California Courts Issue Twin Decisions Enforcing Arbitration Agreements

In two decisions issued within the last month, the California appellate courts broadened the circumstances under which agreements to arbitrate civil claims can be enforced. One court held that an employee effectively entered into an agreement by continuing to work for the company around the same time a claim was filed, while another held that an arbitration agreement applied to a claim even after a lawsuit was filed. The two cases clarified the availability of arbitration agreements to insulate employers from the prospect of jury trials in both such situations.

In Salgado v. Carrows Restaurants Inc. (2018) 33 Cal.App.5th 356, Maureen Salgado filed a lawsuit on November 22, 2016 alleging employment discrimination and violation of civil rights against Carrows.  Subsequently, Carrows filed a motion to compel arbitration of Salgado’s claims based on an agreement that she signed on December 7, 2016. The motion was based on the argument that the agreement required arbitration of all claims “which may arise out of or be related in any way to” the employee’s employment, and that Salgado and Carrows agreed that “any” such claim would be submitted to final and binding arbitration.

 Reversing a trial court order denying the motion to compel arbitration, the Court of Appeal held that the language applied to claims that were included in a previously-filed lawsuit as opposed to just future disputes, as Salgado argued. The court noted that there was no language containing a limitation or restriction based on the age of the claim, and that Salgado’s current lawsuit was one such claim given the parties’ agreement to arbitrate “any” and “all” such claims. Citing cases from courts in other states, the appellate court stated that “an arbitration agreement may be applied retroactively to transactions which occur prior to the execution of the arbitration agreement.” 

 In the second case, Diaz v. Sohnen Enterprises Inc. (2018) --- Cal.App.5th ---, Erika Diaz filed a complaint alleging workplace discrimination on December 22, 2016, twenty days after she and her co-workers received notice at an in-person meeting that Sohnen Enterprises was adopting a new dispute resolution policy that they would be bound to if they continued their employment after receiving it.  The court found that Diaz impliedly consented to the agreement by continuing her employment after the meeting, even though the alleged conduct that was the subject of her claim may have occurred prior to that time. The court decided not to rely on federal cases from other jurisdictions which held that arbitration agreements required an employee’s express written consent.

 These cases provide a further basis for enforcing arbitration agreements that have been adopted by employers, even when they have been implemented after an employee has decided to pursue litigation of the covered claims.  If you have any questions regarding these cases or about implementing an arbitration agreement, please contact the authors, or your usual employment law counsel at AALRR.

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