Mollica v. IGS Solutions CA1/5 ( 2023 )

Filed 10/9/23 Mollica v. IGS Solutions CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
SAMANTHA MOLLICA, et al.,
Plaintiffs and Respondents, A164588
v. (City & County of San Francisco
IGS SOLUTIONS LLC, Super. Ct. No. CGC-21-589239)
Defendant and Appellant.
Defendant IGS Solutions LLC (IGS) appeals the trial court’s order
denying its motion to compel arbitration of the employment claims brought
by plaintiffs and respondents Samantha Mollica and Carissa Timbal. It is
undisputed that Timbal never signed an arbitration agreement with IGS.
The trial court found that Timbal’s claims were severable from Mollica’s and
not subject to arbitration based on equitable estoppel. The court further
found that there was no valid arbitration agreement between Mollica and
IGS because the agreement Mollica signed did not identify IGS as the
employer and was not signed by IGS or any employer. We agree and affirm.
1
I. BACKGROUND
In January 2021, Mollica and Timbal sued Shryne Group, LLC
(Shryne) and Stiiizy, LLC (Stiiizy), their purported employer.1 After IGS was
revealed to be their actual employer, plaintiffs amended their complaint to
add IGS as a defendant and dismissed Shryne and Stiiizy. The amended
complaint alleged that in September 2020, Timbal interviewed with IGS and
was “hired on the spot” to work as an assistant store manager. After she was
hired, IGS asked Timbal what would come up if it ran a background check on
her. On her scheduled start date, IGS told Timbal not to show up because it
was no longer interested in employing her. Timbal alleged she was
wrongfully fired because of her criminal conviction history, and alleged
causes of action for negligence, retaliation, violation of the unfair competition
law, and wrongful termination against IGS.
Mollica worked at IGS as a “budtender” and then as an assistant
district manager. The amended complaint alleged that in October 2020, IGS
fired Mollica after learning that Timbal “was initiating a FEHA-related
proceeding against [IGS] for employment discrimination” and that Mollica
was assisting her.2 Mollica alleged the same causes of action against IGS as
Timbal on the grounds that IGS terminated Mollica’s employment based on
her association with Timbal and opposition to IGS’s discriminatory practices
against Timbal. Mollica also alleged causes of action against IGS for various
Labor Code violations, including failure to provide rest breaks (Lab. Code,
1 The original complaint alleged that Mollica was hired by Shryne (a
cannabis holding company) to work at a retail store operated by Stiiizy (a
cannabis lifestyle brand).
2 IGS alleged that Mollica and Timbal are good friends and that Mollica
had recommended Timbal for employment at IGS.
2
§ 226.7)3, failure to reimburse business expenses (§ 2802), and failure to pay
all wages upon separation (§§ 201, 202, 203).
IGS moved to compel arbitration. Its motion relied on a two-page
arbitration agreement that Mollica electronically signed as part of her
onboarding process through IGS’s online portal.4 The agreement’s letterhead
states, “Shryne Group Inc.” (Capitalization omitted.) The agreement makes
no reference to IGS but states, in relevant part, that “[t]his is an agreement
between you (hereinafter ‘Employee’) and your employer, [__Retail__]
(hereinafter the ‘Company’), that provides for how employment dispute(s), if
any, will be resolved if they cannot be resolved informally.” (Bolding
omitted.)
The arbitration agreement specifies that “Employee and the Company
agree to resolve by final and binding arbitration any dispute, claim, or
controversy, including but not limited to those related to Employee’s
employment with or termination of employment by the Company, its
affiliated or managed entities, or their respective officers, directors,
employees, or agents.” The second page of the agreement has a signature
block for “Employee” and includes Mollica’s printed name and signature
above it. There are no other signatures and no signature block for
“Company.”
In its motion, IGS argued that although Timbal did not sign an
arbitration agreement, she should be compelled to arbitrate because her
claims against IGS are intertwined with and cannot be separated from
Mollica’s claims. In its supporting declaration to the motion, IGS clarified its
3 All further statutory references are to the Labor Code unless
otherwise specified.
4 Although Mollica briefly contends that she does not recall signing this
agreement, she does not dispute that she signed it.
