Defendants and appellants appeal from an order denying their motions to compel plaintiffs and respondents to individually arbitrate the
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
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.'"
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...."
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
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 Resolution Process Integrated presented were nonetheless unconscionable. Integrated timely appealed.
A. Relevant Legal Principles Regarding Compelling Arbitration
"There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed. [Citations.]" (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425 [34 Cal.Rptr.3d 547].) Interpreting a written document to determine whether it is an enforceable arbitration agreement is a question of law subject to de novo review when the parties do not offer conflicting extrinsic evidence regarding the document's meaning. (24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1212 [78 Cal.Rptr.2d 533] (24 Hour Fitness).) Here, both the substantial evidence and de novo standards apply.
Integrated's motion to compel Cade to arbitrate her claims is governed by the substantial evidence standard because the motion turned on conflicting evidence regarding whether Cade received and agreed to Integrated's arbitration policy. (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 421-422 [100 Cal.Rptr.2d 818] (Craig); see Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 701 [74 Cal.Rptr.3d 210].) Integrated's motions to compel the other seven Plaintiffs to arbitrate their claims are governed by the de novo standard because the issue turned on whether the documentation Integrated submitted set forth an enforceable arbitration provision. (Mitri, supra, 157 Cal.App.4th at pp. 1169-1170; 24 Hour Fitness, supra, 66 Cal.App.4th at p. 1212.) The parties did not submit conflicting extrinsic evidence regarding the documentation's meaning.
B. Integrated May Not Apply the Alternative Dispute Resolution Process in the 2009 Employee Handbook to Plaintiffs' Claims
Integrated sought to compel Plaintiffs to individually arbitrate their claims based on two arbitration agreements: (1) the Fair Treatment Process in the
Four months after Avery filed her initial class action complaint, Integrated unilaterally modified the Fair Treatment Process in the Tenet Employee Handbook by renaming it the Alternative Dispute Resolution Process and adding a class arbitration waiver. Integrated modified the Fair Treatment Process based on a provision that authorized the employer to "change or modify the FTP procedures from time-to-time without advance notice and without the consent of employees." Integrated posted the Integrated Employee Handbook containing the Alternative Dispute Resolution Process on its intranet page, but it did not provide employees with a copy of the new handbook, instruct employees to review the new handbook on the intranet page, or even notify employees of the new handbook's existence.
Integrated contends these rules exempt only Avery's claims from the Alternative Dispute Resolution Process because all other Plaintiffs filed their
Finally, Integrated argues we should sever the class arbitration waiver provision and apply the remainder of the Alternative Dispute Resolution Process if we find Integrated improperly added the waiver. This argument also misses the point. Plaintiffs' claims against Integrated are governed by the arbitration agreement that existed at the time the claims accrued. Integrated, however, relies on a revised agreement it issued after the claims accrued. Simply put, the revised agreement is irrelevant because Integrated may not apply it retroactively to claims that existed before the revision was imposed. (See Peleg, supra, 204 Cal.App,4th at p. 1465.)
C. Cade Never Agreed to Arbitration
Integrated concedes Cade did not sign an arbitration agreement but nonetheless argues Cade must arbitrate her claims because she had an implied-in-fact arbitration agreement that applied to all claims regarding her employment. According to Integrated, the Tenet Employee Handbook required all employees to arbitrate any claims against Integrated as a condition of their employment, and therefore Cade implicitly agreed to arbitration by continuing to work for Integrated after she received the Tenet Employee Handbook. We disagree because substantial evidence supports the trial court's finding Cade did not receive the Tenet Employee Handbook.
In Craig, the employee worked for the employer for several years before the employer established a dispute resolution policy that required all employees to arbitrate disputes regarding their employment. The employer established the policy and made it a condition of employment by sending its employees a memorandum and brochure emphasizing all future disputes with the employer would be resolved through binding arbitration and explaining the arbitration procedures. Four years later, the employee sued the employer claiming it wrongfully terminated her employment. The employer petitioned the court to compel arbitration and presented evidence showing it twice mailed the memorandum and brochure establishing the arbitration policy to the employee at her home address. The employee opposed the petition, arguing she never agreed to the arbitration policy and never received the memorandum and brochure establishing the policy. The trial court granted the petition based on its factual finding the employee continued working for the employer after receiving the memorandum and brochure. (Craig, supra, 84 Cal.App.4th at pp. 419-420.) The Court of Appeal affirmed. (Id. at p. 423.)
Unlike Craig, Integrated failed to present any evidence showing it sent or otherwise provided Cade a copy of the Tenet Employee Handbook containing the Fair Treatment Process. As stated above, Integrated concedes Cade did not sign an Employee Acknowledgment Form, Application for Employment, Transition Letter, or any other document acknowledging she received the Tenet Employee Handbook or otherwise agreeing to the Fair Treatment Process.
Integrated, however, failed to provide testimony from anyone who was present during Cade's orientation, who gave or sent Cade an employee handbook, or who could explain how the orientation was conducted or what these documents mean. The only testimony Integrated submitted regarding these documents is a declaration from its current vice-president of human resources, who simply declared these two documents were found in Cade's personnel file. Neither document states Cade was actually provided a Tenet Employee Handbook and neither mentions arbitration or any other form of dispute resolution.
