Cluck v. GEO: When a Confidentiality Agreement Makes an Arbitration Agreement Unconscionable

A confidentiality agreement arbitration unconscionable problem is now a live drafting risk in California: in Cluck v. GEO Secure Services, LLC, No. D087341, the Court of Appeal held that an employer's Arbitration Agreement cannot be judged on its own four corners when a second onboarding document routes the employer's own likely claims to court. The panel, sitting in the Fourth Appellate District, Division One, affirmed the denial of a motion to compel arbitration on 3 August 2026, certified the decision for partial publication, and it reached the defense bar in force in the week of 22 September 2026, when Proskauer, the National Law Review and the California Lawyers Association's monthly litigation update all circulated it.

The mechanism matters more than the outcome. Jeffrey Cluck brought a putative wage and hour class action. GEO Secure Services, LLC and The GEO Group, Inc. moved to compel arbitration under an agreement Cluck had signed electronically when he was hired. The trial court refused to enforce it. On appeal, the panel did not find a single fatal term inside the arbitration document. It found the fatal asymmetry by reading that document alongside a confidentiality agreement signed in the same sitting.

What did the court decide in Cluck v. GEO Secure Services?

The Court of Appeal held that the arbitration agreement had to be construed together with the confidentiality agreement executed during the same hiring, and that the resulting package was unfairly one-sided — compelling Cluck to arbitrate the claims he was most likely to bring while permitting GEO to pursue in a Florida court the claims it was most likely to bring — which made the arbitration arrangement substantively unconscionable and, combined with procedural unconscionability in the onboarding form and its opt-out, unenforceable. The denial of the motion to compel was affirmed.

The operative sentence is short and portable: "[W]e find the arbitration agreement must be read together with a confidentiality agreement Cluck also signed during his hiring." Everything else follows from that construction choice. Once the two instruments are one contract for Unconscionability purposes, the employer's carve-out is no longer a separate commercial arrangement about trade secrets. It is a term of the dispute resolution bargain, and it is a term that runs one way.

Two things the court did not hold are worth stating plainly, because the September commentary compresses them out. It did not hold that confidentiality agreements are unlawful, and it did not hold that an employer may never reserve access to a court. It held that where the reservation lives in a companion document executed as part of the same transaction, the reservation counts against the arbitration bargain in the ordinary Substantive Unconscionability analysis.

The two documents, and why the forum mismatch mattered

The architecture is unremarkable, which is exactly why the decision travels. When he was hired, Cluck electronically signed an arbitration agreement providing for binding arbitration of all disputes arising out of or related to his employment. At the same time he electronically agreed to hold GEO's information in confidence. That second agreement provided that any breach "will cause irreparable harm" to the company and that GEO accordingly "will be entitled to" special remedies, to be resolved in a court of law, sitting without a jury, in Florida.

Set the two side by side and the distribution of forums is visible without any interpretive effort. The employee's realistic claims — unpaid wages, meal and rest periods, derivative penalties — go to an arbitrator. The employer's realistic claims — breach of confidence, competition, solicitation of colleagues or customers — go to a Florida judge, with the jury waived in advance. Neither instrument says "the employee arbitrates and the employer litigates." Together, that is what they do.

California has long treated that pattern as the paradigm case of a one-sided Arbitration Carve-Out. The requirement that an employment arbitration agreement have a "modicum of bilaterality" descends from Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, and the Supreme Court restated in Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478 that an agreement is substantively unconscionable where it compels arbitration of the claims commonly brought by employees while exempting the claims commonly brought by employers. Cluck adds only this: the exemption does not have to be in the arbitration agreement to count.

The Florida forum and the pre-committed jury waiver sharpened the asymmetry. It was not simply that GEO could sue in court. It was that GEO could sue in a distant forum of its own selection, before a judge rather than a jury, on a stipulated premise — "irreparable harm" — that the employee had signed away the ability to contest on the merits at the threshold.

Can a confidentiality agreement make an arbitration agreement unconscionable?

Yes. Where the confidentiality agreement is signed as part of the same hiring transaction and it governs how a category of disputes between the same parties will be resolved, a California court will read it together with the arbitration agreement, and an imbalance created across the two documents can render the arbitration agreement substantively unconscionable and unenforceable.