3
relationship to Shryne and explained that it “serves as the Professional
Employer Organization [] for [Shryne], along with other
Shryne-affiliated entities, and provides payroll processing, document and
policy administration, and other administrative services.” “IGS is a distinct
business from Shryne and the relationship is that of a service provider in the
form of employee management services between Shryne and IGS.”
Mollica and Timbal opposed the motion. With respect to Timbal, the
opposition argued that Timbal never signed an arbitration agreement and
never agreed to arbitrate any claims with IGS. With respect to Mollica, the
opposition argued that the arbitration agreement was not valid because it did
not identify the parties to the agreement, did not reference IGS, and was not
signed by IGS (or any other employer). The opposition further contended
that the agreement was substantively unconscionable based in part on IGS’s
failure to sign the agreement.
Following a hearing, the trial court denied IGS’s motion. With respect
to Timbal, the court held that she never agreed to arbitrate her claims and
that her claims were severable and not intertwined with Mollica’s claims.
Therefore, equitable estoppel did not warrant the enforcement of the
arbitration agreement against Timbal as a nonsignatory. With respect to
Mollica, the court concluded that the agreement was invalid because “[t]he
identity of the ‘employer’ is unclear and the agreement even lacks an
employer signature block.” The court relied on Flores v. Nature’s Best
Distribution, LLC (2016) 7 Cal.App.5th, 1 (Flores) as support.
IGS timely appealed.
4
II. DISCUSSION
A. Standard of Review
“ ‘In ruling on a motion to compel arbitration, the trial court shall order
parties to arbitrate “if it determines that an agreement to arbitrate the
controversy exists . . . .” [Citation.] “[T]he party seeking arbitration bears
the burden of proving the existence of an arbitration agreement by a
preponderance of the evidence, and the party opposing arbitration bears the
burden of proving by a preponderance of the evidence any defense . . . .”
[Citation.] In evaluating an order denying a motion to compel arbitration,
“ ‘ “we review the arbitration agreement de novo to determine whether it is
legally enforceable, applying general principles of California contract
law.” ’ ” ’ [Citation.] To the extent the trial court resolved contested facts, we
review those determinations for substantial evidence. [Citation.] Finally,
should our review of the arbitration provisions here at issue require statutory
interpretation, we engage in such analysis independently.” (Luxor Cabs, Inc.
v. Applied Underwriters Captive Risk Assurance Co. (2018) 30 Cal.App.5th
970, 977.)
B. Equitable Estoppel Does Not Require Arbitration of Timbal’s
Claims.
IGS contends that under the doctrine of equitable estoppel, Timbal,
who never signed the arbitration agreement, should be compelled to arbitrate
her claims against IGS because they are intertwined with the claims of
Mollica, a signatory to the agreement. According to IGS, Mollica and Timbal
are friends, and Mollica recommended Timbal for employment with IGS, was
involved in Timbal’s interview process, opposed IGS’s discriminatory
practices, and assisted Timbal. Based on these facts, IGS argues that
5
Timbal’s claims “are subsumed by the Arbitration Agreement and thus must
be arbitrated together” with Mollica’s claims. We disagree.
In general, “one must be a party to an arbitration agreement to be
bound by it or invoke it.” (Westra v. Marcus & Millichap Real Estate
Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763.) There are
exceptions to this general rule. (Id. at p. 765.) One main exception, based on
the doctrine of equitable estoppel, provides that “a nonsignatory defendant
may invoke an arbitration clause to compel a signatory plaintiff to arbitrate
its claims when the causes of action against the nonsignatory are ‘intimately
founded in and intertwined’ with the underlying contract obligations.”
(Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.)
In JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222,
1239–1240 (JSM Tuscany), the court of appeal extended this exception to a
nonsignatory plaintiff: “There is no reason why this doctrine should not be
equally applicable to a nonsignatory plaintiff. When that plaintiff is suing on
a contract—on the basis that, even though the plaintiff was not a party to the
contract, the plaintiff is nonetheless entitled to recover for its breach, the
plaintiff should be equitably estopped from repudiating the contract’s
arbitration clause.” Notably, the court focused on “claims that are dependent
upon or inextricably intertwined with the obligations imposed by [a] contract”
and concluded that “when nonsignatory plaintiffs are pursuing such claims,
they should be bound by the arbitration clause in the contract which is
integral to their claims.” (Id. at p. 1241.)
