Schmidt v. Service Corp. International
Filed 8/7/13 Schmidt v. Service Corp. International CA2/4
NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying
on opinions not certified for publication or ordered published, except as
specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
MICHAEL SCHMIDT,
Plaintiff and Appellant,
v.
SERVICE
CORPORATION INTERNATIONAL et al.,
Defendants and Respondents.
B242154
(Los Angeles County
Super. Ct. No. BS130021)
APPEAL
from a judgment (order of dismissal) of the Superior Court of
County, Susan Bryant-Deason, Judge. Affirmed.
Thomas
& Solomon, The Strong-Todd House, Annette M. Gifford, and Sarah E. Cressman
for Plaintiff and Appellant.
Gurnee
& Daniels, Joan A. Mason; Stinson Morrison Hecker, and Lonnie J. Williams,
Jr. (Pro Hac Vice) for Defendants and Respondents.
Appellant
Michael Schmidt filed a petition to compel respondents, his former employer and
his employer’s alleged affiliates, to arbitrate his overtime and other wage
claims.
title="">[1] The trial court denied and dismissed
Schmidt’s petition because (1) the evidence failed to show that all of the
respondents were bound by the arbitration agreement, and (2) his delay in
requesting arbitration constituted a waiver of the right to arbitration. In this appeal from the judgment (order of
dismissal), we affirm.
This
dispute involves Schmidt’s two and a half year employment with respondent SCFS,
which began in March 2005, when he became an apprentice funeral director at
respondent Pierce Brothers, and ended in November 2007, when he was a funeral
director at respondent Eternal Valley.
When Schmidt began working for SCFS, he signed a
(agreement) with an entity identified in the agreement as “the Company.†The agreement contained an arbitration clause
Schmidt and the Company to submit all disputes regarding any aspect of his
employment (except those disputes expressly excluded from the agreement) to
binding arbitration. The arbitration
clause applied, but was “not limited to, any claims against the Company, its
affiliates or their respective officers, directors, employees, or agents for
breach of contract, wrongful discharge, discrimination, harassment, defamation,
misrepresentation, and emotional distress, as well as any disputes pertaining
to the meaning or effect of this Agreement.â€
The
arbitration clause required that a written claim be presented by the party
seeking arbitration (the claimant) within one year of the date when the
claimant knew or should have known of the facts giving rise to the claim. It stated that if the claimant failed to
present a timely claim, “the claim shall be deemed waived and forever barred
even if there is a federal or state statute of limitations which would have
given more time to pursue the claim.â€
On April 1, 2011, more than three years
after his employment had ended, Schmidt submitted a “Demand for Arbitration†of
his state law claims for unpaid overtime and other wages. The arbitration demand listed disputes
arising “out of injuries . . . caused by respondents’ violations
of various California state laws including California Labor Code § 201,
§§ 226.7 and 512, et seq., §§
226(a) and 226.3, et seq., § 1194,
17200, et seq. and/or breach of contract, fraud and misrepresentation laws.†The arbitration demand was submitted to: (1) the parent company, SCI; (2) SCI’s three
alleged affiliates (SCI Funeral and Cemetery Purchasing Cooperative, Inc., SCI
Western Market Support Center, L.P., a/k/a SCI Western Market Support Center,
Inc., and California Cemetery and Funeral Services, LLC.), and (3) four
individuals (Jane D. Jones, Gwen Petteway, Thomas Ryan, and Curtis Briggs).
On November
17, 2011, Schmidt petitioned the superior court for an order to compel
arbitration against respondents: (1) the
parent company, SCI; (2) SCFS and the businesses (Pierce Brothers and Eternal
Valley) where he was employed; (3) SCI’s three alleged affiliates (SCI Funeral
and Cemetery Purchasing Cooperative, Inc., SCI Western Market Support Center,
L.P., a/k/a SCI Western Market Support Center, Inc., and California Cemetery
and Funeral Services, LLC.); and (4) two individuals (Jane D. Jones and Thomas
Ryan).
In
opposition, respondents collectively asserted several defenses including
waiver.
the right to arbitrate by (1) committing acts inconsistent with the right
to arbitrate, and (2) failing to submit a timely arbitration demand within one
year of the date when he knew or should have known of the facts giving rise to
the claim.
