Judge David S. Cunningham, Case Number: 23STCV12938, Date: 2023-10-17 Tentative Ruling

Judge: David S. Cunningham, Case: 23STCV12938, Date: 2023-10-17 Tentative Ruling

Moving Party: PeopleReady, Inc. (“PeopleReady”) and TrueBlue, Inc. (“TrueBlue”) (collectively “Defendants”)

The hearing on Defendants’ motion to compel arbitration is continued. The Court intends to hold an evidentiary hearing with testimony under oath to determine whether Plaintiff signed the arbitration agreement and/or impliedly accepted it.

“PeopleReady is a staffing agency that specializes in providing quick and reliable temporary workers, which PeopleReady calls ‘Temporary Associates,’ to client employers.” (Mering Decl., ¶ 3.) “PeopleReady provides Temporary Associates to client employers in a wide range of industries, including construction, manufacturing and logistics, retail, and hospitality.”

According to Defendants, in August 2012, Plaintiff “applied to work as a Temporary Associate for PeopleReady . . . at the PeopleReady San Bernardino Branch, No. 1567[.]” (Id. at ¶ 4.)[1] Defendants claim he signed an arbitration agreement, “worked for a short period,” and then stopped working for approximately three years. (Id. at ¶ 6.)

In 2015, he allegedly returned to PeopleReady and signed another arbitration agreement. (See id. at ¶¶ 6, 8-9.)

On 6/7/23, Plaintiff filed a putative “wage and hour” class action against Defendants.

Now, Defendants move to compel arbitration of Plaintiff’s individual claims and to dismiss (or stay) the rest of the case.

“[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4^th 394, 413.)

“Under ‘both federal and state law, the threshold question . . . is whether there is an agreement to arbitrate.’” (Cruise v. Kroger Co. (2015) 233 Cal.App.4^th 390, 396, emphasis in original.)

The burden of proof rests with the petitioner. (See Rosenthal, supra, 14 Cal.4^th at 413 [requiring the petitioner to prove the existence of the agreement “by a preponderance of the evidence”].) To meet the burden, “the provisions of the written agreement and the paragraph that provides for arbitration . . . must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (Cal. Rules of Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4^th 215, 218 [same].)

“Competent evidence is required to establish both the existence of the arbitration agreement and any ground for denial.” (Knight, et al., Cal. Prac. Guide: Alt. Disp. Res. (The Rutter Group December 2022 Update) ¶ 5:321.) “The verified petition (and attached copy of the agreement) normally proves the existence of the arbitration agreement. Affidavits or declarations may be necessary when factual issues are tendered.” (Ibid.)

Defendants claim Plaintiff signed two arbitration agreements, one in 2012 and one in 2015, yet they only move to compel arbitration under the 2015 agreement. (See Motion, pp. 1 n.1, 6 n.3.)[2]

AGREEMENT TO ARBITRATE. The Company, including its affiliates, subsidiaries, and parents (including TrueBlue, Inc.), and their respective employees, agents, officers, directors, shareholders, successors, and assigns, and I (“Parties”) agree that for any claim arising out of or relating to this Agreement or breach of this Agreement, my employment, application for employment, and/or termination of employment, shall be submitted to and resolved by binding individual arbitration under the Federal Arbitration Act (“FAA”). For purposes of this Agreement, the Parties specifically agree that the Company's affiliates, subsidiaries, and parents (including TrueBlue, Inc.), and their respective employees, agents, officers, directors, shareholders, successors and assigns are designated as third-party beneficiaries to the terms of this Agreement. The Parties agree that all claims shall be submitted to arbitration including, but not limited to: claims based on any alleged violation of any constitution, federal, state, or local law; any claims of discrimination, harassment, retaliation, wrongful termination, or violation of civil rights; claims for wages or compensation owing; any claim based in tort, contract, or equity; or, any claim arising under the TCPA or any state consumer protection law or regulation. In no way does this agreement limit my ability to bring claims before the NLRB, EEOC, or any local, state or federal governmental or administrative agency, or to utilize the procedures of those agencies.

