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Cortez v. Lowe's Home Ctrs.

California Court of Appeals, Second District, Fifth Division
Jun 27, 2024
No. B321909 (Cal. Ct. App. Jun. 27, 2024)

Opinion

B321909

06-27-2024

MELINDA CORTEZ, Plaintiff and Respondent, v. LOWE'S HOME CENTERS, LLC, Defendant and Appellant.

Seyfarth Shaw, Jonathan L. Brophy, Sumithra R. Roberts, and Kiran A. Seldon for Defendant and Appellant. Michael Martinez Law and Michael C. Martinez for Plaintiff and Respondent.


NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Los Angeles County, No. 22STCV08329, Theresa M. Traber, Judge. Affirmed.

Seyfarth Shaw, Jonathan L. Brophy, Sumithra R. Roberts, and Kiran A. Seldon for Defendant and Appellant.

Michael Martinez Law and Michael C. Martinez for Plaintiff and Respondent.

BAKER, ACTING P.J.

Lowe's Home Centers, LLC (Lowe's) appeals from an order denying its motion to compel arbitration of a dispute with one of its employees, Melinda Cortez (Cortez). The trial court found the parties had not agreed to arbitrate their employment disputes because Cortez opted out of an arbitration provision. We consider whether the trial court correctly found there was no mutual assent to an agreement to arbitrate disputes.

I. BACKGROUND

A. Cortez Declines a Stand-Alone Arbitration Agreement with Lowe's

Cortez began working for Lowe's in November 1998 as an Installed Sales Manager. Beginning in the spring of 2016, Lowe's began presenting both prospective and current employees with an agreement to arbitrate any claims arising out of their employment.

In 2017, Lowe's provided Cortez and her coworkers with a four-page, printed "Agreement to Arbitrate Disputes" (AAD-1).AAD-1 was the first arbitration agreement Lowe's had presented to Cortez. In bold type, AAD-1 advised Cortez she could "opt out and not be subject" to the arbitration agreement. AAD-1 advised further that if she opted out in a timely manner, Cortez would not be subject to any adverse or negative employment actions.

The text of the agreement was contained in the document's first two pages; the third page was a signature page for the employee to assent to the agreement; the fourth page, as discussed post, was a form for the employee to decline arbitration. In the footer of each page of the document was the following date: "3/20/2017."

The last page of AAD-1 was an "Opt-Out Form for Agreement to Arbitrate Disputes." To opt out, Cortez was required to return a signed and dated opt-out form to Lowe's "within 30 days" to the following email address: arbitrationoptout@lowes.com. Timely return of an executed optout form was "the only way to opt-out." On May 1, 2017, Cortez signed, dated, and returned the opt-out form to Lowe's via email and by hand delivery to the company's human resources department. In addition to emailing a copy of her executed optout form to Lowe's, she also emailed a copy to herself.

B. Cortez Accepts a Promotion Three Days Later and Does Not Again Return an Arbitration Opt-Out Form

On May 4, 2017, i.e., three days after Cortez opted out of arbitration, Lowe's offered her a promotion to Assistant Store Manager-Support at its Burbank, California location (the Offer).Cortez accessed the Offer, which was styled as a letter addressed to her, through a hyperlink to Lowe's online job portal.

Cortez had applied for the position several weeks earlier.

The Offer was divided into sections by bolded and underlined subheadings addressing different topics, such as salary, job description, and paid sick leave; it also included an integration clause. One of the Offer's sections was entitled "Agreement to Arbitrate Disputes" (AAD-2). The terms of AAD-2 were substantively identical to AAD-1: AAD-2 provided for binding arbitration of any dispute arising out of Cortez's employment or termination of employment with the arbitration. AAD-2 also stated Cortez could decline binding arbitration. In language important to this appeal, the directions for opting out stated the following (emphasis ours): "You may submit a form stating that you wish to opt-out and not be subject to this Agreement To Arbitrate Disputes....In order to be effective, the signed and dated opt-out form must be returned to Lowe's via email to arbitrationoptout@lowes.com within 30 days of your acceptance of this Agreement To Arbitrate Disputes....If you timely opt-out as provided in this paragraph, you will not be bound by the terms of the Agreement To Arbitrate Disputes. If you opt-out, you will not be subject to any adverse or negative employment action as consequence of that decision and may pursue available legal remedies without regard to this Agreement To Arbitrate Disputes. If you do not opt-out of this Agreement To Arbitrate Disputes within 30 days of your acceptance of this Agreement, continuing your employment and agreeing to mutually arbitrate the claims covered by this Agreement To Arbitrate Disputes constitutes mutual acceptance of this Agreement To Arbitrate Disputes by you and Lowe's."

