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Susan Gorlach v. the Sports Club Company et al

October 16, 2012


APPEAL from an order of the Superior Court of Los Angeles County, Susan Bryant-Deason, Judge. (Los Angeles County Super. Ct. No. BC452721)

The opinion of the court was delivered by: Suzukawa, J.



Defendants The Sports Club Company and five of its officers appeal an order denying a motion to compel arbitration.*fn1 We conclude that the trial court properly denied the motion to compel, and thus we affirm.


Susan Gorlach is the former human resources director for Sports Club. She resigned her position on August 6, 2010.

Prior to 2010, there were no arbitration agreements between Sports Club and its employees (or "team members"). In 2010, Sports Club revised its "Team Member Handbook" (handbook) to include an arbitration agreement. The revisions relevant to this appeal are as follows:

(1) On page 31, the handbook states: "As a condition to employment, all Team Members must sign the Mutual Agreement to Arbitrate Claims found in Appendix 4."

(2) Appendix 4, "Mutual Agreement to Arbitrate Claims," states in relevant part: "The Sports Club Company, Inc. ('Company') and I agree to the resolution by arbitration of all claims, disputes, and/or controversies (collectively 'claims'), whether or not arising out of my employment (or its termination), that the Company may have against me or that I may have against the Company or against its partners, owners, employees or agents, in their capacity as such or otherwise." It concludes: "I acknowledge that I have carefully read this Agreement, that I understand its terms, that all understandings and agreements between the Company and me relating to the subjects covered in the Agreement are contained in it, and that I have entered into the Agreement voluntarily and not in reliance on any promises or representations by the Company other than those contained in this Agreement itself. I understand that by entering into this Agreement, the Company and I have both waived our right to a jury trial and our right to appeal with respect to all claims covered by this Agreement."

Gorlach was tasked with presenting the new handbook to all Sports Club employees and collecting their signatures to the arbitration agreement. She began conducting general meetings about the handbook and collecting employee signatures the week of June 14, 2010.

On June 30, 2010, Gorlach told Chief Operating Officer April Morgan that all corporate employees except four had signed the arbitration agreement, but she did not identify herself as one of the employees who had not signed. She also told Morgan that 254 of the 256 employees who had attended the general meetings signed all signature pages of the handbook, but that 164 employees had not yet attended meetings. Gorlach said she would resume "make up" meetings the week of July 11, 2010. On July 21, 2010, she informed the Sports Club's group exercise team that she would like their signatures by July 23, 2010.

Throughout June and July 2010, Gorlach led Sports Club executives to believe that she had signed the arbitration agreement, although she had not. On July 30, 2010, Gorlach sent an email to four Sports Club executives, which addressed the need to "continue to think about how we're going to proceed when an active team member does not sign the Arbitration Agreement." The email continued: "From our 'Legal Update' meeting, I realize this has been an important question and potential direction for SCC [(Sports Club Company)]; therefore, I wanted to give you an update. Those who have not signed are inquiring about what it means to his or her status as a team member of SCC. As per our meetings, I'm giving them time to seek counsel prior to signing to prevent any forced agreement and since it's not an implied agreement. Additionally, it appears that Natania Goldberg has not signed just yet amongst others. . . . Leanne will be conducting the presentations in New York the week of August 9th while I help fill in for Karol since he'll be on vacation."

Gorlach resigned her position with Sports Club on August 6, 2010. It is undisputed that she never signed the arbitration agreement.


Gorlach filed a complaint against Sports Club and five of its officers on January 7, 2011.*fn2 The complaint alleged causes of action for wrongful termination, retaliation, paramour sexual harassment, intentional infliction of emotional distress, defamation, breach of contract, and negligence.

Sports Club answered the complaint on February 23, 2011, generally denying the complaint's allegations and asserting 26 affirmative defenses. In its twenty-second affirmative defense, Sports Club asserted that the court lacked jurisdiction to resolve the dispute "due to the existence of a mandatory, binding arbitration agreement that Plaintiff agreed to be bound by."

I. Motion to Compel Arbitration

On April 15, 2011, Sports Club moved to compel arbitration. The motion asserted that although Gorlach did not sign the arbitration agreement, she assented to it by her continued employment with Sports Club. In support of the motion to compel arbitration, Sports Club submitted the following declarations:

Declaration of Jeff Peters. Peters is the general manager of the Sport Club's West Los Angeles fitness club. On May 11, 2010, he attended a quarterly manager's meeting, at which Gorlach presented updates to the handbook. Gorlach emphasized that among the updates was a new arbitration agreement. Gorlach said Sports Club expected each team member to sign the arbitration agreement as a condition of employment. She provided each team member ...

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