PREGERSON, Circuit Judge:
Paul Mantor appeals from the district court's grant of Circuit City Stores, Inc's
Facts and Procedural Background
Paul Mantor worked for Circuit City from August 1992 until October 2000, when Circuit City terminated his employment. When Circuit City hired Mantor, it had no arbitration program. In 1995, Circuit City implemented an arbitration program called the "Associate Issue Resolution Program" (AIRP).
On October 10, 2001, a year after Circuit City terminated his employment, Mantor brought a civil action in state court, alleging twelve causes of action.
We have jurisdiction to review an order compelling arbitration under 9 U.S.C. § 16(a)(3) (2000). Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 84-89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000); Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299, 1302 (9th Cir.1994), cert. denied, 516 U.S. 812, 116 S.Ct. 61, 133 L.Ed.2d 24 (1995). We review de novo the district court's order compelling arbitration. Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 n. 2 (9th Cir.2002) (Adams III).
Mantor contends that Circuit City's arbitration agreement
To determine whether Circuit City's arbitration agreement with Mantor is procedurally unconscionable we must evaluate how the parties negotiated the contract and "the circumstances of the parties at that time." Ingle, 328 F.3d at 1171 (quoting Kinney v. United Healthcare Servs., Inc., 70 Cal.App.4th 1322, 1329, 83 Cal.Rptr.2d 348, 352-53 (1999)). One factor courts consider to determine whether a contract is procedurally unconscionable is whether the contract is oppressive. Id. Courts have defined oppression as springing "from an inequality of bargaining power[that] results in no real negotiation and an absence of meaningful choice." Stirlen v. Supercuts, Inc., 51 Cal.App.4th 1519, 1532, 60 Cal.Rptr.2d 138, 145 (1997) (internal quotation marks and citations omitted). Another factor courts look to is surprise, defined as "the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms." Id.
Circuit City argues that because Mantor was given an opportunity to "opt-out" of the arbitration agreement, the agreement was not oppressive — and therefore not procedurally unconscionable. In support of its argument, Circuit City cites our decisions in Circuit City Stores, Inc. v. Najd, 294 F.3d 1104 (9th Cir.2002), and Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198 (9th Cir.2002). We do not agree that Najd and Ahmed guide our analysis here; in both Najd and Ahmed, the arbitration agreement did not prove procedurally unconscionable specifically because both Najd and Ahmed had a meaningful opportunity to opt-out of the arbitration program. See Najd, 294 F.3d at 1108; Ahmed, 283 F.3d at 1200. Mantor had no such meaningful opportunity.
In 1995, Mantor was given an "opt-out" form by which he could elect not to participate in the arbitration program. But Circuit City management impliedly and expressly pressured Mantor not to opt-out, and even resorted to threatening his job outright should Mantor exercise his putative "right" to opt-out.
We turn now to consider whether the arbitration agreement is substantively unconscionable. Substantive unconscionability concerns the "`terms of the agreement and whether those terms are so one-sided as to shock the conscience.'" Ingle, 328 F.3d at 1172 (quoting Kinney, 70 Cal. App.4th at 1330, 83 Cal.Rptr.2d at 353 (citations omitted)).
To evaluate the substantive terms of a contract, a court must analyze the contract "as of the time [it] was made." A & M Produce Co., 135 Cal.App.3d at 487, 186 Cal.Rptr. 114 (citation omitted).
Many of the terms we have already held to be substantively unconscionable in earlier versions of Circuit City's arbitration agreement remain in the 2001 version we review in this case. In Ingle, we reviewed the 1998 version of Circuit City's arbitration agreement, holding that the scope of the agreement itself as well as the terms concerning the statute of limitations, the prohibition on class actions, the filing fee, cost-splitting, remedies, and Circuit City's unilateral power to modify or terminate the arbitration agreement were substantively unconscionable. Ingle, 328 F.3d at 1172-79.
We note that Circuit City has modified and improved its arbitration agreement to comport with our holding regarding limitations on available remedies.
1. Filing Fee/Waiver Provision
Under its arbitration program, Circuit City requires an employee to pay a seventy-five dollar filing fee to initiate an arbitration proceeding. In Ingle, we criticized the filing fee rule in the 1998 version of the arbitration agreement because "the
We also observed that "Circuit City's  arbitration agreement ... makes no ... provision for waiver of the filing fee (or other fees and costs of arbitration)." Id. at 1177, 99 Cal.Rptr.2d 745, 6 P.3d 669. In federal court, indigent plaintiffs may be exempt from having to pay court fees. Id.; 28 U.S.C. § 1915(a)(1) (2000). In the 2001 version of the arbitration agreement we review here, Circuit City has revised the rule to allow for waiver of the filing fee. But the fact that Circuit City vests in itself the sole discretion to consider applications for waivers indicates that the process of filing could be halted unilaterally by Circuit City if an employee does not have the means to pay the seventy-five dollar filing fee. The fee waiver provision might not be one-sided if the discretion to waive the fee were assigned to a disinterested party.
2. Scope of Circuit City's Arbitration Agreement
We recognize that Circuit City has amended its arbitration agreement to indicate that legal claims brought by Circuit City and employees both are subject to arbitration. The agreement we reviewed in Ingle expressly applied to "all claims of an Associate." Circuit City has since excised the words limiting the scope of the agreement to employee claims. But we also noted in Ingle that "[e]ven if the limitation to claims brought by employees were not explicit, an arbitration agreement between an employer and an employee ostensibly binds to arbitration only employee-initiated actions." Id. at 1175. We reasoned that "[b]ecause the possibility that Circuit City would initiate an action against one of its employees is so remote, the lucre of the arbitration agreement flows one way: the employee relinquishes rights while the employer generally reaps the benefits of arbitrating its employment disputes." Id. at 1174 (footnote omitted). Thus, we concluded that:
Id. (footnote and citations omitted). This holding certainly would apply to the agreement we review in this case; however, this case had already been submitted by the time Ingle was decided. Circuit City, therefore, has not been given an opportunity to rebut the presumption that the arbitration agreement between Mantor and Circuit City is substantively unconscionable.
Under California law, a court has discretion whether to sever particular unconscionable terms or invalidate a contract entirely. Cal. Civ.Code § 1670.5(a) (1999). To assess whether unconscionable terms can be severed, a court considers whether the illegality is "central" or "collateral" to the purpose of the contract to determine whether an entire contract should be invalidated or whether only a particular term or set of terms should be severed. Armendariz, 99 Cal.Rptr.2d 745, 6 P.3d at 696-97. We are mindful of the federal policy in favor of arbitration agreements. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). But "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening" federal law. Doctor's Assocs. v. Casarotto, 517 U.S. 681, 686-87, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). As we discussed above, under California contract law, a party may not fashion an adhesive arbitration agreement that significantly limits the other party's ability to substantiate his legal claims. The arbitration agreement between Circuit City and Mantor violates that rule: the arbitration agreement was procedurally unconscionable and numerous provisions in Circuit City's arbitration agreement operate to benefit itself at its employees' expense. Because "[a]ny earnest attempt to ameliorate the unconscionable aspects of Circuit City's arbitration agreement would require this court to assume the role of contract author rather than interpreter," we hold that this agreement is unenforceable in its entirety. Ingle, 328 F.3d at 1180; Adams III, 279 F.3d at 895-96.
Because we conclude that the Circuit City arbitration agreement is unconscionable under California contract law, we reverse the district court's order compelling arbitration and remand with instructions to allow the civil action to continue in state court.