Quiroz v. World Variety Produce CA2/7 ( 2021 )

Filed 5/14/21 Quiroz v. World Variety Produce CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
JUAN ANTONIO QUIROZ, B303012
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 19STCV07024)
v.
WORLD VARIETY PRODUCE,
INC. et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County. Michelle Williams Court, Judge. Affirmed.
Michelman & Robinson, Reuben A. Ginsburg, and Mona Z.
Hanna for Defendants and Appellants.
Lavi & Ebrahimian, N. Nick Ebrahimian, Jordan D. Bello,
and Tielle Shue; The deRubertis Law Firm and David M.
deRubertis for Plaintiff and Respondent.
INTRODUCTION
Juan Antonio Quiroz sued his prior employer, World
Variety Produce, Inc., and its owner, Joe Hernandez (collectively,
World Variety), for various wage and hour violations. The trial
court denied World Variety’s motion to compel arbitration, ruling
World Variety failed to prove that Quiroz, by signing a form
acknowledging receipt of an employee handbook that included a
section containing an arbitration agreement, agreed to arbitrate
his claims. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Quiroz Sues World Variety
In March 2019 Quiroz filed this action against World
Variety, a produce distributor. Quiroz alleged that World Variety
employed him from 1985 to 2018 as a “buyer,” a position that
involved “routine” work such as “travel[ling] to various regions of
Mexico, collect[ing] certifications from farmers,” and taking
“photos of the field and produce,” but that World Variety
misclassified him as an exempt employee for purposes of the
California Labor Code. Quiroz also alleged World Variety failed
to transfer or pay the value of shares of stock the company owed
him. Quiroz asserted causes of action for violations of Labor
Code provisions governing wages, wage statements, and meal
and rest breaks; a cause of action for breach of contract; and a
cause of action for unfair competition.
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B. World Variety Moves To Compel Arbitration
World Variety filed a motion to compel arbitration,
attaching its employee handbook from August 2017. The
handbook had nine sections, including one titled “Arbitration
Agreement.” This section stated, among other things, the
employee and World Variety agree to arbitrate all “disputes
arising out of, relating to, and/or in connection with [the
employee’s] employment.” The final page of the arbitration
section stated: “ENTERING THIS AGREEMENT IS NOT A
CONDITION OR REQUIREMENT OF EMPLOYMENT AND/OR
CONTINUED EMPLOYMENT. EMPLOYEE UNDERTSANDS
THAT BY SIGNING BELOW, EMPLOYEE GIVES UP ALL
RIGHTS TO A JURY TRIAL . . . AS TO CLAIMS COVERED BY
. . . THIS AGREEMENT.” The last page of the arbitration
section included over half a page of blank space where the
employee could sign, but there was no printed signature line.
The last page of the handbook was a form titled “Receipt of
Employee Handbook.” The form included six bullet points,
followed by a printed signature line at the bottom of the page.
One bullet point stated the employee “is responsible for
understanding and complying with the policies and procedures”
in the handbook, while another bullet point similarly stated the
employee “agree[s] to read and abide by the policies in the
Handbook.” The handbook receipt form, however, did not state
that the employee agrees to arbitration or that the employee
agrees to the terms described in the arbitration section of the
handbook.
World Variety also submitted a copy of a handbook receipt
form signed by Quiroz in August 2017 and argued Quiroz agreed
to the terms described in the arbitration section of the handbook
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by signing the handbook receipt form. Quiroz argued in
opposition to the motion he did not agree to the arbitration
agreement when he signed the form. He also submitted a
declaration stating that, when World Variety originally gave him
the handbook, he did not sign the receipt form. World Variety
subsequently told Quiroz to go to the office of Janene Allen, the
company’s Senior Director of Human Resources. Allen gave
Quiroz a copy of the receipt form—not the entire handbook (or
the arbitration section). Quiroz signed the form acknowledging
he received the handbook.
C. The Trial Court Denies the Motion
The trial court denied World Variety’s motion to compel
arbitration, ruling World Variety failed to meet its burden to
prove Quiroz agreed to arbitrate his claims. The court ruled the
signed handbook receipt form did not demonstrate Quiroz agreed
to arbitrate his claims because the form “does not address the
issue of arbitration at all.” The court also stated that, while “the
arbitration provision in the handbook clearly state[s] that
arbitration is not mandatory,” the evidence was that, after Quiroz
received the handbook, “signing the acknowledgement of receipt
of the handbook was mandatory.” World Variety timely
appealed.
