Opinion
A150382
09-20-2017
BRUCE BLAKELY, Plaintiff and Respondent, v. AMERICAN CONTRACT BRIDGE LEAGUE et al., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. MSC 16-01110)
INTRODUCTION
American Contract Bridge League (ACBL or the League) and the individual League members named as defendants timely appeal from an order denying their motion to compel arbitration on the ground that no arbitration agreement exists between the League and plaintiff Blakely, also a League member. The denial of a motion to compel arbitration is an appealable order. (Valentine Capital Asset Management, Inc. v. Agahi (2009) 174 Cal.App.4th 606, 612, fn. 5.) Substantial evidence supports the trial court's order. We affirm.
STATEMENT OF THE CASE
In June 2016 plaintiff Bruce Blakely, a member of ACBL, filed a complaint suing the defendants in Contra Costa County Superior Court for breach of contract, fraud, defamation, compensatory and punitive damages, and declaratory relief. On August 15, 2016, the defendants moved to compel arbitration. Blakeley opposed the motion. The court tentatively granted the motion. Argument on the motion was heard on October 14, 2016. After argument, "the Court was not convinced that Defendants had carried their burden of proving the existence of an agreement to arbitrate." The court continued the hearing to December 16, 2016, to permit the parties to submit further briefing pertaining to the issue of plaintiff Blakely's agreement to arbitrate. The court's subsequent ruling was informed by "the supplemental briefs submitted by the parties, as well as the material previously submitted by the parties in connection with the Motion." Following issuance of a second tentative ruling denying the motion, and further argument on December 16, 2016, the court adopted the second tentative ruling as its order.
We take judicial notice of the fact of the tentative ruling. To the extent defendants request that we also take judicial notice of the content of trial court's first tentative ruling, we decline to do so. It was never adopted. Such a tentative ruling is not a judgment and is not binding on the court. (Cal. Rules of Court, rule 3.1590(b); see In re Marriage of Ditto (1988) 206 Cal.App.3d 643, 646-647 [tentative ruling may not be relied upon to impeach a judgment on appeal].) As such, it is of no legal consequence and therefore not relevant to this appeal. (Cal. Rules of Court, rule 8.252(2)(A).)
In their first request for judicial notice in this court, defendants also proffer a number of facts which were not presented to the trial court before it ruled on their motion to compel arbitration. They were presented in connection with an opposition to a motion to sever claims, signed February 27, 2017, for a March 10, 2017 hearing. We decline to include or consider those facts, since they were not before the trial court. The Request for Judicial Notice in Support of the Opening Brief is denied in its entirely, except as noted in footnote 1, ante.
STATEMENT OF FACTS
The ACBL is a multinational corporation which sponsors bridge tournaments through numerous bridge clubs in the U.S., Canada, Mexico, and other countries. It has more than 220 employees and 165,000 members worldwide. It also runs numerous multi-day bridge tournaments at sea on cruise ships. Plaintiff Blakely and the individually named defendants are members of ACBL.
In March 2014, the League accused Blakely of sexual harassment, a charge he denied. In May 2014 he entered into a written contract with ACBL to resolve the dispute. In it, Blakely agreed to resign from the ACBL board of directors and withdraw his name for reelection to the board in 2014 in exchange for the League's dismissal of the charges made against him by the board oversight committee. In addition, the contract provided that he and his wife or companion were to serve as hospitality coordinators for all tournaments operated by the ACBL at sea with free ship passage, airfare, and a per diem allowance for him and his wife or companion through May 15, 2019. The contract was drafted by ACBL and does not contain an arbitration clause.
In November 2014, ACBL advised Blakely it was breaching the May 2014 contract. In the fall of 2015, the individual defendants made statements and engaged in a series of actions which Blakely alleges slandered him and damaged his reputation. In June 2016, Blakely sued defendants in Contra Costa County Superior Court for breach of contract, fraud, defamation, compensatory and punitive damages, and declaratory relief. On August 15, 2016, defendants moved to compel arbitration.
Based on the declaration of Sabrina Goley, the League's discipline coordinator, and exhibits relied on by her, defendants alleged that the ACBL had a "Membership Agreement," which contains a mandatory binding arbitration clause, and that on or before March 2014 Blakely entered into that membership agreement. In support of its assertion that ACBL has a membership agreement, and that Blakely was a party to it, the ACBL submitted as exhibits to the Goley declaration (1) printouts of various pages from its website, and (2) a copy of the invoice/payment coupon sent to Blakely for payment of dues for 2015, and his cancelled check.