The equitable estoppel doctrine does not, however, help IGS here.
Timbal’s claims against IGS are not dependent upon or inextricably
intertwined with any obligations imposed by Mollica’s arbitration agreement.
First, the agreement itself only imposes a duty on Mollica and (arguably) IGS
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to resolve any disputes related to Mollica’s employment (including the
termination of her employment) through binding arbitration.5 But Timbal’s
claims against IGS for discrimination and wrongful termination based on her
conviction history are in no way dependent upon any term of Mollica’s
employment with IGS or any other obligation imposed by the arbitration
agreement. That Mollica may have recommended Timbal for a position at
IGS or was involved in interviewing Timbal is irrelevant. While Mollica and
Timbal are certainly witnesses to each other’s claims against IGS for
wrongful termination and retaliation, this does not mean that Timbal’s
claims are somehow “subsumed by the Arbitration Agreement” as IGS claims.
Our conclusion is supported by Goldman v. KPMG, LLP (2009) 173
Cal.App.4th 209. There, the court of appeal held that equitable estoppel did
not apply if the signatory plaintiffs “do not rely or depend on the terms of the
operating agreements in asserting their claims against [the nonsignatory
defendants]” and that the [plaintiffs’] allegations “depend solely on the
actions of [the defendants], not on the terms of the operating agreements, for
their success.” (Id. at p. 230.) Similarly, Timbal’s claims depend solely on
IGS’s allegedly discriminatory conduct against her and not on any claims
made by Mollica against IGS. Put another way, even if IGS had not fired
Mollica, Timbal would still have the same claims against IGS.
Lastly, we note that the amended complaint also included five causes of
action for various Labor Code violations that were brought by Mollica alone
against IGS. This reinforces that Timbal’s claims are distinct and severable
from Mollica’s claims against IGS. Thus, equitable estoppel does not apply
5 This is contrasted with the real estate purchase contracts at issue in
JSM Tuscany which imposed independent performance obligations on the
parties and also included an arbitration clause. (JSM Tuscany, supra, 193
Cal.App.4th at p. 1226.)
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here, and IGS cannot compel Timbal, a nonsignatory plaintiff, to arbitrate
claims that are not intertwined with any term found in the arbitration
agreement.
C. The Trial Court Did Not Err in Finding the Agreement Invalid as to
Mollica.
IGS next contends that the trial court erred in finding that the
arbitration agreement was invalid because it did not clearly identify
Mollica’s employer. IGS argues that it “presented ample evidence that it
assented to the Arbitration Agreement” as the employer. Mollica responds
that while IGS did not have to sign the arbitration agreement, it still had to
establish its intent to be bound by the agreement, which it failed to do. We
agree.
As this court previously held, “the writing memorializing an arbitration
agreement need not be signed by both parties in order to be upheld as a
binding arbitration agreement.” (Serafin v. Balco Properties Ltd., LLC
(2015) 235 Cal.App.4th 165, 176.) “[I]t is not the presence or absence of a
signature which is dispositive; it is the presence or absence of evidence of an
agreement to arbitrate which matters.” (Banner Entertainment, Inc. v.
Superior Court (1998) 62 Cal.App.4th 348, 361 (Banner), italics in original.)
For example, if the parties to an unsigned contract “ratified the arbitration
agreement by repeatedly acknowledging the validity of the contract which
contained the arbitration clause,” they are bound by that contract. (Ibid.)
Similarly, an employer’s failure to sign an arbitration agreement does not
preclude its enforcement where the employer’s agreement to arbitrate is
evidenced by the use of the employer’s letterhead for the agreement and the
agreement’s reference to the employer by name. (Davis v. Kozak (2020) 53
Cal.App.5th 897, 915.)
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By contrast, an employer who fails to sign an arbitration agreement
may not enforce that agreement if there are no other indicia of the
employee’s agreement to “submit her claims against” that particular
employer “to binding arbitration pursuant to its terms.” (Flores, supra, 7
Cal.App.5th at p. 9.) In Flores, the arbitration agreement referenced
“ ‘employee and Company’ ” but did not define either term. (Ibid.) In
addition, “the signature block for the employer [was] not filled in, dated, or
signed.” (Ibid.) The court of appeal therefore concluded that “the
Agreement does not identify with which entity or entities plaintiff had
agreed to submit ‘all legal, equitable, and administrative disputes’ to the
AAA for mediation and binding arbitration.” (Ibid.)
