Bower v. Inter-Con Security Systems, Inc.
181 Cal. Rptr. 3d 729
Cal. Ct. App.2014Background
- Bower, an armed security officer, signed an arbitration agreement (2008) that superseded an earlier one and included a class-waiver provision and coverage for meal/rest-period and wage claims.
- Bower filed a putative wage-and-hour class action in August 2011 asserting meal/rest, unpaid wages, wage statements, waiting-time penalties, UCL, and PAGA claims for all California armed security guards since August 2007.
- Inter-Con answered (October 2011) asserting arbitration as an affirmative defense, served discovery responses (December 2011) limiting production to Bower individually but answered at least one class question (identifying 29 putative class members), and propounded substantial class-wide discovery of its own.
- Parties paused discovery to pursue class-wide settlement discussions; settlement efforts focused on class resolution and lasted months; Inter-Con later sought a stay to file a petition to compel arbitration only after settlement efforts ended (petition filed June 4, 2012).
- The trial court denied Inter-Con’s petition, finding Inter-Con waived arbitration by propounding and responding to class discovery and engaging in class-focused litigation; the court of appeal affirmed on substantial-evidence review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Inter-Con waived the right to compel arbitration | Inter-Con knew arbitration right but acted inconsistently (propounded/responded to class discovery, pursued class settlement) and prejudiced Bower by delaying arbitration and causing wasted litigation effort | No waiver: Inter-Con preserved arbitration in its pleadings; discovery was permitted by the arbitration agreement; little class discovery was obtained; settlement efforts do not waive arbitration; delay was not prejudicial | Held: Waiver established. Substantial evidence supports that Inter-Con acted inconsistently with arbitration and prejudiced Bower by impairing arbitration’s benefits |
| Proper legal standard (FAA v. California law) | N/A (Bower argued California law applies) | Inter-Con argued FAA governs | Court: unnecessary to decide; waiver principles under FAA and California law are materially the same for this dispute |
| Whether discovery propounded but not obtained can support a waiver finding | Bower: what Inter-Con sought and the litigation course mattered, not only what was obtained | Inter-Con: only what was obtained matters; since Bower refused many responses, there was no unfair advantage | Held: The focus may be on discovery sought and litigation conduct; seeking class-wide discovery is inconsistent with arbitration even if results were limited |
| Whether Iskanian (futility exception) defeats waiver | Bower: Iskanian inapplicable because Inter-Con did not timely seek arbitration nor cite futility; delay was tactical | Inter-Con: Iskanian permits delay when earlier law made arbitration futile | Held: Iskanian inapplicable—Inter-Con made a tactical decision, no change in law excused its delay |
Key Cases Cited
- St. Agnes Medical Center v. Pacificare of California, 31 Cal.4th 1187 (California Supreme Court 2003) (waiver factors under federal and state law are comparable)
- Hoover v. American Income Life Ins. Co., 206 Cal.App.4th 1193 (Cal. Ct. App. 2012) (elements and factors for proving waiver of arbitration)
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (California Supreme Court 2014) (futility can excuse delay in seeking arbitration; prejudice analysis depends on whether delay was reasonable)
- Zamora v. Lehman, 186 Cal.App.4th 1 (Cal. Ct. App. 2010) (limited/de minimis discovery may not support waiver)
- Gloster v. Sonic Automotive, Inc., 226 Cal.App.4th 438 (Cal. Ct. App. 2014) (reversing waiver where delay and discovery were minimal)
- Lewis v. Fletcher Jones Motor Cars, Inc., 205 Cal.App.4th 436 (Cal. Ct. App. 2012) (affirming that FAA and California law apply the same standards for waiver of arbitration)