94 F. Supp. 3d 1078, 2015)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND GRANTING PLAINTIFF’S MOTION TO COMPEL ARBITRATION

MARGARET M. MORROW, UNITED STATES DISTRICT JUDGE

On November 12, 2014, CarMax Auto Superstores California LLC (“CarMax”) filed a petition for an order compelling arbitration under § 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4; it also sought a stay of state court proceedings arising out of its dispute with Rosella Michelle Hernandez. Hernandez filed a motion to dismiss CarMax’s petition for lack of subject matter jurisdiction on December 3, 2014, and on December 30, 2014, Car-Max filed a motion to compel arbitration and stay the state court proceedings. Both motions are opposed.

I. FACTUAL BACKGROUND

A. Facts Alleged in the Petition

CarMax alleges that, beginning in 2002, it employed Hernandez as a Management Assistant. It asserts that, at the time Hernandez applied for employment at Car-Max, she executed a Dispute Resolution Agreement (“DRA”). CarMax attaches a copy of the DRA executed by Hernandez to its petition. The DRA states, in relevant part:

“[B]oth CarMax and I agree to settle any and all previously unasserted claims, disputes, or controversies arising out or relating to my application or candidacy for employment, employment, and/or cessation of employment with CarMax, exclusively by final and binding arbitration before a neutral Arbitrator.”

The DRA requires the applicant to “file a claim for arbitration within one (1)' year of the day on which [she] know[s] or, through reasonable diligence, should have known of the facts giving rise to [the] claim.” It requires that the arbitration be conducted in accordance with CarMax’s Dispute Resolution Rules and Procedures (“DRRP”).

Hernandez was purportedly given a copy of the DRRP before signing the DRA. At the time she executed the DRA, the DRRP in effect was dated January 2001; since that time, CarMax has purportedly made various changes to the DRRP, most recently in 2011. CarMax attaches copies of the 2001 and 2011 DRRPs to its petition.

On September 25, 2014, Hernandez sued CarMax and Alan Hanna, one of her supervisors, in Orange Superior Court. Her complaint pleads fifteen claims: (1) discrimination in violation of California Government Code § 12940, et seq/, (2) harassment in violation of California Government Code § 12940, et seq.; (3) retaliation in violation of California Government Code § 12940, et seq.; (4) failure to prevent discrimination, harassment, and retaliation in violation of California Government Code § 12940(k); (5) failure to provide reasonable accommodations in violation of California Government Code § 12940, et seq.; (6) failure to engage in a good faith interactive process in violation of California Government Code § 12940, et seq.; (7) violation of the Ralph Civil Rights Act, California Civil Code § 51.7; (8) violation of the Tom Bane Civil Rights Act, California Civil Code § 52.1; (9) gender violence in violation of California Civil Code § 52.4; (10) battery; (11) assault; (12) sexual battery in violation of California Civil Code § 1708.5; (13) declaratory relief; (14) wrongful termination in violation of public policy; and (15) intentional infliction of emotional distress.

CarMax alleges that, prior to filing the state court complaint, Hernandez’s attorneys told her in writing of the DRA and her obligation to submit the claims in the complaint to binding arbitration. Notwithstanding such notice, Hernandez purportedly refused to submit her claims to arbitration and directed her attorneys to file the state court action.

B. Plaintiff’s Request for Judicial Notice

CarMax requests that the court take judicial notice of a docket entry in Hernandez’s state court action in considering its opposition to Hernandez’s motion to dismiss the petition. The request is unopposed.

A court can consider evidence in deciding a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, including documents that can be judicially noticed. See, e.g., Villegas v. United States, 963 F.Supp.2d 1145, 1158 (E.D.Wash.2013) (“A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction permits a court to consider ‘affidavits or any other evidence properly before the court,’ even material extrinsic to the pleadings,” quoting Association of Am. Medical Colleges v. United States, 217 F.3d 770, 778 (9th Cir.2000)); Ellis v. J.P. Morgan Chase & Co., 950 F.Supp.2d 1062, 1072-73 (N.D.Cal.2013) (taking judicial notice of various documents in deciding defendant’s Rule 12(b)(1) motion to dismiss); Smith v. Kim, No. C 05-01439 JK, 2006 WL 1320483, *2-3 (N.D.Cal. May 15, 2006) (same). Thus, in deciding Hernandez’s motion to dismiss, the court can consider material that can be judicially noticed under Rule 201 of the Federal Rules of Evidence. Fed. R. Evid. 201. Under Rule 201, the court can take judicial notice of “[ojfficial acts of legislative, executive, and judicial departments of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably undisputable accuracy.”

As noted, CarMax requests that the court take notice of an order issued in the parallel state court proceeding. “Under Federal Rule of Evidence 201, the [cjourt may take judicial notice of matters of public record if the facts are not ‘subject to a reasonable dispute.’ ” Olds v. Metlife Home Loans, No. SACV 12-55 JVS (RNBx), 2012 WL 10420298, *1 n. 1 (C.D.Cal. Mar. 19, 2012) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.2001)). Court orders and filings are proper subjects of judicial notice. See, e.g., United States v. Black, 482 F.3d 1035, 1041 (9th Cir.2007) (noting that a court “may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue”); Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir.2006) (taking judicial notice of pleadings, memo-randa, and other court filings); Asdar Group v. Pillsbury, Madison & Sutro, 99 F.3d 289, 290 n. 1 (9th Cir.1996) (court may take judicial notice of pleadings and court orders in related proceedings); United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992) (a court may take judicial notice “of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relationship to the matters at issue”). Because the document is a proper subject of judicial notice, the court grants CarMax’s request, and will consider it in deciding Hernandez’s motion.

II. DISCUSSION

A. Defendant’s Motion to Dismiss the Petition

1. Defendant’s Alleged Failure to Meet and Confer

CarMax argues that Hernandez’s motion should be denied because she failed to comply with Local Rule 7-3. Local Rule 7-3 provides, in relevant part:

“In all cases ..., counsel contemplating the filing of any motion shall first contact opposing counsel to discuss thoroughly, preferably in person, the substance of the contemplated motion and any potential resolution. The conference shall take place at least seven (7) days prior to the filing of the motion. If the parties are unable to reach a resolution which eliminates the necessity for a hearing, counsel for the moving party shall include in the notice of motion a statement to the following effect: ‘This motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on (date).’ ” CA CD L.R. 7-3.