This is not new law so much as newly unavoidable law. Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482 reached the same construction three years earlier, reasoning that the two instruments "were both separate aspects of a single primary transaction" — the plaintiff's hiring — and both governed how disputes arising from the employment would be resolved, so that treating them separately would fail to account for the overall dispute resolution process the parties actually agreed upon. In Alberto the offending term was a compensation-discussion ban that collided with Labor Code section 232; in Cluck it is a forum allocation. The doctrine is the same and the reach is broader, because almost every onboarding packet contains a confidentiality instrument and almost none of them are drafted by the same person who drafted the arbitration clause.

Why did the court read the arbitration agreement and the confidentiality agreement together?

Because both were executed electronically at the same moment as components of one transaction — Cluck's hiring — and both allocated the forum for disputes between the same two parties arising from that employment, which brings them within the ordinary contract rule that several writings made as parts of substantially one transaction are construed together.

That rule is not an arbitration-specific hostility doctrine, which is what makes it durable against a FAA Preemption attack. It is a generally applicable principle of California contract interpretation, applied to arbitration agreements on the same terms as to any other contract. A defendant arguing preemption has to explain why reading two simultaneously executed employment documents together singles out arbitration, and the honest answer is that it does not.

What made GEO's opt-out procedure procedurally unconscionable?

The panel treated the arbitration agreement as a standardized onboarding document — a Contract of Adhesion — and found the escape hatch illusory in practice: to opt out, a new hire had to wait to receive an employee identification number, draft a separate opt-out statement, and mail or fax that statement to Florida, all within 30 days of starting the job, failing which "continuing your employment constitutes mutual acceptance of the terms of this Agreement."

An Opt-Out Clause is normally the defendant's best answer to procedural unconscionability: no one is forced into anything, so where is the oppression? Cluck shows how quickly that answer degrades when the mechanics are audited rather than assumed. Each step is individually defensible and collectively prohibitive. The employee cannot begin until the employer issues a number the employer controls. The opt-out must be composed from scratch rather than checked. It must be transmitted out of state to the legal department of the entity the employee has just started working for. And the clock runs from receipt, during the first month of a new job, when the incentive to identify oneself to in-house counsel as the person who declined the company's dispute resolution terms is close to zero.

The consequence is doctrinal, not rhetorical. California applies a sliding scale: the more procedural unconscionability a court finds, the less substantive unconscionability it needs to refuse enforcement. The California Supreme Court reaffirmed that framework on 2 February 2026 in Fuentes v. Empire Nissan, Inc., No. S280256, holding that illegible small print goes exclusively to procedural unconscionability because it does not touch the substance of the terms, while instructing courts to scrutinise the terms closely where the procedural showing is high. A high-friction opt-out does the same work. It buys the substantive challenge a lower bar to clear.

The California line from Armendariz to Cluck

Six decisions now define the operating envelope for anyone drafting employment arbitration terms enforceable in California. Read as a sequence, they explain why Cluck was the predictable next step rather than an outlier.

Decision	Court and date	What it established	Drafting consequence
Armendariz v. Foundation Health Psychcare Servs. (2000) 24 Cal.4th 83	Cal. Supreme Court	Employment arbitration requires a modicum of bilaterality; one-sided coverage is substantively unconscionable	Symmetry in covered claims is the baseline, not a courtesy
Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482	Ct. App., 2d Dist.	Arbitration and confidentiality agreements signed in one hiring are read together; unconscionability in one infects the other; refusal to sever upheld	The packet, not the clause, is the unit of review
Ramirez v. Charter Communications (2024) 16 Cal.5th 478	Cal. Supreme Court	Asymmetric coverage, shortened limitations and fee exposure are substantively unconscionable; severance is a qualitative judgment on the totality, with no bright-line count	Multiple defects do not automatically void, and one defect does not automatically save
Fuentes v. Empire Nissan, Inc., No. S280256 (2 Feb. 2026)	Cal. Supreme Court	Formatting and legibility are procedural only; sliding scale reaffirmed; a companion document silent on forum can imply a litigation carve-out	Silence on forum in a second document is a drafting decision, not a gap
Santana v. Studebaker Health Care Ctr., LLC, No. B343640 (7 Apr. 2026, pub. 22 Apr. 2026)	Ct. App., 2d Dist., Div. Seven	Ambiguities across three onboarding arbitration documents did not defeat mutual intent to arbitrate; denial of motion to compel reversed	Multiplicity alone is survivable; asymmetry is not
Cluck v. GEO Secure Servs., LLC, No. D087341 (3 Aug. 2026)	Ct. App., 4th Dist., Div. One	Confidentiality agreement's Florida court-and-no-jury reservation, read with the arbitration agreement, is substantively unconscionable; burdensome opt-out supplies procedural unconscionability; denial of motion to compel affirmed	Audit every companion document for forum asymmetry