Plaintiff objected to the Goley declaration on the ground it was sworn under the laws of Mississippi, not California. An out-of-state declaration is invalid if it does not state it was made under the laws of California. (Code Civ. Proc., § 2015.5; Kulshrestha v. First Union Commercial Corp. (2004) 33 Cal.4th 601, 610-611.) Although the court's ruling is not included in the record, we presume the court sustained the objection. The court sustained a similar objection to a declaration submitted on plaintiff's behalf. However, that declarant submitted a corrected declaration in November 2016. There is no evidence a corrected Goley declaration was ever resubmitted. Therefore, we do not consider it or the exhibits it purported to authenticate. We note the trial court did not reference the Goley declaration or the exhibits attached thereto.
Defendants concede "there is no fully integrated, four corner document called 'ACBL Membership Contract' per se. Rather, 'the contract' consists of filling out the initial ACBL application, paying the ACBL membership fee, the ACBL then allows one to become a member, and in return, the member has full access to the benefits provided by the ACBL."
Blakely admits that "ACBL requires its members to complete a standard form membership application initially upon joining and to pay annual dues thereafter." Blakeley has been a member of ACBL since 1995. At that time, Blakely submitted a membership application, which ACBL failed to produce. Nevertheless, it is undisputed that in 1995 there was no arbitration provision in effect when Blakely joined the League.
ACBL adopted an arbitration policy at a board meeting in Long Beach, California, in 2003. The 2003 Long Beach minutes indicate the ACBL board directed management employees to publicize the arbitration policy to members "as soon as possible." Despite that directive, no evidence was presented that the policy was publicized in any way until 2008. At that time, it was included on the reverse side of the renewal notice/dues coupon and appears substantially the same today. Since 2008, it has been "hidden . . . on . . . [its] website."
Blakely was elected to be a member of the board of directors in 2008. At that time, he was given a welcoming pamphlet for new members of the board, which Blakely admitted he received. It does not mention arbitration. Blakely was never informed, during orientation or any time while he was on the board, that the League had an arbitration provision.
In November 2011, Blakely attended a meeting of the board of directors in Seattle, Washington. The agenda items were mailed to the board members and were also accessible on the website. Agenda items 113-86 and 113-87 before the governance committee pertained to the arbitration clause. Defendants admit Blakely was not on the governance committee. However, McGuire averred that the provision was on the "full Board's agenda for consideration" and that the Board unanimously approved the rescission and replacement of the arbitration provision.
The change under consideration by the governance committee was a minor typographical change of a parenthesis to a comma. At least 161 agenda items were considered at the 2011 board meeting in Seattle. The board is composed of numerous committees, and the various committees are assigned agenda items pertaining to their purview. In 2011, Blakely was on four committees. The governance committee met at the same time as the bridge committee, of which Blakely was a member. Only committee members may vote on matters before a board committee. Blakely was not present and did not vote on item 113-86 when it was considered by the governance committee. "Minor housekeeping" matters that do not warrant discussion by the full board are placed on the consent calendar by the committees that considered them. Items on the consent calendar are not voted upon individually but are approved as a whole based upon committee recommendation without review by the full board. Item 113-86 was placed on the consent calendar. The one-page document presented to the full board did not mention arbitration. It states in full: "Original Motion Submitted by: Phyllis Harlan. Item 113-86: Chapter 1A Memberships. Moved that: Chapter 1A. Memberships of the Codifications be replaced with the following revised chapter."
Blakely and three other decades-long members involved in League governance averred that prior to August 2016 they had never heard anyone mention an arbitration clause relating to disputes between the ACBL and its members. In addition, they had never seen any such arbitration clause. Blakely averred he had never signed any contract agreeing to arbitrate and the first time he ever saw the alleged "arbitration agreement" (i.e., the website's arbitration provision) was in the defendants' moving papers in August 2016. Prior to August 17, 2016, he "had never noticed there was a reference to arbitration hidden on the back side of the membership renewal form." When he received the renewal notice in the mail, he treated it as a bill, wrote a check to ACBL, and mailed it. "I did not sign the form which was an invoice for payment."
DISCUSSION
The trial court concluded defendants "failed to carry the threshold burden of establishing by a preponderance of the evidence that an agreement to arbitrate existed between Blakely and the ACBL." Defendants contend this conclusion is not supported by substantial evidence. They argue Blakely's long tenure as a member of the League, his annual receipt of the renewal coupon, his annual renewal of his membership, his membership on the board of directors, attendance at the 2011 board meeting in Seattle, and access to the website show he "could have learned of the Arbitration Agreement." They assert that "[g]iven all the ways Blakely could have learned of the existence of the Arbitration Agreement, it is improbable that he had 'never heard' of it." The trial court believed otherwise.