When a party fails to comply with Local Rule 7-3, the court can, in its discretion, refuse to consider the motion. See, e.g., Singer v. Live Nation Worldwide, Inc., No. SACV 11-0427 DOC (MLGx), 2012 WL 123146, *2 (C.D.Cal. Jan. 13, 2012) (denying a motion for summary judgment because the moving party failed to comply with Local Rule 7-3); Alcatel-Lucent USA, Inc. v. Dugdale Communications, Inc., No. CV 09-2140 PSG (JCx), 2009 WL 3346784, *4 (C.D.Cal. Oct. 13, 2009) (“The meet and confer requirements of Local Rule 7-3 are in place for a reason, and counsel is warned that nothing short of strict compliance with the local rules will be expected in this Court. Thus, the motion is ... denied for failure to comply with Local Rule 7-3”).

In her reply, Hernandez concedes that she did not meet and confer with CarMax prior to filing the motion to dismiss. She asserts, however, that “the parties subsequently met and conferred, and [she] filed an amended notice [of motion] following” that meeting. This does not constitute compliance with Local Rule 7-3. First, despite Hernandez’s representation that she “filed an amended notice following the meet and confer,” no such notice has been filed. More fundamentally, an after-the-fact conference does not satisfy Rule 7-3. Counsel must confer before the motion is filed so that the parties can determine whether it is possible to come to an agreement that obviates the need for the motion; conferences that take place after the motion has been filed cannot serve this purpose. Accordingly, even if Hernandez met and conferred with CarMax after filing her motion—of which there is no evidence—the court would conclude that she had not complied with the Local Rules.

In its discretion, therefore, the court could deny Hernandez’s motion. Failure to comply with the Local Rules does not automatically require the denial of a party’s motion, however, particularly where the non-moving party has suffered no apparent prejudice as a result of the failure to comply. See ECASH Techs., Inc. v. Guagliardo, 35 Fed.Appx. 498, 500 (9th Cir. May 13, 2002) (Unpub.Disp.) (“The Central District of California’s local rules do not require dismissal of appellee’s motions for failure to satisfy the meet-and-confer requirements” (citations omitted)); Brodie v. Board of Trustees of California State University, No. CV 12-07690 DDP (AGRx), 2013 WL 4536242; *1 (C.D.Cal. Aug. 27, 2013) (considering the merits of a motion despite counsel’s failure to comply with Local Rule 7-3); Williams-Ilunga v. Gonzalez, No. CV 12-08592 DDP (AJWx), 2013 WL 571795, *4 (C.D.Cal. Feb. 13, 2013) (same); Reed v. Sandstone Properties, L.P., No. CV 12005021 MMM (VBKx), 2013 WL 1344912, *6 (C.D.Cal. Apr. 2, 2013) (same). The court therefore elects to consider the merits of Hernandez’s motion.

2. Legal Standard Governing Motions to Dismiss Under Rule 12(b)(1)

Federal courts are courts of limited jurisdiction, and may adjudicate only those cases authorized by the Constitution and by Congress. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Attorneys Trust v. Videotape Computer Products, Inc., 93 F.3d 593, 594-95 (9th Cir.1996). “The presumption is that a federal court lacks jurisdiction in a particular case until it has been demonstrated that jurisdiction over the subject matter exists.” 13 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, FedeRAL PRACTICE & PROCEDURE: JURISDICTION 2ü § 3522 n. 3 (1984). Plaintiffs bear the burden of proving that the court has subject matter jurisdiction to hear the action. See, e.g., Sopcak v. Northern Mountain Helicopter Serv., 52 F.3d 817, 818 (9th Cir.1995); Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir.1989).

A defendant mounting a Rule 12(b)(1) challenge to the court’s jurisdiction may do so either on the face of the pleadings or by presenting extrinsic evidence for the court’s consideration. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004) (“A Rule 12(b)(1) jurisdictional attack may be facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir.2000) (citation omitted). In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of allegations that, by themselves, would otherwise invoke federal jurisdiction. See Morrison v. Amway Corp., 323 F.3d 920, 924 n. 5 (11th Cir.2003) (a jurisdictional challenge was a factual attack where it ‘relied on extrinsic evidence and did not assert lack of subject matter jurisdiction solely on the basis of the pleadings’)”); White, 227 F.3d at 1242 (“Rule 12(b)(1) jurisdictional attacks can be either facial or factual”).

3. Whether the Court Has Diversity Jurisdiction to Hear Plaintiffs Petition

CarMax’s petition seeks to compel arbitration under the Federal Arbitration Act. “ ‘Section 4 of the Federal Arbitration Act (FAA), 9 U.S.C. § 4, authorizes a United States district court to entertain a petition to compel arbitration if the court would have jurisdiction, ‘save for [the arbitration] agreement,’ over ‘a suit arising out of the controversy between the parties.’ L.A. Fitness International LLC v. Harding, No. C09-5537-RJB, 2009 WL 3676272, *2 (W.D.Wash. Nov. 2, 2009) (quoting Vaden v. Discover Bank, 556 U.S. 49, 52-53, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009)). Stated differently, “federal courts must have an independent basis for federal jurisdiction to hear claims under the FAA.” Luong v. Circuit City Stores, Inc., 368 F.3d 1109, 1111 (9th Cir.2004) (citing Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 15 n. 32, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); Southland Corp. v. Keating, 465 U.S. 1, 15 n. 9, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984)); Blue Cross of California v. Anesthesia Care Associates Medical Group, Inc., 187 F.3d 1045, 1050 (9th Cir.1999) (“It is well established that the FAA does not, on its own, provide a basis for federal question jurisdiction. Rather, § 4 of the FAA ‘provides for an order compelling arbitration only when the federal district court would have jurisdiction over a suit on the underlying dispute; hence, there must be diversity of citizenship or some other independent basis for federal jurisdiction before the order can issue’” (citation omitted)); Kehr v. Smith Barney, Harris Upham & Co., Inc., 736 F.2d 1283, 1287 (9th Cir.1984) (“Section 4 of the United States Arbitration Act enables a party aggrieved by another’s refusal to arbitrate under a written agreement to petition any federal district court for an order compelling arbitration. A district court may employ this provision, however, only when an independent basis of federal jurisdiction already exists,” citing Metro Industrial Painting Corp. v. Terminal Construction Co., Inc., 287 F.2d 382, 384 (2d Cir.1961)). In its petition, CarMax invokes the court’s diversity jurisdiction under 28 U.S.C. § 1332.