As to the
acts inconsistent with the right to arbitration, the evidence showed that
Schmidt had pursued litigation as an “opt-in plaintiff†in two putative class
action lawsuits against all of the respondents except SCFS and California
Cemetery and Funeral Services,
LLC: Stickle
v. Service Corporation International et
al. (D. Ariz.) Case No. 08‑cv-083-PHX-MHM/JWS (
Schmidt filed notices of consent to become a party in
seeking “‘payment of unpaid wages under federal or state law, including
overtime wages and related relief against any of my employer(s) including any
individual(s) who may be considered my employer(s) on my behalf and other
former employees . . . .’â€
In
opposition to the petition to compel arbitration, respondents argued that after
incurring significant fees and costs to defeat class certification in
force them to incur additional fees and costs to defend the identical claims in
arbitration. Respondents pointed out
that if Schmidt had proceeded directly to arbitration, he could not have
obtained the type of discovery that was obtained in Stickle and Riggio.
Respondents
submitted the declaration of their attorney Lonnie J. Williams, Jr., who
defended them in Stickle and
Williams attested that: (1)
Schmidt “participated in the Stickle litigation
and discovery from February 8, 2008,
until April 25, 2011, the
date of dismissalâ€; (2) respondents had taken over 60 depositions in order to
defeat class certification; and (3) respondents had issued over 1,000 sets of
interrogatories and reviewed over 740 discovery responses.
The
superior court denied Schmidt’s petition to compel arbitration, stating in its
order: “The court finds that the
Petitioner has failed to present evidence showing that the Respondents who
filed a Response to the Petition agreed in writing to arbitrate the claims of
the Petitioner. The court also finds
that the Petitioner waived the right to seek arbitration by delaying his request
for four (4) years since he was last employed by Eternal Valley Memorial Park.â€
The
petition was dismissed with prejudice on March 22,
2012. This timely appeal followed.
Schmidt
contends the trial court erred in finding:
(1) the arbitration agreement was not binding on all respondents, and
(2) a waiver of the right to arbitrate.
In light of our affirmance of the finding of waiver, we do not decide
whether the arbitration agreement was binding on all respondents.
Review
The
basic rule of appellate review is that the judgment or order of the trial court
is presumed to be correct and error must be affirmatively shown. (Denham
v. Superior Court (1970) 2 Cal.3d 557, 564.)
“The question of waiver is generally one of
fact. (St. Agnes Medical Center v. PacifiCare of
1196 [St. Agnes];
841.) The waiver issue may be reviewed
de novo when the question is whether the superior court properly applied
the correct legal standard to the undisputed facts: ‘“When . . . the facts are undisputed and
only one inference may reasonably be drawn, the issue [of waiver] is one of law
and the reviewing court is not bound by the trial court’s ruling.†[Citation.]’
(St. Agnes, at p. 1196
. . . .)†(
(2012) 206 Cal.App.4th 1193, 1202.)
to Timely Demand Arbitration Is a Failure of a Condition Precedent to the Right
to Arbitrate
Schmidt’s opening brief analyzes the trial court’s
finding of waiver solely in terms of a purported finding that his pursuit of
litigation—through class certification in Stickle
and Riggio—was so inconsistent
with the right to arbitration that it constituted a waiver of that right. The trial court’s written order, however, did
not mention Schmidt’s participation in Stickle
or Riggio or any other
litigation. Instead, the order spoke
solely of delay. The order stated that
“Petitioner waived the right to seek arbitration by delaying his request for
four (4) years since he was last employed by Eternal Valley Memorial Park.â€
Based
on our review of the record, we conclude the trial court’s finding of waiver
was grounded on Schmidt’s failure to submit a timely claim within the one-year
period specified in the agreement. It
was undisputed that according to the agreement’s arbitration clause, Schmidt
was required to present a written claim for arbitration within one year of the
date when he knew or should have known of the facts giving rise to the
claim. Because the filing of a claim
initiated the arbitration process, it constituted the functional equivalent of
filing an arbitration demand.
The
concept that a timely arbitration demand is a prerequisite to the right to
arbitrate is well established. As the
California Supreme Court stated in Platt
Pacific, Inc. v. Andelson (1993)
6 Cal.4th 307 (Platt), “[t]he leading
case for the rule that arbitration must be demanded within the time agreed upon
by the parties is a 1946 decision by the Court of Appeal in
Cal.App.2d 726. Significantly, a review
of Jordan
reveals that the court there did not use the term ‘waiver’ in the sense of
voluntary relinquishment of a known right.
“In
Jordan,
a subcontractor sued a general contractor to foreclose a mechanic’s lien. Relying on an
the general contractor filed a motion to stay the proceedings pending
arbitration. The parties’ subcontract
required that a written demand for arbitration be filed with the architect no
later than the time of final payment.
The general contractor, however, made his demand for arbitration to the
subcontractor rather than to the architect, and did so after the time for final
payment had expired. The Court of Appeal
held that, in failing to make a written
demand to the architect as required by the contract, and in not making the
demand until three months after the contractually specified date, the general
contractor was foreclosed from compelling arbitration. The court went on to state: ‘Where a contract provides that a demand for
arbitration must be filed within a stated time and the party desiring
arbitration permits the agreed period to pass without making demand, he waives
his right to arbitration.’ (Jordan v.
