Date: 07-09-2020

Case Style:

Case Number: B296858

Judge: Curry, J.

Court: California Court of Appeals First Appellate District, Division Five on appeal from the Superior Court, County of Napa

Plaintiff's Attorney: David L. Martin and Anne M. Turner

Defendant's Attorney: Raquelle de la Rocha

Description: What if neither party to an arbitration agreement places
initials next to a jury waiver contained in the agreement, even
though the drafter included lines for their initials? On the facts of
this case, we conclude the lack of initials is of no legal
consequence.
Here, when appellants BaronHR, Inc., BaronHR, LLC,
Fortress Worldwide, Inc. and Luis Perez (collectively BaronHR),
hired respondent Joseph Martinez, both Martinez and an
employer representative signed an arbitration agreement, but
neither initialed a jury waiver included in the agreement. Later,
Martinez filed an employment-related lawsuit against BaronHR,
who then moved to compel arbitration. For reasons discussed
below, we conclude the court erred in denying the motion to
compel arbitration, reverse the court’s order, and remand for
further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
BaronHR is an employment staffing company that recruits
candidates for commercial, administrative and health care
positions. BaronHR hired Martinez as a sales manager and gave
him several employment-related documents, including an
arbitration agreement. Martinez signed all of the documents the
same day he was hired.
Martinez filed a complaint asserting 18 employmentrelated causes of action stemming from BaronHR’s alleged
discriminatory and retaliatory mistreatment of him. BaronHR
moved to stay the lawsuit and to compel arbitration, arguing
Martinez was bound by the arbitration agreement.
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The arbitration agreement, entitled “Mutual Agreement to
Arbitrate Claims,” consists of three typed pages in which
BaronHR is referred to as “Employer or Company” and Martinez
as “Employee.” The first sentence of the agreement states
Employer and Employee “mutually agree that they shall resolve
by final and binding arbitration any and all claims or
controversies for which a court or other governmental dispute
resolution forum otherwise would be authorized by law to grant
relief in any way arising out of, relating to, or associated with
Employee’s application for employment with Employer,
Employee’s employment with Employer, or the termination of
any such employment . . . This Agreement shall be effective on
the date it is signed by Employee.”
The third paragraph of the agreement is the subject of the
motion to compel. It consists of two sentences: “Employer and
Employee each agree that arbitration, as provided for in this
Agreement, shall be the exclusive forum for the resolution of any
covered dispute between the parties. In agreeing to
arbitration, both Employer and Employee explicitly waive
their respective rights to trial by jury.” (Original emphasis.)
Next to the bolded sentence, in the right-hand margin,
“INITIAL:” is written. (Capitalization as in the original.) Beneath
that is a short line. Neither a representative of BaronHR nor
Martinez initialed the “INITIAL” line.
The second paragraph of the third page of the agreement
provides, in part: “This is the complete agreement of the parties
on the subjects of arbitration of claims and waiver of trial by
jury.”
The final portion of the agreement, which we will refer to
as the certification paragraph, contains a second express jury
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trial waiver which reads: “EMPLOYEE’S CERTIFICATION
OF UNDERSTANDING OF AGREEMENT EMPLOYEE’S
SIGNATURE BELOW CONFIRMS THAT EMPLOYEE HAS
READ, UNDERSTANDS, AND AGREES TO BE LEGALLY
BOUND BY, ALL OF THE TERMS OF THIS AGREEMENT.[¶]
EMPLOYEE SHALL NOT SIGN UNTIL EMPLOYEE HAS
READ AND UNDERSTANDS THE ENTIRE AGREEMENT.
AFTER SIGNING THIS AGREEMENT, EMPLOYEE HAS NO
RIGHT TO PURSUE CLAIMS AGAINST THE COMPANY IN
COURT AND BEFORE A JURY, BUT ONLY THROUGH THE
ARBITRATION PROCESS.” (Original emphasis, underscoring
and capitalization.)
Directly underneath the certification paragraph are two
separate sets of three lines. One set is for “Employee” and the
other is for “Authorized Company Representative.” The three
lines provide space for the Employee and Authorized Company
Representative to sign, print their names, and insert the date.
Martinez signed, printed his name, and wrote the date, “5/3/17,”
on the first set of lines. Julie Schlotterback, BaronHR’s
authorized representative, signed, printed her name, and wrote
the date, “5/9/17,” on the second set of lines.
Martinez opposed BaronHR’s motion to compel arbitration.
In support of his opposition, Martinez attached a declaration
stating in relevant part: “[¶] 4. I remember coming across the
arbitration agreement and pausing at the bolded paragraph
