Opinion
B328239
09-26-2024
JANE DOE, Plaintiff and Respondent, v. CLAY LACY AVIATION, INC., et al., Defendants and Appellants
Lewis Brisbois Bisgaard &Smith, Corinne C. Bertsche, Lann G. McIntyre, Jerry J. Chang and Steven G. Gatley for Defendant and Appellant Clay Lacy Aviation, Inc. Wolfe &Wyman, Eric J. Erickson, Catherine T. Phan and Michael H. Shen for Defendant and Appellant Steven Lee. Michael Martinez Law and Michael C. Martinez for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. 21STCV40016 Teresa A. Beaudet, Judge.
Lewis Brisbois Bisgaard &Smith, Corinne C. Bertsche, Lann G. McIntyre, Jerry J. Chang and Steven G. Gatley for Defendant and Appellant Clay Lacy Aviation, Inc.
Wolfe &Wyman, Eric J. Erickson, Catherine T. Phan and Michael H. Shen for Defendant and Appellant Steven Lee.
Michael Martinez Law and Michael C. Martinez for Plaintiff and Respondent.
EGERTON, J.
Defendant Clay Lacy Aviation, Inc. (CLA) appeals an order denying its motion to compel arbitration of an employment and sexual battery action brought by plaintiff Jane Doe. CLA contends the trial court erred when it found that plaintiff did not enter into the relevant arbitration agreement because she had received and signed only the last page of the three-page agreement. Substantial evidence supports the court's factual findings. We affirm.
Defendant and appellant Steven Lee is an employee of CLA. He joined in CLA's motion to compel arbitration and has joined with CLA's arguments in this appeal.
BACKGROUND
Consistent with the applicable standard of review, we state the evidence in the light most favorable to the trial court's findings, drawing all favorable inferences to support the court's order. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972, 983-984 (Engalla); Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 166-167 (Gamboa).)
CLA is a private jet charter company. In November 2014, plaintiff began working for CLA as an independent contractor, unofficially classified as a" 'ground girl.'" In March 2015, she was offered a regular employment position as a "cabin server" (flight attendant) and immediately accepted the job.
In October 2021, Plaintiff sued defendants asserting several causes of action arising out of her employment with CLA. She alleged that after persistent sexual battery, harassment, and retaliation by her supervisor (defendant Lee), she was forced to terminate her employment by resigning earlier that year.
CLA moved to compel arbitration of the claims. In a supporting declaration, the company's vice president of human resources (HR), Laura Jung, stated plaintiff received and signed a copy of CLA's mutual arbitration agreement when she was hired in March 2015, as "was customary at the time." Jung authenticated a copy of the three-page arbitration agreement bearing plaintiff's signature on the last page.
According to Jung, CLA's "custom and practice" is to provide all new employees with a set of required "onboarding documents," including the mutual arbitration agreement, employee handbook, and IRS W-4 form, before the employee's start date. New hires are instructed to review the documents, reach out to their HR representative with any questions, sign the documents, and return the signed documents to HR. Plaintiff never approached Jung or anyone in HR with questions about the arbitration agreement.
We draw these facts from Jung's declaration in support of CLA's motion to compel, her declaration in support of CLA's reply memorandum, and her live testimony offered at the court-ordered evidentiary hearing.
These documents also included a New Employee Checklist that, among other things, lists the documents the new employee supposedly received as part of the onboarding processes. Jung authenticated a New Employee Checklist that she pulled from plaintiff's HR file, which included a checkmark indicating plaintiff received the arbitration agreement. The checklist is not signed by plaintiff or anyone else, and plaintiff denied she received it.
While Jung believed plaintiff received the onboarding documents, she admitted she had no "specific recollection" of plaintiff's onboarding process, and she did not recall meeting with plaintiff when plaintiff transitioned to the cabin server position. Although CLA's "customs and practices" required new employees to sign an application, an offer letter, and a release for drug testing, Jung admitted she could not find any of these documents in plaintiff's HR file. Jung also conceded that, although CLA had signed acknowledgments from plaintiff confirming plaintiff had received the applicant information form and employee handbook, the company did not have a similar acknowledgement for the arbitration agreement. Finally, Jung admitted she had no personal knowledge as to whether CLA's customs and practices were "properly and fully applied" in plaintiff's onboarding process for the cabin server position.
The New Employee Checklist that Jung pulled from plaintiff's HR file has checkmarks indicating plaintiff received and signed these documents for the cabin server position. (See fn. 3, ante.)
Plaintiff opposed the motion to compel arbitration. In a series of supporting declarations and testimony, she detailed her hiring and employment with CLA.
We draw these facts from plaintiff's declaration in support of her opposition, her supplemental declaration in support of her sur-reply memorandum, and her live testimony offered at the evidentiary hearing.
