34 Cal. App. 5th 126
Cal. Ct. App. 5th2019Background
- Erika Diaz was employed by Sohnen Enterprises; on Dec. 2, 2016 the company announced a new dispute-resolution policy requiring arbitration and distributed the agreement to employees to review at home.
- At the Dec. 2 meeting, Sohnen's COO (Marla Carr) and an HR employee (Elaina Diaz) told employees (in English and Spanish) that continued employment would constitute acceptance of the arbitration agreement.
- Diaz told HR on Dec. 14 she would not sign; on Dec. 19 Sohnen met privately with Diaz and gave a written memo reiterating that working on/after Dec. 20 would be deemed acceptance.
- On Dec. 20 counsel for Diaz sent a letter rejecting the agreement but stating Diaz intended to continue employment; Diaz filed a discrimination complaint Dec. 22 and served it Dec. 23.
- Sohnen demanded arbitration Jan. 17 and moved to compel in April; the trial court denied the motion, finding the agreement adhesive and asserting no meeting of the minds; the appellate majority reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an arbitration agreement was formed | Diaz argued she rejected the agreement (oral and written) and therefore did not consent | Sohnen argued Diaz impliedly consented by continuing employment after notice that continued work would constitute acceptance | Court held undisputed evidence showed Sohnen provided notice and Diaz continued working, satisfying Sohnen's burden to show formation (implied consent) |
| Standard of review | Diaz contended trial court's factual resolution should be deferred to (trial court found no meeting of minds) | Sohnen argued facts were undisputed so appellate review is de novo | Court applied de novo review because record presented no disputed material facts and reversed trial court |
| Whether the agreement was unenforceable for unconscionability | Diaz asserted substantive unconscionability in briefing but did not identify specific terms or record citations | Sohnen argued no evidence of procedural surprise or substantive unconscionability | Court held Diaz waived unconscionability challenge for failure to specify offending terms or cite authority; no evidence of surprise/sharp practices in record |
| Effect of Diaz's repudiation letter | Diaz argued her written rejection while continuing to work prevented imposition of arbitration | Sohnen argued the letter was, at most, an attempted repudiation and continued employment already bound Diaz by implied acceptance | Court held the letter did not negate the already-formed implied agreement; repudiation was not shown to be clear and unequivocal to avoid arbitration |
Key Cases Cited
- Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (party seeking arbitration bears burden to prove agreement)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, 55 Cal.4th 223 (arbitration is a matter of contract; continued employment can imply consent)
- Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (burden shifts to opposing party to show unenforceability)
- Baltazar v. Forever 21, Inc., 62 Cal.4th 1237 (unconscionability requires procedural and substantive elements)
- Gorlach v. Sports Club Co., 209 Cal.App.4th 1497 (no implied agreement where handbook required signature)
- Mitri v. Arnel Management Co., 157 Cal.App.4th 1164 (receipt/acknowledgment of handbook alone may be insufficient absent specific assent)
- Craig v. Brown & Root, Inc., 84 Cal.App.4th 416 (continued employment held sufficient to imply consent to arbitration)