a. Legal Standard Governing Diversity Jurisdiction

Under 28 U.S.C. § 1332(a), “[t]he district courts ... have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs, and is between ... citizens of different states.” -28 U.S.C. § 1332(a); see also Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir.2003) (“[JJurisdiction founded on [diversity] requires that the parties be in complete diversity and the amount in controversy exceed $75,000”). In any case where subject matter jurisdiction is premised on diversity, there must be complete diversity, i.e., all plaintiffs must have citizenship different than all defendants. See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806); see also Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 n. 3, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996).

b. Whether the Amount in Controversy Requirement is Satisfied

Although neither party disputes that the amount in controversy requirement is satisfied, the court nonetheless evaluates the allegations of the petition to determine whether more than $75,000 is at issue in this case. Generally, the amount in controversy claimed by a plaintiff in good faith will be determinative of the jurisdictional amount, unless it appears to a legal certainty that the claim is for less than $75,000. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938). “When a petition to compel arbitration is involved, ‘the amount at stake in the underlying litigation ... is the amount in controversy for purposes of diversity jurisdiction.’ ” L.A. Fitness, 2009 WL 3676272, at *3 (quoting Theis Research, Inc. v. Brown & Bain, 400 F.3d 659, 662 (9th Cir.2005)). In the petition, CarMax alleges that the amount in controversy exceeds $75,000, citing the prayer for damages in Hernandez’s state court complaint; Hernandez seeks no less than $5,000,000 in damages for Car-Max’s alleged violations of state law. This suffices to satisfy the amount in controversy requirement. See L.A, Fitness, 2009 WL 3676272, at *3 (“Although Ms. Harding does not request a specific amount of damages in her state action complaint, it is reasonable to assume that she intends to request more than $75,000. The court is satisfied that the statutory amount in controversy for this matter has reasonably been met”); Home Buyers Warranty Corp. v. Leighty, No. CV 07-177-PHX-RCB, 2007 WL 4616687, *4 (D.Ariz. Dec. 28, 2007) (“[T]o measure the amount in controversy here, the court will examine the ‘underlying [state court] cause[s] of action that w[ill] be arbitrated[,]’ as opposed to HBW’s complaint seeking to compel arbitration,” citing Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir.1995)); Cf. Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107-08 (9th Cir.2010) (“Under the legal certainty standard, the good faith allegations in GeoEx’s petition [to compel arbitration] as to the amount in controversy suffice to establish the jurisdictional amount unless it appears legally certain that the amount in dispute is $75,000 or less. Here, GeoEx’s petition alleges that Lhotka’s damages in the state court- action are reasonably in excess of $75,000. GeoEx bases this allegation on the fact that Lhotka’s state court complaint requests damages: (1) for the alleged wrongful death of Jason Lhotka, who was 37 years old at the time of the trip, was married, and had at least one dependant; (2) for loss of consortium for his wife and his son; (3) for fraud, misrepresentation, gross negligence, and intentional infliction of emotional distress; (4) for violations of California’s consumer fraud statutes; and (5) for funeral, medical, and burial expenses. GeoEx alleged that, based on Lhotka’s request in state court, it has a reasonable good-faith belief that the damages exceed $75,000,’ even though the state court complaint does not specify an amount. This allegation is sufficient to confer subject matter jurisdiction on a federal court because it is not legally certain the amount in controversy is $75,000 or less”).

c. Whether the Complete Diversity Requirement is Satisfied

The court next evaluates whether there is complete diversity of citizenship between the parties, i.e., whether Hernandez has citizenship different than all defendants. See Strawbridge, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435; see also Caterpillar, Inc., 519 U.S. at 68 n. 3, 117 S.Ct. 467. Hernandez does not dispute that her citizenship is diverse from CarMax’s. She contends, however, that complete diversity is lacking because Hannah, a California citizen, is named as a defendant in her state court complaint. As a consequence, Hernandez asserts, the court must consider Hannah’s citizenship in determining whether it has diversity jurisdiction to hear CarMax’s petition. As CarMax notes in its opposition, however, the Ninth Circuit has considered — and squarely rejected — Hernandez’s argument. In Circuit City Stores, Inc. v. Najd, 294 F.3d 1104, 1106 (9th Cir.2002), Circuit City filed a petition in federal court seeking to stay a state court action and compel arbitration on Najd’s claims under the FAA. It asserted that the claims were covered by a “Dispute Resolution Agreement” like the one at issue here. The district court concluded that diversity jurisdiction existed, notwithstanding the fact that Najd’s state court complaint named a non-diverse individual defendant. Najd, 294 F.3d at 1106. On appeal, Najd advanced the argument Hernandez makes in her motion, i.e., that the court lacked subject matter jurisdiction because of the presence of a non-diverse defendant in the state court action. That defendant, however, was not a party to Circuit City’s petition. Id. The Ninth Circuit rejected Najd’s argument, reasoning that the state court defendant’s citizenship was irrelevant in determining whether the district court had diversity jurisdiction to hear the petition:

“Najd claims that the district court lacked diversity jurisdiction.... Circuit City and Najd, the only parties in this action, are diverse. However, Najd argues that we must consider the citizenship of Khorsand, who is a defendant in the state court action. If Khorsand’s citizenship is considered, complete diversity is lacking because Najd and Khor-sand are both California residents. However, the citizenship of someone not before the court is irrelevant to the jurisdictional inquiry. The district court properly exercised diversity jurisdiction over Circuit City’s petition.”

Id. (citing We Care Hair Development, Inc. v. Engen, 180 F.3d 838, 842 (7th Cir.1999); MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 945 (11th Cir.1999); Doctor’s Associates, Inc. v. Distajo, 66 F.3d 438, 445-46 (2d Cir.1995) (emphasis added)).

As in Najd, it is undisputed that the citizenship of the parties before the court, i.e., the parties to CarMax’s arbitration petition, is diverse. It is of no consequence that Hannah, who is not a party to the petition, is a California citizen; under Najd, “the citizenship of someone not before the court[, i.e., Hannah,] is irrelevant to the jurisdictional inquiry.”

