Mar v. Perkins

321 Cal.Rptr.3d 268

Winston MAR, Plaintiff and Respondent,

v.Lawrence PERKINS et al., Defendants and Appellants.

B327665

Court of Appeal, Second District, Division 7.

Filed May 22, 2024

APPEAL from an order of the Superior Court of Los Angeles County, Maurice A. Leiter, Judge. Affirmed. (Los Angeles County Super. Ct. No. 22STCV26170)

Practus, Sana Swe, Los Angeles, and Andrew W. Heger for Defendants and Appellants.

Cohen Williams, Marc S. Williams, Los Angeles, and Martin J. Chrisopher Santos for Plaintiff and Respondent.

FEUER, J.

SierraConstellation Partners, LLC (Sierra) and Lawrence Perkins (collectively, Sierra defendants) appeal from an order denying their motion to compel arbitration of Winston Mar’s action for buyout of his partnership interest. The trial court found the Sierra defendants failed to meet their burden to establish the existence of an arbitration agreement because Mar clearly stated that he refused to sign the arbitration agreement and Sierra could terminate his employment if it objected. On appeal, the Sierra defendants contend the trial court erred because Sierra notified Mar that his continued employment constituted assent to the arbitration agreement, and Mar continued his employment for 19 months before he left Sierra and filed this lawsuit.

The Sierra defendants are correct that where an employer modifies its employment policy to require employees to arbitrate their disputes and clearly communicates to employees that continued employment will constitute assent to an arbitration agreement, the employees will generally be bound by the agreement if they continue to work for the company, However, where, as here, the employee promptly rejects the arbitration agreement and makes clear he or she refuses to be bound by the agreement, there is no mutual assent to arbitrate. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Mar's Complaint

On August 12, 2022 Mar commenced this action, asserting a cause of action for buyout of his partnership interest in Sierra pursuant to Corporations Code section 16405.¹ Mar alleged that in June 2015 he and the Sierra defendants entered into a general partnership "to conduct business as a national interim management and advisory firm serving middle-market companies" facing "difficult business challenges."² On April 1, 2022 Mar provided the Sierra defendants with written notice of his dissociation from the partnership effective that date. In his notice, Mar stated the Sierra defendants were required to purchase Mar’s partnership interest within 120 days pursuant to Corporations Code section 16701, subdivisions (a) and (e). The Sierra defendants did not respond to Mar’s demand for payment or tender any payment for his partnership interest. Mar sought a determination of the buyout price of his partnership interest; an order directing the Sierra defendants to pay the buyout price plus interest; costs of suit; and reasonable attorneys’ fees and the fees and expenses of any appraisers and other experts.

B. The Sierra Defendants’ Motion To Compel Arbitration

On November 29, 2022 the Sierra defen dants filed a motion to compel arbitration.³ They argued Mar was an at-will employee and was bound by the arbitration agreement in Sierra’s employee handbook because the handbook stated that Mar’s obligation to arbitrate was an express term of his employment. Further, Mar’s refusal to sign the handbook acknowledgment and standalone arbitration agreement was immaterial because Mar’s continued employment with Sierra for 19 months after Sierra added the mandatory arbitration agreement to its handbook created an implied-in-fact agreement to arbitrate between the parties.⁴ The Sierra de- fendants argued Mar’s claim fell within the scope of the arbitration agreement, and he was therefore required to arbitrate in accordance with federal and state law, which strongly favored arbitration.

In support of their motion, the Sierra defendants submitted a declaration from Rebecca Waits, Sierra’s chief people officer, who started working at Sierra in October 2019. Waits stated that Perkins, Sierra’s chief executive officer, founded Sierra in January 2013. Mar began working at Sierra as a business advisor in July 2013. According to Waits, Mar is an at-will employee with the title of "Managing Director." Mar was paid a salary, and he received an annual W-2 form from Sierra until his employment ended in 2022.

In 2020 Sierra added a mandatory arbitration agreement to its employee handbook. On August 11, 2020 Waits emailed a copy of the handbook to all Sierra employees, including Mar, along with a separate arbitration agreement.⁵ Waits stated in her email, "Please print out and sign the acknowledgments for the handbook, non-harassment policy and binding arbitration policy." (Boldface omitted.) Waits averred in her declaration that Mar called her "to say that he would not sign either document." On August 17 and 21 Waits sent emails requesting that employees send their signed acknowledgments to her by August 21.

