Diaz v. Sohnen Enters.

34 Cal.App.5th 126

245 Cal.Rptr.3d 827

Erika DIAZ, Plaintiff and Respondent,

v.SOHNEN ENTERPRISES et al., Defendants and Appellants.

B283077

Court of Appeal, Second District, Division 7, California.

Filed April 10, 2019

Wolflick & Simpson, Gregory D. Wolflick, David B. Simpson and Theodore S. Khachaturian, Glendale, for Defendants and Appellants.

Bruce Loren Karey,Long Beach, for Plaintiff and Respondent.

ZELON, Acting P. J.Sohnen Enterprises appeals from the denial of its motion to compel arbitration of claims brought by its employee, Erika Diaz. The record before this court demonstrates there was no evidence to support the denial; accordingly, we reverse with directions.

FACTUAL AND PROCEDURAL BACKGROUND

Erika Diaz, an employee of Sohnen Enterprises, filed a complaint alleging workplace discrimination on December 22, 2016. Twenty days earlier, on December 2, 2016, she and her co-workers received notice at an in-person meeting that the company was adopting a new dispute resolution policy requiring arbitration of all claims. At that meeting, according to the declaration of Marla Carr, the Chief Operating Officer of Sohnen, Carr informed all employees present, including Diaz, about the new dispute resolution agreement. She included in her explanation that continued employment by an employee who refused to sign the agreement would itself constitute acceptance of the dispute resolution agreement. According to Carr, she provided the explanation in English and Elaina Diaz, a human resources employee, explained the terms in Spanish. Diaz confirmed this in her own declaration, in which she stated that she discussed the terms in Spanish; she did not provide further details about the December 2 meeting. All employees received a copy of the agreement to review at home.

On December 19, 2016, representatives of the company met privately with Diaz, who had indicated to Elaina Diaz on December 14 that she did not wish to sign the agreement. Carr and Diaz advised her again, in Spanish and English, that continuing to work constituted acceptance of the agreement.

On December 23, 2016, Diaz and her lawyer presented to Sohnen a letter dated December 20, 2016 rejecting the agreement but indicating that Diaz intended to continue her employment. On the same date, Diaz also served the complaint in this action.

On January 17, 2017, Sohnen sent a demand for arbitration to Diaz’s counsel, based on the fact of Diaz’s continued employment at the company. Counsel for Diaz did not reply. Sohnen filed its motion to compel arbitration in April. Diaz filed opposition in May. The trial court heard argument, and denied the motion.

The trial court, in its oral ruling, held that the agreement was a "take-it or leave-it contract and (sic ) adhesion. There is no meeting of the minds." The court made no factual findings, nor did it address whether the agreement was substantively unconscionable.

DISCUSSION

A. We Review The Ruling De Novo

The facts in the record are undisputed.¹ Accordingly, our review is de novo. ( Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413, 58 Cal.Rptr.2d 875, 926 P.2d 1061 ; Flores v. Nature’s BestDistribution, LLC (2016) 7 Cal.App.5th 1, 9, 212 Cal.Rptr.3d 284 ; Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787, 206 Cal.Rptr.3d 474.)

B. The Record Demonstrates Consent to Arbitration

When presented with a petition to compel arbitration, the initial issue before the court is whether an agreement has been formed. ( American Express Co. v. Italian Colors Restaurant (2013) 570 U.S. 228, 233 [133 S.Ct. 2304, 2306, 186 L.Ed.2d 417 ] [arbitration is a matter of contract]; Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US ), LLC (2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217 [" ‘ " ‘a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit’ " ’ "].)

It is the party seeking to compel arbitration which bears the burden of proving the existence of the agreement. ( Rosenthal, supra , 14 Cal.4th at p. 413, 58 Cal.Rptr.2d 875, 926 P.2d 1061.) In this case, Sohnen presented to the trial court evidence of the manner in which the agreement was presented to Diaz, and the actions which followed. This undisputed evidence was sufficient to meet Sohnen’s burden.

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. ( Pinnacle, supra , 55 Cal.4th at 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217 ; Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 383, 203 Cal.Rptr.3d 522 ; Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420, 100 Cal.Rptr.2d 818 ; cf. Asmus v. PacificBell (2000) 23 Cal.4th 1, 11, 96 Cal.Rptr.2d 179, 999 P.2d 71 [continued employment demonstrated implied acceptance of change in job security rules].)²

Diaz relies on Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 69 Cal.Rptr.3d 223, and Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 148 Cal.Rptr.3d 71, arguing that these cases support the trial court’s ruling. Neither case, however, addresses the situation presented here; accordingly, neither supports the result below.

