Judge: Daniel S. Murphy, Case: 23STCV15760, Date: 2023-11-20 Tentative Ruling

Case Number: 23STCV15760    Hearing Date: November 20, 2023    Dept: 32

BACKGROUND

            On July 6, 2023, Plaintiff Antonella Semere filed this action against Defendant Hawaiian Gardens Casino, alleging (1) discrimination, (2) retaliation, (3) failure to prevent, and (4) wrongful termination.

            On September 8, 2023, Defendant filed the instant motion to compel arbitration. Plaintiff filed her opposition on November 6, 2023. Defendant filed its reply on November 13, 2023.

LEGAL STANDARD

The Federal Arbitration Act (“FAA”) states that “[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . 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 term “involving commerce” is interpreted to mean simply “affecting commerce” to give the FAA the broadest reach possible, and does not require a transaction that is actually “within the flow of interstate commerce.” (See Allied-Bruce Terminix Co. v. Dobson (1995) 513 U.S. 265, 273-74; Citizens Bank v. Alafabco, Inc. (2003) 539 U.S. 52, 56.) Moreover, parties may agree to apply the FAA notwithstanding any effect on interstate commerce. (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.)

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists….” (Code Civ. Proc, § 1281.2.) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

DISCUSSION

            Upon onboarding in February 2017, Plaintiff signed an Employee Handbook Acknowledgement, agreeing “to be bound by the policies and procedures contained within the Handbook.” (Rojas Decl., Ex. A.) The Handbook contains a provision on Mandatory Arbitration covering any claim between Plaintiff and Defendant arising from Plaintiff’s employment or termination thereof, including discrimination claims. (Id., Ex. B.)

            Plaintiff argues that no agreement to arbitrate was formed because she was not provided with a copy of the Handbook and had not read it when she signed the acknowledgment. (Semere Decl. ¶¶ 4, 5, 9.) Plaintiff denies knowledge of the arbitration provision and avers that no one explained arbitration to her. (Id., ¶¶ 17, 18.) Plaintiff argues that the acknowledgment fails to expressly confirm that Plaintiff has read the Handbook.

            Courts have found “no agreement to arbitrate [where] language in the handbook or acknowledgment forms . . . indicated that the handbook was intended to be informational, not contractual; could be changed by the employer at any time; or did not create a contract of employment.” (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 784.) An arbitration clause in a handbook is not an enforceable agreement to arbitrate where it is “not prominently distinguished from the other clauses . . . not specifically highlighted, and there is no place for the employee to acknowledge it in writing.” (Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1519.) “At a minimum, there should be a specific reference to the duty to arbitrate employment-related disputes in the acknowledgment of receipt form signed by the employee at commencement of employment.” (Id. at p. 1522.) The right to a judicial forum cannot be waived “based on one obscure clause in a large employee handbook distributed to new employees for informational purposes.” (Ibid.)

Here, Defendant’s Employee Handbook begins by stating that it “is a guide for all employees” to help them “know what they can expect from the Company and what will be expected from them.” (Rojas Decl., Ex. B.) The Handbook purports to list “some of the general expectations, rules and regulations regarding employment at Hawaiian Gardens Casino.” (Ibid.) This indicates that the Handbook is meant to be informational, not contractual. “Conspicuously absent from the acknowledgment receipt form is any reference to an agreement by the employee to abide by the employee handbook's arbitration agreement provision.” (Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 1173.) The arbitration provision is not specifically highlighted or distinguished from other clauses in the thirty-page Handbook. (See Rojas Decl., Ex. B; Serrano Decl., Ex. 2.) The policies in the Handbook are also subject to change by Defendant at any time without notice. (Rojas Decl., Ex. A, B.) These factors weigh against finding an agreement to arbitrate. (See Mendoza, supra, 75 Cal.App.5th at p. 784.)

It is true that the acknowledgment form states that Plaintiff “agree[s] to be bound by the policies and procedures contained within the Handbook” and that Plaintiff is “expected to read, understand and will familiarize [her]self with the material in the Employee Handbook.” (Rojas Decl., Ex. A.) However, “[m]erely agreeing to abide by all applicable rules and policies and to ‘read, observe and abide by’ the contents of the Handbook that ‘is designed for quick reference and general information’ does not constitute a contract and does not bind the employee to arbitration.” (Mendoza, supra, 75 Cal.App.5th at p. 786.) As discussed above, there should at least be a specific reference to arbitration in the acknowledgment form. (Sparks, supra, 207 Cal.App.4th at p. 1522.)

Relying on Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, Defendant argues that Plaintiff consented to arbitration by continuing her employment. However, in Harris, “the acknowledgement form which plaintiff signed included acknowledging receiving both the Employee Handbook and the attached arbitration agreement.” (Id. at p. 383.) “[T]he arbitration agreement . . . was specifically highlighted in the signed acknowledgement form.” (Ibid.) The arbitration provision “state[d] without equivocation that receipt and agreement to the mandatory arbitration policy [was] ‘an absolute prerequisite’ to hiring and continued employment.” (Ibid.) The policy further stated that “[i]f, for any reason, an applicant fails to execute the Agreement to Arbitrate yet begins employment, that employee will be deemed to have consented to the Agreement to Arbitrate by virtue of receipt of this Handbook.” (Ibid.) The court in Diaz v. Sohnen Enterprises (2019) 34 Cal.App.5th 126, 130 similarly held that “[w]hen an employee continues his or her employment after notification that an agreement to arbitration is a condition of continued employment, that employee has impliedly consented to the arbitration agreement.” In Diaz, there was an “express explanation provided twice to Diaz: that continued employment would itself be a manifestation of agreement to the arbitration provisions.” (Ibid.)

None of this is present here. Here, the acknowledgment form states that Plaintiff “ha[s] been informed that a copy of [the Handbook] is available through UltiPro, or by requesting a copy from Human Resources” and that Plaintiff is “expected” to read the Handbook. (Rojas Decl., Ex. A.) The acknowledgment does not state that Plaintiff has received or read the Handbook. The acknowledgment form does not mention arbitration. Neither the Handbook nor the acknowledgment states that agreeing to the arbitration policy is a prerequisite for hiring or continued employment. Nor is there any statement that an employee will be deemed to have consented to the arbitration agreement by continuing their employment.

Plaintiff cannot be deemed to have executed an agreement to arbitrate where the only instrument Plaintiff signed is an acknowledgment that she has been told where to find the Handbook and that she is expected to read the Handbook. The acknowledgment form does not confirm that Plaintiff has read the Handbook or is aware of an arbitration clause. Under such circumstances, the weight of authority stands against a finding that the parties agreed to arbitration. (See Mendoza, supra, 75 Cal.App.5th at p. 784; Sparks, supra, 207 Cal.App.4th at p. 1522; Mitri, supra, 157 Cal.App.4th at p. 1173.) Although the law favors arbitration, it does not require arbitration where no agreement to arbitrate exists. (Lopez v. Charles Schwab & Co., Inc. (2004) 118 Cal.App.4th 1224, 1229.)

CONCLUSION

            Defendant’s motion to compel arbitration is DENIED.