Standard of Review
"There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed." (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.)
Here, there was a material factual dispute as to whether Blakely had actual notice of the arbitration provision on ACBL's website, on the reverse side of its annual dues invoice, and the agenda minutes of the 2011 board of directors meeting in Seattle. The court resolved the factual question of notice against defendants. "As the reviewing court, '[w]e resolve neither credibility issues nor evidentiary conflicts; we look for substantial evidence.' " (Bloxham v. Saldinger (2014) 228 Cal.App.4th 729, 750.) " ' " 'To warrant the rejection of the statements given by a witness who has been believed by a trial court, there must exist either a physical impossibility that they are true, or their falsity must be apparent without resorting to inferences or deductions. [Citations.] Conflicts and even testimony which is subject to justifiable suspicion do not justify the reversal of a judgment, for it is the exclusive province of the trial judge or jury to determine the credibility of a witness and the truth or falsity of the facts upon which a determination depends.' " ' " (Ibid.)
Applying the substantial evidence test, this court views the evidence presented in the light most favorable to the party who prevailed in the trial court, giving that party the benefit of every reasonable inference and resolving all conflicts in its favor. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053.) Whether the trial court's ruling is based on oral testimony or declarations, "[t]he trial court . . . [is] able to assess credibility and resolve any conflicts in the evidence. Its findings relating to lack of notice are entitled to great weight. Even though contrary findings could have been made, an appellate court should 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 Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 953 ["To the extent there are material facts in dispute, we accept the trial court's resolution of disputed facts when supported by substantial evidence; we presume the court found every fact and drew every permissible inference necessary to support its judgment."].)
Requirements of an Agreement to Arbitrate
"Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to compel arbitration 'if [the court] determines that an agreement to arbitrate the controversy exists.' [Citation.] 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." ' " (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59.) "In California, '[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.' [Citations.] Generally, an arbitration agreement must be memorialized in writing. [Citation.] A party's acceptance of an agreement to arbitrate may be express, as where a party signs the agreement. A signed agreement is not necessary, however, and a party's acceptance may be implied in fact (e.g., Craig [v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420] [employee's continued employment constitutes acceptance of an arbitration agreement proposed by the employer]) . . . . An arbitration clause within a contract may be binding on a party even if the party never actually read the clause. [Citation.] [¶] The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability." (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)
Here, defendants concede "there is no single, standalone document that constitutes Blakely's membership agreement with ACBL and/or that contains a signed agreement to arbitrate disputes with ACBL." (Italics added.) In other words, there is no written agreement to arbitrate. But ACBL argues that "Blakely assented to the terms of membership in the ACBL by renewing his membership year after year. By doing so he also accepted the obligations of membership, including the Arbitration Agreement." This is certainly a correct statement, if the member knew acceptance of mandatory arbitration and waiver of jury trial rights was one those obligations. However, before a party's acceptance of contract to arbitrate will be implied in fact, that party must have notice of the arbitration clause. "[A]n offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious. [Citations.] [¶] This principle of knowing consent applies with particular force to provisions for arbitration." (Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal.App.3d 987, 993 (Windsor Mills); accord, Norcia v. Samsung Telecommunications America, LLC (9th Cir. 2017) 845 F.3d 1279.) While defendants rely on 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199 (24 Hour Fitness) for the proposition that "[i]t is not even necessary for [Blakely] to have read the Agreement to be bound by it," that case does not dispense with the principle of knowing consent. In 24 Hour Fitness, when the plaintiff was hired she signed a written document entitled, "Certificate Of Acknowledgement of Receipt & Reading The Personnel Handbook," which explicitly stated that she specifically agreed to arbitrate any dispute arising out of her employment. (Id. at p. 1205 & fn. 1.) In that context, the court found "unavailing" plaintiff's suggestion that she never actually read the handbook. " ' "Reasonable diligence requires the reading of a contract before signing it. A party cannot use his own lack of diligence to avoid an arbitration agreement." ' " (24 Hour Fitness, at p. 1215 & fn. 1, italics added.) Here, it hardly need be pointed out, defendants concede Blakely signed no written document containing an arbitration provision. There was nothing for him to read before signing.
