Avery v. Integrated Healthcare Holdings CA4/3
218 Cal. App. 4th 50
| Cal. Ct. App. | 2013Background
- Integrated Healthcare Holdings acquired four Tenet hospitals in 2005; employees’ overtime wage claims arise from 12-hour shifts at these hospitals.
- Plaintiffs signed various documents acknowledging arbitration under a Fair Treatment Process in Tenet’s handbook or related materials prior to Integrated’s handbook changes.
- Integrated subsequently issued a revised Integrated Employee Handbook (2009) renaming the FTP to ADRP and adding a class arbitration waiver, without notice to most employees.
- Cade did not sign any document acknowledging the arbitration policy and never received a Tenet handbook; her arbitration issue is disputed.
- The trial court denied Integrated’s motions to compel arbitration; the court found lack of proof of a valid, enforceable arbitration agreement with all Plaintiffs, and unconscionability arguments were preserved for later.
- On appeal, the court held Integrated cannot apply the 2009 ADRP to pre-existing claims and cannot enforce the specific arbitration terms because the evidence did not establish the exact agreement Plaintiffs relied on.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Cade’s arbitration enforceability | Cade did not receive or sign arbitration documents; no implied agreement | Cade implicitly accepted arbitration by continuing employment | No enforceable arbitration; no express/implied agreement with Cade |
| Enforceability of the Fair Treatment Process | Plaintiffs agreed to FTP terms and arbitration by signing acknowledgments | Integrated’s FTP terms insufficiently identified; incorporation by reference failed | Not enforceable; terms not clearly incorporated or identified |
| Applicability of the 2009 ADRP to pre-existing claims | ADR Process applies to all claims once invoked | ADR Process valid for all employees and claims, including class waiver | ADR Process cannot apply to accrued claims; changes ineffective for pre-existing claims |
| Class arbitration waiver validity | Waiver is unconscionable or invalid under class arbitration principles | Waiver validly reduces class/representative claims | Waiver not enforceable due to failure to establish the governing agreement |
Key Cases Cited
- St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1197 (Cal. 2003) (policy favors arbitration but requires voluntary agreement)
- Sparks v. Vista Del Mar Child & Family Services, 207 Cal.App.4th 1511 (Cal. App. 4th 2012) (burden on party seeking arbitration; contract interpretation)
- Gorlach v. Sports Club Co., 209 Cal.App.4th 1497 (Cal. App. 4th 2012) (court approves de novo review for arbitration agreements)
- 24 Hour Fitness, Inc. v. Superior Court, 66 Cal.App.4th 1199 (Cal. App. 4th 1998) (incorporation by reference; notice and clarity requirements)
- Chan v. Drexel Burnham Lambert, Inc., 178 Cal.App.3d 632 (Cal. App. 3d 1986) (clear identification of incorporated document required)
- Kleveland v. Chicago Title Ins. Co., 141 Cal.App.4th 761 (Cal. App. 4th 2006) (mutual consent; precise arbitration provision required)
- Peleg v. Neiman Marcus Group, Inc., 204 Cal.App.4th 1425 (Cal. App. 4th 2012) (unilateral changes to accrued claims breach implied covenant)
- Serpa v. California Surety Investigations, Inc., 215 Cal.App.4th 695 (Cal. App. 4th 2013) (notice requirements for changes to employment terms)
- Weddington Productions, Inc. v. Flick, 60 Cal.App.4th 793 (Cal. App. 4th 1998) (mutual assent and contract formation requirements)
- Craig v. Brown & Root, Inc., 84 Cal.App.4th 416 (Cal. App. 4th 2000) (continued employment can form implied-in-fact arbitration agreement)
- Wolschlager v. Fidelity National Title Ins. Co., 111 Cal.App.4th 784 (Cal. App. 4th 2003) (incorporation by reference requires clear identification)