SCOPE OF ARBITRATION. The Parties agree that arbitration in no way limits the relief that any party may seek regardless of the jurisdiction in which the arbitration has been filed. THE PARTIES AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER OR ANY THIRD PARTY ONLY IN THEIR INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS ACTION, COLLECTIVE ACTION, OR REPRESENTATIVE PROCEEDING. Further, unless the Parties agree otherwise, the arbitrator may not consolidate more than one person’s claims, and may not otherwise preside over any form of a representative or class proceeding. If this specific paragraph regarding scope of arbitration is found to be unconscionable, then the entirety of Section 2 (DISPUTE RESOLUTION) shall be null and void.

ARBITRATION PROCEDURE. Any arbitration between the Parties will be administered by the American Arbitration Association (“AAA”) under its Employment Arbitration rules then in effect, which can be accessed via http:/www.adr.org. A copy of such rules can also be provided upon request. Unless the Parties agree otherwise, any arbitration hearings will take place in the county (or parish) where I last worked for the Company. The Company will pay all AAA administration, and arbitrator fees for any arbitration as well as any filing fees where required by law. If, however, the arbitrator finds that either the substance of my claim or the relief sought in the demand is frivolous or brought may for an improper purpose (as measured by the standards set forth in Federal Rule of Civil Procedure 11(b)), then the arbitrator may award all fees and costs as per Rule 11 to the Company. Notwithstanding the foregoing, either party may bring an individual action in small claims court.

CLAIMS UNDER $10,000. If my demand for arbitration is for $10,000 or less, the Company will promptly reimburse me for my payment of any filing fee for arbitration, and the Parties agree that I may choose whether the arbitration will be conducted solely on the basis of documents submitted to the arbitrator, through a telephonic hearing, or by an in-person hearing as established by the AAA Employment Arbitration Rules. Also, if after a finding in my favor in any respect on the merits of my claim, the arbitrator issues me an award that is greater than the value of the Company's last written settlement offer made, then the Company will: (1) pay me the amount of the award or $10,000, whichever is greater; and (2) pay my attorney, and reimburse any expenses (including expert witness fees and costs) that my attorney reasonably accrues for investigating, preparing, and pursuing my claim in arbitration.

Plaintiff does not challenge these provisions. He does not contend the agreement is unconscionable.

Rather, the dispute concerns assent. Defendants do not have a signed copy of the 2015 agreement. There is no signed copy, they claim, because Plaintiff’s onboarding documents were destroyed in an office fire in June 2021. (See Motion, p. 5; see also Mering Decl., ¶ 12; James Decl., Ex. A.) But Plaintiff says he does not remember signing an arbitration agreement. Ever. (See Plaintiff Decl., ¶ 4.) Defendants disagree. They contend Plaintiff must have signed the 2015 agreement because all Temporary Associates were required at that time to sign it as a matter of company practice. (See Motion, pp. 3-4, 6-8; see also Mering Decl., ¶¶ 8-9.) And assuming he did not sign it, Defendants contend he effectively accepted it by continuing to work after PeopleReady gave it to him during onboarding. (See Motion, pp. 8-10.)

In support of their contentions, Defendants primarily cite Sprunk v. Prisma, LLC (2017) 14 Cal.App.5^th 785, Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4^th 416, Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4^th 373, Lovig v. Best Buy Stores L.P. (N.D. Cal., Aug. 28, 2018, Case No. 18-cv-02807-PJH) 2018 U.S. Dist. LEXIS 146473, Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4^th 223 (“Pinnacle”), Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4^th 50, and Davis v. Nordstrom, Inc. (9^th Cir. 2014) 755 F.3d 1089. (See Motion, pp. 7-10; see also Reply, pp. 6 [addressing Craig and Harris], 10 [addressing Sprunk].)

In Sprunk, the defendant asserted that “each class member signed an arbitration provision[.]” (Sprunk, supra, 14 Cal.App.5^th at 794.) The plaintiff “did not challenge the truth” of the assertion. (Ibid.) Nevertheless, the Court of Appeal found that the defendant “waived its right to seek arbitration by filing and then withdrawing a motion to compel arbitration against the named plaintiff . . . and then waiting until after a class had been certified to seek arbitration against class members.” (Id. at 788.)