Cortez accepted Lowe's Offer on May 8, 2017. In doing so, she did not return another arbitration opt-out form to Lowe's.

C. Cortez Sues Lowe's, and Lowe's Moves to Compel Arbitration

In March 2022, Cortez sued Lowe's and her direct manager/supervisor for employment discrimination, harassment, retaliation, failure to promote, failure to prevent discrimination and harassment, and infliction of emotional distress. In addition to seeking monetary damages, she sought injunctive relief enjoining the defendants from any future misconduct.

The following month, Lowe's moved to compel arbitration. Lowe's argued arbitration was required in view of Cortez's claims and her acceptance of the Offer, which included AAD-2. In support of its motion, Lowe's submitted the declaration of Cassandra Jones (Jones), an area human resources business partner with Lowe's. Jones described the company's online job portal and the events leading to Cortez's acceptance of the Offer.

Cortez opposed the motion. Although she admitted reading the Offer and all its terms, Cortez argued she did not need to optout of its arbitration provision because she declined binding arbitration with the company by opting out of AAD-1-which occurred within 30 days of her acceptance of the Offer. In support of her opposition, Cortez submitted a declaration that attached, among other things, her executed opt-out form.

In reply, Lowe's maintained there was no evidence Cortez had opted out of AAD-1. Casey Morales (Morales), a director of human resources for Lowe's stores, declared she had conducted a complete search of the electronic mailbox dedicated to arbitration opt-outs and failed to find an email from Cortez containing an executed opt-out form. Lowe's maintained further that, even if Cortez had properly opted out of arbitration before accepting the Offer, that earlier opt-out was ineffective to opt out of the arbitration provision included in the Offer.

Although Cortez stated in her declaration opposing the motion that she emailed and hand-delivered her AAD-1 opt-out form to Lowe's human resources department, Morales did not state whether she searched any of Lowe's hard copy files relating to Cortez and/or arbitration opt-outs; she stated only that she searched its electronic arbitration opt-out mailbox.

D. The Trial Court Denies Lowe's Motion to Compel Arbitration

In June 2022, the trial court held a hearing on Lowe's motion to compel arbitration and denied the motion, reasoning there was no arbitration agreement between the parties. On the issue of whether Cortez opted out of AAD-1, the court made a factual finding that Cortez "met her burden of demonstrating that she submitted a signed Opt-Out form on May 1, 2017, ...." The court found further that Cortez's earlier opt-out meant she did not have to opt out of the Offer's arbitration agreement because of "ambiguity" in its provisions.

The trial court identified two pertinent ambiguities in AAD-2. First, while the arbitration agreement "makes clear an intent to supplant any prior arbitration agreement [it] says nothing about any impact on an employee's prior decision to opt out of arbitration....If [Lowe's] had intended for [AAD-2] to invalidate prior Opt-Out forms, it would have been easy for [Lowe's] to include express language that the new agreement also overrides any previous Opt-Out form submitted, and that a new Opt-Out must be exercised. No such language was included." Second, the court found the arbitration agreement's requirement for opt-outs to be submitted "within 30 days" was ambiguous in that it permitted an interpretation which allowed effective optouts to be submitted either 30 days before or 30 days after acceptance of the Offer. Because "ambiguities should be construed against the drafting party," the court found Cortez's opt-out to AAD-1 "was effective to opt out of the arbitration provision in the May 4th Offer, and thus, there is no agreement to arbitrate between the parties."