Hernandez asserts that Najd is no longer good law in light of the Supreme Court’s decision in Vaden v. Discover Bank, 556 U.S. 49, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009). In Vaden, Discover Bank’s servicing affiliate sued the plaintiff in state court to recover past-due charges. Vaden, 556 U.S. at 53, 129 S.Ct. 1262. Vaden answered and filed counterclaims against Discover, alleging that its finance charges, interest, and late fees violated state law. Id. Invoking an arbitration clause in its cardholder agreement with Vaden, Discover filed a § 4 petition in federal court to compel arbitration of Va-den’s counterclaims. Id. The district court concluded that it had subject matter jurisdiction over the petition because Discover asserted a federal preemption defense to the counterclaims and compelled arbitration. Id. After the Fourth Circuit affirmed, the Supreme Court granted certio-rari to address “whether district courts, petitioned to order arbitration pursuant to § 4 of the FAA, may ‘look through’ the petition and examine the parties’ underlying dispute to determine whether federal-question jurisdiction exists over the § 4 petition.” Id. at 57, 129 S.Ct. 1262.

The Court rejected Vaden’s argument that the “controversy between the parties ... [was] simply and only the[ir] ... dispute over the arbitrability of their claims.” Id. at 62-63, 129 S.Ct. 1262. Invoking the language of § 4 — i.e., that a party may seek an order compelling arbitration in “any United States district court which, save for [the arbitration] agreement, would have jurisdiction under title 28, in a civil action ... of the subject matter of a suit arising out of the controversy between the parties” — the Court reasoned that the district court was required to “look through” to the “substantive conflict” underlying the petition to determine whether a federal question was presented. Id. at 62-63, 129 S.Ct. 1262 (“The phrase ‘save for [the arbitration] agreement’ indicates that the district court should assume the absence of the arbitration agreement and determine whether it ‘would have jurisdiction under title 28’ without it: Jurisdiction over what? The text of § 4 refers us to ‘the controversy between the parties.’ That phrase, the Fourth Circuit said, and we agree, is most straightforwardly read to mean the ‘substantive conflict between the parties’ ” (citation omitted)). “Looking through” to the nature of the dispute between Vaden and Discover, i.e., to the state court counterclaims, the Court held that the Fourth Circuit erred in concluding that the district court had jurisdiction because the purported federal question was raised by a defense to the counterclaims, and defenses “cannot be [used to] invoke [federal question jurisdiction.” Id. at 70, 129 S.Ct. 1262.

Hernandez relies on the Supreme Court’s statement in Vaden that the district court should “look through a § 4 petition” to consider the “substantive conflict between the parties” as support for her argument that the court must consider the citizenship of all parties named in a parallel state court action to determine if it can exercise diversity jurisdiction over CarMax’s 4 petition. The court is not persuaded.

Most fundamentally, Hernandez’s argument ignores the limited scope of the Supreme Court’s holding in Vaden. The Eighth Circuit’s decision in Northport Health Services of Arkansas, LLC v. Rutherford, 605 F.3d 483 (8th Cir.2010), is particularly instructive on this point. There, the court addressed the argument Hernandez makes here — that the Vaden “look through” directive applies when the court is determining whether it has diversity jurisdiction to entertain a § 4 petition. Rutherford, 605 F.3d at 488-91. After extensive analysis of Vaden and relevant authorities, the court concluded that the “look through” approach mandated by the Supreme Court in federal question cases does not “appl[y] in deciding diversity of citizenship ... § 4 disputes.” Id. at 489. In reaching this conclusion, the Rutherford court made several important observations.

First, it addressed “[t]he fundamental flaw in the [ ] contention that Vaden implicitly overruled prior circuit court diversity jurisdiction decisions” concluding that a court can consider only the citizenship of the parties to the § 4 petition. The court stated “that [the argument] ignore[d] the underlying facts and the Supreme Court’s decision in Moses H. Cone [Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ]. In Moses H. Cone, the Supreme Court observed that the court had diversity jurisdiction over a § 4 petition and affirmed an order compelling arbitration, notwithstanding the fact that a “non-diverse party [] made the parallel state court action [underlying the petition] non-removable.” See Rutherford, 605 F.3d at 490 (citing Moses H. Cone, 460 U.S. at 7 & n. 4, 103 S.Ct. 927). The Eighth Circuit found it unlikely that the Supreme Court in Vaden had “implicitly overruled” Moses H. Cone on this point, given that it cited Moses H. Cone with approval throughout its opinion. The court also observed that the Vaden Court cited cases that employed a “no look-through” approach to diversity jurisdiction, and “carefully limited its statement of the issues and holding to federal question jurisdiction.” Id. at 490.

Second, the Eighth Circuit noted that, although the Supreme Court described at length “the ‘curious practical consequences’ of the no-look-through approach to federal question issues,” it made no mention of similar concerns associated with employing such an approach where diversity jurisdiction was invoked. Id. It found this significant, as the Vaden Court “adopted the look-through approach to expand the universe of § 4 cases in which there will be an independent basis of federal question jurisdiction [so that it would] be more compatible with diversity jurisdiction cases (i.e., Moses H. Cone).” Adopting the “look-through approach” for diversity jurisdiction, the Rutherford court observed, would run counter to the Supreme Court’s focus on expanding § 4 jurisdiction because it would “severely contradi ] pre-existing § 4 diversity jurisdiction” under Moses H. Cone. Id. at 490-91.

The court agrees with the Eighth Circuit’s reasoned analysis, and concludes that the Supreme Court’s holding in Vaden is not so expansive as to mandate that a district court adopt the “look-through approach” to determine whether it has diversity jurisdiction to hear a § 4 petition. In reaching this conclusion, the court finds particularly significant the expressly limited nature of the Vaden Court’s approval of the “look-through approach” to assess the existence of federal question jurisdiction. See Vaden, 556 U.S. at 62, 129 S.Ct. 1262 (“Attending to the language of the FAA and the above-described jurisdictional tenets, we approve the “look through” approach to this extent: A federal court may “look through” a § f petition to determine whether it is predicated on an action that ‘arises under’ federal law ” (emphasis added)). The court is also cognizant of the well-established principle that the Supreme Court “does not normally overturn, or [ ] dramatically limit, earlier authority[, i.e., Moses H. Cone ] sub silentio.” Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 18, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000).

