California Cases December 29, 2023: Mayo v. Discovery Health Servs.

Case Description

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NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of San Diego County, No. 37-2021-00044001-CU-WT-CTL Keri G. Katz, Judge. Affirmed.

Ballard Rosenberg Golper &Savitt, David Jonathan Fishman, John Joseph Manier and Teri A. Gibbs for Defendant and Appellant.

Hillier DiGiacco, Andrew E. Hillier and Francis Anthony DiGiacco for Plaintiff and Respondent.

O'ROURKE, J.

Plaintiff and respondent Jorden Mayo sued her previous employer, defendant and appellant Discovery Health Services, Inc. (Discovery Health),

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alleging, inter alia , discrimination based on gender identity and various Labor Code violations.

Discovery Health petitioned to compel arbitration, which Mayo opposed. The court denied the petition. Discovery Health contends the court erred, as sufficient evidence showed Mayo agreed to arbitrate her claims.

Mayo seeks monetary sanctions against Discovery Health for filing a frivolous appeal. We affirm the court's order, but deny the sanctions motion.

FACTUAL AND PROCEDURAL BACKGROUND

Mayo alleged in her complaint that Discovery Health, which provides on-site wellness services to government agencies, schools, and employers, discriminated against her on grounds of gender identity and gender expression in violation of the Fair Employment and Housing Act (Gov. Code, § 12940, subd. (a)) and wrongfully terminated her in violation of public policy. She also alleged it violated labor laws regarding: overtime (Lab. Code, §§ 501, 1198); minimum wage payments (Lab. Code, §§ 1194, 1197, 1197.1); meal periods (Lab. Code, §§ 226.7, 512, subd. (a)); itemized wage statements (Lab. Code, § 226, subd. (a)); and payments for wages owed at time of separation (Lab. Code, §§ 201-203). She set out causes of action for unfair competition (Bus. &Prof. Code, § 17200 et seq.) and violation of the Private Attorneys General Act (PAGA) (Lab. Code, § 2698 et seq.).

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Discovery Health's Petition to Compel Arbitration

Discovery Health petitioned to compel arbitration. It relied extensively on a declaration by its vice president of clinical operations, Jorge Gonzalez, and attached exhibits so as to show that the parties entered into an arbitration agreement. Gonzalez reviewed records of Mayo's July 27, 2020 to August 17, 2020 employment with Discovery Health. He explained that after Discovery Health accepts a new hire, the applicant, to complete the full employment application, must electronically acknowledge acceptance of documents and agreements online through a third-party website, Contingent Health Management (CHM), which Discovery Health hired for that purpose. Gonzalez stated that CHM houses "Discovery [Health] employee documents and assists with recruiting, hiring, onboarding and various other personnel practices. CHM maintains a cloud-based password-protected online portal [that] provides Discovery [Health] applicants with access to certain employment policies, documents, forms, and agreements and also gives them the ability to sign these documents electronically. [¶] The CHM system contains several built-in safeguards to prevent tampering and to ensure an applicant's privacy." (Some capitalization omitted.)

Gonzalez stated that upon creating a unique, private password online, and clicking "submit," an applicant is routed to a "candidate dashboard" that displays links to Discovery Health's employment application form, a skills checklist, and digitized employee documents, forms, and agreements. (Some capitalization omitted.) One such document, the "2019 employee handbook sign pages," includes a "Statement of Employee" and an arbitration agreement. (Some capitalization omitted.)

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Gonzalez explained that the "Statement of Employee" provides: "I have received and read a copy of the 2019 employee handbook, and I acknowledge the following[:] . . . I understand that this handbook represents the current policies, regulations[.] . . . My signature below certifies that I understand the foregoing agreement and that it is the sole and entire agreement between Discovery [Health] and me." (Some capitalization omitted.) At the end of the statement, there are three printed lines for the date, an applicant's electronic signature, and printed or typed name. The date and printed or typed name are prepopulated for them. The statement of employee warns an applicant in all capital letters, "DO NOT SIGN UNTIL YOU HAVE READ THE ABOVE ACKNOWLEDGEMENT AND AGREEMENT."