DISCUSSION
A. Applicable Law and Standard of Review
“‘Whether an agreement to arbitrate exists is a threshold
issue of contract formation and state contract law.’” (Cohen v.
TNP 2008 Participating Notes Program, LLC (2019)
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31 Cal.App.5th 840, 859; see Avila v. Southern California
Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 843-844.) “The
party seeking arbitration bears the burden of proving the
existence of an arbitration agreement . . . .” (Pinnacle Museum
Tower Assn. v. Pinnacle Market Development (US), LLC (2012)
55 Cal.4th 223, 236 (Pinnacle); accord, Garcia v. KND
Development 52, LLC (2020) 58 Cal.App.5th 736, 743-744; Swain
v. LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59,
65-66.) “‘When “the language of an arbitration provision is not in
dispute,”’” and “‘“no conflicting extrinsic evidence is introduced to
aid the interpretation of an agreement to arbitrate, the Court of
Appeal reviews de novo a trial court’s ruling on a petition to
compel arbitration.”’” (Esparza v. Sand & Sea, Inc. (2016)
2 Cal.App.5th 781, 787 (Esparza); accord, Brinkley v. Monterey
Financial Services, Inc. (2015) 242 Cal.App.4th 314, 325; see
Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866
[where there is “no conflict in the extrinsic evidence,” we “make
an independent determination of the meaning of the contract”].)
“Although both California and federal law recognize the
important policy of enforcing arbitration agreements” (Cruz v.
PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 313), that
policy “is based on the assumption that ‘parties have elected to
use [arbitration] as an alternative to the judicial process’”;
therefore, the policy “does not extend to those who . . . have not
consented to arbitration” (Berglund v. Arthroscopic & Laser
Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 539; see
Garcia, at p. 744 [“‘“public policy in favor of arbitration does not
extend to those who are not parties to an arbitration
agreement”’”]).
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B. Quiroz Did Not Agree To Arbitrate His Claims by
Signing the Receipt Form
“In California, ‘[g]eneral principles of contract law
determine whether the parties have entered a binding agreement
to arbitrate.’” (Pinnacle, supra, 55 Cal.4th at p. 236; accord,
Martinez v. BaronHR, Inc. (2020) 51 Cal.App.5th 962, 967; see
Lamps Plus, Inc. v. Varela (2019) ___ U.S. ___, ___ [139 S.Ct.
1407, 1415, 203 L.Ed.2d 636] [under the Federal Arbitration Act,
courts ordinarily enforce arbitration agreements “by relying on
state contract principles”]; Sandquist v. Lebo Automotive, Inc.
(2016) 1 Cal.5th 233, 244 [“‘When deciding whether the parties
agreed to arbitrate a certain matter,’” courts generally “‘apply
ordinary state-law principles that govern the formation of
contracts.’”].) As with any contract, “‘[a]n essential element’” of
an arbitration agreement “‘is the consent of the parties, or
mutual assent.’” (Martinez, at p. 967; see Esparza, supra,
2 Cal.App.5th at pp. 787-788.) “‘Mutual assent is determined
under an objective standard applied to the outward
manifestations or expressions of the parties, i.e., the reasonable
meaning of their words and acts, and not their unexpressed
intentions or understandings.’” (Martinez, at p. 967; accord,
Esparza, at p. 788.)
We first consider the language of the handbook and receipt
form to determine whether Quiroz agreed to arbitrate his claims.
(See Civ. Code, §§ 1638, 1639; State of California v. Continental
Ins. Co. (2012) 55 Cal.4th 186, 195; Martinez v. BaronHR, Inc.,
supra, 51 Cal.App.5th at p. 967.) We consider the handbook “as a
whole, and interpret contested provisions in their context, not in
isolation, with the aim of giving effect to all provisions, if doing so
is reasonably possible.” (Camacho v. Target Corp. (2018)
6
24 Cal.App.5th 291, 306; see Civ. Code, § 1641; Mitri v. Arnel
Management Co. (2007) 157 Cal.App.4th 1164, 1170; Romo v. Y-3
Holdings, Inc. (2001) 87 Cal.App.4th 1153, 1158.) If “the
meaning a layperson would ascribe to contract language is not
ambiguous, we apply that meaning.” (AIU Ins. Co. v. Superior
Court (1990) 51 Cal.3d 807, 822; see Cuenca v. Cohen (2017)
8 Cal.App.5th 200, 222; RealPro, Inc. v. Smith Residual Co., LLC
(2012) 203 Cal.App.4th 1215, 1221.)