II. DISCUSSION

The trial court correctly denied Lowe's motion to compel arbitration. The Offer's arbitration agreement does not specify that a party may opt out of arbitration only by returning an optout form no later than 30 days after accepting an offer of employment. Instead, it provides only that an opt-out form must be submitted within 30 days of acceptance of the employment offer. Because Cortez returned a form opting out of arbitration (on May 1, 2017) within 30 days of accepting the offer of a promotion (on May 8, 2017), she effectively opted out of the agreement to arbitrate.

Before granting a petition to compel arbitration, a trial court must determine the factual issue of "the existence or validity of the arbitration agreement." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 402.) "The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence." (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) While there exists "a strong policy in favor of enforcing agreements to arbitrate, . . . there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate and which no statute has made arbitrable." (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 481; accord, Bouton v. USAA Casualty Ins. Co. (2008) 43 Cal.4th 1190, 1199.) The interpretation of a written contract to arbitrate is a question of law subject to de novo review. (Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 227; see also Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 ["In California, '[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.' [Citations]"].)

AAD-2 is ambiguous in some respects, but not in the respect that really matters for purposes of resolving this appeal. AAD-2 states an opt-out form must be submitted "within 30 days of [Cortez's] acceptance" of the Offer. The trial court found, based on sufficient evidence, that Cortez delivered an arbitration optout form to Lowe's in the prescribed manner within that 30-day period. Because the opt-out provision Lowe's drafted does not require the opt-out to come after execution of the agreement, the opt-out completed and submitted by Cortez was still effective and there was no mutual assent to arbitration.

First, it is not entirely clear from AAD-2's language whether it is distinct from AAD-1. While AAD-2 does repeatedly refer to "this Agreement to Arbitrate Disputes," suggesting a contract separate and apart from AAD-1, it does not do so consistently. Second, while AAD-2 refers to prior arbitration agreements and states AAD-2 supplants all such agreements and applies to all positions Cortez might hold with Lowe's, it is silent about opt-outs to prior arbitration agreements and their continued effectiveness. Third, while AAD-2 states Cortez may submit "a" form stating she did not want to be subject to binding arbitration, it does not state she must use the form at the embedded link. AAD-2 describes the electronically available optout form merely as "an opt-out form," not the only acceptable form.

Lowe's nonetheless argues the trial court erred when it considered Cortez's May 1, 2017, opt-out of arbitration because such consideration was a violation of the parol evidence rule.Lowe's, however, did not object in the trial court to the admission of Cortez's evidence of her signed and executed opt-out form on the ground it was impermissible parol evidence (or on any other ground). That means the argument is forfeited. (See, e.g., Quiles v. Parent (2018) 28 Cal.App.5th 1000, 1013 ["'Failure to raise specific challenges in the trial court forfeits the claim on appeal'"].)

The parol evidence rule provides that the "[t]erms set forth in a writing intended by the parties as a final expression of their agreement . . . may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement" (Code Civ. Proc., § 1856, subd. (a)), but it "does not exclude other evidence of the circumstances under which the agreement was made ...." (Code Civ. Proc., § 1856, subd. (g).)

DISPOSITION

The order denying the motion to compel arbitration is affirmed. Cortez is awarded costs on appeal.

We concur: MOOR, J., KIM, J.


Summaries of

Cortez v. Lowe's Home Ctrs.

California Court of Appeals, Second District, Fifth Division
Jun 27, 2024
No. B321909 (Cal. Ct. App. Jun. 27, 2024)
Case details for

Cortez v. Lowe's Home Ctrs.

Case Details

Full title:MELINDA CORTEZ, Plaintiff and Respondent, v. LOWE'S HOME CENTERS, LLC…

Court:California Court of Appeals, Second District, Fifth Division

Date published: Jun 27, 2024

Citations

No. B321909 (Cal. Ct. App. Jun. 27, 2024)