Davis v. Continental Airlines, Inc.

Decision Date17 November 1997
Docket NumberNo. B100718,B100718
Citation69 Cal.Rptr.2d 79,59 Cal.App.4th 205
CourtCalifornia Court of Appeals Court of Appeals
Parties, 75 Fair Empl.Prac.Cas. (BNA) 976, 97 Cal. Daily Op. Serv. 8698, 97 Daily Journal D.A.R. 14,079 Alsenia DAVIS, Plaintiff and Respondent, v. CONTINENTAL AIRLINES, INC., et al., Defendants and Appellants.

Law Offices of Steven Drapkin, Steven Drapkin, and Lee W. Rierson, and Krakow & Kaplan, and Steven J. Kaplan, Los Angeles, for Defendants and Appellants.

Margaret S. Henry, Santa Monica, and Judith K. Williams, Berkeley, for Plaintiff and Respondent.

CHARLES S. VOGEL, Presiding Justice.

INTRODUCTION

Defendants and appellants Continental Airlines, Inc., and Nathaniel Griffin appeal (Code Civ. Proc., § 1294, subd. (a)) from an order denying their motion to compel arbitration of plaintiff and respondent Alsenia Davis's complaint for sexual harassment in employment brought under the California Fair Employment and Housing Act (FEHA, Gov.Code, §§ 12900 and 12940 et seq.) with additional contract and tort causes of action. According to the complaint, plaintiff, a female skycap, was sexually harassed verbally and physically by defendant Griffin, a male skycap in a supervisory position.

Defendants contend plaintiff must resolve her dispute by means of the steps in a company "appeal procedure" specified in an employee handbook. The trial court denied defendants' motion to compel arbitration, on the alternative grounds that (1) the employee handbook does not set forth a mandatory agreed procedure as an alternative to court litigation, and (2) defendants waived any right to compel arbitration, by unreasonably delaying their motion until after obtaining extensive discovery from plaintiff. We affirm the order on the ground defendants have waived any right to compel arbitration. We need not decide, therefore, whether the employee handbook sets forth a binding agreement to arbitrate.

FACTUAL AND PROCEDURAL BACKGROUND

According to the complaint, defendant Griffin was a "lead" skycap in a supervisory position over plaintiff, and over a period of several years he subjected plaintiff to escalating sexual harassment, from verbal remarks about his sexual desire for her, to handwritten notes, to physically rubbing against her buttocks and grabbing her breast. Plaintiff alleged that defendant Continental failed to take effective action to control Griffin's conduct despite plaintiff's complaints, and that plaintiff suffered retaliation from Griffin and other skycaps for having complained.

Plaintiff filed her complaint on January 24, 1995, and served it on defendants in March 1995 (on Griffin March 14 and on Continental March 24). Following a stipulated extension of time to answer, defendants answered the complaint on May 30, 1995. Although each defendant's answer alleged, among other affirmative defenses, that plaintiff's action was barred for her failure to have pursued "binding internal grievance procedures" (Continental's answer) or "contractual requirements that plaintiff submit her dispute to arbitration" (Griffin's answer), defendants did not promptly demand arbitration. Not until November 22, 1995, did defendants move to stay the action (Code Civ. Proc., § 1281.4) pending determination of their forthcoming motion to compel arbitration, which they did not file until January 3, 1996, following plaintiff's December 4, 1995, stipulation for a stay.

Prior to seeking a stay or petitioning to compel arbitration, defendants served plaintiff with a discovery demand for, and obtained by August 1, 1995, documents in 86 categories totaling 1,600 pages and took plaintiff's videotaped deposition for two days on August 15 and 16, 1995, which produced a 410-page deposition transcript. Plaintiff also agreed in the December 4, 1995, stipulation to respond to defendant Griffin's interrogatories by December 8, 1995. Griffin responded to plaintiff's interrogatories and request for documents in August 1995. The December 4, 1995, stipulation permitted plaintiff to take the deposition of Jesse Saenzpardo (whose relevance as a witness is not clear from the record) no later than January 30, 1996.