On August 31 Waits emailed Mar, stating in part, "We know that you have received this Employee Handbook, and that you are aware of its terms, regardless of the fact that you have refused to sign for it. We are therefore advising you, by way of this memo, that whether or not you agree to sign the Acknowledgment of Employee Handbook, these are the rules of this Company and they do still apply to you, including the mandatory arbitration provisions…. [¶] We are just sending this memo to you to say that you do not have to sign the Employee Handbook. Regardless, because you have received the handbook and are aware of its terms, if indeed you elect to continue your employment with … us beyond today, August 31, 2020[,] you will be deemed to have accepted the terms of these policies of the Employee Handbook, including the arbitration provisions, and will be bound by and held accountable to them, regardless of the fact that you have failed to sign it, and regardless of any express objections you may have noted." Mar responded eight minutes later by email, "Again, I am not signing this handbook. And will not be bound by it. [¶] If you would like, please feel free to terminate me due to that." Mar worked at Sierra for another 19 months after receiving Waits’s August 31 email.

On March 29, 2021 Waits emailed Sierra’s 2021 team member handbook to employees along with a separate arbitration agreement. Mar again called Waits "shortly thereafter to reiterate his refusal to sign the Handbook acknowledgement form."

The 2021 handbook, which was attached as an exhibit to Waits’s declaration, contained an arbitration agreement that provided in part, "To the maximum extent permissible under federal and state law, any controversy, dispute or claim (‘Dispute(s)’) between you and the Company, or its officers, directors, owners, agents or other Team Members, subsidiaries, affiliates, parent, or related entities, related in any manner to your employment or association with the Company, or termination thereof, that could have been resolved in a court of law before a judge or jury, shall be resolved by binding arbitration at the request of any party. Arbitration is the process by which a neutral third party, rather than a judge or jury, makes a binding decision relating to a Dispute. The arbitrability of any Dispute under this agreement shall be determined by application of the substantive provisions of the Federal Arbitration Act (9 U.S.C. Sections 1 and 2) (‘FAA’). To the extent that the FAA is inapplicable, the arbitration law of the state in which you work or last worked for the Company shall apply. Arbitration shall be the exclusive method for resolving any Dispute; provided however, that any party may request provisional relief from a court of competent jurisdiction, as provided under federal or state law. Even if the Company does not sign or acknowledge receipt of this agreement, the Company, like you, agrees to be bound by this agreement and agrees to arbitrate all Disputes."

The 2021 handbook contained an acknowledgment page, which stated in part, "Whether or not I have signed a separate agreement to arbitrate, I understand that I have agreed that my employment with the company is subject to binding arbitration which is set forth in the ‘arbitration’ section of the handbook. I understand and acknowledge that the agreement to arbitrate contains a waiver of my ability to act as a class representative in any class action proceeding or to participate in any class proceeding as a member of a class. Arbitration provided for under this agreement is the exclusive method to resolve any disputes or controversies that the company or I may have, whether or not arising out of my employment or termination of that employment with the company." (Capitalization omitted.) Mar did not sign the handbook acknowledgment form.

The separate arbitration agreement contained the same provisions as the arbitration agreement in the 2021 handbook, except it contained a different acknowledgment paragraph and signature line for the employee.⁶ The acknowledgment paragraph provided, "I hereby acknowledge that I have received, reviewed, and agree to the binding arbitration agreement and the class action waiver and that I have waived my right to a trial before a judge or jury in all disputes with the company." (Capitalization omitted.) Mar did not sign the separate arbitration agreement.

C. Mar’s Opposition to the Motion To Compel Arbitration

In Mar’s opposition to the Sierra defendants’ motion to compel arbitration, he argued that he never agreed to arbitrate his claim as evidenced by Waits’s declaration. Mar asserted that when Sierra proposed a change to its existing relationship with Mar by requiring arbitration of all disputes, he was free to reject it and make a counteroffer. After Mar told Waits that Sierra could terminate him due to his refusal to sign the handbook acknowledgment form, Sierra never attempted to fire him.

In his...