According to Gonzalez, clicking "next" on the top of the webpage above the embedded "Statement of Employee" will navigate an applicant to a two-page, embedded arbitration agreement, which is the same one that appears in the employee handbook. The CHM system will not automatically input

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anyone's electronic signature/record acknowledgement of the "Statement of Employee," or any other agreement, without an applicant completing the process to submit the agreement.

Gonzalez states: "The employee handbook includes two references to [Discovery Health's] arbitration agreement and related policies . . . one on page 9 where it lists Discovery Health's mutual/bilateral arbitration of disputes policy and another on pages 65-66 where it includes a copy of the arbitration agreement." (Some capitalization omitted.) Clicking "next" on the top of the webpage above the embedded "Statement of Employee" will navigate an applicant to the two-page, embedded arbitration agreement, which is identical to the one included in the employee handbook.

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According to Gonzalez, Mayo followed the same procedure described above. Gonzalez submitted documents showing that on July 26, 2020, Mayo visited Discovery Health's website and created her unique, private password. That same day, "she executed the arbitration agreement using the CHM system." She also "electronically signed/acknowledged the '2019 employee handbook sign pages,' which includes the arbitration agreement and statement of employee." (Some capitalization omitted.) Gonzalez concludes Mayo would have been unable to submit the full employment application and begin employment without signing all of the documents assigned to her by logging onto the system using her personal e-mail address and unique, private password.

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Gonzalez concludes: "Even if the signature line remains blank on an agreement, that agreement is deemed 'signed/acknowledged' because of the extensive process set up by the CHM system wherein an applicant must first log onto the CHM system using their own unique, private password, then either (1) check the 'sign' box to enter their username and password; (2) click the 'next' button to click through the documents prior to clicking 'submit form'; or (3) click the 'submit form' button." (Some capitalization omitted.) Gonzalez continues: "When [Mayo] checked 'submit form' after inputting her username and unique password to log onto the CHM system, she agreed that she was electronically signing the statement of employee and arbitration agreement." (Some capitalization omitted.) Discovery Health added: "In signing the Statement of Employee, [Mayo] acknowledged receipt, understanding and accepting of the policies and regulations within the

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employee handbook.... The arbitration agreement is listed in the table of contents of the employee handbook and is expressly incorporated therein[.]"

Discovery Health alternatively moved the court to stay the proceedings pending the United States Supreme Court's decision in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 ( Viking River ) . It reasoned, "If this court will not dismiss [Mayo's] PAGA claims by way of this motion, the decision in Viking River should inform the court that [she] effectively waived her right to bring PAGA claims when she signed the arbitration agreement with Discovery [Health] and that her PAGA claims must be dismissed from this action." (Some capitalization omitted.)

Mayo's Opposition

In opposing the petition, Mayo submitted a declaration stating: "I accessed [Discovery Health's] online portal. When I did, I had access to [its] employee handbook. I do not recall reviewing anything in [it] that referred to an arbitration agreement nor do I recall being informed that I should review the employee handbook for information about an arbitration agreement." (Some capitalization omitted.) Mayo explained her understanding behind her signing the Statement of Employee electronically: "I believed that I was acknowledging receipt of the employee handbook I accessed prior to signing." She added, "I did not receive any notification through [Discovery Health's] online portal that I had not filled out and/or signed any documents that I was

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required to fill out or sign before submitting. [¶] When I started my job on July 27, 2020, no one at Discovery [Health] told me that I had not filled out and/or signed any documents that I was required to fill out or sign nor did anyone provide me with any documents to fill out or sign as part of my onboarding."

