Judge: David S. Cunningham, Case: 23STCV26302, Date: 2024-05-23 Tentative Ruling

Case Number: 23STCV26302    Hearing Date: May 23, 2024    Dept: 11

Brown (23STCV26302)

 

Tentative Ruling Re: Motion to Compel Arbitration

 

Date:                           5/23/24

 

Time:                          10:00 am

 

Moving Party:           Touchstone Golf, LLC (“Defendant” or “Touchstone”)

 

Opposing Party:        Zachary Brown (“Plaintiff”)

 

Department:              11

 

Judge:                        David S. Cunningham III

________________________________________________________________________

 

TENTATIVE RULING

 

Defendant’s motion to compel arbitration is denied.

 

BACKGROUND

 

Touchstone is a company that manages golf courses.  Plaintiff used to work for Touchstone.  He contends Touchstone subjected him and other current and former employees to numerous wage-and-hour violations.

 

Here, Touchstone moves to compel arbitration.

 

DISCUSSION

 

Existence and Assent

 

“[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.4th 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.4th 390, 396, emphasis in original.)

 

The burden of proof rests with the petitioner.  (See Rosenthal, supra, 14 Cal.4th 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.4th 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. Practice Guide: Alternative Dispute Resolution (The Rutter Group December 2023 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.)

 

Plaintiff started working for Defendant in July 2022.  (See Brown Decl., ¶ 4.)  During the onboarding process, which took place online, Plaintiff received several documents, including the employee handbook.  (See Kearney Decl., ¶¶ 5-14; see also Brown Decl., ¶ 7.)  It is undisputed that Plaintiff e-signed an acknowledgement form in which he acknowledged receiving the handbook.  (See Kearney Decl., ¶¶ 13-14; see also Brown Decl., ¶ 4.)

 

The last few pages of the handbook discuss arbitration and include Defendant’s arbitration agreement. The agreement states:

 

Agreement to Arbitrate Employment Disputes (Co-Worker Copy – Please keep):

 

Touchstone Golf and I further agree, in consideration of my employment with Touchstone Golf and the mutual promises contained herein, that any issue between myself and Touchstone Golf or any of its employees, agents, officers, directors or affiliates, which relates to my employment with Touchstone Golf, including, but not limited to any claims of discrimination, harassment, retaliation, statutory claims, tort claims or contract claims, must be resolved exclusively through binding arbitration, with the exception of any claim for injunctive relief, in accordance with the then existing employment rules of the American Arbitration Association in its office closest to San Jose, California.  I understand that this means that I am giving up significant rights, including but not limited to, the right to a jury trial.  Touchstone Golf and I understand that a written request for arbitration must be made to the other party within the time limits which would apply to the filing of a civil complaint in court of the complaining party will waive their right to pursue any claim.  I acknowledge that I am knowingly and voluntarily waiving my right to pursue such claims in court and instead will pursue them in arbitration.  I further agree that any such arbitration will be conducted using a mutually agreed upon arbitrator, that Touchstone Golf will pay for the arbitrator’s fee, and that discovery will be available to each side as provided for by the employment arbitration rules of the American Arbitration Association (for information regarding these rules, see: https://adr.org/sites/default/files/EmploymentRules _Web_2.pdf) The parties agree that any remedies that would have been available in a Civil Action are available to the parties in an arbitration proceeding under this agreement.  The parties agree that the arbitrator will provide a written decision that will be subject to judicial review.  I agree that if I file with a court a complaint which is subject to arbitration, I will reimburse Touchstone Golf costs and attorneys’ fees associated with compelling arbitration of the complaint.  If any court of competent jurisdiction finds any part of this Arbitration Agreement is illegal, invalid or unenforceable, such a finding will not affect the legality, validity or enforceability of the remaining parts of the Agreement, and the illegal, invalid or unenforceable part will be stricken from the Agreement.

 

(Kearney Decl., Ex. 8, p. 33, emphasis in original; see also id. at Ex. 10, p. 35 [same, except for title: “Agreement to Arbitrate Employment Disputes (Touchstone Copy – Please sign and return)”], emphasis in original.)

 

Facts and terms like these normally suffice to demonstrate an agreement to arbitrate, but Plaintiff raises an assent challenge.  He contends he did not sign the arbitration agreement (see Opposition, pp. 6-7), he did not agree to arbitration by e-signing the acknowledgement form (see id. at pp. 7-8), the handbook’s arbitration section is not distinguishable from the other sections (see id. at pp. 8-9), the acknowledgement form does not mention arbitration (see id. at p. 9), and the handbook states that it is “not an employment contract” and does not “create contractual obligations[.]”  (Id. at pp. 9-10, emphasis deleted; cf. Motion, pp. 6-9 [claiming the evidence shows assent because the arbitration agreement is part of the handbook, and Plaintiff e-signed the acknowledgement form, acknowledging reception of the handbook].)

