California Court of Appeals, Fourth District, Third Division
Pub. order 7/23/13
Appeal from an order of the Superior Court of Orange County, Super. Ct. No. 30-2009-00274060, Nancy Wieben Stock, Judge.
Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Derek R. Havel and Daniel J. McQueen for Defendants and Appellants.
Cotchett, Pitre & McCarthy, Niall P. McCarthy, Justin T. Berger, Eric J. Buescher; Coughlin Law Firm, Frank J. Coughlin, Kim-Thao T. Le; Jerry K. Cimmet;
Law Offices of John M. Kelson, John M. Kelson; and Gerald M. Werksman for Plaintiffs and Respondents.
Defendants and appellants appeal from an order denying their motions to compel plaintiffs and respondents to individually arbitrate the wage and hour claims they allege in this class action. Integrated relies on an arbitration policy contained in an employee handbook issued by Tenet Healthcare Corporation (Tenet), the previous owner of the four hospitals where Plaintiffs work, and a revised arbitration policy Integrated issued as part of a new employee handbook. Integrated contends Plaintiffs agreed to the arbitration policy by signing various documents acknowledging and agreeing to the policy.
We affirm the trial court’s decision denying Integrated’s motions because Integrated failed to establish Plaintiffs agreed to the specific arbitration agreement Integrated submitted to the trial court. Initially, we conclude Integrated is limited to the arbitration policy contained in the employee handbook issued by the prior owner of the hospitals because Integrated issued the revised employee handbook and arbitration policy after Plaintiffs’ claims accrued and the original class action complaint was filed.
Substantial evidence in the record establishes one Plaintiff did not sign any document acknowledging or agreeing to the original arbitration policy. Moreover, she did not impliedly agree to that policy by continuing to work at the hospitals because she did not receive notice of its existence. As for the other seven Plaintiffs, Integrated submitted a confusing patchwork of acknowledgments and other forms these Plaintiffs signed, but none of these documents refer to the specific employee handbook Integrated filed as the source of the arbitration policy. To the contrary, the documents Plaintiffs signed either refer to an entirely different document as the source of the arbitration policy or fail to meet the legal standards for incorporating by reference an arbitration policy or other document. Without sufficient evidence of the actual arbitration policy to which Plaintiffs agreed when they signed the acknowledgments and other documents, we may not enforce the policy against Plaintiffs.
Facts and Procedural History
In March 2005, Integrated acquired the following four hospitals from Tenet: (1) Western Medical Center – Santa Ana (Western Med Santa Ana); (2) Chapman Medical Center (Chapman); (3) Western Medical Center – Anaheim (Western Med Anaheim); and (4) Coastal Communities Hospital (Coastal; collectively Hospitals). Calderon, Gebler, Ross, and Zarrinnegar each worked at one of these Hospitals both before and after Integrated acquired them. Aguilar, Avery, Cade, and Nolfo each worked at one of these Hospitals only after Integrated acquired them. Avery worked at Western Med Santa Ana; Aguilar, Nolfo, and Ross worked at Chapman; Cade, Calderon, and Zarrinnegar worked at Coastal; and Gebler worked at Western Med Anaheim. All Plaintiffs still work at one of these Hospitals except Aguilar and Avery.
Before or during their employment at the Hospitals, each Plaintiff except Cade signed at least two of the following documents agreeing to arbitrate claims relating to their employment under an alternative dispute resolution process called the “Fair Treatment Process”: (1) the “Employee Acknowledgment Form”; (2) the “Application for Employment”; and (3) the so-called “‘New Hire’” or “Transition Letter.’” According to Integrated, “[t]he details of the arbitration policy (called the Fair Treatment Process, or FTP)” were set forth in Tenet’s employee handbook, which Integrated adopted as its own when it acquired the Hospitals (Tenet Employee Handbook). Cade did not sign any of these documents or any other document referring to the Fair Treatment Process or arbitration.
Avery, Calderon, Gebler, Ross, and Zarrinnegar each signed the Employee Acknowledgment Form, which stated “I acknowledge that I have received a copy of the Tenet Employee Handbook and Standards of Conduct and that I understand that they contain important information about the company’s general personnel policies and about my privileges and obligations as an employee.... [¶]... [¶] In addition, I acknowledge that I have received a copy of the Tenet Fair Treatment Process brochure. I hereby voluntarily agree to use the Company’s Fair Treatment Process and to submit to final and binding arbitration any and all claims and disputes that are related in any way to my employment or the termination of my employment with Tenet. I understand that final and binding arbitration will be the sole and exclusive remedy for any such claim or dispute against Tenet or its parent, subsidiary or affiliated companies and entities, and each of its and/or their employees, officers, directors or agents, and that, by agreeing to use arbitration to resolve my dispute, both the Company and I agree to forego any right we each may have had to a jury trial on issues covered by the Fair Treatment Process....”
