Opinion
G054926
06-18-2018
WARREN VITTERS, Plaintiff and Respondent, v. SOLESBEE AUTO CRAFTS, INC., Defendant and Appellant.
Fine, Boggs & Perkins, Cory J. King and Rachel D. Donnelly for Defendant and Appellant. Kring & Chung, Kyle D. Kring and Faheem A. Tukhi for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2016-00842289) OPINION Appeal from an order of the Superior Court of Orange County, Glenda Sanders, Judge. Affirmed. Fine, Boggs & Perkins, Cory J. King and Rachel D. Donnelly for Defendant and Appellant. Kring & Chung, Kyle D. Kring and Faheem A. Tukhi for Plaintiff and Respondent.
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Defendant Solesbee Auto Crafts, Inc. appeals from an order denying its motion to compel arbitration. It was undisputed there was no express agreement to arbitrate between Solesbee and its former employee, plaintiff Warren Vitters, and the trial court found the conflicting evidence did not demonstrate an implied-in-fact arbitration agreement. We conclude substantial evidence supports the court's factual findings and the resulting determination that Solesbee failed to meet its burden of showing the existence of an arbitration agreement. Accordingly, we affirm the order.
FACTS
After being employed by Solesbee for about 13 years, plaintiff was presented with a paper copy of a new employee handbook containing the company's policies and procedures. Concurrently, he received a separate two-page document titled "Employee Acknowledgement and Agreement," which the general manager told plaintiff he would need to sign. The agreement contained an arbitration provision requiring "that any claim, dispute, and/or controversy [between the parties] . . . arising from, related to, or having any relationship or connection whatsoever [to plaintiff's employment by Solesbee] . . . be submitted to and determined exclusively by binding arbitration."
Plaintiff read the employee handbook and the agreement, but he refused to sign the agreement. In a meeting with Solesbee's president, plaintiff explained that his refusal to sign the agreement was because he did not agree with the arbitration provision. Solesbee's president informed plaintiff it was a condition of his continued employment and suspended him for one week without pay "to give him an opportunity to reconsider his refusal."
The company president memorialized the suspension in an "employee action report." It indicated plaintiff was to be suspended from November 7, 2007 to November 14, 2007. In a space provided for employee comments, plaintiff wrote: "I did receive the company handbook. I read the handbook. I did not agree with the contract at the back of the handbook. . . . I do not agree with this suspension."
That same day, Solesbee's president drafted a letter to plaintiff. The letter emphasized the importance of the policies and procedures contained in the new employee handbook and indicated they would "govern [plaintiff's] future employment relationship with [Solesbee]." Additionally, it stated: "We hope to have you return to work promptly, but please understand that in doing so we will consider you to have acknowledged receipt of, and agreed to comply with, all the enclosed policies and procedures regardless of whether or not you actually sign the Employee Acknowledgement and Agreement." In closing, the president instructed plaintiff to contact him before the end of the day on November 13th to schedule his return to work. If plaintiff did not do so, the company would assume plaintiff chose to resign.
The letter dated November 7, 2007, was sent to plaintiff by overnight mail via FedEx on November 8 and was delivered on November 9. Because plaintiff had a signature on file with FedEx that authorized deliveries requiring a signature to be left at his front door—even if he was not personally present to receive them—the letter was apparently left at the door.
Plaintiff served his one-week suspension and then returned to work the following week. No one thereafter mentioned the November 7 letter or the arbitration clause. Plaintiff never signed for the former and never expressly agreed to the latter.
Approximately seven and one-half years later, Solesbee implemented a new compensation program for its metal technicians. A document detailing the new program was distributed to all affected employees, including plaintiff. On the last page of the document were two signature lines—one for the employee and one for the company's general manager.
A paragraph above plaintiff's signature line referenced the arbitration agreement. It read, in part: "[T]he Employer and Metal Technician understand and voluntarily agree that any disputes regarding the terms of this Compensation Program, Metal Technician's employment, termination from employment . . ., or any other association with the Company that either of us might have against one another will be resolved exclusively in accordance with binding arbitration that Metal Technician has executed or will execute, as the case may be, as part of a more comprehensive arbitration agreement with the Company." Months after signing the document, plaintiff retired.
Not long thereafter, plaintiff sued Solesbee. The complaint primarily alleged a variety of wage and hour violations, and among the relief sought was general and compensatory damages, punitive damages, statutory damages, civil penalties, restitution and injunctive relief.