Considering the language of the handbook as a whole, we
conclude Quiroz did not agree to arbitrate his claims. As World
Variety points out, the final page of the arbitration section stated
that an employee could agree to arbitration “by signing below,”
and although Quiroz did not sign below on that page, he did sign
the handbook receipt page, which was at the end of the handbook
and after the arbitration section, and therefore technically
(although not immediately) “below.” But the language of the
receipt page shows Quiroz did not agree to the arbitration terms
by signing the receipt page. The receipt form was titled “Receipt
of Employee Handbook,” indicating that the primary purpose of
signing the form was, as Quiroz contends, to acknowledge that he
received the handbook, not that he agreed to arbitration. (See
Building Maintenance Service Co. v. AIL Systems, Inc. (1997)
55 Cal.App.4th 1014, 1030 [to interpret contracts we give
“‘consideration to the ordinary meaning of the words used
[citation] together with the subject matter heading’”]; Myers
Buldings Industries, Ltd. v. Interface Technology, Inc. (1993)
13 Cal.App.4th 949, 974 [same].) The receipt form did not say
Quiroz was agreeing to arbitration.
The receipt form also required Quiroz to make several
acknowledgments, but none of those acknowledgments referred to
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the arbitration agreement. Generally, where an employee signs a
form acknowledging receipt of a handbook, “‘[t]o support a
conclusion that an employee has relinquished his or her right to
assert an employment-related claim in court,” at “a minimum,
there should be a specific reference to the duty to arbitrate
employment-related disputes in the acknowledgment of receipt
form signed by the employee . . . .’” (Esparza, supra,
2 Cal.App.5th at p. 791; accord, Sparks v. Vista del Mar Child &
Family Services (2012) 207 Cal.App.4th 1511, 1522.) Here, the
form required Quiroz to acknowledge that he received the
handbook, that World Variety had the right to modify the
handbook, that Quiroz had the right to discuss the handbook
with his supervisor or human resources personnel, and that the
handbook did not limit the at-will nature of the employment. But
“[c]onspicuously absent from the acknowledgment receipt form
[was] any reference to an agreement by the employee to abide by
the employee handbook’s arbitration agreement provision.”
(Mitri v. Arnel Management Co., supra, 157 Cal.App.4th at
p. 1173.)
It is true, as World Variety repeatedly mentions, one of the
bullet points on the receipt page made a passing reference to
arbitration, but it did not state the employee agreed to
arbitration by signing the receipt page. The bullet point stated
the employee “understand[s] that the company has the right to
modify, amend, or withdraw any and all of the policies and
procedures described in this Employee Handbook at any time,
with or without cause, except . . . any arbitration agreement I
may have with the company.” But this language supports
Quiroz, not World Variety. By referring to any arbitration
agreement the employee may have with the company, the receipt
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form assumes and suggests the employee is not agreeing to
arbitrate any claims by signing the form. Had the parties
intended the receipt form to be an arbitration agreement, any
reference to arbitration should have clearly stated the employee
was agreeing to arbitration. (See Esparza, supra, 2 Cal.App.5th
at p. 790 [“‘“absent a clear agreement to submit disputes to
arbitration, courts will not infer that the right to a jury trial has
been waived”’”].)
The receipt form included bullet points stating the
employee agreed to comply with the “policies” and “procedures” in
the handbook, which, according to World Variety, included the
arbitration terms. Again, the language of the handbook does not
support World Variety’s position. First, the handbook used
different language when describing the arbitration agreement
and describing the company’s policies and procedures. (See, e.g.,
Romo v. Y-3 Holdings, Inc., supra, 87 Cal.App.4th at p. 1159
[court’s conclusion the employee did not agree to arbitrate claims
by signing a handbook receipt form was “based upon the
disparate language between [the arbitration section] and the
remaining portions of the employee handbook”].) The arbitration
section referred to the arbitration terms as an “agreement,” not a
policy or procedure; in fact, the arbitration section did not use the
term “policy” or “procedure.” On the other hand, the handbook
contained sections titled “Employment Policies” and “Wage and
Salary Policies,” and regularly used the terms “policy” and
“policies” to refer to other (non-arbitration) provisions in the
handbook.