The independent contractor position with CLA was her first employment after graduating from college. She did not receive an offer letter and the position did not have an official title. Unofficially, she was referred to as a "ground girl," and she was told her duties were to "perform any and all tasks" requested of her on the ground. These included picking up dry cleaning for her supervisor, watching her supervisor's kids, and sometimes preparing food for a "managerial employee." Plaintiff took the job with aspirations of becoming a flight attendant.
On March 30, 2015, CLA offered plaintiff a cabin server position on a crew it was filling out for a new jet. She immediately accepted and experienced a "whirlwind hiring process."
The day plaintiff received and accepted the offer, she met with Amber Miranda-a colleague in CLA's flight department who was neither in HR nor plaintiff's supervisor. Miranda handed plaintiff "several signature pages to sign," including the last page of the arbitration agreement, a new employee data record page, and a W-4. She told plaintiff all the documents concerned "employee payroll and benefits."
The three-page arbitration agreement that CLA attached to its motion to compel has no page or paragraph numbers. Each page has the same heading-MUTUAL ARBITRATION AGREEMENT"-and a set of unnumbered terms. The final page includes a signature block and the following text:
"The parties acknowledge that this is the entire agreement between them regarding the subject of arbitration and understand that any modification of this Agreement must be in writing and signed by the parties. The parties further acknowledge that they have carefully read this Agreement, understand its terms, and have been afforded an opportunity to consult with counsel of their own choosing before signing it."
Plaintiff testified she read the single-page document before signing it. In reading it, she did not realize there were other pages that were missing. She believed the single page she received was the "entirety of the mutual arbitration agreement" and it was, as Miranda had represented, "related to employee payroll and benefits."
Plaintiff met with Miranda around 4:00 p.m. The meeting was brief, and Miranda rushed plaintiff to sign the pages before instructing her to leave work immediately to prepare for training the next morning. The training included a culinary aspect and safety training, the latter of which normally took seven days to complete. Miranda had recently completed the training and knew how rushed it would be with only two days before plaintiff's first flight.
After reviewing the parties' briefs and supporting declarations, the trial court ordered an evidentiary hearing to receive oral testimony from Jung and plaintiff regarding plaintiff's execution of the arbitration agreement. At the end of the hearing, the court delivered its ruling from the bench.
The trial court denied CLA's motion to compel arbitration. The court said it "found the testimony of [plaintiff] to be very credible," she was "very direct in her responses," her explanation "made sense," and the documents corroborated her account. In particular, the court noted other multi-page documents required plaintiff to write her name on the document's first page, while the first "two pages from the mutual arbitration agreement . . . didn't have a signature place for her to write something." The court found it was "credible" that plaintiff received only signature pages to sign and that the whole process was rushed.
In contrast, the trial court found Jung's testimony on behalf of CLA to be "generalized because she wasn't there." The documents Jung presented also tended to undermine her account of CLA's "general practices." In particular, the court noted the employee checklist had "defects," including that it "seem[ed] to suggest documents that we don't have would have had a signature attached to them." (See fns. 3 &4, ante.)
All told, the court found the evidence "bolster[ed]" plaintiff's testimony and plaintiff had "convinced the court that what she said happened is what happened." The court "found the testimony of the plaintiff to be more credible and finds that there was not an arbitration agreement signed by the plaintiff."
CLA filed a timely notice of appeal.
DISCUSSION
1. Governing Law and Standard of Review
Under Code of Civil Procedure section 1281.2, a trial court must grant a motion or petition to compel arbitration only "if it determines that an agreement to arbitrate the controversy exists." The court makes this determination in a summary process, sitting "as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination." (Engalla, supra, 15 Cal.4th at p. 972; Gamboa, supra, 72 Cal.App.5th at p. 164, citing § 1290.2.)
Statutory references are to the Code of Civil Procedure.
"The burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence: 'Because the existence of the agreement is a statutory prerequisite to granting the [motion or] petition, the [party seeking arbitration] bears the burden of proving its existence by a preponderance of the evidence.'" (Gamboa, supra, 72 Cal.App.5th at pp. 164-165, quoting Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal); accord, Engalla, supra, 15 Cal.4th at p. 972.) However, "the burden of production may shift in a three-step process." (Gamboa, at p. 165.)
"First, the moving party bears the burden of producing 'prima facie evidence of a written agreement to arbitrate the controversy.' [Citation.] The moving party 'can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party's] signature.' . . . If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion." (Gamboa, supra, 72 Cal.App.5th at p. 165; see Rosenthal, supra, 14 Cal.4th at p. 413; Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544 (Bannister); Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)
"If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement. [Citation.] The opposing party can do this in several ways. For example, the opposing party may testify under oath or declare under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement." (Gamboa, supra, 72 Cal.App.5th at p. 165; see, e.g., Bannister, supra, 64 Cal.App.5th at p. 546 [never saw or signed agreement]; Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, 1065 (Fabian) [never given or signed contract]; Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1054 [did not recall seeing or signing document]; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846 (Ruiz) [did not recall signing agreement].)