In Mitri, the employee acknowledged receipt of an employee handbook containing an arbitration provision, but the acknowledgement form did not reference or contain any agreement to comply with the arbitration provision. ( Mitri, supra , 157 Cal.App.4th at p. 1173, 69 Cal.Rptr.3d 223.) The general acknowledgment stands in distinction to the express explanation provided twice to Diaz: that continued employment would itself be a manifestation of agreement to the arbitration provisions.

In Gorlach, the handbook provided to employees contained an express signature requirement for the arbitration agreement: "[T]he handbook told employees that they must sign the arbitration agreement, implying that it was not effective until (and unless) they did so. Because Gorlach never signed the arbitration agreement, we cannot imply the existence of such an agreement between the parties." ( Gorlach, supra , 209 Cal.App.4th at p. 1509, 148 Cal.Rptr.3d 71.) Here, there was no such implication because Diaz was told that her continued employment was sufficient.

Moreover, unlike Diaz, Gorlach left her employment to avoid the arbitration obligation. ( Gorlach, supra , 209 Cal.App.4th at p. 1508, 148 Cal.Rptr.3d 71.) The uncontradicted evidence in this record demonstrates that Diaz maintained her employment status between December 2 and December 23, and remained an employee at the time of the hearing in this case. As a result, she was already bound by the arbitration agreement before the presentation of the letter indicating both her rejection of the agreement and her intent to remain employed. Although Diaz now asserts that this forced Sohnen to choose whether to proceed without arbitration, this is incorrect. At most, the letter was an attempt to repudiate the agreement. (See, e.g. Taylor v. Johnston (1975) 15 Cal.3d 130, 137, 123 Cal.Rptr. 641, 539 P.2d 425 [express repudiation requires clear and unequivocal refusal to perform]; Mammoth Lakes LandAcquisition, LLC v. Town of Mammoth Lakes (2010) 191 Cal.App.4th 435, 463, 120 Cal.Rptr.3d 797 [same].)³

In any event, because the employment agreement between Diaz and Sohnen was at-will, Sohnen could unilaterally change the terms of Diaz’s employment agreement, as long as it provided Diaz notice of the change. "[I]t is settled that an employer may unilaterally alter the terms of an employment agreement, provided such alteration does not run afoul of the Labor Code. [Citations.]" ( Schachter v. Citigroup (2009) 47 Cal.4th 610, 619, 101 Cal.Rptr.3d 2, 218 P.3d 262.) "The at-will presumption authorizing an employer to discharge or demote an employee similarly and necessarily authorizes an employer to unilaterally alter the terms of employment, provided that the alteration does not violate a statute or breach an implied or express contractual agreement." ( Id. at p. 620, 101 Cal.Rptr.3d 2, 218 P.3d 262 ; see also DiGiacinto v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629, 636-637, 69 Cal.Rptr.2d 300 [in adopting the majority view of at-will contracts, the court stated "[T]the majority line of cases supports the proposition that as a matter of law, an at-will employee who continues in the employ of the employer after the employer has given notice of changed terms or conditions of employment has accepted the changed terms and conditions. Presumably, under this approach, it would not be legally relevant if the employee also had complained, objected, or expressed disagreement with the new offer; as long as the employee continued in employment with notice of the new terms, the employee has no action for breach of contract as a matter of law."].)

C. Diaz Has Not Demonstrated That The Arbitration Agreement Is Unenforceable

Once the party seeking arbitration has established that a binding agreement was formed, as Sohnen did here, the burden shifts to the party opposing arbitration to demonstrate the agreement cannot be enforced. ( Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972, 64 Cal.Rptr.2d 843, 938 P.2d 903 ; Rosenthal, supra , 14 Cal.4th at pp. 409-410, 58 Cal.Rptr.2d 875, 926 P.2d 1061.)

A showing that an agreement is unconscionable can bar enforcement. The doctrine has "both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results." ( Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243, 200 Cal.Rptr.3d 7, 367 P.3d 6.) Both elements must be present for a court to refuse enforcement. ( Ibid. ; see also Pinnacle, supra , 55 Cal.4th at p. 246, 145 Cal.Rptr.3d 514, 282 P.3d 1217 [both elements must be present, but there is a sliding scale; if more of one element...