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Date: 04-14-2019
Case Style:
Erika Diaz v. Sohnen Enterprises
Case Number: B283077
Judge: Zelon, Acting P.J.
Court: California Court of Appeals Second Appellate District, Division Seven on appeal from the Superior Court, County of Los Angeles
Plaintiff's Attorney: Gregory D. Wolfick, David B. Simpson and Theodore S. Khachaturian
Defendant's Attorney: Bruce Loren Karey
Description:
MoreLaw Virtual Receptionists
Nosotros hablamos español
Sohnen Enterprises appeals from the denial of its motion to
compel arbitration of claims brought by its employee, Erika Diaz.
The record before this court demonstrates there was no evidence
to support the denial; accordingly, we reverse with directions.
FACTUAL AND PROCEDURAL BACKGROUND
Erika Diaz, an employee of Sohnen Enterprises, filed a
complaint alleging workplace discrimination on December 22,
2016. Twenty days earlier, on December 2, 2016, she and her coworkers
received notice at an in-person meeting that the
company was adopting a new dispute resolution policy requiring
arbitration of all claims. At that meeting, according to the
declaration of Marla Carr, the Chief Operating Officer of Sohnen,
Carr informed all employees present, including Diaz, about the
new dispute resolution agreement. She included in her
explanation that continued employment by an employee who
refused to sign the agreement would itself constitute acceptance
of the dispute resolution agreement. According to Carr, she
provided the explanation in English and Elaina Diaz, a human
resources employee, explained the terms in Spanish. Diaz
confirmed this in her own declaration, in which she stated that
she discussed the terms in Spanish; she did not provide further
details about the December 2 meeting. All employees received a
copy of the agreement to review at home.
On December 19, 2016, representatives of the company met
privately with Diaz, who had indicated to Elaina Diaz on
December 14 that she did not wish to sign the agreement. Carr
3
and Diaz advised her again, in Spanish and English, that
continuing to work constituted acceptance of the agreement.
On December 23, 2016, Diaz and her lawyer presented to
Sohnen a letter dated December 20, 2016 rejecting the agreement
but indicating that Diaz intended to continue her employment.
On the same date, Diaz also served the complaint in this action.
On January 17, 2017, Sohnen sent a demand for arbitration
to Diaz’s counsel, based on the fact of Diaz’s continued
employment at the company. Counsel for Diaz did not reply.
Sohnen filed its motion to compel arbitration in April. Diaz filed
opposition in May. The trial court heard argument, and denied
the motion.
The trial court, in its oral ruling, held that the agreement
was a “take-it or leave-it contract and (sic) adhesion. There is no
meeting of the minds.” The court made no factual findings, nor
did it address whether the agreement was substantively
unconscionable.
DISCUSSION
A. We Review The Ruling De Novo
The facts in the record are undisputed.1 Accordingly, our
review is de novo. (Rosenthal v. Great Western Fin. Securities
Corp. (1996) 14 Cal.4th 394, 413; Flores v. Nature’s Best
1 Respondent Diaz argues that she was off-work, due to
illness, between December 17 and December 23, 2016. The
record, however, contains no evidence to support that assertion;
Diaz filed no declaration in opposition to the motion to compel,
nor did any of the declarations filed present facts supporting the
argument of counsel. We review based on the factual record
before the trial court.
4
Distribution, LLC (2016) 7 Cal.App.5th 1, 9; Esparza v. Sand &
Sea, Inc. (2016) 2 Cal.App.5th 781, 787.)
B. The Record Demonstrates Consent to Arbitration
When presented with a petition to compel arbitration, the
initial issue before the court is whether an agreement has been
formed. (American Express Co. v. Italian Colors Restaurant
(2013) 570 U.S. 228, 233 [133 S.Ct.2304, 2306, 186 L.Ed.2d 417]
[arbitration is a matter of contract]; Pinnacle Museum Tower
Assn. v. Pinnacle Market Development (US), LLC (2012) 55
Cal.4th 223, 236 [‘“‘“a party cannot be required to submit to
arbitration any dispute which he has not agreed to so submit”’”’].)