"If the opposing party meets its burden of producing evidence, then in the third step, the moving party must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the agreement by a preponderance of the evidence remains with the moving party." (Gamboa, supra, 72 Cal.App.5th at pp. 165-166, citing Rosenthal, supra, 14 Cal.4th at p. 413.)
When the trial court's decision on a petition to compel arbitration "is based upon resolution of disputed facts, we review the decision for substantial evidence." (NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 71; accord, Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.) "In such a case we must' "accept the trial court's resolution of disputed facts when supported by substantial evidence; we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of the credibility of witnesses and the weight of the evidence." '" (NORCAL, at p. 71; accord, Gamboa, supra, 72 Cal.App.5th at p. 166.)
This general formulation of the substantial evidence test is typically implicated when a defendant contends the plaintiff succeeded at trial despite insufficient evidence. (See Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 465.) But this appeal implicates a different formulation. Here, CLA-the petitioner and the party with the burden of proof-challenges the trial court's factual determination that "there was not an arbitration agreement signed by the plaintiff." "When, as here, the court's order denying a motion to compel arbitration is based on the court's finding that petitioner 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, supra, 42 Cal.App.5th at p. 1066, citing Juen v. Alain Pinel Realtors, Inc. (2019) 32 Cal.App.5th 972, 978-979; Sonic, at pp. 465-466; accord, Gamboa, supra, 72 Cal.App.5th at p. 166.)"' "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.'" '" (Fabian, at p. 1067.)
"' "[W]here, as here, the judgment is against the party who has the burden of proof, it is almost impossible for [that party] to prevail on appeal by arguing the evidence compels a judgment in [that party's] favor. That is because unless the trial court makes specific findings of fact in favor of the losing [party], we presume the trial court found the [party's] evidence lacks sufficient weight and credibility to carry the burden of proof. [Citations.] We have no power on appeal to judge the credibility of witnesses or to reweigh the evidence." '" (Fabian, supra, 42 Cal.App.5th at p. 1067.)" 'The appellate court cannot substitute its factual determinations for those of the trial court; it must view all factual matters most favorably to the prevailing party and in support of the judgment. [Citation.]" 'All conflicts, therefore, must be resolved in favor of the respondent.'" '" (Ibid.; accord, Gamboa, supra, 72 Cal.App.5th at pp. 166-167.)
2. The Trial Court Reasonably Found CLA Failed to Prove the Existence of a Valid Arbitration Agreement
The trial court found "there was not an arbitration agreement signed by the plaintiff," in effect concluding CLA had failed to satisfy its burden to prove the existence of a valid arbitration agreement between the parties. (See Rosenthal, supra, 14 Cal.4th at p. 413; Gamboa, supra, 72 Cal.App.5th at pp. 165-166.) In reaching this conclusion, the court expressly credited plaintiff's testimony that she received, reviewed, and signed only the last page of the three-page agreement that CLA proffered as the basis for its right to compel arbitration.
CLA contends the evidence does not support the trial court's finding. The company argues it met its "burden of establishing the existence of the arbitration agreement" by attaching a copy of the agreement that "bore plaintiff's signature" to its motion to compel, and it maintains the court's finding was "contrary to the evidence given plaintiff's admission that she signed the [arbitration agreement]." The former argument misunderstands the law; the latter one misstates the evidence.
Contrary to CLA's contention, the moving party satisfies only its initial "burden of producing 'prima facie evidence of a written agreement to arbitrate'" by attaching" 'a copy of the arbitration agreement purporting to bear the [opposing party's] signature'" to its petition. (Gamboa, supra, 72 Cal.App.5th at p. 165, italics added.) However, when the opposing party sufficiently challenges "the authenticity of the [proffered] agreement," the burden shifts back to the moving party to "establish with admissible evidence a valid arbitration agreement between the parties." (Ibid.) "The burden of proving the agreement by a preponderance of the evidence remains with the moving party." (Id. at pp. 165-166, italics added, citing Rosenthal, supra, 14 Cal.4th at p. 413.)
