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No Arbitration Where Employee Promptly Shunned ‘Must Arbitrate’ Decree—C.A.
Justice Segal Gently Derides Majority for Not Repudiating 2019 Decision He Says Is Irreconcilable With Present One
By a MetNews Staff Writer
Div. Seven of the Court of Appeal for this district has determined that where a management services company announced that it was expressly conditioning continued employment of all who worked for it on their agreeing to arbitrate any disputes, arbitration could not be compelled in a suit by its former managing director who promptly proclaimed he would not assent and whose employment continued for another 19 months.
Justice John L. Segal, in a concurring opinion, gently chided the majority for straining to reconcile its opinion, filed Wednesday, with one the same division issued on April 10, 2019, rather than repudiating the earlier decision. That case is Diaz v. Sohnen Enterprises.
Acting Presiding Justice Laurie D. Zelon, now retired, authored the majority opinion in Diaz; Justice Gail Ruderman Feuer joined in it. Segal wrote a dissent.
Wednesday’s Opinion
Wednesday’s majority opinion in Mar v. Perkins was written by Feuer and signed by Presiding Justice Gonzalo Martinez.
Feuer declared:
“[W]here 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.”
2019 Decision
In Diaz, Zelon wrote:
“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.
There, the employer announced at an in-person meeting on Dec. 2, 2016, that under a new policy, any employment disputes with the company would be arbitrated and that any employee who continued to work for the company would be deemed to have assented.
Segal said in his dissent:
“I agree an employee can impliedly accept an arbitration agreement by continuing to work for his or her employer. I also think an employee, like any other contracting party, can reject an arbitration agreement offered by an employer and yet continue to work for the employer. Whether an employer and an employee entered into an implied agreement regarding the terms of employment is a factual issue we routinely ask a trier of fact to decide in employment cases. Because the facts in this case do not support only one reasonable conclusion, I would defer to the trial court’s resolution of that factual issue.”
Reconciliation of Opinions
Finding no conflict between Diaz and the present case, Feuer said the fact situations are distinguishable. In the earlier case, she set forth, plaintiff Erika Diaz did not repudiate the mandatory arbitration policy until 21 days after it was announced that assent would be presumed if the employee did not quit.
By contrast, she said, plaintiff/respondent Winston Mar—although presented by email with an arbitration agreement and a new employee handbook on Aug. 11, 2020—was not advised, by email, until Aug. 31 that if he did not sign the documents, assent would nonetheless be inferred from his remaining at his post. Within eight minutes, he wrote back:
“…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.”
He wasn’t fired.
Feuer said in a footnote:
“Whether in a particular case an implied-in-fact agreement is created by the employee continuing to work for the company will need to be decided on the facts of the case. But the eight minutes here is too short a period, and in Diaz, the court found 21 days was too long.”
Segal’s View
Segal hailed Feuer’s “well-reasoned and persuasive opinion,” differing only as to her effort to embrace both Diaz and the present case (and she commended, in a footnote, “his thoughtful concurrence”). The concurring justice, also in mild wording, accused the majority of distorting the facts in Diaz.
He wrote:
“Though the majority makes considerable effort to use words like ‘prompt’ or ‘promptly’ to distinguish today’s decision from Diaz, I do not believe Diaz is distinguishable. What today’s decision really shows is that Diaz is incorrect.”
Contradicting Feuer’s impression that it is a fact that Diaz’s employer communicated on Dec. 2, 2016, that employees who did not quit would be assumed to agree to arbitration as their sole remedy in the event of a dispute, he said:
“But the evidence, considered in the light most favorable to the plaintiff (who prevailed in the trial court), was that the company did not.”
Trial Judge’s Impression
He added that there was evidence—which Los Angeles Superior Court Judge William F. Fahey “essentially credited”—that Dec. 19, 2016 marked the first time a company representative told Diaz that if she continued to show up for work, it meant she agreed to arbitration.
“One day later, on December 20, 2016, the plaintiff in Diaz, through her attorney, sent a letter stating that she rejected the proposed arbitration agreement and that she would continue to come to work,” Segal wrote, commenting:
“That’s pretty prompt.”
He noted that he had pointed that out in his dissent in Diaz. Segal said in a footnote: “Even if in Diaz the company did notify the plaintiff at the December 2, 2016 meeting that continuing to work for the company would be deemed accepting the arbitration agreement, and the plaintiff therefore took 18 days to respond through her attorney that she rejected the agreement and would continue to work, eighteen days is still pretty prompt. Especially where the company asks its employees to take the arbitration agreement home to review.”
The jurist remarked:
“From my perspective (dissenting in Diaz and joining this opinion), Diaz is not meaningfully distinguishable from this case. Yet the majority reaches a different result here than we did in Diaz. Which to me means today’s decision leaves Diaz with very little, if any, legal or practical import for employers, employees, litigants, and their attorneys.”
The case is Mar v. Perkins, 2024 S.O.S. 1721..
Sana Swe and Andrew W. Heger of the Pasadena firm of Practus, LLP represented the former employer, SierraConstellation Partners, and its chief executive officer, Lawrence Perkins. Marc S. Williams and Martin J. Chrisopher Santos of the downtown Los Angeles firm of Cohen Williams acted for Mar.
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