which asked for an initial in the blank space to waive a jury trial.
[¶] 5. Due to my experience as a professional in the industry, it
was my belief and understanding that arbitration was not as
beneficial to employees where employers have exhibited harmful
activity. [¶] 6. I did not want to initial a statement agreeing to
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waive jury trial and I did not initial the statement agreeing to
waive a jury trial.”
BaronHR filed a reply brief but did not object to Martinez’s
declaration. The trial court denied the motion to compel
arbitration, explaining that while there was “no ambiguity in the
language” of the agreement, there was “ambiguity” about
whether Martinez in fact agreed to arbitrate and waive his right
to a jury trial. BaronHR timely appealed, and the court issued a
stay.
DISCUSSION
A. Standard of Review
An order denying a motion to compel arbitration is an
appealable order. (Code Civ. Proc. § 1294, subd. (a).) As a
preliminary matter, the parties dispute the appropriate standard
of review. According to BaronHR, there are no factual disputes
and we should thus review the denial of the motion to compel
arbitration de novo. (Franco v. Greystone Ridge Condominium
(2019) 39 Cal.App.5th 221, 227 [“‘[I]f the court’s denial rests
solely on a decision of law, then a de novo standard of review is
employed. . . .’”].) Martinez argues the trial court found there was
insufficient evidence of mutual assent in light of his omitted
initials and declaration. (Ibid. [If the trial court’s decision on
arbitrability “‘ . . . is based on a decision of fact, then we adopt a
substantial evidence standard. [Citations.]’”].)
The issue before the trial court was whether mutual assent
existed, which is a question of fact. (Alexander v. Codemasters
Group Limited (2002) 104 Cal.App.4th 129, 141.) In determining
there was no mutual assent, the trial court relied on extrinsic
evidence produced by Martinez and made an implied credibility
finding from that evidence that Martinez did not want to
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arbitrate when he signed the agreement. Accordingly, we apply
the substantial evidence standard of review. “‘We must accept the
trial court’s resolution of disputed facts when supported by
substantial evidence; we must presume the court found every fact
and drew every permissible inference necessary to support its
judgment, and defer to its determination of credibility of the
witnesses and the weight of the evidence. [Citation.]’ [Citation.]”
(Engineers & Architects Assn. v. Community Development Dept.
(1994) 30 Cal.App.4th 644, 653.)
B. Mutual Assent
“In California, ‘[g]eneral principles of contract law
determine whether the parties have entered a binding agreement
to arbitrate.’ [Citations.]” (Pinnacle Museum Tower Assn. v.
Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223,
236.) “An essential element of any contract is the consent of the
parties or mutual assent. [Citations.]” (Donovan v. Rrl Corp.
(2001) 26 Cal.4th 261, 270, Civ. Code §§ 1550, 1565.) The parties’
mutual intent is to be ascertained solely from the contract that is
reduced to writing, if possible. (Civ. Code § 1639, Palmer v. Truck
Ins. Exchange (1999) 21 Cal.4th 1109, 1115.) The contract
language controls if it is clear and explicit. (Civ. Code § 1638;
Palmer, supra, at p. 1115.) “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. [Citation.]” (Alexander v. Codemasters Group
Limited, supra, 104 Cal.App.4th at p. 141.)
The language of the agreement between Martinez and
BaronHR establishes their mutual assent to submit employmentrelated disputes to arbitration and to waive the right to jury trial.
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As noted, three separate terms of the agreement acknowledge in
explicit and unmistakable language the parties’ mutual intent to
arbitrate all disputes; two of those terms also acknowledge the
parties’ mutual intent to waive their right to jury trial. Among
them, is the uninitialed third paragraph with its boldface jury
waiver: “Employer and Employee each agree that arbitration, as
provided for in this Agreement, shall be the exclusive forum for
the resolution of any covered dispute between the parties. In
agreeing to arbitration, both Employer and Employee
explicitly waive their respective rights to trial by jury.”
Martinez does not dispute he signed the agreement. He is,
therefore, deemed to have assented to all its terms. (Martin
Storage & Trucking, Inc. v. Benco Contracting & Engineering,
Inc. (2001) 89 Cal.App.4th 1042, 1049 [Generally, “one who signs
an instrument, which on its face is a contract, is deemed to assent
to all its terms.”].) Moreover, as the certification paragraph
makes explicit, in signing the agreement, the employee “agrees to
be legally bound by all of the terms of this agreement,” which