It is the party seeking to compel arbitration which bears
the burden of proving the existence of the agreement. (Rosenthal,
supra, 14 Cal.4th at p. 413.) In this case, Sohnen presented to
the trial court evidence of the manner in which the agreement
was presented to Diaz, and the actions which followed. This
undisputed evidence was sufficient to meet Sohnen’s burden.
California law in this area is settled: when 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. (Pinnacle, supra, 55 Cal.4th at 236; Harris v. TAP
Worldwide, LLC (2016) 248 Cal.App.4th 373, 383; Craig v. Brown
& Root, Inc. (2000) 84 Cal.App.4th 416, 420; cf. Asmus v. Pacific
5
Bell (2000) 23 Cal.4th 1, 11 [continued employment demonstrated
implied acceptance of change in job security rules].)2
Diaz relies on Mitri v. Arnel Management Co. (2007) 157
Cal.App.4th 1164, and Gorlach v. Sports Club Co. (2012) 209
Cal.App.4th 1497, arguing that these cases support the trial
court’s ruling. Neither case, however, addresses the situation
presented here; accordingly, neither supports the result below.
In Mitri, the employee acknowledged receipt of an
employee handbook containing an arbitration provision, but the
acknowledgement form did not reference or contain any
agreement to comply with the arbitration provision. (Mitri,
supra, 157 Cal.App.4th at p. 1173.) The general acknowledgment
2 The dissent relies in part on three cases, two of which apply
the law of other states, which come to a different conclusion. The
first, Scott v. Education Management Corporation (3d Cir. 2016)
662 Fed.Appx. 126 involved an arbitration agreement presented
to the employee after a federal civil rights dispute arose. The
case was decided under Pennsylvania law which, according to the
decision, requires an explicit agreement, not an implied
agreement. (Id. at p. 131) The decision, by its own terms, does
not constitute binding precedent. In the second case, Bayer v.
Neiman Marcus Holdings, Inc. (N.D.Cal. Nov. 8, 2011, No. CV 11-
3705 MEJ) 2011 WL 5416173, a court in the Northern District of
California, acknowledging that under California law an employee
could either expressly consent to a new arbitration agreement or
be bound by continuing to work after it was presented, found that
the terms of the agreement before it required a signature to be
effective. Finally, in Kunzie v. Jack-In-The-Box, Inc. (Mo.Ct.App.
2010) 330 S.W.3d 476, 486, the court held that, under Missouri
law, the assent of an employee cannot be implied where the
employee has continued to work after a change in conditions of
employment was presented.
6
stands in distinction to the express explanation provided twice to
Diaz: that continued employment would itself be a manifestation
of agreement to the arbitration provisions.
In Gorlach, the handbook provided to employees contained
an express signature requirement for the arbitration agreement:
“[T]he handbook told employees that they must sign the
arbitration agreement, implying that it was not effective until
(and unless) they did so. Because Gorlach never signed the
arbitration agreement, we cannot imply the existence of such an
agreement between the parties.” (Gorlach, supra, 209
Cal.App.4th at p. 1509.) Here, there was no such implication
because Diaz was told that her continued employment was
sufficient.
Moreover, unlike Diaz, Gorlach left her employment to
avoid the arbitration obligation. (Gorlach, supra, 209
Cal.App.4th at p. 1508.) The uncontradicted evidence in this
record demonstrates that Diaz maintained her employment
status between December 2 and December 23, and remained an
employee at the time of the hearing in this case. As a result, she
was already bound by the arbitration agreement before the
presentation of the letter indicating both her rejection of the
agreement and her intent to remain employed. Although Diaz
now asserts that this forced Sohnen to choose whether to proceed
without arbitration, this is incorrect. At most, the letter was an
attempt to repudiate the agreement. (See, e.g. Taylor v. Johnston
(1975) 15 Cal.3d 130, 137 [express repudiation requires clear and
unequivocal refusal to perform]; Mammoth Lakes Land
7
Acquisition, LLC v. Town of Mammoth Lakes (2010) 191
Cal.App.4th 435, 463 [same].)3
In any event, because the employment agreement between
Diaz and Sohnen was at-will, Sohnen could unilaterally change
the terms of Diaz’s employment agreement, as long as it provided
Diaz notice of the change. “[I]t is settled that an employer may
unilaterally alter the terms of an employment agreement,
provided such alteration does not run afoul of the Labor Code.
