Margarita Valle v. Sagebrook Home, LLC

MOTION TO COMPEL ARBITRATION

 

MOVING PARTY: Defendant Sagebrook Home, LLC

RESPONDING PARTY(S): Plaintiff Margarita Valle

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an employment dispute. Plaintiff Margarita Valle alleges she worked for Defendant Sagebrook Home, LLC, as an Accounts Receivable Coordinator. Following the death of her father in October 2023, Plaintiff took bereavement leave. Upon returning to work, Plaintiff suffered from severe depression, anxiety, and high-blood pressure, among other symptoms. After consultation with a medical provider, Plaintiff requested a one month medical leave of absence, with plans to return in mid-November. Plaintiff alleges that during her leave, Defendants hired a new employee to replace Plaintiff and assigned Plaintiff to a new position with a lower status. 

Defendant now moves to compel Plaintiff to arbitrate the dispute pursuant to CCP § 1281 et seq. Plaintiff opposed. Defendant has not filed a reply.

TENTATIVE RULING:

Defendant’s Motion to Compel Arbitration is DENIED. 

Plaintiff is ordered to give notice, unless waived.

DISCUSSION:

Motion to Compel Arbitration

1. Legal Standard

“[T]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence . . . .”  (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284).  “In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation]. The court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.”  (Weeks v. Crow (1980) 113 Cal.App.3d 350, 353).  “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.”  (California Correctional Peace Officers Ass'n v. State (2006) 142 Cal.App.4th 198, 205).  

“[A] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination.”  (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284).

“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies. . . .”  (CCP § 1281.4.)

2. Analysis

California has a strong public policy in favor of arbitration as an expeditious and cost-effective way of resolving disputes.  “Even so, parties can only be compelled to arbitrate when they have agreed to do so.” (Avila v. S. California Specialty Care, Inc. (2018) 20 Cal. App. 5th 835, 843.)  “The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement.”  (Id.)

An arbitration agreement is a contractual agreement. “General contract law principles include that ‘[t]he basic goal of contract interpretation is to give effect to the parties’ mutual intent at the time of contracting. [Citations.] ... The words of a contract are to be understood in their ordinary and popular sense.” [Citations.]  (Garcia v. Expert Staffing W., 73 Cal. App. 5th 408, 412–13.)  

It is undisputed that there is no signed agreement to arbitrate in this matter. Instead, Defendant relies on an “implied-in-fact” agreement to arbitrate that it contends Plaintiff implicitly consented to by continuing her employment with Defendant.

Courts have recognized an “implied-in-fact” agreement to arbitrate where the employee's continued employment constitutes acceptance of an agreement proposed by the employer. (See Asmus v. Pacific Bell (2000) 23 Cal.4th 1; see also Craig v. Brown & Root, Inc. (2000) 84 Cal. App. 4th 416.) “ ‘Implied-in-fact contracts are found in cases with unexecuted arbitration agreements when (1) employees have knowledge of the arbitration agreement and (2) employees continue to work after receipt of the arbitration agreement. In such cases, courts have held that the employees' continued employment constitutes their acceptance of the agreements to arbitrate.’ ” (Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1507.) This analysis is highly “fact specific” and depends not just on the parties’ conduct, but also on the language of the employer’s policies. (Douglass v. Serenivision, Inc. (2018) 20 Cal. App. 5th 376, 388; Mendoza v. Trans Valley Transp. (2022) 75 Cal. App. 5th 748, 791.) 

Defendant submits a declaration from Patricia Ramirez, its Human Resources Manager. Ramirez attests that Defendant presented Plaintiff with an agreement to arbitrate in her Paylocity Portal. (Ramirez Decl. ¶ 5.) Plaintiff had until October 13, 2023, to sign the agreement. (Id. ¶ 6.) Plaintiff accessed the Paylocity portal multiple times but never signed the arbitration agreement. (Id. ¶ 5.) 

Plaintiff confirms that she never signed the agreement. Plaintiff also maintains that “no one from Sagebrook ever told [her], or otherwise provided any notice to [her], that continuing to work at Sagebrook beyond a certain date would constitute the acceptance of an arbitration agreement or a mandatory arbitration policy.” (Id. ¶ 15.)