 

Multiple cases address this situation.  Generally, the cases recognize that an unsigned arbitration agreement – which is part of, or provided in connection with, an employee handbook – can be enforced if the employee signed an acknowledgment of receipt.  The acknowledgment’s language is one important factor to evaluate.  (See Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 1173; see also Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1507-1511; Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 381-385; Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 788-792; Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1519-1522; Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 782-791; Romo v. Y-3 Holdings, Inc. (2001) 87 Cal.App.4th 1153, 1158-1160; Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 68-70; Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 804-806.)

 

On one hand, the cases arguably support Defendant’s position because:

 

* the handbook’s table of contents identifies pages and sections pertaining to arbitration (see Kearney Decl., Ex. 1, p. 3);

 

* Defendant’s arbitration agreement appears on pages 33 and 35 of the handbook (see id. at ¶¶ 16, 19, Ex. 1, p. 3, Ex. 8, p. 33, Ex. 10, p. 35);

 

* Plaintiff admits that he e-signed the acknowledgement form (see Brown Decl., ¶ 7 [affirming that he received the handbook and read it]);

 

* the “Risk Task Summary” and “New Hire Employee” documents buttress Plaintiff’s admission:

 

– the “Risk Task Summary” document bears Plaintiff’s e-signature, refers to the “Agreement to Arbitrate Employment Disputes[,]” and acknowledges that Plaintiff “received and read a copy of the Co-Worker Handbook and its policies” (Kearney Decl., ¶ 13, Ex. 5, emphasis in original);

 

– the “New Hire Employee” document states that Plaintiff completed the acknowledgement form (id. at Ex. 6, emphasis in original);

 

* Defendant’s offer-of-employment letter to Plaintiff lists “[e]xecution of Agreement to Arbitrate Employment Disputes” as a contingency (id. at Ex. 3);

 

* Plaintiff e-signed a document titled “TERMS OF EMPLOYMENT AT TOUCHSTONE GOLF[,]” “agree[ing,]” “as a term and condition of employment,” “to execute an agreement to binding arbitration of any dispute arising from [his] employment with Touchstone Golf” (id. at Ex. 4);

 

* California policy favors arbitration (see, e.g., Jones v. Humanscale Corp. (2005) 130 Cal.App.4th 401, 416);

 

* failure to read the agreement is not a defense (see, e.g., Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 687); and

 

* nor is failure to understand.  (See ibid.)

 

On the other hand, the cases arguably support Plaintiff’s position because:

 

* the handbook states that it “is not an employment contract and is not intended to create contractual obligations of any kind” (Kearney Decl., Ex. 1, p. 6; see also Opposition, pp. 8-9 [discussing Mendoza, supra, 75 Cal.App.5th 748 and Sparks, supra, 207 Cal.App.4th 1511]);

 

* the handbook also says “[a]ll Co-workers will be asked to sign an agreement to arbitrate their employment disputes with” Defendant (Kearney Decl., Ex. 1, p. 31; see also Opposition, p. 11 [analogizing Gorlach, supra, 209 Cal.App.4th at 1509]);

 

* Plaintiff declares that he did not sign the arbitration agreement (see Brown Decl., ¶ 6);

 

* the face of the agreement lacks a signature, electronic or otherwise (see Kearney Decl., Ex. 8, p. 33, Ex. 10, p. 35);

 

* so does the acknowledgement form (see id.at Ex. 7, p. 32, Ex. 9, p. 34); and

 

* the acknowledgement form fails to refer to arbitration.  (See ibid.)

 

On balance, the Court agrees with Plaintiff.  The plain language of page 31 of the handbook – “[a]ll Co-workers will be asked to sign an agreement to arbitrate their employment disputes with” Defendant (id. at Ex. 1, p. 31) – is materially the same as the language analyzed in Gorlach.  The Court of Appeal interpreted the Gorlach language to mean that the employees were required to “sign the arbitration agreement” and that “it was not effective until (and unless) they did so.”  (Gorlach, supra, 209 Cal.App.4th at 1509.)  Because the employees had “never signed the [] agreement,” the justices found that an agreement to arbitrate did not exist.  (Ibid.)  Here, similarly, the agreement is unsigned, so the motion must be denied.

 

Enforcement, Class Arbitration, Private Attorneys General Act, and Stay Request

 

Given the preceding analysis, it is unnecessary to reach these other issues.