Like Flores, we find that the arbitration agreement in this case does
not identify IGS as the entity with which Mollica agreed to arbitrate and
therefore fails to reflect their mutual assent to arbitrate Mollica’s
employment claims. The agreement was not drafted on IGS’s letterhead, did
not reference IGS, and was not signed by IGS or any employer. While we
agree with IGS that its signature on the agreement is not required, IGS fails
to identify, and we could not find, any cases enforcing an arbitration
agreement that both failed to identify a party to the agreement and failed to
include that party’s signature.
Despite this, IGS argues that the arbitration agreement “made clear
that [it] was with IGS as the employer.” But we find no support for this.
The agreement makes no reference to IGS, is drafted on Shryne’s letterhead,
and defines “ ‘Company’ ” or employer as “[__Retail__].” (Bolding omitted.)
Regardless of whether these discrepancies were included intentionally or
inadvertently, they resulted in an ambiguous agreement that does not
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identify all of the parties that are agreeing to arbitrate, much less IGS as
one of those parties.
Nonetheless, IGS argues that it proffered evidence that it was Mollica’s
known employer. In support, IGS points to its online onboarding portal for
new employees as well as the paystubs it issued to Mollica, both of which
contain references to IGS. These references, however, do not evidence an
intent by Mollica to arbitrate her claims against IGS.
First, unlike in Banner, supra, 62 Cal.App.4th at p. 361, there is no
evidence that the parties “repeatedly acknowledg[ed] the validity of the
contract.” Mollica signed the arbitration agreement as part of her
onboarding process. She stated in her supporting declaration that she was
surprised to learn of IGS’s identity after the complaint was filed. She
further stated that “[d]uring the interviewing process, onboarding process,
and while working for [IGS], everyone referred to the company as Shryne or
Stiiizy.” There is no evidence that Mollica and IGS ever discussed this
arbitration agreement before or after she signed it.
Second, there is ample evidence that Mollica was not aware that IGS,
rather than Shryne or Stiiizy, was her employer. IGS described itself as a
“distinct business from Shryne” and that “the relationship is that of a service
provider in the form of employee management services between Shryne and
IGS.” It was therefore reasonable for Mollica to have believed that her
employer was Shryne or Stiiizy and that her paystubs were being issued by a
third party service provider like IGS. That the arbitration agreement
appeared on Shryne’s and not IGS’s letterhead further supports Mollica’s
belief that Shryne, rather than IGS, was her employer.
Finally, neither the doctrine of equitable estoppel nor IGS’s purported
status as an affiliate of Shryne requires Mollica to arbitrate her employment
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claims against IGS. To find that Mollica is equitably estopped from refusing
to arbitrate or that IGS may enforce the arbitration agreement as an affiliate
of a party to that agreement, there must be a valid arbitration agreement
between Mollica and another party. (Toal v. Tardif (2009) 178 Cal.App.4th
1208, 1219–1220 [“[A] court, before granting a petition to compel arbitration,
must determine the factual issue of ‘the existence or validity of the
arbitration agreement’ ”].) Because the arbitration agreement never
identified the other party to the agreement—i.e., Mollica’s employer—there is
no agreement to enforce here. (See Flores, supra, 7 Cal.App.5th at p. 9.)
Again, that IGS was identified in the onboarding portal or paystubs issued to
Mollica does not mean that Mollica agreed to arbitrate her claims with IGS.
Accordingly, we find no basis for compelling Mollica to arbitrate her
employment claims against IGS.
III. DISPOSITION
The order denying IGS’s motion to compel arbitration is affirmed.6
Mollica and Timbal are entitled to their costs on appeal.
6 Because we affirm based on the lack of evidence of a mutual assent to
arbitrate, we do not decide whether the arbitration agreement is
unconscionable.
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CHOU, J.
We concur.
SIMONS, Acting P.J.
BURNS, J.
Mollica v. IGS Solutions / A164588
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