In Gamboa, our colleagues in Division Seven rejected a similar argument to the one CLA makes here. Like CLA, the appellant in Gamboa relied upon Condee for the proposition that proffering a copy of the purported arbitration agreement with the plaintiff's signature was sufficient "to meet its burden of proving by a preponderance of the evidence that an arbitration agreement existed between the parties." (Gamboa, supra, 72 Cal.App.5th at pp. 167-168.) The Gamboa court rejected the contention, explaining," 'Properly understood, Condee holds that a petitioner is not required to authenticate . . . an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity . . . is not challenged.'" (Gamboa, at p. 168, quoting Ruiz, supra, 232 Cal.App.4th at p. 846.) This narrow holding from Condee did not apply in Gamboa because the plaintiff there had "challenged the authenticity of the agreement by saying under penalty of perjury that she did not remember it." (Gamboa, at p. 168; see also Ruiz, at p. 846.) The Condee holding likewise does not apply here, because plaintiff met her "burden of producing evidence to challenge the authenticity of the agreement." (Gamboa, at p. 165.)
This brings us to CLA's second argument-that the court's finding was "contrary" to plaintiff's "admission" that she signed the arbitration agreement. The contention mischaracterizes the evidence. As discussed, plaintiff testified she received and signed only the last page of the proffered arbitration agreement- not the entire three-page document. This page has the heading "MUTUAL ARBITRATION AGREEMENT" and a signature block, but it does not include page or paragraph numbers to indicate it is part of a larger document. Although the page states it "is the entire agreement between [the parties] regarding the subject of arbitration," it does not include crucial provisions concerning arbitrable claims or the waiver of the right to jury trial. Plaintiff testified she read the page before signing it and did not realize there were other pages that she had not received. She believed the page was the "entirety" of the arbitration agreement and it was "related to employee payroll and benefits" (as she had been told). This evidence was sufficient to challenge the authenticity of the three-page arbitration agreement that CLA claimed plaintiff had signed. (See, e.g., Gamboa, supra, 72 Cal.App.5th at pp. 163-164, 168, 171 [plaintiffs declaration that "she reviewed the arbitration agreement attached to [HR director's] declaration but does 'not remember these documents at all,'" sufficient to challenge employer's prima facie showing; evidence supported trial court's finding that" 'defendant didn't show a contract was formed' "]; Ruiz, supra, 232 Cal.App.4th at pp. 840-846 [plaintiff's declaration that he "did not recall signing any arbitration agreement" sufficient to challenge employer's prima facie showing; evidence supported trial court's finding that defendant" 'failed to establish that an Arbitration Agreement in fact exists between [the parties]' "].)
Finally, CLA's principal argument seems to be that "plaintiff failed to meet her burden to challenge the arbitration agreement based on fraud." (Italics added.) This argument simply begs the question, because it ignores CLA's burden to prove the existence of a valid arbitration agreement in the first instance. If a party "raises a defense to enforcement" of an arbitration agreement-such as fraud in the execution- it is true that this party "bears the burden of . . . proving by a preponderance of the evidence, any fact necessary to the defense." (Rosenthal, supra, 14 Cal.4th at p. 413.) But the need to pose a defense to enforcement arises only if the moving party first meets its burden of proving the existence of a valid arbitration agreement between the parties. This is so because "the existence of [an arbitration] agreement is a statutory prerequisite to granting [a] petition" to compel arbitration, which imposes on "the petitioner . . . the burden of proving [the agreement's] existence by a preponderance of the evidence," regardless of the opposing party's claimed defenses. (Ibid., italics added.) The statutory language makes this clear. Section 1281.2 provides, "the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: . . . Grounds exist for rescission of the agreement," such as fraud in the execution. (§ 1281.2, subd. (b), italics added; see Rosenthal, at p. 413.) Plaintiff's contention that she was fraudulently induced to sign the signature page did not relieve CLA of its burden to prove the existence of a valid agreement to arbitrate. (See, e.g., Gamboa, supra, 72 Cal.App.5th at p. 164 &fn. 2 [statutory exceptions to enforcement "not relevant" because trial court found there was no agreement to arbitrate].)
Once plaintiff presented evidence challenging CLA's claim that she had received and signed the three-page arbitration agreement, the burden shifted back to CLA to "establish with admissible evidence a valid arbitration agreement between the parties." (Gamboa, supra, 72 Cal.App.5th at pp. 165-166, citing Rosenthal, supra, 14 Cal.4th at p. 413.) CLA attempted to meet this burden by presenting Jung's testimony about the company's "customs and practices." The trial court found this evidence lacking, as Jung "wasn't there" when plaintiff supposedly received and signed the arbitration agreement. Moreover, the court expressly credited plaintiff's account, finding that "what she said happened is what happened." On this record, we cannot say the evidence "compelled" a finding in CLA's favor "as a matter of law." (Fabian, supra, 42 Cal.App.5th at p. 1070.) The trial court did not err in denying the motion to compel arbitration.
DISPOSITION
The order is affirmed. Plaintiff is entitled to costs.
We concur: EDMON, P. J. BERSHON, J. [*]
[*] Judge of the Los Angeles County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.