[Citations.]” (Schachter v. Citigroup (2009) 47 Cal.4th 610, 619.)
“The at-will presumption authorizing an employer to discharge or
demote an employee similarly and necessarily authorizes an
employer to unilaterally alter the terms of employment, provided
that the alteration does not violate a statute or breach an implied
or express contractual agreement.” (Id. at p. 620; see also
DiGiancinto v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629,
636-637 [in adopting the majority view of at-will contracts, the
court stated “[T]the majority line of cases supports the
proposition that as a matter of law, an at-will employee who
continues in the employ of the employer after the employer has
given notice of changed terms or conditions of employment has
accepted the changed terms and conditions. Presumably, under
this approach, it would not be legally relevant if the employee
also had complained, objected, or expressed disagreement with
the new offer; as long as the employee continued in employment
3 Neither party has briefed the issue of repudiation, and the
potential effect of an attempted repudiation on the rights of the
parties is not before this court.
8
with notice of the new terms, the employee has no action for
breach of contract as a matter of law.”].)
C. Diaz Has Not Demonstrated That The Arbitration
Agreement Is Unenforceable
Once the party seeking arbitration has established that a
binding agreement was formed, as Sohnen did here, the burden
shifts to the party opposing arbitration to demonstrate the
agreement cannot be enforced. (Engalla v. Permanente Medical
Group, Inc. (1997) 15 Cal.4th 951, 972; Rosenthal, supra, 14
Cal.4th at pp. 409-410.)
A showing that an agreement is unconscionable can bar
enforcement. The doctrine has “both a procedural and a
substantive element, the former focusing on oppression or
surprise due to unequal bargaining power, the latter on overly
harsh or one-sided results.” (Baltazar v. Forever 21, Inc. (2016)
62 Cal.4th 1237, 1243.) Both elements must be present for a
court to refuse enforcement. (Ibid.; see also Pinnacle, supra, 55
Cal.4th at p. 246 [both elements must be present, but there is a
sliding scale; if more of one element is shown, less of the other
need be present].)
The trial court found that the contract was adhesive in
nature, but that finding, standing alone, is not sufficient. (See
Baltazar, supra, 62 Cal.4th at p. 1245 [“[t]he adhesive nature of
the employment contract requires us to be ‘particularly attuned’
to her claim of unconscionability [citation], but we do not subject
the contract to the same degree of scrutiny as ‘[c]ontracts of
adhesion that involve surprise or other sharp practices.’”].)
9
This record contains no evidence of surprise, nor of sharp
practices demonstrating substantive unconscionability. While
Diaz argues in the introduction to her briefing that the
agreement is substantively unconscionable, she fails to specify,
with appropriate citations to the record and relevant legal
authority, any terms of the agreement that she believes are
unconscionable. Accordingly, Diaz has waived any argument
that the agreement is unenforceable. (Okorie v. Los Angeles
Unified School Dist. (2017) 14 Cal.App.5th 574, 599-600 [parties
must present legal authority for all arguments made]; Benach v.
County of Los Angeles (2007) 149 Cal.App.4th 836, 852 [party
raise or support issues by argument and citation to authority];
Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th
989, 1007 [parties must make coherent argument and cite
authority in support of a contention; failure to do so waives the
issue on appeal].)
Outcome: The order denying the petition to compel arbitration is reversed and the matter is remanded for the trial court to conduct further proceedings consistent with this opinion. Appellant is to recover its costs on appeal.
Plaintiff's Experts:
Defendant's Experts:
Comments: