Quiroz v. World Variety Produce, Inc.

• Decision Date: 14 May 2021
• Docket Number: B303012
• Court: California Court of Appeals Court of Appeals
• Parties: JUAN ANTONIO QUIROZ, Plaintiff and Respondent, v. WORLD VARIETY PRODUCE, INC. et al., Defendants and Appellants.

JUAN ANTONIO QUIROZ, Plaintiff and Respondent, v. WORLD VARIETY PRODUCE, INC. et al., Defendants and Appellants.

B303012

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

May 14, 2021

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. 19STCV07024)

APPEAL from an order of the Superior Court of Los Angeles County. Michelle Williams Court, Judge. Affirmed.

Michelman & Robinson, Reuben A. Ginsburg, and Mona Z. Hanna for Defendants and Appellants.

Lavi & Ebrahimian, N. Nick Ebrahimian, Jordan D. Bello, and Tielle Shue; The deRubertis Law Firm and David M. deRubertis for Plaintiff and Respondent.

INTRODUCTION

Juan Antonio Quiroz sued his prior employer, World Variety Produce, Inc., and its owner, Joe Hernandez (collectively, World Variety), for various wage and hour violations. The trial court denied World Variety's motion to compel arbitration, ruling World Variety failed to prove that Quiroz, by signing a form acknowledging receipt of an employee handbook that included a section containing an arbitration agreement, agreed to arbitrate his claims. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Quiroz Sues World Variety

In March 2019 Quiroz filed this action against World Variety, a produce distributor. Quiroz alleged that World Variety employed him from 1985 to 2018 as a "buyer," a position that involved "routine" work such as "travel[ling] to various regions of Mexico, collect[ing] certifications from farmers," and taking "photos of the field and produce," but that World Variety misclassified him as an exempt employee for purposes of the California Labor Code. Quiroz also alleged World Variety failed to transfer or pay the value of shares of stock the company owed him. Quiroz asserted causes of action for violations of Labor Code provisions governing wages, wage statements, and meal and rest breaks; a cause of action for breach of contract; and a cause of action for unfair competition.

B. World Variety Moves To Compel Arbitration

World Variety filed a motion to compel arbitration, attaching its employee handbook from August 2017. The handbook had nine sections, including one titled "Arbitration Agreement." This section stated, among other things, the employee and World Variety agree to arbitrate all "disputes arising out of, relating to, and/or in connection with [the employee's] employment." The final page of the arbitration section stated: "ENTERING THIS AGREEMENT IS NOT A CONDITION OR REQUIREMENT OF EMPLOYMENT AND/OR CONTINUED EMPLOYMENT. EMPLOYEE UNDERTSANDS THAT BY SIGNING BELOW, EMPLOYEE GIVES UP ALL RIGHTS TO A JURY TRIAL . . . AS TO CLAIMS COVERED BY . . . THIS AGREEMENT." The last page of the arbitration section included over half a page of blank space where the employee could sign, but there was no printed signature line.

The last page of the handbook was a form titled "Receipt of Employee Handbook." The form included six bullet points, followed by a printed signature line at the bottom of the page. One bullet point stated the employee "is responsible for understanding and complying with the policies and procedures" in the handbook, while another bullet point similarly stated the employee "agree[s] to read and abide by the policies in the Handbook." The handbook receipt form, however, did not state that the employee agrees to arbitration or that the employee agrees to the terms described in the arbitration section of the handbook.

World Variety also submitted a copy of a handbook receipt form signed by Quiroz in August 2017 and argued Quiroz agreed to the terms described in the arbitration section of the handbookby signing the handbook receipt form. Quiroz argued in opposition to the motion he did not agree to the arbitration agreement when he signed the form. He also submitted a declaration stating that, when World Variety originally gave him the handbook, he did not sign the receipt form. World Variety subsequently told Quiroz to go to the office of Janene Allen, the company's Senior Director of Human Resources. Allen gave Quiroz a copy of the receipt form—not the entire handbook (or the arbitration section). Quiroz signed the form acknowledging he received the handbook.