Solesbee moved to compel arbitration and stay the court action based on its November 7 letter and the signed metal technician compensation program document. According to Solesbee, plaintiff impliedly assented to the arbitration provision by returning to work after the November letter advised him he would be bound by the company's policies and procedures if he returned, irrespective of whether he signed the agreement containing the arbitration provision. The implied agreement to arbitrate, Solesbee argued, was confirmed years later when plaintiff signed the compensation program document, which referenced the comprehensive arbitration agreement.
Plaintiff opposed the motion. In his declaration supporting the opposition, he stated he "never agreed to submit any dispute to arbitration[,]" he never called Solesbee during his suspension to coordinate his return to work, and when he returned to work after the suspension, "[he] simply continued to do [his] job." He further declared that the arbitration provision was never mentioned by anyone following his suspension.
The court issued a tentative ruling indicating its intent to deny Solesbee's motion. At the conclusion of the hearing, however, the court continued the matter and invited further briefing and evidence from the parties concerning the November letter and whether an implied-in-fact agreement to arbitrate resulted from plaintiff's return to work after his suspension.
Both sides filed supplemental declarations. Solesbee provided a copy of the FedEx report showing the letter was delivered—stating it was left at plaintiff's front door on the morning of November 9. Plaintiff declared he "honestly [did] not recall specifically receiving [the] letter from Solesbee while [he] was out on suspension." He further stated that "[he] never contacted Solesbee on November 13th to arrange [his] return to work, as it indicates that [he] was required to do in the letter[;]" and he would not have returned to work if he had been told his return would serve as an acceptance of the arbitration provision.
Solesbee's general manager stated in his declaration that sometime after plaintiff received the November 7 letter—he could not remember exactly when—plaintiff did, in fact, contact the company, and he was then scheduled to return to work.
Following an additional hearing, the court denied Solesbee's motion based on its conclusion Solesbee "failed to establish that the parties agreed to arbitrate." In its statement of decision, the court discussed the law concerning implied contracts and distinguished employment related cases in which an implied agreement to arbitrate had been found. The court explained that the language in each of the documents plaintiff received prior to his suspension indicated that in order to be legally bound by the arbitration provision, plaintiff needed to sign the agreement. It was undisputed he never signed.
Additionally, although the court found the November 7 letter and its attachments were delivered to plaintiff's address on November 9, it also concluded the evidence demonstrated "[p]laintiff did not intend his return to work to constitute acceptance of the [arbitration provision]." Among the facts relied on by the court were (1) plaintiff effectively denied his actual receipt of the November letter; (2) no one approached plaintiff when he returned to work to confirm his receipt of the letter or his understanding that he would be bound by its terms even though he had not signed it; and (3) he was not subjected to any further discipline upon his return to work despite the suspension notice stating he would be "subject to further disciplinary action" if he did not acknowledge receipt of the employee handbook, electronically or in writing.
Solesbee timely appealed.
DISCUSSION
Solesbee contends there is a binding implied agreement to arbitrate, and it was error for the trial court not to compel arbitration. We conclude otherwise, as there is substantial evidence to support the court's factual determination that plaintiff did not have notice of Solesbee's attempted unilateral implementation of the arbitration provision at issue, and thus there is no implied agreement to arbitrate.
We generally review a denial of a petition to compel arbitration for abuse of discretion. (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 60 (Avery).) However, if the court's decision involved a pure question of law, we review that aspect of the decision de novo. (Ibid.) Here, where the facts are in dispute, the issue involving whether plaintiff impliedly agreed to arbitrate is a fact specific inquiry, meaning our review is for an abuse of discretion. (Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 11; Avery, supra, 218 Cal.App.4th at p. 60.)
"The Federal Arbitration Act (9 U.S.C. § 1 et seq.) (FAA) provides that a written arbitration clause 'shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'" (Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 701 (Metters).) The California Arbitration Act provides similarly. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1343.) Both were "'designed "to overrule the judiciary's long-standing refusal to enforce agreements to arbitrate," [citation], and to place such agreements "'upon the same footing as other contracts.'""' (Metters, supra, 161 Cal.App.4th at p. 701) "This . . . policy in favor of arbitration does not come into play, however, until a court has found the parties entered into a valid contract under state law." (Ibid.)
"'There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.'" (Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 634.) Accordingly, "when presented with a petition to compel arbitration, the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute." (Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1505.) State contract law principles are employed to make that determination. (Ibid.)
