Employment: Employee Who Refused To Accept Arbitration Agreement As Condition Of Employment And Promptly Told Employer So Was Not Bound To Arbitrate Despite Continuing Employment
Is An Employee Who Continues To Be Employed After Being Informed That Arbitration Is A Condition Of Continued Employment Bound By The Arbitration Agreement?
“California law in this area is settled: when an employee continues his or her employment after notification that an agreement to arbitration is a condition of continued employment, that employee has impliedly consented to the arbitration agreement.” Diaz v. Sohnen, 34 Cal.App.5th 126, 130 (2019). But Diaz did not govern the outcome in Winston Mar v. Lawrence Perkins, B327665 (2/7 5/22/24) (Feuer, Martinez; Segal separately conc.).
Relying on Diaz, defendant argued that after it informed Mar that an arbitration agreement was a condition of his further employment, and he continued to be employed, he was required to arbitrate. The trial court disagreed because Mar stated he refused to sign the arbitration agreement and defendant could terminate his employment if it objected. Therefore, there was no agreement. Agreeing that Mar promptly refused to sign the employee handbook and be bound by arbitration, and that he informed the employer that he could be fired, the Court of Appeal affirmed the trial court's denial of defendant's motion to compel arbitration.
Justice Feuer sought to distinguish Diaz on the grounds that Mar acted more quickly than Diaz, and Mar explicitly told the employer that he could be fired if the employer didn't like his decision to refuse to be bound by arbitration.
Concurring separately, Justice Segal believed that Mar's case showed Diaz was wrongfully decided because it could not be effectively distinguished from Mar's case. Diaz, an unsophisticated party, took time to consult an attorney, but also acted promptly. And there was no need to remind the employer that it could fire the employee, because an employer can fire at-will employees for cause and without cause.
Authentication: Failure To Authenticate Electronic Signing Means Arbitration Agreement Is Unenforceable
Shifting Burdens Of Proof.
Isabel Garcia sued her employer and its sales manager, alleging sexual harassment. Defendants petitioned to compel arbitration, and carried their initial burden by producing an arbitration agreement. But Garcia pushed back, claiming she had not signed, putting the employer to the test of authenticating her electronic signature. The employer was not able to authenticate to the satisfaction of the trial judge or the Court of Appeal. Garcia v. Stoneledge Furniture LLC et al., A166785 (1/3 5/17/24) (Petrou, Fujisaki, Rodriguez).
The employer relied on a declaration of a person who did not have personal knowledge that Garcia signed. Furthermore, the employer did not explain its security system to establish that only Garcia could have signed the document. Also, the employer used Taleo, described as a third-party electronic workforce management platform. However, "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."
The order denying defendants' petition to compel arbitration was affirmed.
COMMENT: In the age of the internet, there are still some advantages to ink signatures on paper with a witness signature. Authenticating electronic signatures can be tricky. Here, it might have helped to have a date, time, or IP address. One wants a verification system that identifies the signer and the authenticity of the signature, and there are electronic tools such as DocuSign that can be effective. Indeed, perhaps Taleo would have provided the necessary authentication, but the opinion states that there was "no indication [the document] was created within the Taleo system."
Happy Fourth Of July To All Our Readers
HAPPY FOURTH OF JULY
July 4th tourists, NYC, 1969. Bernard Gotfryd, photographer. Library of Congress.
Internet Commerce: Clickwrap Arbitration Agreement Was Unenforceable Because Seller “Undid” Notice
An Effective Clickwrap Agreement Provides Notice Of Arbitration, Which, However, Can Be Undone.
Plaintiffs, who purchased the Dexcom G6 Continuous Glucose Monitoring System to manage their diabetes, and sued the manufacturer alleging the the Dexcom G6 was defective and caused injuries. Dexcom moved to compel arbitration, based on a clickwrap agreement referring to arbitration. After the trial court granted motions to compel, Plaintiffs appealed. Herzog v. Superior Court of San Diego County (Real Party In Interest Dexcom, Inc.), D082847 (4/1 5/16/24) (Do, Kelety; Irion dsst).