The Santana counter-example: when multiple onboarding documents survive

The September commentary presents Cluck as a warning about onboarding packets generally. That overstates it, and the overstatement is itself a drafting hazard, because it invites the conclusion that nothing can be done. Four months before Cluck, the Second Appellate District, Division Seven, reversed a denial of a motion to compel in Santana v. Studebaker Health Care Center, LLC, No. B343640, where the employer had required three related arbitration documents at onboarding and those documents were ambiguous about Federal Arbitration Act applicability, arbitrator selection and the treatment of representative claims under the Private Attorneys General Act. Ambiguity across multiple instruments did not defeat the parties' mutual intent to arbitrate.

Put Santana and Cluck together and the line is clear. Courts will tolerate a messy, multi-document, internally ambiguous arbitration architecture and resolve the ambiguities toward enforcement. What they will not tolerate is an architecture that, once assembled, allocates the employee's likely claims to the arbitrator and the employer's likely claims to a court. Ambiguity is a construction problem. Asymmetry is an unconscionability problem, and only the second one is fatal.

Is a carve-out for injunctive relief unconscionable in California?

Not automatically, but a carve-out that reserves to the employer alone a judicial forum for the claims the employer is realistically going to bring, particularly one that also fixes the venue and waives the jury in advance, is the classic substantively unconscionable term, and placing it in a confidentiality agreement rather than in the arbitration agreement does not insulate it.

The distinction worth preserving is between provisional and final relief. A mutual provision preserving either party's right to seek provisional injunctive relief in aid of arbitration — the kind of reservation contemplated by statute and by most institutional rules — is materially different from a standing reservation of a court forum for the merits of an entire claim category. Cluck involved the second kind: the confidentiality agreement stipulated irreparable harm, declared GEO "will be entitled to" special remedies, and sent those remedies to a Florida bench trial. Nothing reciprocal appears on the employee's side of the ledger.

Can a court sever the unconscionable terms instead of voiding the whole arbitration agreement?

It can, and California's severance statute, Civil Code section 1670.5, expressly permits a court to refuse enforcement of the contract, enforce the remainder without the unconscionable clause, or limit the clause's application — but Ramirez makes severance a qualitative judgment on the totality of the circumstances rather than an arithmetic one, and where the defect is the shape of the bargain rather than a discrete excisable term, there is often nothing to cut.

That is the structural reason Cluck could not be rescued by blue-pencilling. The problem was not a clause that could be struck and the rest left standing. The problem was the allocation of forums across two documents. Removing the Florida provision would not restore mutuality; it would leave the confidentiality agreement silent on forum, which is precisely the condition Fuentes identified as implying a litigation carve-out. Alberto is to the same effect: the trial court's conclusion that unconscionability permeated the agreement and its refusal to sever were upheld as a reasonable exercise of discretion.

Practitioners tracking mass claims will recognise the pattern from Heckman v. Live Nation Entertainment, Inc., where the Ninth Circuit held an entire mass arbitration programme procedurally and substantively unconscionable and declined to sever the offending provisions, taking the delegation clause down with the agreement. Severance is the defendant's last line, and it is the line that fails most often when the vice is architectural.

Does Cluck apply outside California?

Directly, no — it is a California Court of Appeal decision applying California unconscionability law, and it binds California trial courts. Indirectly, it reaches any employer whose standard onboarding package is used in California, and its reasoning is portable to every state that applies the ordinary rule that contemporaneous writings forming one transaction are construed together, which is most of them.

The Federal Arbitration Act (FAA) does not supply an answer for the defence here. Section 2 preserves generally applicable state-law contract defences, and construing simultaneously executed documents together is about as generally applicable as a contract rule gets. A national employer that maintains a single onboarding template therefore faces the practical reality that its California exposure sets the ceiling for the template as a whole, unless it is prepared to maintain state-specific packets and to keep them synchronised as the underlying instruments are revised by different functions inside the business.

What should drafters change after Cluck?

