ISABEL GARCIA, Plаintiff and Respondent, v. STONELEDGE FURNITURE LLC et al., Defendants and Appellants.
A166785
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE
Filed 5/17/24
CERTIFIED FOR PUBLICATION;
Stoneledge Furniture LLC (Stoneledge), RAC Acceptance East, LLC (RAC), and Inderjit Singh (collectively, defendants) appeal from the trial court’s denial of their petitions to compel arbitration of Isabel Garcia’s lawsuit against them. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Garcia is employed by RAC, a company that offers financing for purchases. On her first day of work in early 2016, she completed onboarding paperwork using Taleo, a third-party electronic workforce management platform used by RAC.
Starting in 2016, Garcia worked at аn RAC kiosk located inside an Ashley HomeStore operated by Stoneledge. In 2019, Singh began working as an
Garcia’s Complaint
In 2021, Garcia filed a complaint against defendants alleging ten claims related to her allegation that Singh sexually harassed her. The operative second amended complaint asserts causes of action for sexual battery, battery, unlawful sexual violence, intentional infliction of emotional distress, false imprisonment, and gender violence against all defendants; three claims under the California Fair Employment and Housing Act (
Petitions to Compel Arbitration
RAC petitioned to compel arbitration pursuant to an arbitration agreement it claimed Garcia electronically signed during the onboarding process on her first day of employment.
In support of the petition, RAC submitted a declaration by Jared Dale, a Human Resources Information Systems Analyst for RAC, that included the following statements. During Garcia’s onboarding, she created a unique user ID and confidential password using Taleo. Garcia executed an Electronic Signature Acknowledgement and Agreement stating her Taleo password would serve as her electronic signature on new hire documents. Garcia clicked on the link to review a standalone arbitration agreement, and she electronically signed the arbitration agreement. Garcia’s assent was evidenced by an electronic signature block with her name next to an execution date of February 4, 2016, as well as her name separately typed on the arbitration agreement. Upon completion of the new hire paperwork, Garcia exited the Taleo platform, after which neither she nor anyone elsе could make any changes to the arbitration agreement, except by hand on printed copies. All personnel documents, including completed arbitration agreements, were stored electronically in a confidential and secure manner and were accessible only to management level employees or Human Resources employees who were granted access.
Dale’s declaration attached the arbitration agreement. The agreement stated in part: “[RAC] and I mutually consent to the resolution by arbitratiоn of all
Stoneledge petitioned to compel arbitration on the same grounds and in reliance on Dale’s declaration. Stoneledge acknowledged it was not a signatory to the arbitration agreement but argued it could enforce it through equitable estoppel. It further contended thаt, because the agreement contained a delegation clause giving the arbitrator “exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation” of the arbitration agreement, any such dispute Garcia may raise must be decided by the arbitrator. Singh joined Stoneledge’s petition.
Garcia opposed the petitions to compel arbitration. She argued that RAC failed to meet its burden to prove she executed the agreement as Dale was not present when she completed the onboarding paperwork, and he did not attest to having personal knowledge that she electronically signed the agreement. She further argued that, because no agreement existed, the delegation clause relied upon by Stoneledge and Singh was inapplicable.1
Aside from arguing the inadequacy of Dale’s declaration, Garcia noted the purported arbitration agreement lacked indicia of trustworthiness present in other documents she electronically signed during the onboarding process. Garcia submitted five doсuments she electronically signed during the onboarding process, all of which differed from the arbitration agreement in several key respects. First, all five documents showed “Maria Garcia” underneath “E Signature.” In contrast, the arbitration agreement showed her name as “Maria Isabel Izzy Garcia,” and Garcia averred she did not include “Izzy” in her electronic or handwritten signature. Second, all five documents indicated Garcia assented to agreement by inputting her Taleo password,
Garcia flatly denied signing the arbitration agreement. Her declaration stated she “did not electronically sign” the exhibit representing the arbitration agreement or “recall being asked to sign” it, nor was she given a paper copy of the document. Garcia did not recall receiving any information about “what arbitration is or what it means” during the onboarding process and was never told that by signing any document she would waive her right to sue in court. In addition, she did not recognize the name of the company representative on the arbitration agreement, did not know who Dale was, and stated that no one was present when she electronically signed the new hire documents.