In Craig, a former employee sued her former employer and former supervisor for wrongful termination, sexual harassment, and gender discrimination. The trial court granted the employer’s motion to compel arbitration and subsequently confirmed the arbitrator’s award in favor of the employer.

On appeal, the employee claimed the evidence was insufficient to prove an agreement to arbitrate. The employer said it had mailed a brochure containing the arbitration agreement and an explanatory memorandum to the employee’s home address. The employee claimed she never received the documents.

Brown & Root's evidence shows that copies of its memorandum and brochure were twice sent to Craig, once in 1993, then again in 1994. This evidence created a presumption that Craig received the items that were sent, and shifted the burden of producing evidence to her. [Citations.] As is true of most presumptions affecting the burden of producing evidence, this one is an expression of common experience, one in which the presumed fact (receipt of that which was mailed) is so likely to be true that the law requires it to be assumed in the absence of contrary evidence. [Citation.]

When the foundational facts are established, a presumption affecting the burden of producing evidence obligates the trier of fact to assume the existence of the presumed fact unless and until evidence is introduced to support a finding of its nonexistence—in which event the trier of fact determines the existence or nonexistence of the fact from the evidence and without regard to the presumption. [Citation.] Although the presumption disappears where, as here, it is met with contradictory evidence, inferences may nevertheless be drawn from the same circumstances that gave rise to the presumption in the first place. [Citations.]

On this appeal, the disappearance of the presumption is moot. Its only relevance was in the trial court, where the trier of fact (in this context, the court) was required to determine the contested fact (whether the memorandum and brochure were received by Craig) without regard to the presumption and solely on the basis of the conflicting evidence – Brown & Root's declarations and documents showing that the items were mailed to Craig at her home address and not returned, and Craig's equivocal denial of receipt. The trial court decided that issue in favor of Brown & Root, and its credibility call is binding on this appeal. [Citation.]

The disappearance of the presumption does not mean there is insufficient evidence to support the trial court's finding. Brown & Root's declarations and documents (mailing lists) are circumstantial evidence from which the court was entitled to infer that Craig had received the memorandum and brochure. “‘[I]f a party proves that a letter was mailed, the trier of fact is required to find that the letter was received in the absence of any believable contrary evidence. However, if the adverse party denies receipt, the presumption is gone from the case. The trier of fact must then weigh the denial of receipt against the inference of receipt arising from proof of mailing and decide whether or not the letter was received.’” [Citation.]

Accordingly, there is substantial evidence (1) that the memorandum and brochure were received by Craig in 1993 and again in 1994; (2) that she continued to work for Brown & Root until 1997; and (3) that she thereby agreed to be bound by the terms of the Dispute Resolution Program, including its provision for binding arbitration.

[the] [e]mployer distributed an employee handbook containing an arbitration provision as an appendix. Employee acknowledged receipt of the handbook but argued there was no valid arbitration agreement because he did not sign the agreement but only acknowledged receipt of the documents. Under general principles of contract law, an arbitration agreement was formed. Employee unequivocally accepted the employment offer, commenced work and received payment, constituting assent to the employment terms of which he was aware. The handbook specifically discussed the situation where an employee does not execute the arbitration agreement and accepts employment. . . .

(Knight, supra, at ¶ 5:82.3 [summarizing Harris].) To be precise, page nine of the handbook stated that, “upon commencing employment, the employee was deemed to have consented to the agreement to arbitrate by virtue of acceptance of the Employee Handbook.” (Harris, supra, 248 Cal.App.4^th at 384; see also id. at 379 [quoting paragraph 10 of the arbitration agreement: “If Employee voluntarily continues his/her employment with TAP [Worldwide, LLC,] after the effective date of this Policy [or January 1, 2010], Employee will be deemed to have knowingly and voluntarily consented to and accepted all of the terms and conditions set forth herein without exception.”].)