Mayo contended she did not electronically sign the arbitration agreement; rather, she signed only the Statement of Employee: "The lack of a signature is striking given that the CHM system . . . clearly applies an electronic signature to documents that [Mayo] actually signed," like the Statement of Employee, which includes a statement that says, "electronically signed by [Mayo]." (Some capitalization omitted.) She points out that by contrast, "if [she] had electronically signed the arbitration agreement, it would bear the same electronic signature .... The fact it does not confirms that [she] did not sign [it]." (Some capitalization omitted.)

Mayo contended: "The signed Statement of Employee does not bind [me] to arbitrate [my] claims; it does not so much as mention arbitration." She pointed out that the handbook by its express language was "not a contract." She concluded that her "signature on the statement of employee cannot act as a signature on the arbitration agreement given that agreement's own signature lines." (Some capitalization omitted.) Mayo objected to several statements in the declarations of Gonzalez and Discovery Health's attorney.

Discovery Health's Reply

Discovery Health in reply argued: "[Mayo] could not have signed the 'employment handbook sign pages' without pressing submit after reviewing the statement of employee and arbitration agreement.... Pressing submit

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was a manner in which [Mayo] could sign the agreements.... Once the agreements were submitted, the CHM system (a) indicated so by inputting a green check mark next to the words 'employment handbook sign pages' on the CHM system home page and (b) produced metadata showing that that the agreements were signed.... No one else could have submitted the agreements, but [Mayo].... [Her] conduct plainly establishes her mutual assent to be bound by the agreements." (Some capitalization omitted.) Discovery Health also objected to several statements in Mayo's declaration.

The Court's Ruling

At a proceeding on the court's tentative ruling denying the petition, the court asked Discovery Health's counsel if he agreed that Mayo's signature did not appear on the arbitration agreement. Counsel conceded, "on the line that says 'signature,' we don't dispute that the line is blank."

Following argument from counsel, the court confirmed its tentative ruling. It overruled the parties' evidentiary objections. It ruled that although Discovery Health met its initial burden of producing prima facie evidence of a written agreement to arbitrate the controversy, Mayo also met her burden of challenging the authenticity of the arbitration agreement. Therefore, the burden shifted back to Discovery Health to establish with admissible evidence a valid arbitration agreement existed between the parties. The court found Discovery Health's evidence, including Gonzalez's declaration and the exhibits submitted, did not satisfy its burden: "It is undisputed that [Mayo] did not click the 'sign' box. Without any further evidence, the court is not persuaded by Discovery Health's argument that clicking on a 'next' button or a 'submit form' button constitutes signing the arbitration agreement. While the evidence may be sufficient to support a finding that [Mayo] was required to view the arbitration agreement as part of

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the onboarding process, there is insufficient evidence to establish that [she] signed, either electronically or otherwise, the arbitration agreement." (Some capitalization omitted.)

The court also concluded that "there is insufficient evidence to establish that [Mayo's] signature on the 'statement of employee' at the end of the employee handbook satisfies the separate signature requirement on the arbitration agreement." (Some capitalization omitted.) It regarded as "irrelevant" Gonzalez's assertion "that the arbitration agreement is 'deemed' signed" by Mayo because of the extensive process set up by the CHM system, pointing out that in California, mutual assent is determined on an objective basis. Therefore, "the subjective intent of Gonzalez and/or Discovery Health, and evidence that the CHM system treats the statement of employee and the arbitration agreement as a singular document, have no bearing on the issue of whether there was mutual assent." (Some capitalization omitted.)

DISCUSSION

Discovery Health contends it presented sufficient undisputed evidence establishing "Mayo assented to the arbitration agreement's terms." (Emphasis and capitalization omitted.) It asserts: "Although the employee signature line on her arbitration agreement is blank, Mayo's printed name and signature date . . . both appear.... This could have happened only if someone using Mayo's personal email address and her unique, private password logged onto her CHM system account that day, as only Mayo admittedly did . . .-and only if that logged-in person (Mayo) clicked 'submit form' above the arbitration agreement, which the applicant is explicitly

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instructed to do when they 'are ready to send the form' to Discovery [Health]."