In reply, RAC claimed Garcia’s declaration did not establish that she did not sign the arbitration agreement, as she stated she did not “recall” being asked to sign it and stated she did not sign the “[e]xhibit” attached to Dale’s declaration, which was only a copy of the agreement. Further, the Electronic Signature Acknowledgement and Agreement—the authenticity of which Garcia did not challenge—contained the name “Maria Isabel Izzy Garcia.” Stoneledge’s reply (which Singh joined) similarly argued RAC had proven the existence of an arbitration agreement and asserted an arbitrator must decide the issues raised in Garcia’s opposition.
Tentative Ruling and Hearing
In a tentative ruling, the trial court found RAC had met its initial burden to show an agreement to arbitrate by providing the agreement, but that Garcia’s denial of signing the agreement shifted the burden back to RAC to prove by a preponderance of the evidence that her electronic signature was authentic. It further found RAC failed to meet this burden as Dale’s declaration did not present sufficient details of the onboarding process to establish how he knew Garcia must have signed the agreement, and the agreement did not have the appearance of an electronically signed document created in Taleo. As RAC failed to meet its burden to show the existence of an enforceable arbitration agreement, the court declined to consider whether the agreement’s dеlegation clause required an arbitrator to determine the issue of contract formation.
At the hearing on the petitions to compel arbitration, RAC and Stoneledge averred, for the first time, that an evidentiary hearing was warranted as to disputed facts regarding whether a valid agreement existed. RAC asked for an evidentiary hearing to provide further evidence in support of its petition, such as testimony from Dale. Neither RAC nor Stoneledge explained why there had previously been no request for an evidentiary hearing. Garcia argued an
Trial Court’s Ruling
In a detailed written order, the trial court denied the petitions to compel arbitration. The court found RAC met its initial burden by providing a copy of the agreement to arbitrate with its petition. However, because Garcia declared she did not sign the agreement оr remember anyone asking her to do so, the burden shifted back to RAC to prove the authenticity of Garcia’s signature by a preponderance of the evidence. The court concluded RAC failed to do so. It found Dale’s declaration failed to establish the electronic signature was ” ‘the act of’ ” Garcia because he was not a percipient witness; he merely stated that Garcia created a unique user ID and confidential password as part of the onboarding process, before summarily concluding she electronically signеd the agreement. The court also suggested the declaration lacked sufficient detail regarding the security precautions employed by RAC, noting that managers had access to arbitration agreements. Further, the arbitration agreement lacked the appearance of an electronically signed document as it contained no date, time, or IP address, nor any indication it was created within the Taleo system. Accordingly, RAC failed to establish the existence of an agreement to arbitrate.
The trial court concluded Stoneledgе and Singh could not rely on equitable estoppel to compel arbitration given RAC’s failure to meet its burden to establish an arbitration agreement. As to their argument regarding the delegation clause, the court concluded the lack of an agreement to arbitrate meant there was no delegation clause for it to consider.
Finally, the trial court denied RAC’s and Stoneledge’s belated request for an evidentiary hearing. It noted they made the request for the first time at the hearing and found an evidentiary hearing would not resolve any factual disputes as there was no conflicting evidence.
Defendants appealed the denial of the petitions.
DISCUSSION
Defendants challenge the trial court’s order denying their petitions to compel arbitration on two grounds. First, they argue the court erred by failing
I. The Trial Court Did Not Err in Deciding Whether Defendants Established the Existence of an Agreement to Arbitrate
We first consider whether the trial court erred by deciding whether any agreement to arbitrate existed in the first place, rather than delegating that decision to an arbitrator. Applying a de novo standard of review to this question of law, we find the trial court did not err. (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755 (Iyere) [“On appeal, we review orders denying motions to compel arbitration for abuse of discretion unless the matter presents a pure question of law, which we review de novo.“].)
It has been long established that “when a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal); accord, Nielsen Contracting, Inc. v. Applied Underwriters, Inc. (2018) 22 Cal.App.5th 1096, 1108 [“[C]hallenges to the validity of the arbitration clause itself are generally resolved by the court in the first instance.“]; see
However, Stoneledge and Singh assert the trial court should not have determined the existence of an agreement to arbitrate because the agreement’s delegation clause served as an “antecedent agreement” to have the arbitrator decide the “gateway” issue of contract formation. The delegation clause at issue states: “The Arbitrator, and not any federal, state, or local court . . . shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable.”