Lovig “involved a dispute over whether the employee assented to Best Buy’s Arbitration Policy[.]” (Rakowski v. Best Buy Stores, L.P. (D. Md., Nov. 3, 2020, Case No. ELH-20-1107) 2020 WL 6485085, at *11 [summarizing Lovig].) “[T]he court found that there was an enforceable arbitration agreement between the employee and Best Buy even though the employee never completed the E-Learning program on the Arbitration Policy or signed the acknowledgement.” (Ibid. [same].) Notably,

[t]he court held that the fact that the employee was put on notice of the Policy, the Policy specifically stated that continued employment constituted agreement to its terms, and plaintiff continued to work for Best Buy for five months after the Policy went into effect indicated the employee’s consent to be bound by the Arbitration Policy even if he did not know that his actions would constitute acceptance.

In Pinnacle, the California Supreme Court considered whether a condominium developer could compel arbitration against an owners association pursuant to an arbitration clause in the covenants, conditions, and restrictions (“CC&Rs”), which had been “executed and recorded before the time the association came into existence.” (Knight, supra, at ¶ 5:282.10 [summarizing Pinnacle].) The justices answered yes.

In Avery, the defendant moved to compel arbitration under two arbitration policies. The first was “contained in an employee handbook issued by . . . the previous owner of the four hospitals” where the plaintiffs worked. (Avery, supra, 218 Cal.App.4^th at 55.) The second was a “revised arbitration policy [] issued as part of a new employee handbook.” (Ibid.) The Court of Appeal held that the defendant could only move pursuant to the first policy since the plaintiffs’ claims accrued before the defendant issued the second policy.

Moreover, the Court of Appeal found that one of the plaintiffs “did not sign any document acknowledging or agreeing” to the first policy. (Ibid.) “She did not impliedly agree . . . by continuing to work at the hospitals because she did not receive notice of its existence.” (Ibid.)

As for the remaining plaintiffs, the defendant “submitted patchwork of acknowledgments and other [signed] forms . . . , but none of the[] documents refer[red] to the specific employee handbook [] filed as the source of the arbitration policy.” (Ibid.) “To the contrary, the documents [p]laintiffs signed either refer[red] to an entirely different document as the source of the arbitration policy or fail[ed] to meet the legal standards for incorporating by reference an arbitration policy or other document.” (Ibid.) “Without sufficient evidence of the actual arbitration policy to which [p]laintiffs agreed when they signed the acknowledgments and other documents,” the Court of Appeal found that they could not “enforce the policy against [p]laintiffs.” (Ibid.)

Davis permits an employer to “require an employee to arbitrate a dispute based on a revised provision in the employee handbook that the employee accepted by continuing employment after receiving reasonable notice of the revision.” (Knight, supra, at ¶ 5:149.3a [summarizing Davis].) “The employer is not required to advise the employee that continued employment after receiving notice is deemed acceptance of the new terms of employment.” (Ibid. [same].) Nordstrom “satisfied the 30-day notice requirement for modifications by sending a letter to all employees informing them of the modification and not attempting to enforce the arbitration provision during the notice period.” (Ibid. [same].)

Defendants are correct that “a party may be bound by an agreement to arbitrate even in the absence of his signature.” (Valero Refining, Inc. v. M/T Lauberhorn (5^th Cir. 1987) 813 F.2d 60, 64; see also Knight, supra, at ¶ 5:15 [noting that “even an unsigned arbitration agreement is enforceable”].) Indeed, “[a] signed agreement is not necessary, [] and a party’s acceptance may be implied in fact[.]” (Pinnacle, supra, 55 Cal.4^th at 236.) Implied acceptance occurs, for example, when an employee continues employment after being presented with the agreement. (See ibid.; see also Craig, supra, 84 Cal.App.4^th at 420.)

The 2015 agreement states that the FAA governs. These acceptance rules apply to agreements governed by the FAA. (See Amirhamzeh v. Wells Fargo Bank, N.A. (N.D. Cal., Oct. 31, 2014, Case No. 14-cv-02123-VC) 2014 WL 12610227, at *2 [quoting Nghiem v. NEC Electronic, Inc. (9^th Cir. 1994) 25 F.3d 1437 for the proposition that, “[w]hile the FAA requires a writing, it does not require that the writing be signed by the parties”]; see also Pinnacle, supra, 55 Cal.4^th at 236 [recognizing the “implied in fact” rule and citing Craig with approval in an FAA case].)