The authority Hernandez cites, moreover, does not support her argument to the contrary. Each case cites Vaden only for the general proposition that “a federal court has jurisdiction over a petition to compel arbitration if the federal court would have jurisdiction over the underlying substantive dispute.” See Countrywide Home Loans, Inc. v. Mortgage Guar. Ins. Corp., 642 F.3d 849, 855 (9th Cir.2011); Geographic Expeditions, Inc., 599 F.3d at 1106; In re Wade, No. 14-CV-03453-LHK, 2014 WL 5088258, *4 (N.D.Cal. Oct. 9, 2014). None of these decisions provides any substantive support for Hernandez’s argument, however. In Countrywide Home Loans and Geographic Expeditions, Inc., the Ninth Circuit concluded that there was diversity jurisdiction to hear § 4 petitions because there was complete diversity of citizenship among the parties; in neither decision did the court indicate that the parties to the federal action were different than the parties to the underlying state action. Nor did either address whether, assuming this was the case, complete diversity should be assessed by looking to the citizenship of the parties to the underlying state action. See Countrywide Home Loans, 642 F.3d at 855 n.2 (it is undisputed that the “parties are completely diverse”); Geographic Ex peditions, Inc., 599 F.3d at 1106 n. 4 (“The parties concede this is a suit between citizens of different states”). Given the Ninth Circuit’s explicit holding in Najd, moreover, it would appear the Countrywide Home Loans and Geographic Expeditions, Inc. courts determined complete diversity by looking to the parties to the § 4 petition in federal court.

In re Wade is similarly of little help; the court notes in summary fashion that “[it was] simply not the case [t]here” that “the matter involve[d] a question of federal law, or [that] it involve[d] diverse parties.” In re Wade, 2014 WL 5088258, at *4. Finally, Anaya v. Lowe’s Home Centers, LLC, No. 14cvl260 L(BGS), 2014 WL 2199878, *1 (S.D.Cal. May 27, 2014), is clearly distinguishable, as it addressed removal jurisdiction rather than a petition to compel arbitration under the FAA; the decision makes no reference whatsoever to Vaden.

In sum, for the reasons stated, the court declines to extend the limited approval of the “look-through” approach announced in Vaden to the question of diversity jurisdiction in this case.

Consequently, Najd, which is directly on point, controls. See L.A. Fitness, 2009 WL 3676272, at *2-3 (“This case is fundamentally different than Va-den. We are not dealing with federal question jurisdiction here; rather, this action is brought into federal court on the basis of complete diversity between the parties.... While Ms. Harding’s argument appears to logically flow from the Supreme Court’s holding in Vaden, the Ninth Circuit has explicitly ruled otherwise in the context of diversity jurisdiction. ... While [Najd] predates the Supreme Court’s ruling in Vaden, and the language in Vaden is broad enough to suggest that the court may look favorably on allowing district courts to ‘look’ to an underlying action for diversity purposes, doing so here would be an extension of the law as it currently exists, and is not necessary here. The Ninth Circuit authority is clear—in a petition to compel arbitration, the court is only concerned with the parties in front of it for purposes of diversity. There is no reason to ‘look through’ to the underlying action in order to determine diversity. In the present matter, L.A. Fitness and Ms. Harding are diverse parties, and this court may entertain the plaintiffs petition to compel arbitration”); see also Nichols v. Harris, 17 F.Supp.3d 989, 993 (C.D.Cal.2014) (“A panel decision of the Ninth Circuit is binding on lower court as soon as it is published, even before the mandate issues, and remains binding authority until the decision is withdrawn or reversed by the Supreme Court or an en banc court,” citing Gonzalez v. Arizona, 677 F.3d 383, 389 n. 4 (9th Cir.2012) (en banc) (“[A] published decision of this court constitutes binding authority which ‘must be followed unless and until overruled by a body competent to do so,’ ” citing Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir.2001)). Because the citizenship of the parties to this action is completely diverse, and because the amount in controversy requirement has been satisfied, the court has diversity jurisdiction to hear CarMax’s petition. Accordingly, Hernandez’s Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction is denied.

B. Plaintiffs Motion to Compel Arbitration and Stay State Court Proceedings

1. Legal Standard Governing Motions to Compel Arbitration

The Federal Arbitration Act (“FAA”) provides that written arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 4 of the FAA, which governs petitions to compel arbitration, provides that

“[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction.... The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement....” 9 U.S.C. § 4.

In enacting the FAA, Congress “declared a national policy favoring arbitration” that was intended to reverse centuries of judicial hostility to arbitration agreements. Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984); see Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 475 n. 8 (9th Cir.1991) (“The Federal Arbitration Act of 1925 ... reflects the strong Congressional policy favoring arbitration by making such clauses ‘valid, irrevocable, and enforceable,’ ” quoting 9 U.S.C. § 2); Arreguin v. Global Equity Lending, Inc., No. C 07-06026 MHP, 2008 WL 4104340, *4 (N.D.Cal. Sept. 2, 2008) (stating that the FAA “is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary,’ ” quoting Moses H. Cone, 460 U.S. at 24, 103 S.Ct. 927). As a result, the FAA requires that courts “rigorously enforce agreements to arbitrate.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); id. at 218, 105 S.Ct. 1238 (“By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that, district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed,” citing 9 U.S.C. §§ 3, 4 (emphasis original)); see also Moses H. Cone, 460 U.S. at 22-23, 103 S.Ct. 927.

Despite this strong policy favoring arbitration, “ ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to,submit.’” Howsam v. Dean Witter Reynolds, 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)); see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (explaining that “arbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes— that the parties have agreed to submit to arbitration”); Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 756 (9th Cir.1989) (“When we are asked to compel arbitration of a dispute, our threshold inquiry is whether the parties agreed to arbitrate”). “While ambiguities in the language of [an] agreement should be resolved in favor of arbitration, [courts] do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated.” EEOC v. Waffle House, Inc., 534 U.S. 279, 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (citation omitted); see also Par-Knit Mills, Inc. v. Stockbridge Fabrics Company, Ltd., 636 F.2d 51, 54 (3d Cir.1980) (“Before a party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should be an express, unequivocable agreement to that effect”).

A district court’s “role under the [FAA] is ... limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms.” Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir.2000) (citations omitted).