C. The Trial Court Denies the Motion

The trial court denied World Variety's motion to compel arbitration, ruling World Variety failed to meet its burden to prove Quiroz agreed to arbitrate his claims. The court ruled the signed handbook receipt form did not demonstrate Quiroz agreed to arbitrate his claims because the form "does not address the issue of arbitration at all." The court also stated that, while "the arbitration provision in the handbook clearly state[s] that arbitration is not mandatory," the evidence was that, after Quiroz received the handbook, "signing the acknowledgement of receipt of the handbook was mandatory." World Variety timely appealed.

DISCUSSION

A. Applicable Law and Standard of Review

"'Whether an agreement to arbitrate exists is a threshold issue of contract formation and state contract law.'" (Cohen v. TNP 2008 Participating Notes Program, LLC (2019)31 Cal.App.5th 840, 859; see Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 843-844.) "The party seeking arbitration bears the burden of proving the existence of an arbitration agreement . . . ." (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle); accord, Garcia v. KND Development 52, LLC (2020) 58 Cal.App.5th 736, 743-744; Swain v. LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 65-66.) "'When "the language of an arbitration provision is not in dispute,"'" and "'"no conflicting extrinsic evidence is introduced to aid the interpretation of an agreement to arbitrate, the Court of Appeal reviews de novo a trial court's ruling on a petition to compel arbitration."'" (Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787 (Esparza); accord, Brinkley v. Monterey Financial Services, Inc. (2015) 242 Cal.App.4th 314, 325; see Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866 [where there is "no conflict in the extrinsic evidence," we "make an independent determination of the meaning of the contract"].) "Although both California and federal law recognize the important policy of enforcing arbitration agreements" (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 313), that policy "is based on the assumption that 'parties have elected to use [arbitration] as an alternative to the judicial process'"; therefore, the policy "does not extend to those who . . . have not consented to arbitration" (Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 539; see Garcia, at p. 744 ["'"public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement"'"]).

B. Quiroz Did Not Agree To Arbitrate His Claims by Signing the Receipt Form

"In California, '[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.'" (Pinnacle, supra, 55 Cal.4th at p. 236; accord, Martinez v. BaronHR, Inc. (2020) 51 Cal.App.5th 962, 967; see Lamps Plus, Inc. v. Varela (2019) ___ U.S. ___, ___ [139 S.Ct. 1407, 1415, 203 L.Ed.2d 636] [under the Federal Arbitration Act, courts ordinarily enforce arbitration agreements "by relying on state contract principles"]; Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 244 ["'When deciding whether the parties agreed to arbitrate a certain matter,'" courts generally "'apply ordinary state-law principles that govern the formation of contracts.'"].) As with any contract, "'[a]n essential element'" of an arbitration agreement "'is the consent of the parties, or mutual assent.'" (Martinez, at p. 967; see Esparza, supra, 2 Cal.App.5th at pp. 787-788.) "'Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.'" (Martinez, at p. 967; accord, Esparza, at p. 788.)

We first consider the language of the handbook and receipt form to determine whether Quiroz agreed to arbitrate his claims. (See Civ. Code, §§ 1638, 1639; State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195; Martinez v. BaronHR, Inc., supra, 51 Cal.App.5th at p. 967.) We consider the handbook "as a whole, and interpret contested provisions in their context, not in isolation, with the aim of giving effect to all provisions, if doing so is reasonably possible." (Camacho v. Target Corp. (2018)24 Cal.App.5th 291, 306; see Civ. Code, § 1641; Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 1170; Romo v. Y-3 Holdings, Inc. (2001) 87 Cal.App.4th 1153, 1158.) If "the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning." (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822; see Cuenca v. Cohen (2017) 8 Cal.App.5th 200, 222; RealPro, Inc. v. Smith Residual Co., LLC (2012) 203 Cal.App.4th 1215, 1221.)

Considering the language of the handbook as a whole, we conclude Quiroz did not agree to arbitrate his claims. As World Variety points out, the final page of the arbitration section stated that an employee could agree to arbitration "by signing below," and although Quiroz did not sign below on that page, he did sign the handbook receipt page, which was at the end of the handbook and after the arbitration section, and therefore technically (although not immediately) "below." But the language of the receipt page shows Quiroz did not agree to the arbitration terms by signing...