Moreover, Cade submitted a declaration stating she does not recall ever receiving an employee handbook and does not believe she received one because she kept her orientation documents and they do not include a
The foregoing constitutes substantial evidence supporting the trial court's finding Integrated failed to meet its evidentiary burden to establish Cade received a Tenet Employee Handbook containing the Fair Treatment Process. (See Quigley v. McClellan (2013) 214 Cal.App.4th 1276, 1282-1283 [154 Cal.Rptr.3d 719] [substantial evidence "is evidence of ponderable legal significance that is reasonable, credible and of solid value, supporting the challenged findings of the trier of fact"].) Without evidence establishing Cade received (or at least was sent) a Tenet Employee Handbook making the Fair Treatment Process a condition of her employment, there is no basis to conclude an implied-in-fact arbitration agreement existed based on her continued employment. (See Craig, supra, 84 Cal.App.4th at pp. 420-422.)
Integrated contends we need not decide whether the evidence establishes Cade agreed to arbitrate her claims because she conceded she did. Specifically, Integrated contends the declaration Cade filed to oppose its motion stated she "`had no choice of whether to accept any arbitration provision.'" This statement is taken out of context and does not support Integrated's contention. Cade never stated she accepted an arbitration agreement and, in fact, emphasized she did not sign her Application for Employment containing an arbitration provision. Cade simply stated Integrated never discussed arbitration with her when she applied for her position and Integrated did not give her a choice of accepting or rejecting any arbitration provision. None of these statements amount to an admission that Cade agreed to arbitrate her claims.
Accordingly, we affirm the trial court's order denying Integrated's motion to compel Cade to arbitrate her claims because Integrated failed to establish it had either an express or implied-in-fact arbitration agreement with Cade.
D. Integrated Cannot Compel Plaintiffs to Arbitrate Their Claims Because It Failed to Establish the Terms of an Enforceable Arbitration Agreement
Integrated contends the trial court erred in denying its motions to compel arbitration because Plaintiffs each agreed to arbitrate their claims under the Fair Treatment Process set forth in the Tenet Employee Handbook. According to Integrated, the Employee Acknowledgment Form, Application for Employment, and Transition Letter Plaintiffs signed incorporated the Fair Treatment Process and established its binding arbitration provisions as the exclusive means for resolving all claims regarding Plaintiffs' employment. Although we agree Plaintiffs (except Cade) generally agreed to a Fair Treatment Process by signing one or more of these documents, we nonetheless affirm the trial court's order denying the motions to compel arbitration because Integrated failed to present sufficient evidence establishing the specific Fair Treatment Process it presented to the trial court was the Fair Treatment Process to which Plaintiffs agreed.
Although the preliminary title report incorporated the ALTA policy and its arbitration provision, the Kleveland court explained the insurer could not enforce that arbitration provision because the insurer did not issue the ALTA policy upon which the parties agreed and therefore the ALTA policy's arbitration provision never went into effect. The court further explained the insurer could not enforce the arbitration provision in the CLTA policy because the preliminary title report did not incorporate that policy and therefore the parties did not agree to its arbitration provision. The insurer argued the court should nonetheless order the plaintiff to arbitration because the plaintiff agreed to arbitration by accepting the title report incorporating the ALTA policy and the arbitration provisions in the two policies were "virtually identical." The Kleveland court, however, found the similarities between the two policies irrelevant because the court could only enforce the specific arbitration provision on which the parties agreed and the insurer's decision to issue a different policy prevented that provision from going into effect. (Kleveland, supra, 141 Cal.App.4th at p. 765.)
As the Fair Treatment Process to which it and Plaintiffs agreed, Integrated presented 12 pages from the "Western Medical Center Employee Handbook, Western Medical Center Santa Ana" (Western Med Santa Ana Employee Handbook). Integrated, however, failed to present any evidence identifying the Western Med Santa Ana Employee Handbook as the source of the Fair Treatment Process to which Plaintiffs agreed. The Employee Acknowledgment Form, Application for Employment, and Transition Letter Plaintiffs signed either identify documents other than the Western Med Santa Ana Employee Handbook as the source of the incorporated Fair Treatment Process or identify no specific document at all as the source of the agreed-upon Fair Treatment Process. Moreover, Integrated provides no explanation how the seven Plaintiff's who worked at hospitals other than Western Med Santa Ana agreed to an arbitration provision in an employee handbook for a hospital at which they did not work.
The Employee Acknowledgment Form five Plaintiffs signed states they received a copy of the "Tenet Employee Handbook and Standards of Conduct" and the "Tenet Fair Treatment Process brochure." The form does not mention either the Western Med Santa Ana Employee Handbook or that the Fair Treatment Process is set forth in any employee handbook. To the contrary, the form states the Fair Treatment Process is in the Tenet Fair Treatment Process brochure, but Integrated failed to submit a copy of that brochure to the trial court and does not explain that failure. Accordingly, the Employee Acknowledgment Form does not establish Plaintiffs agreed to the Fair Treatment Process set forth in the Western Med Santa Ana Employee Handbook Integrated presented to the trial court.