When evaluating whether a party is bound by an arbitration agreement, “the liberal federal policy regarding the scope .of arbitrable issues is inappo-site.” Comer v. Micor, Inc., 436 F.3d 1098, 1104 n. 11 (9th Cir.2006); Chastain v. Union Security Life Insurance Co., 502 F.Supp.2d 1072, 1075 (C.D.Cal.2007) (where the issue is whether parties are bound by an arbitration agreement, “the Court is not bound by [the] ... policy encouraging arbitration in reviewing plaintiffs’ motion”). The issue instead is determined according to ordinary principles of contract law. Waffle House, 534 U.S. at 293, 122 S.Ct. 754 (in deciding whether a valid agreement to arbitrate exists, federal courts must “place arbitration agreements on equal footing with other contracts”); Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir.2003) (“[T]o evaluate the validity of an arbitration agreement, federal courts ‘should apply ordinary state-law principles that govern the formation of contracts,’ ” quoting First Options of Chicago, 514 U.S. at 944, 115 S.Ct. 1920)); see also Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.2002) (“[The] federal policy favoring arbitration does not apply to the determination of whether there is a valid agreement to arbitrate between the parties; instead ‘Mrdi-nary contract principles determine who is bound,’” quoting Daisy Manufacturing Co. v. NCR Corp., 29 F.3d 389, 392 (8th Cir.1994)); Flores v. Jewels Marketing and Agribusiness, No. CIV-F 07-334 AWI WMW, 2007 WL 2022042, *6 (E.D.Cal. July 9, 2007) (same). Accordingly, arbitration agreements “are subject to all defenses to enforcement that apply to contracts generally.” Ingle, 328 F.3d at 1170.

“[A]n arbitration agreement may - not function so as to require employees to waive potential recovery for substantive statutory rights in an arbitral forum, especially for statutory rights established ‘for a public reason.’” Davis v. O’Melveny & Myers, 485 F.3d 1066, 1075 (9th Cir.2007) (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), and Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83, 100, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000)); see also Arreguin v. Global Equity Lending, Inc., No. C 07-06026 MHP, 2008 WL 4104340, *6 (N.D.Cal. Sept. 2, 2008) (“parties that agree to arbitrate statutory claims ... are entitled to basic procedural and remedial protections so that they can effectively realize their statutory rights.” quoting Ting v. AT & T, 319 F.3d 1126, 1151 (9th Cir.2003)).

Thus, to be enforceable, an agreement to arbitrate claims based on statutory rights must meet minimum requirements first articulated in Cole v. Burns International Sec. Services, 105 F.3d 1465 (D.C.Cir.1997). Specifically, they must' “(1) provide[] for neutral arbitrators, (2) provide[] for more than minimal discovery, (3) require[ ] a written award, (4) provide[] for all types of relief that would otherwise be available in court, and (5)[ ] not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.” See id. at 1482 (applying Gilmer, 500 U.S. at 28, 111 S.Ct. 1647); see also Arreguin, 2008 WL 4104340, at *4 (listing the Cole factors, and noting that “[b]oth the Ninth Circuit and the California Supreme Court have cited ... this portion of Cole with approval,” citing Ting, 319 F.3d at 1151, and Armendariz, 24 Cal.4th at 102, 99 Cal.Rptr.2d 745, 6 P.3d 669).

In addition, “generally applicable defenses, such as ... unconscionability, may be applied to invalidate arbitration agreements” between employers and employees. Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). Because Hernandez was employed in California, the court must apply California law to determine whether the arbitration agreement is unconscionable. See Ingle, 328 F.3d at 1170 (“Ingle was employed in California; we therefore evaluate Circuit City’s arbitration agreement under the contract law of that state”).

2. Whether the Court Should Grant Plaintiffs Motion to Compel

a. Whether the FAA Applies to the Parties’ Agreement

As an initial matter, Hernandez contends that CarMax’s motion must be denied because the FAA does not apply to her arbitration agreement with CarMax. Specifically, she argues that her employment contract with CarMax did not concern interstate commerce and her job duties did not “bear on interstate commerce in a substantial way.”

“The FAA applies to any contract affecting interstate commerce.” Yahoo! Inc. v. Iversen, 836 F.Supp.2d 1007, 1009 (N.D.Cal.2011) (citing Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001)); see Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir.2013) (“With limited exceptions, the Federal Arbitration Act (FAA) governs the enforceability of arbitration agreements in contracts involving interstate commerce” (citation omitted)); Tompkins v. 23andMe, Inc., Nos. 5:13— CV-05682-LHK, 5:14-CV-00294-LHK, 5:14-CV-00429-LHK, 5:14-CV-01167~ LHK, 5:14-CV-01191-LHK, 5:14-CV-01258-LHK, 5:14-CV-01348-LHK, 5:14-CV-01455-LHK, 2014 WL 2903752, *4 (N.D.Cal. June 25, 2014) (“The Federal Arbitration Act (‘FAA’) applies to arbitration agreements in any contract affecting interstate commerce,’ ” citing Circuit City Stores, 532 U.S. at 119, 121 S.Ct. 1302)). Section 2 of the FAA states:

“A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

The Supreme Court has held that the FAA applies to employment contracts if the employment affects interstate commerce. See, e.g., Herrera v. CarMax Auto Superstores California, LLC, No. CV-14-776-MWF (VBKx), 2014 WL 3398363, *3 (C.D.Cal. July 2, 2014) (“The FAA applies to written arbitration agreements in ‘eon-tract[s] evidencing a transaction involving commerce.’ An employment contract including an agreement to arbitrate can be subject to the FAA, if it is not expressly exempted by the FAA and if the employment affects interstate commerce,” citing Circuit City Stores, 532 U.S. at 113, 119, 121 S.Ct. 1302 (rejecting an argument that an employment agreement is not a “contract evidencing a transaction involving interstate commerce,” and holding that 9 U.S.C. § 1 does not exempt all employment contracts from the FAA)); Plows v. Rockwell Collins, Inc., 812 F.Supp.2d 1063, 1066 (C.D.Cal.2011) (“The FAA, which provides that ‘a written provision in any ... contract ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,’ applies to transactions involving interstate commerce, including employment agreements where the employment relationship involves interstate commerce,” citing Circuit City Stores); Slaughter v. Stewart Enterprises, Inc., No. C 07-01157 MHP, 2007 WL 2255221, *5 (N.D.Cal. Aug. 3, 2007) (“[T]he FAA undis-putably reaches some employment contracts,” citing Circuit City Stores).