The audit unit changes from the clause to the packet. Four concrete moves follow directly from the defects the panel identified.

Inventory the companion documents. Confidentiality, invention assignment, non-solicitation, equity award, relocation repayment, arbitration and handbook acknowledgements are frequently owned by different functions and revised on different cycles. Establish which of them say anything about forum, venue, jury, injunctive relief or governing law.

Make forum treatment symmetrical and explicit. Either route the employer's confidentiality and competition claims to arbitration on the same terms as the employee's claims, or confine any judicial reservation to mutual provisional relief in aid of arbitration. Leaving a companion document silent is the worst of the three options after Fuentes, because silence is read as permission to litigate.

Strip friction from the opt-out. If the programme relies on an opt-out to answer procedural unconscionability, the opt-out must be executable on day one by a person who has not yet been issued a system credential, in a single step, without composing original prose, and without addressing it to the legal department of the employer. A checkbox with a business-day clock that starts on signature is defensible. A drafted statement faxed out of state inside 30 days is not.

Drop the stipulated-harm recital. Language declaring that breach "will cause irreparable harm" and that the company "will be entitled to" relief converts a remedy into a pre-agreed entitlement. Coupled with an employer-only judicial forum, it reads as the employer writing itself a better dispute resolution deal than the one it imposed.

What it means for each audience

Audience	Consequence of Cluck	Concrete step
Clause drafters	The arbitration agreement is no longer the unit of review; the onboarding packet is	Run a forum-allocation matrix across every document signed in the first week and eliminate one-way entries
Employer-side defendants	A Motion to Compel Arbitration can now fail on a document the motion never mentions	Produce and analyse all contemporaneous agreements before moving, and expect the plaintiff to do so if you do not
Claimants' counsel	Unconscionability discovery extends to the whole hiring file	Demand the complete onboarding packet and the opt-out administration records, not just the arbitration agreement
Mass arbitration programme owners	The programme's batching, fee and Bellwether Provision (Arbitration) design is irrelevant if the clause dies at the threshold	Validate enforceability against California asymmetry law before investing in protocol design
Litigation funders and portfolio buyers	Enforceability risk in employment portfolios is a packet-level diligence item	Price California employment claim inventories on the full document set

For anyone running a mass arbitration defence, the sequencing point is the one to carry away. Batching schedules, Mass Filing Threshold triggers, staged fee structures and bellwether protocols all presuppose an enforceable agreement. Heckman demonstrated that a sophisticated programme can be struck down in its entirety on unconscionability grounds. Cluck demonstrates that the vulnerability need not even reside in the programme documents. A confidentiality agreement drafted years earlier by a different team, for an unrelated purpose, can be the instrument that takes the whole structure down.

Frequently asked questions

Does Cluck mean employers cannot use confidentiality agreements?

No. The decision does not restrict confidentiality agreements as such. It holds that where such an agreement is signed as part of the same hiring transaction and allocates a forum for the employer's likely claims, it is read together with the arbitration agreement and its one-sidedness counts against enforcement of arbitration.

Was the arbitration agreement itself defective?

The panel's reasoning does not turn on a defect internal to the arbitration agreement. The substantive unconscionability arose from the combination of the two instruments, and the procedural unconscionability from the standardised onboarding form and the burdensome opt-out procedure.

How long did employees have to opt out, and why was that not enough?

Thirty days from receipt, with continued employment treated as acceptance if no opt-out was made. The period was not the problem on its own; the steps were. The employee had to obtain an employee identification number first, then prepare a separate written statement, then send it to the legal department in Florida.

Is Cluck citable authority?

The opinion was filed on 3 August 2026 and certified for partial publication, so the published portions are citable in California. Practitioners relying on a specific passage should confirm that it falls within the published portions of the opinion.

Does the Federal Arbitration Act preempt this result?

The reasoning rests on a generally applicable California contract rule — that writings executed as parts of one transaction are construed together — and on the general unconscionability doctrine. Under section 2 of the Federal Arbitration Act (FAA), generally applicable contract defences survive preemption, which is why a preemption argument is a difficult one on these facts.

What is the single most useful fix?

Make the forum allocation symmetrical across every document in the onboarding packet. Every other change is secondary to removing the pattern in which the employee's realistic claims go to an arbitrator and the employer's realistic claims go to a court.

This article is analysis of a published decision and is not legal advice.