The majority opinion authored by Justice Do concluded that the clickwrap here did not constitute unambiguous acceptance of Terms of Use, including an arbitration agreement, because Dexcom "undid whatever notice it might have provided" by telling the customer that clicking "constituted authorization for Dexcom to collect and store the user's sensitive, personal health information."
Health Care: Parents Had To Arbitrate Their Claims Where Son Agreed To Arbitration Of Medical Malpractice Claims
The Outcome Relied On Ruiz v. Podolsky, 50 Cal.4th 838 (2020) (Ruiz).
Parents sued Asistencia, a skilled nursing facility, alleging survivor claims for dependent adult abuse and negligence on behalf of their son Skyler as well as their own claim for wrongful death. An arbitration agreement existed between Skyler and Asistencia, so Astincencia moved to compel arbitration. The trial court granted Asistencia’s motion as to the survivor claims, but not as to the wrongful death claim, reasoning that the parents, who had not signed the arbitration agreement, did not have an enforceable agreement. Asistencia appealed — successfully. Jonie A. Holland v. Silverscreen Healthcare, Inc. (Asistencia), 101 Cal. App. 5th 1125 (2/2 4/16/24) (Ashmann-Gerst, Chavez, Hoffstadt).
In Ruiz, the California Supreme Court held that CCP § 1295 permitted patients who consented to arbitration to bind their heirs in actions for wrongful death. The Court in Asistencia agreed that the parents' claims were essentially for medical negligence, and were governed by Ruiz, requiring that the parents' claims be arbitrated.
Deadlines, Federal Preemption: California Judges Disagree About Whether 30-Day Deadline To Pay Fees Furthers Purpose Of Arbitration
Thirty-Day Deadline Applies.
The Court of Appeal, Fifth District, following the weight of California precedent, applies California Code of Civ. Proc. § 1281.98, requiring that the party who has drafted an arbitration agreement must pay arbitration fees within 30 days of when they are due, or else the other party gets an option to reject arbitration and litigate instead. In Reynosa v. Superior Court (Real Party in Interest Advanced Transportation Services, Inc., F086342 (5th Dist. 5/6/24) (Detjen, Meehan, Snauffer), employee Reynosa did not expressly agree to the extension of a due date for his employer to pay arbitration fees, and the employer did not pay within 30 days, in violation of 1281.98. The Court of Appeal issued a writ of mandate issue directing the Superior Court to vacate its order denying plaintiff Reynosa’s motion to withdraw from arbitration. and to enter an order granting Reynosa's motion to withdraw from arbitration.
Thirty-Day Deadline Does Not Apply If There Is Federal Preemption.
The arbitration agreement stated "this agreement is governed by the FAA" in Hernandez v. Sohnen Enterprises, Inc. B323303 (2/5 5/22/24). Justice Moor, writing for the majority, explains that this results in federal preemption of California procedural and substantive provisions. Furthermore, the majority takes the position that the California requirement of payment within 30 days unduly burdens arbitration. Usually, a payment deadline is only enforce in a contract if time is of the essence and the breach is material. Thus, the majority opinion aligns with Justice Wiley's dissent in Hohenshelt, and in fact cites to Wiley's dissent in footnote 8 of the Hernandez opinion.
Justice Baker, dissenting, believes there is no preemption. He takes the position, consistent with other California cases, that the statutory 30-day limit to pay fees furthers the goal of arbitration by preventing employers from compelling arbitration and then delaying arbitration by not paying fees. "The majority’s opinion rather obviously invites a grant of review from our Supreme Court," writes Justice Baker.
COMMENT: I have written about conflicting California and Federal views of whether California is a friend or foe of arbitration, as well as about Justice Wiley's dissent in Hohenshelt. For my April 10, 2024 article in the Daily Journal, use this link to the ARC website. I also have an April 11, 2024 blog post on the subject.