The term “involving commerce” “signals an intent to exercise Congress’ commerce power to the full.” Circuit City Stores, 532 U.S. at 115, 121 S.Ct. 1302 (citing Alliedr-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 277, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995)). Given that the statute “provides for ‘the enforcement of arbitration agreements within the full reach of the Commerce Clause,’ ” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56, 123 S.Ct. 2037, 156 L.Ed.2d 46 (citing Perry v. Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987)), the Court has held that “the FAA encompasses a wider range of transactions than those actually ‘in commerce’ — that is ‘within the flow of interstate commerce.’ ” Id. at 56, 123 S.Ct. 2037 (citing Allied-Bruce, 513 U.S. at 277, 115 S.Ct. 834).

Hernandez argues that CarMax has “fail[ed] to establish that [her] specific job and job duties [bore] upon interstate commerce in any substantial way as required,” and thus that the FAA does not apply.' CarMax counters that it has demonstrated that Hernandez’s employment agreement “evidenc[ed] a transaction involving commerce” within the meaning of § 2 of the FAA. The court agrees.

CarMax proffers the declaration of Kimberly Ross, its vice president of human resources. Ross states that CarMax is a “national sales organization,” with sales locations in thirty-six states. She asserts that CarMax customers regularly review the national sales inventory to find a vehicle that best suits their needs. If a customer chooses a vehicle that is located out-of-state, CarMax sales consultants arrange for transport of the vehicle from the out-of-state sales location. Ross reports that CarMax sales consultants and employees regularly “respond to inquiries from other CarMax locations that may be out[side] ... California and arrange for transport of vehicles from their location to a location out-of-state.” With respect to management assistants, like Hernandez, Ross states that they “support the[] national sales efforts” at CarMax. They purportedly hire CarMax employees, including sales consultants; make travel arrangements for CarMax employees, including travel out-of-state; and serve as a liaison to CarMax’s corporate offices located in Virginia.

The evidence proffered by CarMax suffices to demonstrate that Hernandez’s employment contract with CarMax “in-volv[ed] [interstate] commerce.” It is undisputed that Hernandez was employed by a national corporation that did business in thirty-six states and engaged in interstate transactions on a regular basis. CarMax has also adduced evidence that Hernandez’s job directly involved interstate commerce in that management assistants (1) hire employees who engage in interstate activity; (2) correspond with CarMax’s corporate offices in Virginia; and (3) make out-of-state travel arrangements. Courts have concluded that similar employment relationships have a sufficient connection in interstate commerce that they are subject to the FAA. See, e.g., Herrera, 2014 WL 3398363, at *2-3 (concluding that an employment contract between CarMax and three former employees — a painter, service mechanic, and automotive service technician — involved interstate commerce); Montes v. San Joaquin Community Hospital, No. 1:13-cv-01722-AWI-JLT, 2014 WL 334912, *5 (E.D.Cal. Jan. 29, 2014) (concluding that an employment contract between plaintiff and a hospital was governed by the FAA because the hospital’s activities were involved interstate commerce); Abdullah v. Duke University Health System, Inc., No. 5:09-CV-8-FL, 2009 WL 1971622, *3 (E.D.N.C. July 8, 2009) (concluding that an employment contract between a hospital and the plaintiff “involve[d] interstate commerce because DUHS treats patients from all over the country and the world, it receives payments from individuals and entities other than North Carolina residents, and its employees travel outside of North Carolina”); Collie v. Wehr Dissolution Corp., 345 F.Supp.2d 555, 561 & n. 2, 3 (M.D.N.C.2004) (concluding that plaintiffs employment contract “involve[d] commerce” and thus was governed by the FAA because his employer, National Hearing Centers, Inc., was a “national corporation! ] involved in interstate commerce,” rejecting a contention that the “employment contract allegedly did not ‘actually involv[e] interstate commerce,” and observing that, although plaintiffs job duties had a limited relationship to interstate commerce, he had engaged interstate commerce when he, inter alia, “corresponded with National Hearing Centers, Inc.’s [out-of-state] office”); see also Allied-Bruce, 513 U.S. at 282, 115 S.Ct. 834 (concluding that a relationship involved interstate commerce where, inter alia, defendant was a national corporation that was engaged in business in multiple states). Accordingly, the court concludes that the FAA is applicable to the parties’ arbitration agreement.

b. Whether the Parties’ Arbitration Agreement is Valid

(1) Legal Standard Governing Unconscionability

Hernandez argues that the arbitration agreement is unconscionable and thus unenforceable. As the party opposing arbitration, Hernandez bears the burden of establishing that unconscionability is a defense to enforceability. See, e.g., Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1296 (9th Cir.2006) (en banc); Sossamon v. Central Valley RV Outlet, Inc., No. F043318, 2004 WL 1418733, *2 (Cal.App. June 25, 2004) (Unpub.Disp.) (“The party opposing arbitration bears the burden of proof for any defense that may exist to the arbitration agreement”).

The California Supreme Court’s decision in Armendariz “provides the definitive pronouncement of California law on uncon-scionability to be applied to mandatory arbitration agreements.” See Ferguson v. Countrywide Credit Industries, Inc., 298 F.3d 778, 782-83 (9th Cir.2002). Prior to Armendariz, California courts applied two distinct analytical frameworks in assessing whether a contract was unconscionable. See Morris v. Redwood Empire Bancorp, 128 Cal.App.4th 1305, 1317, 27 Cal.Rptr.3d 797 (2005) (“In California, two separate approaches have developed for determining whether a contract or provisions thereof [are] unconscionable”); see also Flores v. Transamerica HomeFirst, Inc., 93 Cal.App.4th 846, 852-53 & n. 6, 113 Cal.Rptr.2d 376 (2001) (explaining the two frameworks); Patterson v. ITT Consumer Financial Corp., 14 Cal.App.4th 1659, 1663-64, 18 Cal.Rptr.2d 563 (1993) (“Two alternative analyses exist under California law for determining whether a contractual provision will be enforceable because it is unconscionable”). In Armendariz, the Supreme Court cited both tests with approval but did not treat them as separate. See Armendariz, 24 Cal.4th at 113-14, 99 Cal.Rptr.2d 745, 6 P.3d 669.