Here, Defendant has provided no evidence or indication that Plaintiff knew that continued employment would constitute acceptance of the arbitration agreement. Indeed, the only thing suggesting that it might be mandatory to sign the arbitration agreement is the fact that the online portal listed a “due date” next to it. Defendant suggests this means that after the time to sign the agreement, its expiration denotes acceptance. But it could also mean the opposite. A reasonable person seeing a due date to sign the arbitration agreement could be justified in thinking that the failure to sign the agreement before the due date results in a nullity.

In addition, Defendant has identified nothing in the agreement itself providing that the agreement could be accepted by continued employment. Instead, by its standard language, it suggests that the agreement would have effect only if Plaintiff signed it. (See Anderson Decl., Exh. 2, p. 3 [“MY SIGNATURE BELOW CONFIRMS THE FACT THAT I HAVE READ, UNDERSTAND, AND VOLUNTARILY AGREE TO BE LEGALLY BOUND TO ALL OF THE ABOVE TERM”].)

Thus, Plaintiff’s continued employment, without more, is insufficient evidence of an implied-in-fact agreement to arbitrate. Defendant’s authorities purporting to suggest otherwise are not analogous on the facts. 

In Craig, the employer sent a memorandum and brochure to all employees and “emphasized…that everyone would be bound by [an arbitration procedure].” (Craig v. Brown & Root, Inc. (2000) 84 Cal. App. 4th 416, 419.) The memorandum stated: 

The enclosed brochure explains the procedures as well as how the Dispute Resolution Program works as a whole. Please take the time to read the material. IT APPLIES TO YOU. It will govern all future legal disputes between you and the Company that are related in any way to your employment.

(Id.)

Thus, the Court held that because there was evidence Plaintiff received the memorandum and brochure and that she continued to work, “she thereby agreed to be bound by the terms of the Dispute Resolution Program, including its provision for binding arbitration.” (Id. at 422.)

Similarly, in Doubt, the employer adopted a dispute resolution policy involving arbitration. (Doubt v. NCR Corp. (N.D. Cal. Sept. 13, 2010) No. C 09-05917 SBA, 2010 WL 3619854, at *1.) “[E]mployees were informed that, pursuant to the terms of the [policy], acceptance would be demonstrated through continued employment and/or acceptance of employment-related benefits.” Thus, the Court held that because the employer provided notice of the policy and its language, and that Plaintiff “subsequently continued his employment with Defendant for several years” thereafter, a valid agreement to arbitrate existed.  (Id.)

In Hicks, the employer also had an alternative dispute resolution in place. (Hicks v. Macy's Dep't Stores, Inc. (N.D. Cal. Sept. 11, 2006) No. C 06-02345 CRB, 2006 WL 2595941, at *1). Though arbitration was not a condition of employment, employees could only “opt-out” of arbitration by signing a written statement. The employer’s handbook also discussed the dispute resolution system in place. “Despite being given notice that he would be bound unless he opted out, [the] plaintiff-twice-failed to return the opt out form.” (Id.) Therefore, the court held that the plaintiff was bound to arbitrate.

Here, unlike in Craig and Doubt, there is no evidence that arbitration was a condition of employment, or that continued employment would constitute acceptance of Defendant’s arbitration agreement. Plaintiff maintains that she was never notified of any such policy, and Defendant has not refuted that position. In other words, arbitration was purely voluntary. The result might be different had Defendant provided some evidence, such as an employee handbook, stating that arbitration was a condition of employment. But no such evidence exists here.

Also, unlike in Hicks, there is no evidence that arbitration was the default procedure unless an employee opted out of the agreement. Rather, Defendant gave Plaintiff the option to opt into arbitration by signing the agreement, and it is undisputed she never did. 

On these facts, Defendant has not established the existence of an agreement to arbitrate by a preponderance of the evidence. “Arbitration is a matter of consent,” and none exists here. (Barrera v. Apple Am. Grp. LLC (2023) 95 Cal. App. 5th 63, 76.)

Accordingly, Defendant’s Motion to Compel Arbitration is DENIED. 

IT IS SO ORDERED.

Dated:   August 14, 2024 ___________________________________