In their motion to compel "arbitration" filed January 3, 1996, defendants contended plaintiff was required to resolve her dispute in the manner specified in an employee handbook. 1 According to defendants, the employee handbook sets forth a procedure for resolving "disagreements regarding the proper application of Company policy or disciplinary action," which plaintiff had agreed to follow by virtue of her signed employment application which included her agreement to "comply with all rules and regulations of Continental Air Lines, Inc., [and] to acquaint myself with Company policy and abide thereby." The "Appeal Procedure" section of the manual contains an introduction which states, "Continental is fully committed to its open door policy. Employees at all levels are urged to discuss problems or disagreements regarding the proper application of Company policy or disciplinary action with their supervisor. [p] ... Should this discussion fail to resolve the issue, employees are encouraged, but not required, to bring it to the attention of the next level of supervision. If the issue is not resolved in this process employees may appeal using Continental's Non-Management Appeal Procedure." There follows a description of a three-step appeal procedure. Step 1 is initiated by a written request from the employee to the Department Director and Employee Relations Manager within 10 days. A Hearing Manager is appointed to hear the matter within 15 days at an informal hearing and to issue a written decision within 10 days after the hearing. Step 2 is initiated by a written request from the employee to the Regional Vice President and Employee Relations Manager within 10 days after receipt of the results of the Step 1 hearing. A "divisional board," which consists of "two employees appointed by the Company and two selected from a list supplied by the employee council," conducts an informal hearing and issues a written decision within 10 days after the hearing which "is final and binding on all parties." Step 3 is available only if the Step 2 board fails to reach a majority decision or fails to conduct a hearing within 60 days of the employee's request and the employee is dissatisfied with the delay. In Step 3 "Employee Relations will submit a list of three outside arbitrators. The employee will choose the arbitrator to hear the appeal." "The decision of the arbitrator is final and binding." In describing "employee preparation and presentation," the manual states, "Employees must submit appeals as specified in the Appeal Step 1 and Step 2 Procedures detailed above. Employees must comply with the specified time limits."

In support of their motion defendants contended the employee handbook sets forth a binding procedure for arbitration of disputes. They contended plaintiff was bound by it because of her signed employment application and her receipt of the handbook, and because on two prior occasions plaintiff had herself invoked the procedures to protest disciplinary letters in her personnel file and sexual harassment by another employee. As evidence, defendants relied both upon (1) the declaration of Field Human Resource Manager Donna Towle based upon personal knowledge of company procedures, company files, and documents obtained from plaintiff and (2) statements in plaintiff's deposition acknowledging her signature on the employment application, her receipt of a copy of the handbook, and her prior two invocations of the procedure.

In opposition to the motion, plaintiff argued (1) defendants waived the right to compel arbitration by their conduct after the filing of plaintiff's complaint, (2) plaintiff never explicitly waived her right to a jury trial, (3) the handbook procedure is not mandatory, and (4) public policy prohibits subjecting plaintiff's statutory causes of action to mandatory arbitration. Plaintiff relied on her attorney's declaration concerning the extensive discovery defendants conducted before they filed a motion to compel arbitration and on plaintiff's declaration that she did not use the appeal procedure in this case because she did not think she was required to do so.

In reply, defendants argued (1) they did not waive the right to compel arbitration, because they timely raised it as an affirmative defense in their answers to the complaint and their subsequent conduct did not waive it, (2) an express waiver of jury trial was not essential to plaintiff's agreement to arbitrate, (3) the appeal procedure should properly be interpreted to require binding arbitration despite its introductory language suggesting voluntariness and its use of the word "may" in reference to appeal, and (4) the FEHA does not prohibit an agreement to arbitrate claims arising under it.

The motion was argued at a hearing held February 14, 1996. After submission of the matter the court denied defendants' motion. The court's minute order states, "the Court finds that based upon the facts submitted and understood by the Court, plaintiff had no mandatory obligation to utilize Continental's appeal procedure. Furthermore, the Court finds that defendants by their untimely assertion, other than by an affirmative defense, of any claimed right to arbitration have waived it."

The court's oral remarks at the hearing suggest its reasoning. First, the court believed that the language of the manual would not suggest to a layperson such as plaintiff that the procedure was mandatory. Second, the court was very disturbed by defendants' behavior of waiting for many months to bring their motion. Although defendants set up an affirmative defense in their answers filed in May 1995, they sat on that defense and conducted discovery before bringing their motion months later. The court hinted it believed...

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