However, Defendants’ showing appears inadequate on the current record. Waiver is not at issue (Sprunk); presumed receipt via mail is not at issue (Craig); CC&Rs are not at issue (Pinnacle); Plaintiff challenges the truth of Defendants’ assertion that he signed the 2015 agreement (Sprunk); Defendants fail to show that Plaintiff acknowledged receiving an employee handbook attaching the agreement (Harris and Avery); Defendants also fail to show that they provided a letter or some other form of notice to Plaintiff (Craig, Lovig, Avery, and Davis); and the agreement itself fails to state that continued work equals acceptance (Harris and Lovig). In fact, the agreement calls for Plaintiff’s signature. (See Mering Decl., Ex. C, p. 3 [stating: “CAREFULLY READ THE FOLLOWING TERMS AND CONDITIONS WHICH SET FORTH THE LEGAL RELATIONSHIP BETWEEN YOU AND THE COMPANY. IF YOU AGREE WITH THESE TERMS & CONDITIONS, INDICATE YOUR AGREEMENT BY PLACING YOUR SIGNATURE BELOW”], capitalization in original, italics and bold added.) These factual differences render Defendants’ burden unsatisfied at this point.

Ultimately, though, the Court favors continuing the matter and holding an evidentiary hearing. Plaintiff does not claim he did not sign the agreement, only that he does not recall signing it. (See Plaintiff Decl., ¶ 4.) Defendants’ evidence of company practice (see Mering Decl., ¶¶ 4-9), if coupled with sufficient supplemental evidence, may be enough to establish an actual or implied agreement. The Court is inclined to grant both sides leave to bring witnesses to testify under oath at the hearing – e.g., Plaintiff, Defendants’ person most knowledgeable, and/or a hiring employee who assisted Plaintiff with the application process in 2015. The Court believes this is the fairest and most efficient way to resolve Defendants’ motion.

One last point. Plaintiff relies on Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4^th 836, Costa v. Road Runner Sports, Inc. (2022) 84 Cal.App.5^th 224, Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5^th 158, Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5^th 541, and Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5^th 1062. (See Opposition, pp. 9-13.) These cases are distinguishable or cannot be applied at this time given the undeveloped record. The Ruiz, Bannister, and Fabian courts analyzed disputed electronic signatures. (Cf. Reply, p. 2 [stating that, in 2004, 2012, and 2015, “the original application materials were paper forms filled out by hand”].) In Costa, the defendant admitted that the plaintiff did not have actual or constructive knowledge of the arbitration agreement and that he first became aware of it through his counsel in the course of litigation. Defendants do not admit the same here. In Gamboa, the Court of Appeal affirmed the trial court’s denial of the motion to compel arbitration because the declaration of the defendant’s human resources director was inadmissible to prove that the plaintiff signed the agreement. Plaintiff has not filed objections to Defendants’ declarations. Thus, it is appropriate to go forward with the evidentiary hearing.

[1] In August 2012, PeopleReady’s name was Labor Ready. (See ibid.)

[2] Plaintiff contends he could not have signed an arbitration agreement in 2012 because he actually started working for Defendants in 2004. Plaintiff asserts that he did not sign an agreement in or after 2004. (See Opposition, p. 4.)

In reply, Defendants state that they went back and reviewed their legacy electronic system and determined that Plaintiff is correct – he did work for them in 2004. They say he necessarily would have signed the 2004 arbitration agreement when he applied. (See Reply, pp. 2-4.)

This is a rabbit hole, and the Court declines to go down it. Defendants submitted the 2004 agreement for the first time in reply. There is no signed copy of it. Most importantly, Defendants’ notice of motion only requests arbitration pursuant to the 2015 agreement. (See Notice of Motion, p. 2.) What Plaintiff did or did not do in 2004 does not bear on whether he signed or otherwise agreed to the 2015 agreement.