102 Cal.App.5th 201
Cal. Ct. App.2024Background
- Winston Mar brought an action against SierraConstellation Partners, LLC and its founder, Lawrence Perkins, seeking a buyout of his alleged partnership interest after dissociating from the firm.
- Sierra added a mandatory arbitration clause to its employee handbook in 2020 and notified all employees, including Mar, that continued employment would constitute agreement to the policy.
- Mar explicitly refused to sign or assent to the arbitration agreement, repeatedly confirming he would not be bound by it and inviting Sierra to terminate his employment if non-compliance was unacceptable.
- Despite Mar’s rejections, Sierra did not terminate him; Mar continued working for 19 months until he ultimately left the company.
- The trial court denied Sierra’s motion to compel arbitration, finding there was no mutual assent to arbitrate due to Mar’s explicit rejection, and Sierra appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of arbitration | Mar never agreed—expressly or impliedly— | Mar's continued employment after notice constituted implied consent | No agreement; no assent found. |
| agreement by continued | to arbitrate and explicitly rejected it. | to the arbitration policy, binding him to arbitrate. | |
| employment | |||
| Effect of non-signature | Express refusal and non-signing shows | Signature not necessary; continued work suffices for assent. | Express rejection prevails. |
| on enforceability | lack of mutual assent. | ||
| Employer’s obligation | Employer could have terminated Mar for | Company had right to consider continued work as acceptance. | Termination was employer’s |
| to respond to refusal | refusal but did not; cannot later impose | remedy, but they did not use. | |
| arbitration without mutual consent. | |||
| Comparison to precedent | Distinguished prior cases; a prompt, | Relied on Diaz, arguing precedents support formation by conduct. | Prompt, explicit rejection |
| cases on implied-in-fact | unequivocal rejection blocks implied-in- | blocks implied contracts. | |
| contracts | fact contract. |
Key Cases Cited
- Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev. (U.S.), LLC, 55 Cal.4th 223 (Cal. 2012) (Arbitration is a matter of contract and mutual consent is required)
- Asmus v. Pacific Bell, 23 Cal.4th 1 (Cal. 2000) (Unilateral modifications to employment contracts may be accepted by continued employment)
- Harris v. TAP Worldwide, LLC, 248 Cal.App.4th 373 (Cal. Ct. App. 2016) (Employment can indicate assent to arbitration under certain conditions)
- Craig v. Brown & Root, 84 Cal.App.4th 416 (Cal. Ct. App. 2000) (Continued employment can create implied-in-fact arbitration agreements)