Nor does Craig v. Brown & Root, Inc., supra, 84 Cal.App.4th 416, assist defendants. There, the employer produced evidence that it sent to all of its employees, and to the plaintiff's home address in particular, a memorandum informing employees of its adoption of a mandatory arbitration policy, along with a brochure explaining the arbitration process and the employees' rights. The mail to the plaintiff's home address was not returned. The plaintiff's declaration stated she had reviewed the memorandum and brochure and could affirmatively state she did not receive them at her residence. (Id. at pp. 419-420, 421.) The trial court ruled in favor of the employer and the Court of Appeal affirmed, explaining that the trial court was "required to determine the contested fact (whether the memorandum and brochure were received by Craig) . . . solely on the basis of the conflicting evidence—Brown & Root's declarations and documents showing that the items were mailed to Craig at her home address and not returned, and Craig's equivocal denial of receipt. The trial court decided that issue in favor of Brown & Root, and its credibility call is binding on this appeal." (Id. at p. 421.)
Here, the trial court's legal ruling that defendants had not proven the existence of an agreement to arbitrate hinged on its factual finding that Blakely did not have actual notice of any arbitration provision, and that the various factual assertions proffered by ACBL as bases for imputing such notice to Blakely were refuted by better evidence, such as Blakeley's declaration about his attendance at the Seattle meeting, the inaccessibility of the website, and the nature and appearance of the dues invoice/payment coupon.
For example, having "weighed the evidence presented by both sides, and the evidence submitted by Blakely with his supplemental opposition," the trial court found more "convincing" the evidence that arbitration was not a topic of discussion at any meeting Blakely actually attended at the 2011 Seattle board meeting. Our review of Blakely's second declaration and the exhibits attached thereto, many of which (if not all) were originally submitted by defendants in support of defendants' McGuire declaration, amply support the court's conclusion that Blakely was not privy to any discussion about the arbitration clause that may have occurred at the 2011 board meeting in Seattle.
The court also correctly questioned the authenticity of defendants' purported proof that starting in 2008 the ACBL sent Blakeley a renewal billing form that included language stating that by becoming a member or renewing a membership "you expressly agree to waive your right to have disputes between you and the ACBL resolved in court before a jury and agree to accept the use of binding arbitration. . . . Specifics of the ACBL binding arbitration agreement are available for inspection at the [website address]." In addition to apparently later-added notations on the form submitted by defendants, the court noted it had tried to access the website in order to view the specifics of the arbitration provision and had received an error message. Thus, there was no evidence before the court that the URL referenced in the notice of binding arbitration on the back of the renewal form was easily accessible in 2008 or any time thereafter.
The trial court did not mention the declaration of Sabrina Goley, which was not properly sworn, but which defendants augmented into the record on appeal, to which were appended exhibits purporting to show the arbitration provision on website pages downloaded in August 2016, and a dues invoice/payment coupon Blakeley received and paid in 2015 sporting the same notices as appeared in 2008.
Pursuant to Evidence Code section 452, subdivision (h), the court may take judicial notice of facts and propositions that are not reasonably subject to dispute. In their second request for judicial notice, filed contemporaneously with their reply brief, defendants ask this court to take judicial notice "of three webpages that are links to the [ACBL] Homepage." They argue that "while the link may be broken," by clicking on the alternative links provided in the motion, "the Arbitration Agreement is nonetheless readily assessable [sic]." We decline to do so. This evidence proffered in the request was not presented to the trial court. Furthermore, there is no evidence these new links were available in 2008 or at any other time prior to 2016, the dates relevant to this appeal.
The trial court closely examined and accurately described the dues invoice. The court observed: "The fourth item in a list of 'notices' about marginally important membership information, on the reverse of a renewal dues statement is not the sort of place one would ordinarily expect to find an agreement to give up the right to a jury trial and arbitrate disputes. Indeed, Exhibit A is the sort of document that a renewing member might review only to the extent necessary to determine the amount the member owed to renew his or her membership and in what manner to pay that amount. It would be surprising indeed if many members read the reverse of the renewal dues statement, and even more surprising still if many were aware that it purports to waive their right to a jury trial."
"The first page includes identifying information concerning the member, including player number, name, address, phone numbers, e-mail, and date of birth. . . . There is a box for the renewing member to fill in the amount enclosed, and a space for the payment due date to be noted. Finally, above the credit card payment instruction, the form says 'Change of address on back.' There is no other notation that would advise a person reviewing the form that anything other than 'change of address' could be found on the back of the form. [¶] What is labeled Page 2 of Exhibit A contains space for the renewing member to correct his or her address. As a result, the Court concludes that what is labeled Page 2 is actually the reverse side of the renewal billing statement, which was a 1-page, 2-sided document. It is only on the back page of the renewal billing form that the language pertaining to arbitration set forth above appears. In the middle of the page, there is a section entitled 'Notices.' The arbitration language set forth above is the fourth item in that list. [¶] The other items in the 'Notices' section are a warning that ACBL dues are not tax deductible and can be changed at any time, a statement that dues include subscriptions to various publications, and admonition that a member's residence determines which ACBL unit/district the member is a part of, and a link to a website for information on ACBL's privacy policy."