Under the first test, which derives from Graham v. Scissor-Tail, Inc., 28 Cal.3d 807, 817-20, 171 Cal.Rptr. 604, 623 P.2d 165 (1981), courts look first to whether the agreement at issue is a contract of adhesion. See Armendariz, 24 Cal.4th at 113, 99 Cal.Rptr.2d 745, 6 P.3d 669 (“Uncon-scionability analysis begins with an inquiry into’ whether the contract is one of adhesion,” citing Graham, 28 Cal.3d at 817-19, 171 CahRptr. 604, 623 P.2d 165). A contract of adhesion is “a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” Id. (quoting Neal v. State Farm Ins. Cos., 188 Cal.App.2d 690, 694, 10 Cal.Rptr. 781 (1961)). If an agreement is a contract of adhesion, the court must consider both whether the terms are contrary to the expectations of the weaker party, and whether they are otherwise unduly oppressive. See id. (“Generally speaking, there are two judicially imposed limitations on the enforcement of adhesion contracts or provisions thereof. The first is that such a contract or provision which does not fall within the reasonable expectations of the weaker or ‘adhering’ party will not be enforced against him. The second — a principle of equity applicable to all contracts generally — is that a contract or provision, even if consistent with the reasonable expectations of the parties, will be denied enforcement if, considered in its context, it is unduly oppressive or ‘unconscionable’” (citations and internal quotation marks omitted)).

The second test derives from A & M Produce Co. v. FMC Corp., 135 Cal.App.3d 473, 485-88, 186 Cal.Rptr. 114 (1982). See Flores, 93 Cal.App.4th at 852-53, 113 Cal. Rptr.2d 376. Under this test, courts ask whether a contract is both “procedurally” and “substantively” unconscionable. See Armendariz, 24 Cal.4th at 114, 99 Cal.Rptr.2d 745, 6 P.3d 669 (“[UJnconsciona-bility has both a ‘procedural’ and a ‘substantive’ element, the former focusing on ‘oppression’ or ‘surprise’ due to unequal bargaining power, the latter on ‘overly harsh’ or ‘one-sided results,” quoting A & M Produce Co., 135 Cal.App.3d at 486-87, 186 Cal.Rptr. 114 (internal quotation marks omitted)). “The prevailing view is that [procedural and substantive uncon-scionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or caluse under the doctrine of unconscionability.” Id. (citing Stirlen v. -Supercuts, Inc., 51 Cal.App.4th 1519, 1533, 60 Cal.Rptr.2d 138 (1997)). “[T]hey need not[, however,] be present in the same degree.... [T]he more substantively oppressive the contract term, the less evidence of procedural un-conscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” Id.

The different phrasing of the two tests has produced some confusion. In particular, Armendariz’s statement that “[u]n-conscionability analysis begins with an inquiry into whether the contract is one of adhesion,” id. at 113, 99 Cal.Rptr.2d 745, 6 P.3d 669, has led some courts to conclude that a contract must be adhesive to be unconscionable. See Morris, 128 Cal.App.4th at 1317, 27 Cal.Rptr.3d 797 (“Each of the two approaches has generated some confusion in its application. For example, the Graham approach commences with a determination of whether the contract is one of adhesion, thus fostering the impression that a nonadhesion contract may never be unconscionable”). While Armendar-iz ’s statement that adhesiveness is the starting point for unconscionability analysis may have generated confusion, the Court also made clear that any contract or contract term may be unconscionable if it is “unduly oppressive.” See Armendariz, 24 Cal.4th at 113, 99 Cal.Rptr.2d 745, 6 P.3d 669 (“The second [judicially imposed limitation on enforcement of adhesion contracts] — a principle of equity applicable to all contracts generally — is that a contract or provision, even if consistent with the reasonable expectations of the parties, will be denied enforcement if, considered in its context, it is unduly oppressive or ‘unconscionable’ ” (emphasis added and internal quotation marks omitted)).

The Graham test is thus best understood as a specific application of the “sliding scale” adopted in A & M Produce. Because “[a] finding of a contract of adhesion is essentially a finding of procedural unconscionability,” Flores, 93 Cal.App.4th at 853; 113 Cal.Rptr.2d 376, the Graham test simply describes the degree of substantive unconscionability that must be present before it is appropriate to refuse to enforce an adhesive contract or term on grounds of unconscionability. The California Supreme Court has observed, in fact, that the Graham and A & M Produce frameworks produce identical results. See Perdue v. Crocker National Bank, 38 Cal.3d 913, 925 n. 9, 216 CaLRptr. 345, 702 P.2d 503 (1985).

(2) Whether the 2001 or 2011 DRRP is Applicable

Before considering whether Hernandez and CarMax entered into a valid, enforceable arbitration agreement, the court must first determine whether the 2001 or 2011 DRRP reflects that agreement. Hernandez asserts that unconscion-ability must be measured “at the time the agreement is entered into, not when it is sought to be enforced.” She thus maintains that the 2001 DRRP, which was in effect when she began her employment with CarMax, controls. For its part, CarMax argues that unconscionability should be judged by looking to the 2011 DRRP because the DRRP was validly modified as authorized by Rule 19, set forth therein. For this reason, it asserts the most recent DRRP — i.e., the 2011 version — controls.

Rule 19 of the 2001 DRRP included a modification clause stating:

“CarMax may alter or terminate the Agreement and these Dispute Resolution Rules and Procedures on December 31st of any year upon giving 30 calendar days written notice to Associates, provided that all claims arising before alteration or termination shall be subject to the Agreement and corresponding Dispute Resolution Rules and Procedures in efect at the time the Arbitration Request Form and accompanying filing fee, or Request for Waiver of Filing Fee is received by the Company. Notice may be given by posting a written notice by December 1 of each year at all CarMax locations (including locations of affiliated companies). A copy of the text of any modification to the Agreement or Rules and Procedures will be published in the Applicant Packet, which will be available at such locations after December 31 of each year.”

Hernandez does not dispute that CarMax provided the notice required by Rule 19 or that it validly modified the DRRP. Rather, she appears to contend that the modified DRRP does not apply because it was not in effect at the time she entered into the DRA, and thus cannot govern any of her claims. While it is true that “[t]he court determines unconsciona-bility with reference to the time the contract is entered into,” Lanigan v. City of Los Angeles, 199 Cal.App.4th 1020, 1035, 132 Cal.Rptr.3d 156 (2011), Hernandez fails to appreciate that “a subsequent written contract alters the terms of a previous contract,” Thiele v. Merrill Lynch, Pierce, Fenner & Smith, 59 F.Supp.2d 1060, 1064 (S.D.Cal.1999).

It is for this reason that courts considering modifications to arbitration clauses have found that, when a term has been altered through a valid