A. Applicable Law

California statutes create a "summary proceeding" for resolving petitions or motions to compel arbitration. ( Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) "The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination." ( Ibid. )

"To carry [its] burden of persuasion the moving party must first produce 'prima facie evidence of a written agreement to arbitrate the controversy.' [Citations.] 'If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then . . . the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement.' [Citations.] If the opposing party produces such evidence, then 'the moving party must establish with admissible evidence a valid arbitration agreement between the parties.' [Citations.] Despite the shifting burden of production, '[t]he burden of proving the agreement by a preponderance of the evidence remains with the moving party.'" ( Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1120.)

The California Supreme Court "has clearly stated that a court, before granting a petition to compel arbitration, must determine the factual issue of 'the existence or validity of the arbitration agreement.' [Citation.] In this

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way, a court's role, though limited, is critical. 'There is indeed a strong policy in favor of enforcing agreements to arbitrate, but 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.'" ( Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1219-1220.)" 'An "arbitration agreement is subject to the same rules of construction as any other contract ...."' [Citation.] For any contract, the parties' consent is a basic element. [Citation.] In addition, the parties' consent must be communicated to one another. [Citation.] Thus, a party's consent is essential to 'the contractual underpinning of the arbitration procedure ....' [Citation.] '[T]he asserted absence of contractual consent renders arbitration, by its very definition, inapplicable to resolve the issue.'" ( Id. at p. 1221.)

"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 [citation] or be effectuated by delegated consent [citation]. An arbitration clause within a contract may be binding on a party even if the party never actually read the clause." ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development ( US ), LLC (2012) 55 Cal.4th 223, 236.)

" 'There is no uniform standard of review for evaluating an order denying a motion to compel arbitration.'" ( Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619, 630.) "[T]he existence of an enforceable arbitration agreement is established under state law principles involving formation, revocation and enforcement of contracts generally." ( Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 357.) Where the facts are undisputed, the reviewing court assesses de novo whether a valid agreement to arbitrate was formed. ( Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173.)

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When, as here, the court's order denying a motion to compel arbitration is based on the court's finding that petitioner failed to carry its burden of proof, the question for the reviewing court is whether that finding is erroneous as a matter of law. ( Juen v. Alain Pinel Realtors, Inc. (2019) 32 Cal.App.5th 972, 978-979; see also Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 465 [where trier of fact concludes that the party with the burden of proof fails to carry the burden, it is "misleading" to characterize the standard of review as one of substantial evidence].)" 'Specifically, the question becomes whether the appellant's evidence was (1) "uncontradicted and unimpeached" and (2) "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding." '" ( Juen , at pp. 978-979; see also Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 769 [same].)

B. Analysis

Discovery Health supported its petition to compel by submitting two electronic documents (a statement of employee that Mayo signed and an arbitration agreement that she did not sign). The court concluded the absence of Mayo's signature on the arbitration agreement sufficed to show she did not agree to arbitrate her claims. Discovery Health's evidence was not uncontradicted and unimpeached as a matter of law; rather, the court found it was insufficient to compel a finding of contract formation. ( Juen v. Alain Pinel Realtors, Inc., supra, 32 Cal.App.5th at pp. 978-979.) Specifically, Gonzalez's declaration regarding the CHM System and how Discovery Health's new employees are processed for employment using that system allowed the court to infer that if Mayo had agreed to arbitrate her claims, she would have signed the arbitration agreement electronically, just as she did

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with the statement of employee. Under the objective standard of ascertaining mutuality of assent in contract formation ( Serafin v. Balco Properties Ltd., LLC , supra, 235 Cal.App.4th at p. 173), Mayo's failure to sign the arbitration agreement leads to a rational inference she did not agree to it.

