Esparza v. Sand & Sea, Inc.
2 Cal. App. 5th 781
| Cal. Ct. App. | 2016Background
- January Esparza started at Shore Hotel on Nov. 19, 2012 and received a 52‑page employee handbook the same day.
- The handbook’s first page (the “welcome letter”) stated the handbook "is not intended to be a contract (express or implied), nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees."
- Pages 3–4 contained an "Agreement to Arbitrate" written in first person; the handbook also included other workplace policies.
- The last pages contained a policy acknowledgement (two copies) which Esparza signed on her first day; the acknowledgement said she had received the handbook, expected to read it within a week, and that the handbook did not constitute an express or implied employment contract.
- Esparza later sued for sexual harassment, discrimination, wrongful termination, and IIED; defendants moved to compel arbitration over a year after the initial complaint, relying on the handbook and the signed acknowledgement.
- The trial court denied the petition, concluding there was no agreement to arbitrate; the Court of Appeal affirmed.
Issues
| Issue | Esparza's Argument | Sand & Sea's Argument | Held |
|---|---|---|---|
| Whether the handbook and signed policy acknowledgement created a binding agreement to arbitrate employment claims | Esparza: she only acknowledged receipt and had not read the handbook; the welcome letter and acknowledgement disclaim any legally enforceable obligations, so no mutual assent to arbitrate | Sand & Sea: the acknowledgement referenced the handbook (including arbitration provision); Esparza had a week to read it and continued working, so she assented to be bound | No — no mutual assent. The handbook’s disclaimers and the acknowledgement’s language do not show an enforceable agreement to arbitrate |
| Whether continued employment after the one‑week period constituted acceptance of arbitration terms | Esparza: mere continuation is insufficient without clear notice/agreement | Sand & Sea: continued employment after being given opportunity to read equals implied acceptance | No — courts will not infer waiver of jury right absent clear agreement; continued employment alone insufficient |
| Whether the acknowledgement incorporated the arbitration clause by reference | Esparza: the acknowledgement merely lists policies as informational and explicitly disclaims a contract | Sand & Sea: the acknowledgement references “various policies, practices and procedures including our Arbitration Agreement,” so incorporation is established | No — reference was informational and did not show assent to be bound by arbitration provision |
| Whether Mitri and similar authorities required a separate signed arbitration agreement | Esparza: Mitri supports that a handbook plus receipt is insufficient where handbook disclaims enforceability | Sand & Sea: asserts an integrated handbook/acknowledgement here obviates need for separate signature | Court: Mitri is persuasive; handbook disclaimers and the unsigned arbitration clause fail to demonstrate mutual assent |
Key Cases Cited
- Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (California 1997) (petitioning party must prove existence of valid arbitration agreement by preponderance)
- Rosenthal v. Great Western Fin. Sec. Corp., 14 Cal.4th 394 (California 1996) (California law governs whether parties reached agreement to arbitrate)
- Mitri v. Arnel Management Co., 157 Cal.App.4th 1164 (Cal. Ct. App. 2007) (handbook disclaimers and references to separate signed arbitration agreement defeat claim that handbook alone formed agreement)
- Molecular Analytical Sys. v. Ciphergen Biosystems, Inc., 186 Cal.App.4th 696 (Cal. Ct. App. 2010) (strong public policy favors arbitration but only where parties agreed)
- Serafin v. Balco Properties Ltd., LLC, 235 Cal.App.4th 165 (Cal. Ct. App. 2015) (mutual assent determined by objective manifestations)
- Sparks v. Vista Del Mar Child & Family Servs., 207 Cal.App.4th 1511 (Cal. Ct. App. 2012) (handbook arbitration clauses require clear reference in receipt to bind employee)
- Harris v. TAP Worldwide, LLC, 248 Cal.App.4th 373 (Cal. Ct. App. 2016) (distinct handbook language can deem employee to have consented if handbook/appendix clearly states continued employment manifests consent)