includes the third paragraph, and the employee “has no right to
pursue claims against the company in court and before a jury but
only through the arbitration process.” (Italics added.) This
paragraph is prominently displayed in all capital letters and is
located immediately above Martinez’s signature.
Martinez claims “[b]y withholding his initials, [he] was
manifesting his intent not to agree to arbitrate,” citing this
court’s decision in Esparza v. Sand & Sea, Inc. (2016) 2
Cal.App.5th 781, 788 (Esparza). However, Mitri v. Arnel
Management Co. (2007) 157 Cal.App.4th 1164 (Mitri), upon
which Esparza relies, is inapposite. In Esparza, the employee
received an employee handbook, which contained an arbitration
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provision. (Esparza, supra, 2 Cal.App.5th at pp.784-785.) On the
first page of the handbook was a ‘“welcome letter,”’ which stated
the handbook was “‘not intended to be a contract (express or
implied), nor is it intended to otherwise create any legally
enforceable obligations on the part of the Company or its
employees.”’ (Id. at p. 784, italics omitted.) The employee signed a
form acknowledging she had received the handbook, which
mentioned the arbitration provision as one of the Company’s
“‘policies, practices, and procedures[.]’” (Id. at p. 783.) On appeal
from the denial of the Company’s motion to compel arbitration, a
different panel of this court concluded the employee handbook’s
disclaimer of “‘. . . any legally enforceable obligations,’” the
emphasis upon its informational purpose, and the recognition
that employees would not have read it when they signed the
policy acknowledgment form precluded a finding the parties
agreed, expressly or impliedly, to arbitrate disputes. (Id. at pp.
789-791.)
Similarly, in Mitri v. Arnel Management Co., supra, 157
Cal.App.4th 1164, the employee handbook contained an
arbitration policy stating employees would be obligated to sign a
separate arbitration agreement. (Id. at pp. 1167-1168.) The two
affected employees did not sign the separate agreement. (Id. at p.
1168.) The appellate court concluded there was no binding
agreement, because the employees had not consented to be bound
by the arbitration agreement. (Id., at p. 1173.)
Neither Esparza nor Mitri apply to the situation in this
case: an employee’s execution of a stand-alone arbitration
agreement unequivocally expressing the employee’s agreement to
the employer’s arbitration policies. Nor has Martinez cited any
cases holding the failure to initial a provision in such an
9
agreement invalidates it. We found only one published case that
is instructive.
1 In Elsken v. Network Multi-Family Sec. Corp.
(10th Cir. 1995) 49 F.3d 1470 (Elsken), the plaintiff, an
administrator of a murdered woman’s estate, filed suit against a
security alarm corporation alleging breach of contract and
negligence, among other claims. (Id. at p. 1472.) The murder
victim, in an unsuccessful attempt to rent a safe apartment, had
contracted for a twenty-four hour alarm system from the
corporation at the same time she signed her rental lease. (Elsken
1 BaronHR cites three unpublished federal district court
opinions that are persuasive. (Haligowski v. Superior Court
(2011) 200 Cal.App.4th 983, 990, fn. 4 [“Unpublished federal
opinions are ‘“citable notwithstanding [Cal. Rules of Court, rule
8.1115] which [ordinarily] only bars citation of unpublished
California opinions. . . .” [Citations.]’” (Original italics.).]) In
Anderson v. Pitney Bowes, Inc. (N.D.Cal., May 4, 2005, No. C04-
4808) 2005 U.S. Dist. Lexis 37662 (Anderson), Burgoon v.
Narconon of N. Cal. (N.D.Cal., Jan. 15, 2016, Case No. 15-cv01381) 2016 U.S. Dist. Lexis 5489, and Hartung v. J.D. Byrider,
Inc. (E.D.Cal., Oct. 16, 2008, 1:08-cv-00960) 2008 U.S. Dist. Lexis
86972 (Hartung), the courts held the failure to initial a specific
arbitration provision in a signed agreement was not dispositive of
mutuality. In Anderson, the employee signed an application
requiring arbitration as a condition of employment and an
arbitration agreement containing, in addition to the uninitialed
arbitration provision, an express jury trial waiver in the final
paragraph above the signature line. (Anderson, supra, at pp. 1-
3.) In Hartung, although the purchaser signed the retail
installment contract, she failed to initial the arbitration
provision. (Hartung, supra, at p. 4.) However, the purchaser
initialed and signed a companion document entitled “Buyer’s
Statement of Understanding,” which stated her understanding
the contract contained an arbitration provision. (Id. at p. 8.)
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v. Network Multi-Family Sec. Corp. (10th Cir. 1995) 49 F.3d
1470, 1472.) “The Services Agreement contained an indemnity
clause and a limitation” of liability clause. (Ibid.) Although the
