SAN DIEGO, July 16, 2026 /PRNewswire/ -- Zakay Law Group, APLC today announced a victory before the California Court of Appeal, Third Appellate District, in Phan v. Knight Sacramento SU Inc., affirming a trial court ruling that the employer's mandatory arbitration agreement was unconscionable and unenforceable.

The case arose after a former employee of Elk Grove Subaru and Elk Grove Volkswagen (operated by Knight Sacramento SU Inc.), filed a wage-and-hour class action alleging the dealership group failed to pay minimum and overtime wages, provide required meal and rest breaks, issue accurate wage statements, and reimburse business expenses. Knight sought to compel individual arbitration of Phan's claims and strike her class allegations, relying on arbitration agreements she had signed during her employment.

Both the Sacramento County Superior Court and the Court of Appeal rejected that effort. The court of Appeal held the arbitration agreements substantively unconscionable because they required Phan to arbitrate virtually any claim — including claims unrelated to her employment — against the company and a sweeping list of third parties, indefinitely, while imposing no reciprocal obligation on those third parties to arbitrate claims against her. Applying Cook v. University of Southern California (2024), the Court of Appeal found the scope and one-sidedness of the agreement unjustified and declined to sever the offending terms, allowing Phan's class action to proceed in court.

The opinion was certified for publication on July 2, 2026, making it binding authority within the Third Appellate District and persuasive authority statewide.

Zakay Law Group represents California employees in wage-and-hour class actions and PAGA claims statewide.

Employees with questions about an arbitration agreement they've signed, or about unpaid wages, missed breaks, or other wage-and-hour issues, are encouraged to contact Zakay Law Group for a free consultation.

Need help with a class action lawsuit? Call Zakay Law Group today at (619) 353-8032 or contact us online for a FREE consultation! 

Past results do not guarantee a similar outcome; every case depends on its own facts.

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SOURCE Zakay Law Group, APC