The Application for Employment five other Plaintiffs signed states those Plaintiffs agreed all disputes regarding their employment would be subject to
Integrated contends it had only one Fair Treatment Process during the relevant time period and therefore the Fair Treatment Process described in the Western Med Santa Ana Employee Handbook is necessarily the same Fair Treatment Process to which Plaintiffs agreed when they signed the Employee Acknowledgment Form, Application for Employment, and Transition Letter. But even if we assume Integrated had one Fair Treatment Process, Integrated still failed to meet its burden of establishing Plaintiffs agreed to the Fair Treatment Process as described in the Western Med Santa Ana Employee Handbook.
As explained above, incorporation by reference requires the parties' contract to clearly and unequivocally identify the document being incorporated (Wolschlager, supra, 111 Cal.App.4th at p. 790), and it is the terms in that specific document to which the parties agree (see Kleveland, supra, 141 Cal.App.4th at p. 765). The Employee Acknowledgment Form incorporated the Fair Treatment Process as described in the Tenet Fair Treatment Process brochure, not as described or summarized in any other document. Integrated neither presented the Tenet Fair Treatment Process brochure nor explained why it failed to do so. Moreover, Integrated presents no authority that allows it to establish terms incorporated into a contract by presenting documents other than the one incorporated into the contract. We decline to compel arbitration based on a document to which the parties did not agree. (See ibid.)
Whether Integrated had only one Fair Treatment Process similarly does not overcome the evidentiary deficiencies relating to the Application for Employment or Transition Letter some Plaintiffs signed. As explained above, although both documents refer to the Fair Treatment Process, neither clearly
Integrated next argues the Western Med Santa Ana Employee Handbook it introduced into evidence is the employee handbook referred to in the Employee Acknowledgment Form. According to Integrated, it is "obvious" Integrated simply placed a Western Med Santa Ana cover page on the existing Tenet Employee Handbook when it purchased the Hospitals because the body of the handbook repeatedly refers to Tenet rather than Western Med Santa Ana. This argument is a red herring because the Employee Acknowledgment Form refers to the Tenet Fair Treatment Process brochure as the source of the Fair Treatment Process, not the Tenet Employee Handbook. Nonetheless, we reject this argument because it is based solely on speculation unsupported by any evidence in the record. The repeated references to Tenet in the Western Med Santa Ana Employee Handbook do not establish it as the Tenet Employee Handbook when the title page clearly identifies it as the Western Med Santa Ana Employee Handbook. The references to Tenet in the Western Med Santa Ana Employee Handbook are neither surprising nor significant because Tenet owned Western Med Santa Ana when it issued the handbook.
Integrated also contends we may ignore the incorporation references to the Fair Treatment Process in the Employee Acknowledgement Form and Application for Employment and enforce those documents as stand-alone arbitration agreements because they express an intent to arbitrate all disputes between Integrated and Plaintiffs. Both documents state Plaintiffs agree to submit any dispute regarding their employment to binding arbitration. The Employee Acknowledgment Form further states the arbitration will be conducted under the American Arbitration Association's procedural rules and describes how the arbitrator's fees and administrative costs will be divided among the parties.
Finally, Integrated contends we should reverse the trial court's decision denying its motions because Plaintiffs' trial court oppositions conceded Plaintiffs each agreed to arbitrate their claims against Integrated. We reject this contention because it does not address the grounds on which we affirm the trial court's decision. We acknowledge all Plaintiffs except Cade signed at least two documents stating they agreed to arbitrate their claims against Integrated. We nonetheless affirm the trial court's decision because Integrated failed to present sufficient evidence to establish all of the terms of the parties' agreement and therefore we cannot enforce the agreement. Nothing in Plaintiffs' trial court oppositions overcomes the evidentiary shortcomings described above.
We emphasize our decision is based solely on the insufficiency of Integrated's evidence. We do not suggest an arbitration provision in an employee handbook is unenforceable or that employees cannot agree to arbitration by signing an acknowledgment form regarding an employee handbook that contains an arbitration provision. Rather, we affirm the trial court decision because the incomplete and confusing patchwork of documents Integrated submitted prevents us from finding an enforceable arbitration agreement. Because we affirm the trial court's decision based on the insufficiency of Integrated's evidence, we do not address the merits of the parties' contentions concerning the unconscionability of the Fair Treatment Process described in the Western Med Santa Ana Employee Handbook.
The order is affirmed. Plaintiffs shall recover their costs on appeal.
Rylaarsdam, Acting P. J., and Fybel, J., concurred.
Plaintiffs and respondents are (1) Maileen Aguilar, (2) Alexandra Avery, (3) Gwendolyn B. Cade, (4) Ruth Calderon, (5) Jaimie Ann Gebler, (6) Denise Nolfo, (7) Julie Ross, and (8) Minoosh Zarrinnegar. We will refer to them individually by their last names and collectively as Plaintiffs.