Pacheco v. Baronhr CA2/7
B302687
Cal. Ct. App.Jul 20, 2021Background:
- In June 2017 Pacheco (employee) signed a bilateral arbitration agreement with BaronHR (temporary staffing agency) covering employment-related claims and stating FAA governance.
- Pacheco sued BaronHR and others in September 2018 alleging FEHA violations, workplace injuries, breach of contract, and wrongful termination.
- BaronHR answered in November 2018, asserting arbitration as an affirmative defense, and participated in discovery responses, an informal discovery conference, mediation, and several status conferences during 2019.
- After mediation failed, BaronHR moved to compel arbitration (initial filing problems in August; refiled and noticed for November 4, 2019). Pacheco opposed, arguing waiver under St. Agnes factors and untimeliness under Code Civ. Proc. §1281.5.
- The trial court denied the motion, finding waiver based on delay and St. Agnes factors and citing §1281.5(b); BaronHR appealed.
- The Court of Appeal reversed: it held there was insufficient evidence of waiver (no prejudice, BaronHR timely asserted arbitration, delay explained by settlement efforts) and that §1281.5(b) was inapplicable; remanded with directions to grant the motion.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of right to arbitrate under St. Agnes factors | BaronHR waited >1 year, litigated (discovery responses, mediation, status conferences), so waived arbitration and caused prejudice | BaronHR raised arbitration in its answer and discovery, delay due to settlement/mediation, did not invoke litigation machinery or gain advantage, no prejudice | Reversed: no substantial evidence of waiver—early assertion of arbitration, delay excused by settlement efforts, no demonstrated prejudice |
| Reliance on Code Civ. Proc. §1281.5(b) to deny motion | Section 1281.5(b) renders motion untimely | Motion timely under court scheduling and facts; §1281.5(b) inapplicable here | Court of Appeal: trial court erred—§1281.5(b) applies only to mechanic’s lien actions and was misapplied |
| Arbitrability / unconscionability of arbitration agreement | Agreement unconscionable; compelling arbitration against BaronHR but not non‑signatories risks inconsistent rulings | Agreement not unconscionable; any offending terms severable | Trial court did not decide unconscionability; appellate court did not affirm on that basis and Pacheco did not pursue it on appeal |
Key Cases Cited
- St. Agnes Medical Center v. Pacificare, 31 Cal.4th 1187 (2003) (sets six-factor test for waiver of arbitration; prejudice is critical)
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) (party claiming waiver must show substantial expense/delay caused by moving party)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, 55 Cal.4th 223 (2012) (party seeking to compel arbitration bears burden to prove agreement exists)
- Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (1996) (party opposing arbitration bears burden to prove defenses like waiver)
- Lewis v. Fletcher Jones Motor Cars, Inc., 205 Cal.App.4th 436 (2012) (mere participation in litigation insufficient; must show prejudice)
- Gloster v. Sonic Automotive, Inc., 226 Cal.App.4th 438 (2014) (delay alone insufficient where arbitration asserted early and no prejudice shown)
- Spracher v. Paul M. Zagaris, Inc., 39 Cal.App.5th 1135 (2019) (affirmation that waiver is question of fact and heavy burden on party alleging waiver)