Second, the arbitration section, unlike the policies
described elsewhere in the handbook, stated that agreeing to
arbitration was not a mandatory condition of employment. For
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example, the handbook included mandatory policies and
prohibitions concerning how employees may use company cell
phones, computers, and email, and how they may access
electronic communications. The handbook required employees to
consent to World Variety conducting video surveillance of its
premises. The handbook included a “Harassment,
Discrimination and Retaliation Prevention Policy” that
prohibited various types of harassment and discrimination and
instituted a “‘zero tolerance’ policy” on workplace violence. And
the handbook prohibited using alcohol and drugs while working
and prohibited smoking on World Variety premises.
The facts of this case are similar to the facts in Sparks v.
Vista Del Mar Child & Family Services, supra, 207 Cal.App.4th
1511. In Sparks the employer distributed to all employees a
handbook containing an arbitration clause. (See id. at p. 1519.)
Like the handbook here, the handbook in Sparks did not contain
a printed signature line immediately after the arbitration
provision where the employee could indicate he or she agreed to
arbitration. (See ibid.) And like Quiroz, the employee in Sparks
signed only a form acknowledging receipt of the handbook that
stated he agreed to be “governed” by the employee’s personnel
policies. (See id. at p. 1516.) The court in Sparks held that,
because “the acknowledgment form did not reference the
arbitration clause, much less advise [the employee] that he would
be bound by it,” the form did not show the employee had agreed
to arbitration. (Id. at p. 1522.) Similarly, the acknowledgment of
receipt form here did not state the employee was agreeing to
arbitration (although it included a number of different
acknowledgments). In addition, the handbook treated the
arbitration terms differently from other policies by using
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different language to describe the terms of arbitration and the
employer’s policies, and the only reference to arbitration on the
receipt form suggested the employee was not bound by an
arbitration agreement. Quiroz, even more than the employee in
Sparks, did not agree to arbitration by signing the receipt form.
The relevant extrinsic evidence supports the conclusion
Quiroz did not agree to arbitrate his claims. The trial court
found that, after World Variety provided Quiroz the handbook,
World Variety required him to sign the receipt form as a
condition of employment. Substantial evidence supported the
trial court’s finding. (See Garcia v. KND Development 52, LLC,
supra, 58 Cal.App.5th at p. 744 [“[w]e review the court’s factual
conclusions under the substantial evidence standard” when
reviewing “a trial court’s denial of a petition to compel
arbitration”]; Martinez v. BaronHR, Inc., supra, 51 Cal.App.5th
at p. 966 [where the trial court relies on “extrinsic evidence . . .
and [makes] an implied credibility finding from that evidence” to
determine whether there was an agreement to arbitrate, “‘“[w]e
must accept the trial court’s resolution of disputed facts when
supported by substantial evidence”’”]; Burch v. Premier Homes,
LLC (2011) 199 Cal.App.4th 730, 742 [“On an appeal challenging
the interpretation given to a writing . . . the substantial evidence
rule will apply in cases where the parties present conflicting
extrinsic evidence to aid in the interpretation.”].)
Quiroz stated in his declaration that he initially did not
sign the receipt form after he received the employee handbook,
but that World Variety subsequently directed him to go to Allen’s
office, where Allen gave Quiroz a new copy of the receipt form
(only) and asked him to sign it. It was reasonable for the court to
find, based on this testimony, that Quiroz did not intend to sign
11
the receipt form, but that World Variety told him he had to sign
it to continue working. (See Holmes v. California Victim
Compensation & Government Claims Bd. (2015) 239 Cal.App.4th
1400, 1406 [“‘Inferences may constitute substantial evidence as
long as they are the product of logic and reason rather than
speculation or conjecture.’”]; Maaso v. Signer (2012)
203 Cal.App.4th 362, 371 [“Substantial evidence includes
reasonable inferences drawn from the evidence in favor of the
judgment.”].) As discussed, the arbitration section stated that
agreeing to arbitration was “not a condition or requirement of
employment and/or continued employment” with World Variety.
That World Variety required Quiroz to sign the handbook receipt
form confirms he was not agreeing to arbitration, which,
according to the arbitration agreement in the handbook, was not
mandatory.
Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373(Harris), on which World Variety primarily relies, is
distinguishable. In Harris a new employee acknowledged he
received a handbook from his employer, which contained an
arbitration agreement. (Id. at p. 381.) But that is where the
similarities between Harris and this case end. The arbitration
section of the handbook in Harris stated arbitration was “an
absolute prerequisite” to “hiring by, and continued employment
with,” the employer. (Id. at p. 377.) It stated: “‘If for any reason,
an applicant fails to execute the Agreement to Arbitrate yet
begins employment, that employee will be deemed to have
consented to the Agreement to Arbitrate by virtue of receipt of
12
this Handbook.’” (Id. at p. 378.) There was no similar provision
in the arbitration section of the handbook Quiroz received.1
C. Quiroz Did Not Impliedly Agree To Arbitrate His
Claims
World Variety also argues that, even if Quiroz did not
expressly agree to arbitrate his claims by signing the handbook
receipt page, Quiroz impliedly agreed to arbitrate his claims by
continuing to work for World Variety and failing to object after
receiving the handbook containing the arbitration agreement. “A
party’s acceptance of an agreement to arbitrate . . . may be
implied in fact.” (Pinnacle, supra, 55 Cal.4th at p. 236; accord,
Harris, supra, 248 Cal.App.4th at pp. 383-384.) For example, in
some situations, “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 Enterprises (2019) 34 Cal.App.5th 126, 130; see Craig v.
Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) As World
Variety recognizes, however, courts have generally found an
employee impliedly agreed to arbitrate only where accepting a
1 On December 16, 2020 the Supreme Court ordered not
published the other case World Variety primarily relies on,
Conyer v. Hula Media Services, LLC (Aug. 26, 2020, B296738),
review dismissed as moot March 24, 2021, S264821. In the other
case World Variety cites, Serafin v. Balco Properties Ltd., LLC
(2015) 235 Cal.App.4th 165, the employee, unlike Quiroz, did not
sign a form acknowledging receipt of an employer’s handbook
that contained both an arbitration agreement and other policies.
The employee in Serafin executed a two-page agreement entitled
“MANDATORY ARBITRATION POLICY.” (Id. at p. 171.)
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proposed arbitration agreement was a mandatory condition of
employment. World Variety asserts, however, that “[t]he same
rule should apply when an employer proposes a voluntary
arbitration policy . . . .”
Assuming World Variety has not forfeited this argument,2
it is meritless. Where an employer requires an employee to agree
to arbitration before beginning or continuing employment, the
employee has “‘knowledge of the arbitration agreement,’” and the
employee “‘continue[s] to work after receipt of the arbitration
agreement,’” a factfinder may infer that the employee has
consented to the mandatory arbitration agreement by beginning
or continuing employment. (Gorlach v. Sports Club Co. (2012)
209 Cal.App.4th 1497, 1507; see id. at p. 1508 [“California law
permits employers to implement policies that may become
unilateral implied-in-fact contracts when employees accept them
by continuing their employment.”].) The rationale is that, if the
employee did not agree to the proposed arbitration agreement, he
or she would have not accepted or would have discontinued the
employment. But where, as here, the employer does not require
the employee to accept a proposed arbitration agreement to
continue the employment relationship, that the employee
continues working for the employer after receiving the proposed
agreement, without more, says nothing about whether the
employee has (impliedly) agreed to arbitration. (See id., at
p. 1507 [“‘“Although an implied in fact contract may be inferred
from the ‘conduct, situation or mutual relation of the parties, the
2 World Variety did not raise this argument in its motion to
compel arbitration in the trial court. But in his opposition Quiroz
for some reason raised the issue and argued there was no implied
agreement.
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very heart of this kind of agreement is an intent to promise.’”’”];
see also Southern California Acoustics Co. v. C. V. Holder, Inc.
(1969) 71 Cal.2d 719, 722 [“Silence in the face of an offer is not an
acceptance, unless there is a relationship between the parties or
a previous course of dealing pursuant to which silence would be
understood as acceptance.”]; C9 Ventures v. SVC-West, L.P.
(2012) 202 Cal.App.4th 1483, 1500 [same].) World Variety again
relies on Harris, supra, 248 Cal.App.4th 373. But as discussed,
unlike World Variety, the employer in Harris required employees
to agree to arbitration as a mandatory condition of employment,
and the arbitration agreement stated the employee would be
deemed to have accepted the agreement by continuing
employment, even if he or she did not sign the agreement. (See
id. at p. 381.) Neither was the case here.
DISPOSITION
The order is affirmed. Quiroz is to recover his costs on
appeal.
SEGAL, J.
We concur:
PERLUSS, P. J. FEUER, J.
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