The Employee Acknowledgment Form further stated (1) the arbitration would be conducted under the Federal Arbitration Act and the American Arbitration Association’s procedural rules; (2) the “Company” agreed to submit any dispute it had with the employee to final and binding arbitration; and (3) the maximum amount the employee would be responsible to pay toward the arbitrator’s fees and administrative costs.
Aguilar, Avery, Calderon, Nolfo, and Ross each signed the Application for Employment, which included the following statement immediately above the signature line: “I understand that any and all disputes regarding my employment with Tenet, including any disputes relating to the termination of my employment, are subject to the Tenet Fair Treatment Process, which includes final and binding arbitration, and I also understand and agree, as a condition of employment and continued employment, to submit any such disputes for resolution under that process, and I further agree to abide by and accept the decision of the Arbitration panel as the final binding decision and resolution of any disputes I may have.”
Approximately two months after Integrated acquired the Hospitals, it sent employees the Transition Letter explaining their employment with Tenet would formally end on a specified date in May 2005, but Integrated “is offering you employment on the terms set forth below. [¶]... [Integrated] and you agree to utilize the existing Open Door Policy and Fair Treatment Process, as hereby amended to substitute [Integrated] for Tenet, to resolve any and all disputes related to your future employment.... [¶] In order to confirm your acceptance of employment with [Integrated], we request that you sign this letter in the spaces provided below and return an executed original of this letter to the Human Resources Department.... In any event, your commencement of work after [the date specified] shall constitute your acceptance of the terms and conditions set forth above.” Aguilar, Calderon, Gebler, Nolfo, and Zarrinnegar each signed and returned this letter. Integrated presented no evidence showing Avery, Ross, or Cade received this letter or that Integrated attempted to send the letter to these three Plaintiffs.
In June 2009, Avery filed a class action complaint against Integrated on behalf of all employees at the Hospitals who worked 12-hour shifts without receiving proper overtime wages. Four months later, Integrated unilaterally issued a new version of the Tenet Employee Handbook (Integrated Employee Handbook) without notifying Plaintiffs or any other employees. The Integrated Employee Handbook renamed the Fair Treatment Process the “Alternative Dispute Resolution Process” and added a provision waiving the employee’s right to join his or her claims with other employees’ claims or bring a class or representative action against Integrated. Integrated contends it made no other significant changes to the Fair Treatment Process.
In January 2010, Aguilar, Nolfo, and Ross filed a separate class action complaint against Integrated on behalf of all employees at the Hospitals who worked 12 hour shifts without receiving proper overtime wages. The parties thereafter agreed to consolidate the two actions and Aguilar, Avery, Nolfo, and Ross filed a consolidated complaint setting forth their claims in a single pleading. In June 2010, Plaintiffs filed a first amended consolidated class action complaint adding Cade, Calderon, Gebler, and Zarrinnegar as plaintiffs. This amended complaint alleged the following claims against Integrated: (1) unfair competition; (2) failure to pay appropriate overtime wages; (3) failure to provide meal and rest periods; (4) failure to pay wages when due; and (5) failure to provide accurate wage statements.
In July 2010, Integrated filed eight motions seeking to compel each Plaintiff to separately arbitrate their claims on an individual basis based on the Fair Treatment Process described in the Tenet Employee Handbook and the Alternative Dispute Resolution Process set forth in the Integrated Employee Handbook. Plaintiffs opposed the motions on numerous grounds, including (1) the Fair Treatment Process and Alternative Dispute Resolution Process excluded Plaintiffs’ nonwaivable statutory claims from their terms; (2) the class arbitration waiver was invalid and unenforceable; (3) Integrated waived its right to compel arbitration; and (4) the Fair Treatment Process and Alternative Dispute Resolution Process were unconscionable. Plaintiffs also pointed out the employee handbook and Fair Treatment Process Integrated submitted with the motions applied to Western Med Santa Ana only and none of Plaintiffs worked at that Hospital except Avery. Finally, Cade argued she never signed any document acknowledging or agreeing to the Fair Treatment Process, Alternative Dispute Resolution Process, or any other arbitration policy.
The trial court denied all motions, finding Integrated “failed to meet [its] burden to show that any of the Plaintiffs are subject to an enforceable arbitration agreement.” The court explained Integrated failed to present sufficient evidence establishing an enforceable arbitration agreement between the parties and the Fair Treatment Process and Alternative Dispute ...