As evidenced by their misplaced reliance on Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63 (Rent-A-Center) and Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231 (Tiri), Stoneledge and Singh confuse the question of enforceability of an arbitration agreement (including whether the underlying dispute is subject to arbitration), with the question of the existence of any agreement at all.
Stoneledge and Singh make much of Rent-A-Center’s statement that “parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate.” (Rent-A-Center, supra, 561 U.S. at pp. 68–69.) This argument is much ado about nothing as there was no challenge (in either Rent-A-Center or Tiri for that matter) to the existence of an agreement to arbitrate anything at all. We decline to expand the “gateway” language to a circumstance not before the Supreme Court and not addressed by the Supreme Court. This is especially so as the Supreme Court reiterated its prior holdings that ” ‘[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is “clea[r] and unmistakabl[e]” evidence that they did so’ “; without such evidence, ” ‘the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.’ ” (Rent-A-Center, at p. 69, fn. 1.)
Simply put, parties may delegate questions regarding the validity of an arbitration agreement (such as enforceability in the face of a challenge based on unconscionability) or aspect of an arbitration agreement (such as whether a particular claim is subject to the arbitration agreement) to the arbitrator if they clearly and unmistakably agree to do so. (Rent-A-Center, supra, 561 U.S. at p. 69, fn. 1.) However, the delegation of such questions presupposes the existence of an agreement between the parties, which the court necessarily had to decide before it could enforce any such delegation. To conclude otherwise would mean that a party need only fabricate a signature on an alleged arbitration agreement to bypass the courts and send a dispute to arbitration. We do not suggest this occurred here, but we decline to embrace an interpretation of the law that could lead to such results. (See ibid.)
We now consider whether RAC met its burden to prove the existence of thе arbitration agreement.
In determining the existence of an agreement to arbitrate, the trial court must employ a three-step burden shifting process. (Iyere, supra, 87 Cal.App.5th at p. 755.) The party seeking to compel arbitration bears an initial burden to show an agreement to arbitrate; that burden can be met by providing a copy of the alleged agreement. (Ibid.) If that initial burden is met, the burden shifts to the party opposing arbitration to identify a factual dispute as to the agreement’s existence, thereby shifting the burden back to the arbitration proponent. (Ibid.) At that point, and “[b]ecause the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.” (Rosenthal, supra, 14 Cal.4th at p. 413.)
“In these summary proceedings, the trial court sits as a trier of fact,” weighing the evidence to reach a final determination. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) Ordinarily, “the facts are to be proven by affidavit or declaration and documentary evidence, with oral testimony taken only in the court’s discretion.” (Rosenthal, supra, 14 Cal.4th at pp. 413–414id. at p. 414.)
Even when an agreement provides that it is governed by the FAA, courts must first apply state law principles in determining whether the parties entered into an agreement to arbitrate. (Lopez v. Charles Schwab & Co., Inc. (2004) 118 Cal.App.4th 1224, 1229; see also First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944.)
The parties do not dispute that RAC met its initial burden by attaching to its petition a copy of the arbitration agreement purporting to contain Garcia’s electronic signature. (See Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060 (Espejo).) RAC asserts the trial court erred in (1) finding Garcia’s declaration created a factual dispute, thereby shifting the burden back to RAC to prove the existence of an agreement, and (2) finding RAC failed to meet that burden. We disagree on both points.
RAC contends Garcia failed to raise a factual dispute as to the authenticity of the electronic signature on the arbitration agreement. RAC asserts Garcia never affirmatively stated she did not sign the arbitration agreement, but rather declared that she did not “recall being asked to sign” the agreement and did not electronically sign the exhibit to Dale’s declaration, which RAC notes was “simply a duplicate” of the arbitration agreement. In fact, Garcia did state in her declaration that she “did not electronically sign” the exhibit.
A party opposing arbitration by challenging the authenticity of his or her signature “need not prove that his or her purported signature is not authentic, but must submit sufficient evidence to create a factual dispute and shift the burden back to the arbitration proponent.” (Iyere, supra, 87 Cal.App.5th at p. 755Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 [collecting cases where opposing party’s denial of seeing or signing arbitration agreement was sufficient to shift burden back to moving party to prove existence of agreement].) And while Garcia’s denial was adequate, we note she also provided additional evidence comparing the arbitration agreement to the other documents she signed on that same day and in that same manner; documents that bore indicia of reliability not evidenced by the arbitration agreement.