It is true, as Discovery Health argues without elaboration, that binding California authority holds "mutual assent may be demonstrated without a formal signature." However, the case Discovery Health relies on for that proposition, Craig v. Brown &Root, Inc. (2000) 84 Cal.App.4th 416, is unavailing here. That court cited evidence the employer sent the employee a memorandum informing her of the employer's new dispute resolution program, emphasized "IT APPLIES TO YOU," and explained "[i]t will govern all future legal disputes between you and the Company." ( Id. at p. 419.) Unlike the arbitration agreement provision in the Discovery Health handbook, the memorandum in Craig v. Brown &Root, Inc . established in and of itself the employer's dispute resolution program, and did not include an express requirement that its employees sign an arbitration agreement. Therefore, Craig v. Brown &Root, Inc. is inapposite.

Discovery Health also relies on case law stating an individual does not need to read the arbitration agreement to be bound by it. ( 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1215.) However, in that case, the employee did sign the agreement, and the court ruled the signature was binding regardless of whether the employee read the document. By contrast, Discovery Health concedes Mayo did not sign the arbitration agreement.

Discovery Health argues that by signing the Statement of Employee, Mayo agreed to the arbitration agreement. Although it recognizes the Statement of Employee "does not mention arbitration," it concludes that the

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statement of employee "establishes the applicant has received and read the handbook . . ., which pointedly draws the reader's attention to the arbitration agreement by listing it in the table of contents." (Some capitalization omitted.)

In rejecting a similar argument, one court pointed out: "Nothing in the acknowledgment forms notified [the employee] either that the Handbook contained an arbitration clause or that his acceptance of the Handbook constituted a waiver of his right to a judicial forum in which to resolve his wage and hour claims. [Citation.] Since the Handbook 'was informational rather than contractual' and [the employer] failed to call attention to the

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arbitration requirement in the acknowledgment form, [the employee] should not be required to arbitrate. [Citation.] . . . 'To support a conclusion that an employee has relinquished his or her right to assert an employment-related claim in court, there must be more than a boilerplate arbitration clause buried in a lengthy employee handbook .... At a minimum, there should be a specific reference to the duty to arbitrate . . . in the acknowledgment of receipt form signed by the employee.'" ( Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 786.)

Discovery Health's claim lacks merit in light of the fact the statement of employee that Mayo signed does not refer to an arbitration agreement. We cannot and will not create a term of a contract between the parties that the evidence does not show was ever agreed to by the parties. (Code Civ. Proc., § 1858 ["In the construction of a statute or instrument, the office of the Judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted"]; accord, Mitri v. Arnel Management. Co. (2007) 157 Cal.App.4th 1164, 1173.) We therefore conclude the trial court did not err by denying the motion to compel arbitration.

II. Sanctions Motion

Mayo contends that in this appeal, Discovery Health attempts "another bite at the apple," claiming it "has now had five chances (the original motion to compel arbitration, the trial court reply brief, the trial court hearing, the appellant's opening brief and the appellant's reply brief) to identify a single piece of legal authority that would support its positions" that Mayo agreed to arbitrate her claims. (Some capitalization omitted.) She seeks an award of sanctions in the amount of $40,620 for her attorney fees incurred.

Although we acknowledge that some of Discovery Health's arguments are a rehash of unsuccessful arguments made below and do not adequately

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address the trial court's analysis, we cannot deem all of them as frivolous. "[A]n appeal should be held to be frivolous only when it is prosecuted for an improper motive-to harass the respondent or delay the effect of an adverse judgment-or when it indisputably has no merit-when any reasonable attorney would agree that the appeal is totally and completely without merit." ( In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.) Courts must use this power "most sparingly to deter only the most egregious conduct" given the potential chilling effect in taking an appeal. ( Id. at pp. 650-651.) Because we cannot say that any reasonable attorney would find this appeal totally and completely without merit, we deny the sanctions request.

DISPOSITION

The order is affirmed. Mayo shall recover her costs on appeal.

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WE CONCUR: HUFFMAN, Acting P. J., KELETY, J.