Under California's law of contracts, a contract may be express (i.e., written or oral) or implied (i.e., its existence and terms are shown by conduct). (Civ. Code, §§ 1619-1621; Retired Employees Assn. of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171, 1178.) In the employment context, employers may unilaterally implement policies or conditions that become an implied contract when the employee chooses to begin, or to continue, working for the employer. (Asmus, supra, 23 Cal.4th at p. 11.) Mandatory arbitration may be such a condition. (Avery, supra, 218 Cal.App.4th at p. 63.) However, before courts will imply such an agreement, there must be evidence the employee received notice of the condition. (Ibid.) Absent notice, it cannot be said the employee impliedly agreed to anything.
Solesbee presented evidence showing it sent a letter to plaintiff, along with attachments, containing notice of a unilaterally implemented arbitration provision. It also submitted evidence FedEx delivered the letter to plaintiff's residence, leaving it at his front door. This created a rebuttable presumption plaintiff received the letter and was on notice his return to work would be an implicit agreement to the arbitration provision. See Evid. Code, § 641 ["A letter correctly addressed and properly mailed is presumed to have been received in the ordinary course of mail"]; see also Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 421 (Craig).)
We reject Solesbee's suggestion we should deem plaintiff to have received the letter because he "assumed responsibility for receipt of . . . deliveries" by placing his signature on file with FedEx. Proof of delivery and proof of receipt are, especially in this context, very different things.
Plaintiff, however, rebutted the presumption. He stated, under penalty of perjury, he did not recall receiving the letter. He further explained that if he had known his return to work would be considered an acceptance of the mandatory arbitration provision, he would not have returned. These statements were consistent with the undisputed pre-litigation facts: (1) plaintiff objected to the arbitration provision when it was initially presented to him; and (2) he held so strongly to his conviction that he was suspended for one week without pay. In other words, plaintiff acted in a manner that was consistent with his persistently stated position that he would not agree to mandatory arbitration.
Ultimately, faced with conflicting evidence, the trial court was required to make a factual determination as to whether plaintiff was on notice of the unilaterally implemented mandatory arbitration provision. (Craig, supra, 84 Cal.App.4th at p. 422.) This necessarily involved evaluating plaintiff's credibility.
It is not our role to reevaluate credibility calls by the trial court. (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622-623.) "Even though contrary findings could have been made, [we] defer to the factual determinations made by the trial court when the evidence is in conflict." (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479; see also Johnson, supra, 28 Cal.App.4th at p. 623 ["When . . . 'the evidence gives rise to conflicting reasonable inferences, one of which supports the findings of the trial court, the trial court's finding is conclusive on appeal'"].)
The above-described evidence is substantial and supports the trial court's finding Solesbee did not establish plaintiff received notice of the unilaterally implemented arbitration provision. (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1202 [to be substantial evidence must be "'"reasonable . . . , credible, and of solid value"'"]; In re Marriage of Mix (1975) 14 Cal.3d 604, 614 ["'The testimony of a witness, even the party himself, may be sufficient'"].) The lack of notice makes this case distinguishable from Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 386, on which Solesbee relies.
We find no error in the trial court's conclusion concerning the metal technician compensation program document—that it provided no support for the existence of an agreement to arbitrate. Although it mentioned arbitration, it specified disputes would "be resolved exclusively in accordance with binding arbitration that Metal Technician has executed or will execute. . . as part of a more comprehensive arbitration agreement with the Company." (Emphasis added.) At no point in time did plaintiff ever, expressly or impliedly, agree to mandatory arbitration.
It must be noted here that during oral argument, defendant's counsel conceded that the key issue on this appeal is whether or not plaintiff actually received the November 7 letter. If he did, defendant argues plaintiff had actual notice of the arbitration agreement and was, therefore, bound by it. If not, no such agreement could be implied. The trial court, having heard and considered all evidence offered by the parties on this issue, determined plaintiff did not receive the critical letter. There is substantial evidence to support the trial court's ruling.
Given the absence of notice and the lack of an express agreement to arbitrate, the trial court correctly concluded Solesbee did not meet its burden of demonstrating the existence of any agreement to arbitrate. (Avery, supra, 218 Cal.App.4th at pp. 65-66.) Accordingly, we do not reach plaintiff's alternative argument that the purported arbitration agreement is invalid as a matter of law.
DISPOSITION
The order is affirmed. Plaintiff is entitled to his costs on appeal.
GOETHALS, J. WE CONCUR: BEDSWORTH, ACTING P. J. MOORE, J.