The court's description omits reference to two paragraphs located above the notices pertaining to charities: "Charitable Contributions [¶] The American Contract Bridge League does more than sponsor bridge tournaments. The ACBL also is involved in promoting bridge education, charitable endeavors and international bridge relations. [¶] Please consider tax-deductible donations to the ACBL Educational Foundation, ACBL Charity Foundation or the United States Bridge Federation—the organizations that support these efforts. [¶] To make donations, please write separate checks payable to the ACBL Educational Foundation, ACBL Charity Foundation or the U.S. Bridge Federation and send separately to ACBL, 2990 Airways Blvd., Memphis TN 38116-3847. Thank you."
Underneath that it states: "Become a Patron Member [¶] Special benefits include guaranteed reservations at NABC host hotels when reserved by the deadline, Baron Barclay Bridge Supply credits and discounts for the Hall of Fame Banquet, Individual Dues: $250 per year. Household Dues: $350 per year (U.S.) Join with this renewal or contact the ACBL for more information."
We agree a dues invoice the member receives once a year is not the sort of writing in which one would ordinarily expect to find a contract to arbitrate disputes and give up trial rights. Nothing on the front of the invoice alerts the member to this important information on the back side of the invoice. In fact, it invites the member to read the back side only for "change of address on back" at the bottom of the page below the notices. Nor does anything about the placement of the notices alert the member to their importance. The "Notices" section ranks below "Charitable Contributions" and "Become a Patron Member." Finally, the arbitration notice is neither the first, nor the last, of the notices: it is the fourth of five. This document is not calculated to give a member notice of an important waiver of rights and implied agreement to arbitrate by paying membership dues. The nature of an invoice and the particular placement of the arbitration clause on this invoice supports the trial court's credibility determination that Blakely was telling the truth when he averred he did not read the notices and was unaware of the arbitration clause.
Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696 (Metters), relied on by the court below, is not fairly distinguishable. In Metters, an employee who attempted by numerous means on multiple occasions to file a discrimination grievance with his employer was given a form to fill out entitled, "Notice of Dispute & Request for Resolution," which included an arbitration clause. (Id. at pp. 699-700.) Metters, the employee, signed the form. (Id. at p. 700.) In opposition to the employer's motion to compel arbitration, Metters averred he understood he needed to sign the form before his claim would be investigated, but no one told him about arbitration and he was unaware he had signed an arbitration agreement. (Ibid.) The trial court found "the dispute form did not look like a contract and did not alert Metters that he was agreeing to binding arbitration." (Metters, at p. 702.) The trial court ruled there was no meeting of the minds and therefore no valid arbitration agreement. (Id. at p. 700.)
Citing Windsor Mills, supra, 25 Cal.App.3d 987, where "the court found an arbitration provision unenforceable because it was buried in small print on the reverse side of a form on which a carpet manufacturer acknowledged receipt of yarn shipments from the yarn distributor," the Metters court upheld the trial court's ruling as supported by substantial evidence. (Metters, supra, 161 Cal.App.4th at pp. 702, 704.) The Court of Appeal observed "the agreement to arbitrate was not contained in an employment contract, where it might have been expected, but in a form on which Metters was directed to submit his grievance. The context of this form did not alert him he was agreeing to anything, let alone arbitration." (Id. at p. 703.)
Defendants argue the Metters reasoning should not apply here because there was an element of coercion in that case which is absent here: "Blakeley chose to be a member of the ACBL." We disagree that coercion is the guiding principle of Metters. Metters is a reasonable application of the well-established principle that "when the writing does not appear to be a contract and the terms are not called to the attention of the recipient . . . no contract is formed with respect to the undisclosed term." (Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049-1050; Windsor Mills, supra, 25 Cal.App.3d at pp. 993-994.)
We also note Blakely alleges he earns his living by playing bridge professionally and his "livelihood depends upon his being a member of ACBL in good standing and his ability to play in ACBL-sanctioned events."
Here, substantial evidence supports the court's conclusion that the invoice did not appear to be a contract, and the arbitration clause was not called to the attention of the unwary member. Therefore, no contract was formed as to that undisclosed term.
DISPOSITION
The order denying the motion to compel arbitration is affirmed. Respondent is entitled to costs on appeal.
/s/_________
Dondero, J.
We concur:
/s/_________
Margulies, Acting P. J.
/s/_________
Banke, J.