victim “signed the contract, she did not initial the reverse side of
the Services Agreement[]” where the limitation of liability clause
was located. (Ibid.) The victim’s signature on the agreement was
placed directly below a provision referencing the limitation of
liability claim. (Id. at p. 1474.)
The plaintiff argued, in part, because the victim did not
initial the limitation of liability clause, it was not in effect
because she did not agree to it. (Elsken, supra, 49 F.3d at pp.
1473-1474.) The circuit court rejected this contention, finding the
contract itself, which the victim signed, advised her of the terms
on the back page of the agreement. (Id. at p. 1474.) The Elsken
court found the signature directly above a reference to the
provision meant the victim agreed to the contract in its entirety,
including the limitation of liability clause which she failed to
initial. (Ibid.)
We find this analysis persuasive. As in Elsken, Martinez’s
signature is adjacent to the certification paragraph, which refers
to all terms of the agreement sought to be enforced. In this
situation, that Martinez did not also initial the subject paragraph
does not provide a basis for concluding the parties did not
mutually assent to the arbitration agreement.
Martinez points to his declaration as, “at a minimum,”
resolving any ambiguity in the agreement caused by the omission
of his initials. But as discussed previously, the language of the
signed agreement is not ambiguous. It is an objective expression
of the parties’ mutual assent to arbitrate.
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Martinez attempted to create ambiguity with his previously
undisclosed assertions he did not want to arbitrate or waive his
jury trial right when he signed the agreement. We defer to the
trial court’s finding the declaration was credible. The court,
however, should not have considered Martinez’s unexpressed
intentions as evidence of the lack of mutual assent. The law is
well-settled that unexpressed subjective intentions are irrelevant
to the issue of mutuality. (Reigelsperger v. Siller (2007) 40
Cal.4th 574, 579-580 [“uncommunicated subjective intent is
irrelevant” to mutual assent, which is determined from
reasonable meaning of parties’ words and actions], Hilleary v
Garvin (1987) 193 Cal.App.3d 322, 327 [because “existence of
mutual assent is determined by objective criteria[,]”
uncommunicated subjective intent is irrelevant], Schmitz v.
Wetzel (1961) 188 Cal.App.2d 210, 212 [“‘[Where] the terms of an
agreement are set forth in writing, and the words are not
equivocal or ambiguous, the writing or writings will constitute
the contract of the parties, and one party is not permitted to
escape from its obligations by showing that he did not intend to
do what his words bound him to do.’ [Citation.]” (Italics
omitted.)].) This is substantive contract law, so the employer’s
failure to object to Martinez’s declaration did not permit the court
to consider his unexpressed intent when construing the contract.
Reigelsperger v. Siller, supra, 40 Cal.4th 574, is illustrative.
A patient entered into an arbitration agreement with a
chiropractor for lower back pain treatment. (Id. at p. 576.) The
agreement stated it applied to the patient’s treatment “now or in
the future[.]” (Id. at p. 577 (Original emphasis).) Two years later,
the patient returned to the chiropractor, this time seeking
treatment involving the cervical spine and shoulder. (Ibid.) The
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patient filed a lawsuit, alleging this most recent treatment was
negligent. (Id. at pp. 577.) The trial court denied the
chiropractor’s motion to compel arbitration, and the Court of
Appeal affirmed the order. (Ibid.) In reversing the Court of
Appeal, the California Supreme Court concluded the wording of
the agreement was dispositive, noting the agreement stated it
“‘ . . . is intended to bind the patient and heath care
provider . . .who now or in the future treat[s] the
patient . . .’ . . . To contradict this objective manifestation of the
parties’ intent to arbitrate, [the patient] asserts that he had not
intended to return to [the chiropractor] for treatment. However,
his uncommunicated subjective intent is irrelevant.
[Citations.] . . . Regardless of whether [the patient] had a present
intention to return for treatment, he agreed that if he did decide
to do so, the arbitration provision . . . would apply to a future
dispute.” (Id. at pp. 579-580 (Original emphasis).) Thus,
Martinez’s declaration is insufficient evidence as a matter of law.
The trial court erred in denying BaronHR’s motion; the
parties are required to arbitrate.

Outcome: The order denying the motion to compel arbitration is reversed. The cause is remanded for further proceedings consistent with this opinion. Appellants are awarded their costs on appeal.

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