In its October 17, 2013 opinion in Sonic-Calabasas v. Moreno (Sonic II), the California Supreme Court overturned its decision in Sonic-Calabassas v. Moreno (Sonic I) categorically prohibiting the waiver of an employee's right to a state Labor Commissioner hearing for unpaid wages (called a Berman hearing) in a pre-dispute arbitration agreement. In Sonic II, the California Supreme Court held, in a 5-2 decision, that employment arbitration agreements that preclude employees from pursuing administrative remedies are enforceable because the Federal Arbitration Act (FAA) preempts state law that imposes procedures delaying the arbitration process. However, such arbitration agreements may be unenforceable if found to be unconscionable under the standard articulated by the California Supreme Court in Armendariz v. Foundation Health Psychcare Servs., Inc..

Plaintiff was a former employee of Sonic-Calabasas A, Inc. (Sonic) who had signed an employment agreement with a binding arbitration clause as a condition of employment. After his employment ended, the plaintiff filed a wage claim with the Labor Commissioner to recover payment of accrued vacation. Sonic moved to compel arbitration.

The superior court denied the motion to compel as a matter of public policy, allowing for the Berman hearing to be held prior to arbitration. The Court of Appeals reversed, holding that the arbitration agreement waived the Berman hearing. On appeal, the California Supreme Court concluded that the employee could be compelled to arbitrate, but he could not be forced to waive his right to a Berman hearing prior to arbitration. The US Supreme Court then granted Sonic's petition for a writ of certioriari, vacated the California Supreme Court's decision and remanded the case to the California Supreme Court for further consideration in light of the US Supreme Court's holding in AT&T Mobility LLC v. Concepcion, which bars courts from imposing unconscionability rules that delay or interfere with arbitration procedures.

Applying Concepcion's ruling, and reviewing the US Supreme Court's decision in American Express v. Italian Colors Restaurant which was decided while Sonic II was pending, the California Supreme Court held:

The court then remanded the case to the trial court to decide the merits of the employee's unconscionability defense.

Among other things, the dissent rejected the majority's application of an "unreasonably one-sided" standard for unconscionability, insisting that courts should review agreements using a "shocks the conscience" standard.

The dissent also argued that the FAA precludes the majority's directive to courts to review arbitration agreements for unconscionability on a case by case basis. A court's subjective determination that an arbitration agreement is unconscionable frustrates the holding in Concepcion and the purpose of the FAA to ensure that private arbitration agreements are enforced according to their terms in a streamlined, efficient and inexpensive manner.