Gorlach v. Sports Club Co.
209 Cal. App. 4th 1497
| Cal. Ct. App. | 2012Background
- Gorlach, former HR director for Sports Club, was tasked with implementing a 2010 handbook that included an arbitration agreement; the agreement required signing as a condition of employment.
- The Handbook referenced Appendix 4 Mutual Agreement to Arbitrate Claims, which stated arbitration for all claims and that both parties waived a jury trial and appeal rights.
- Gorlach led 26 handbook presentations in June 2010 and collected signatures, but she herself never signed the arbitration agreement.
- By late June and July 2010, Sports Club executives were led to believe—by Gorlach’s representations—that most employees had signed, though Gorlach had not, and she did not disclose her own non-signature.
- Gorlach resigned on August 6, 2010, before signing the arbitration agreement; this status left the enforceability of any arbitration agreement in question.
- Gorlach was sued on January 7, 2011; Sports Club moved to compel arbitration on April 15, 2011, which the trial court denied on June 1, 2011; the denial was affirmed on appeal; the Supreme Court denied review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gorlach is equitably estopped from denying arbitration | Gorlach knowingly misled executives about signing; no detrimental reliance by Sports Club | Gorlach’s continued employment after learning of the condition implies acceptance | No estoppel; not entitled to compel arbitration on this basis |
| Whether an implied-in-fact arbitration agreement exists | Continued employment after knowledge of arbitration requirement implies acceptance | Arbitration was only a potential bilateral agreement requiring signing; no mutual intent shown | No implied-in-fact arbitration agreement due to lack of mutual intent and absence of signed arbitration contract |
| Whether the overall denial to compel arbitration was proper as a matter of law | Arbitration agreement existed in law via implied contract due to continued employment | No valid agreement formed; unsigned and not mutually assented to | Denial affirmed; no valid written or implied arbitration contract formed |
Key Cases Cited
- Mitri v. Amel Management Co., 157 Cal.App.4th 1164 (Cal. Ct. App. 2007) (unexecuted arbitration provisions not binding where handbook required signing a separate agreement)
- Brown & Root, Inc. v. Craig, 84 Cal.App.4th 416 (Cal. Ct. App. 2000) (continued employment alone does not prove implied arbitration where no signed agreement present)
- Asmus v. Pacific Bell, 23 Cal.4th 1 (Cal. 2000) (unilateral policy may create unilateral contracts; not applicable when arbitration requires mutual signing)
- Mitri, supra, 157 Cal.App.4th 1164 (Cal. Ct. App. 2007) (handbook arbitration provision urged but not mutual when employee did not sign)
- Marcus & Millichap Real Estate Investment Brokerage Co. v. Hock Investment Co., 68 Cal.App.4th 83 (Cal. Ct. App. 1998) (applied general contract law to determine existence of arbitration agreement)
- Zenith Ins. Co. v. O’Connor, 148 Cal.App.4th 998 (Cal. Ct. App. 2007) (explains implied contracts and conduct-based obligations)