Finally, we readily dispose of RAC’s red herring argument that Garcia denied signing a copy of the arbitration agreement rather than the agreement itself, as any rational reader of Garcia’s declaration would understand that her denial of signing the exhibit representing the agreement was a denial of signing the agreement itself.
B. The Trial Court Did Not Err in Denying the Petitions to Compel Arbitration
1. RAC Failed to Prove Authentication
When, as here, the trial court’s decision “is based on the court’s finding that [the party sеeking arbitration] failed to carry its burden of proof, the question for the reviewing court is whether that finding is erroneous as a matter of law.” (Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, 1066 (Fabian).) ” ’ “Specifically, the question becomes whether the appellant’s evidence was (1) ‘uncontradicted and unimpeached’ and (2) ‘of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.’ ” ’ ” (Id. at p. 1067.)
As discussed above, RAC bore the burden to prove the authenticity of the signature on the arbitration agreement. (See Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 (Ruiz).) A proponent seeking to authenticate an electronic signature must show the electronic signature ” ‘was the act of the person,’ ” which could be shown ” ‘in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.’ ” (Id. at p. 843, italics omitted; see
Here, RAC failed to carry its burden because the evidence it provided—which rested entirely on Dale’s declaration—did not show that only Garcia could have placed the electronic signature on the arbitration agreement. (See Ruiz, supra, 232 Cal.App.4th at p. 844.) Although Dale declared that Garcia created a unique user ID and confidential password using Taleo, he did not explain how he knew that the name “Maria Isabel Izzy Garcia” could have only been placed on the agreement using Garcia’s user ID and password and not the other onboarding documents. (See id. at pp. 844–845.) Instead, Dale summarily concluded that Garcia electronically signed and acknowledged the agreement before exiting out of Taleo, with the only purported evidence being her name on the agreement.
Contrary to RAC’s assertion, this was insufficient to mеet the authentication requirements described in Ruiz. (See Ruiz, supra, 232 Cal.App.4th at pp. 844–845.) The trial court found that Dale’s declaration did not detail the security precautions regarding the use of the Taleo username and password; the arbitration agreement lacked a date, time, or IP address; and the agreement contained no indication it was created within the Taleo system. The court also took into consideration and credited Garcia’s statements disputing the reliability of the evidence given the differences between the arbitration agreement and other documents she signed the same day and in the same manner.
Given the evidence before the court, we conclude the court did not err as a matter of law, and we accordingly reject RAC’s challenge to the court’s finding that it failed to establish the authenticity of the signature on the agreement.4 (See Fabian, supra, 42 Cal.App.5th at p. 1067 [It is not our role to reweigh the evidence or substitute our factual determinations for those of the trial court].)
2. Request for an Evidentiary Hearing
Finally, RAC and Singh contend the trial court erred in denying the request for an evidentiary hearing. This basis for reversal has been forfeited as neither defendant requested an evidentiаry hearing until after the trial court issued an adverse tentative ruling. In fact, they did not request it until the actual hearing on the petition to compel arbitration. (See JRS Products, Inc. v. Matsushita Electric Corp. of America (2004) 115 Cal.App.4th 168, 178 [“Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider.“].)5
If we were to reach the merits, we would conclude the trial court did not abuse its discretion by declining to hold an evidentiary hearing. (See Rosenthal, supra, 14 Cal.4th at p. 414.) As noted above, a trial court may—but is not required to—hold an evidentiary hearing on a petition to compel arbitration. (Id. at pp. 413–414.)
Under these circumstances, we conclude the trial court did not abuse its discretion in denying RAC’s request for an evidentiary hearing.
DISPOSITION
The order denying defendants’ petitions to compel arbitration is affirmed. Garcia shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
Petrou, J.
WE CONCUR:
Fujisaki, Acting P. J.
Rodríguez, J.
A166785/ Garcia v. Stoneledge Furniture, LLC et al.
Trial Court: Sonoma County Superior Court
Trial Judge: Hon. Patrick M. Broderick
Counsel: Morgan, Lewis, and Bockius, Barbara J. Miller, David J. Rаshé and Kimerli A. Williams for Defendant and Appellant Stoneledge Furniture LLC.
Weston Herzog and Jonathon J. Herzog for Defendant and Appellant Inderjit Singh.
K&L Gates, Eugene C. Ryu and Ashley Song for Defendant and Appellant RAC Acceptance East, LLC.
Emily Nugent Law, Emily A. Nugent; Shukla Law and P. Bobby Shukla for Plaintiff and Respondent.