Friedman, supra, 72 Cal.App.2d at p. 727, italics added.) It cannot be said of the general contractor
in Jordan that it intended to voluntarily relinquish its right to
arbitration, for it had demanded arbitration both orally and in writing. Thus, the Jordan court’s use of the
term ‘waiver’ in its holding was simply a shorthand way of stating that, by
failing to perform certain acts specified in the parties’ contract, the general
contractor had lost the right to arbitration.â€
(Platt, supra, 6 Cal.4th at pp. 315-316; see St. Agnes, supra, 31
Cal.4th at p. 1195, fn. 4 [“In the arbitration context, ‘[t]he term “waiverâ€
has also been used as a shorthand statement for the conclusion that a
contractual right to arbitration has been lost.’â€].)
“Private arbitration is a matter of
agreement between the parties and is governed by contract law. (See, e.g., Moncharsh v. Heily & Blase
(1992) 3 Cal.4th 1, 8; Ericksen,
Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak
Street (1983) 35 Cal.3d 312, 323; Code Civ. Proc., § 1280 et seq.)
expressly agree that a right or duty is conditional upon the occurrence or
nonoccurrence of an act or event. (See,
e.g., Civ. Code, § 1434 et seq.; Rest.2d Contracts, § 224; 3A Corbin, Contracts
(1960) § 631, p. 21; 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, §
722, p. 654.) Thus, a condition
precedent is either an act of a party that must be performed or an uncertain
event that must happen before the contractual right accrues or the contractual
duty arises. (Civ. Code, § 1436; 1
Witkin, Summary of Cal. Law, supra, Contracts, § 722, p. 654.)
“
arbitration must be made within a certain time, that demand is a condition
precedent that must be performed before the contractual duty to submit the
dispute to
excused for a number of legally recognized reasons. But when a party has failed to fulfill a
condition that was within its power to perform, it is not an excuse that the
party did not thereby intend to surrender any rights under the agreement. (See 5 Williston, Contracts (3d ed. 1961) §
676, pp. 219-223.) A contrary conclusion
would undermine the law of contracts by vesting in one contracting party the
power to unilaterally convert the other contracting party’s conditional
obligation into an independent, unconditional obligation notwithstanding the
terms of the agreement.
with the law governing private arbitration agreements to assert, as plaintiffs
do here, that the failure to satisfy the contractual requirement of making a
timely demand for arbitration has no effect absent an intent to abandon
submission of the dispute to arbitration.
“Moreover, plaintiffs’ assertion is
contrary to the rule that the failure to timely demand arbitration is a
‘waiver’ of the right to arbitrate. As
we shall see, the term ‘waiver,’ as used in the context of the failure to
timely demand arbitration, refers not to a voluntary relinquishment of a known
right, but to the loss of a right based on a failure to perform an
obligation.†(Platt, supra, 6 Cal.4th
at pp. 313-314.)
to Refute the Trial Court’s Finding that His Request for Arbitration Was Not
Submitted Within the One-Year Deadline
As previously mentioned, Schmidt’s opening
brief does not address the denial of his petition to compel arbitration based
on his failure to make a timely request within the one-year period specified in
the agreement. (See Platt,
test to determine whether a party waived the right to compel arbitration by
participating in litigation. (See
The six-factor test has no bearing on the loss of a right based on a
failure to perform an obligation.
Even if the arguments raised
by Schmidt in the opening brief were correct, they fail to refute the dispositive
finding that the request for arbitration was untimely and, therefore, a
condition precedent to the right to
arbitration was not met. “An appellate court is not required to examine undeveloped
claims, nor to make arguments for parties. [Citation.]†(Paterno v. State of California (1999) 74 Cal.App.4th 68, 106.)
Applying the basic rule that a judgment or order is
presumed to be correct and error must be affirmatively shown (
his burden of setting forth a reasoned argument, supported by applicable
authority, to refute the trial court’s determination that, because he did not
present a timely request for arbitration within the one-year period set forth
in the agreement, the right to arbitration was lost due to the failure of a
condition precedent. (See Platt, supra, 6 Cal.4th
pp. 313-314.)
At oral argument,
Schmidt claimed, for the first time, that he preserved his right to arbitrate
by filing the requisite claim.
Initially, we note that we need not consider an argument not raised in
the briefs. (People v. Thompson (2010) 49 Cal.4th 79, 110, fn. 13 [because
counsel failed to raise issue in briefs, it was improper to raise it at oral
argument].) On the merits, Schmidt’s
contention is not supported by the record.
There is no evidence that he filed a written claim directly with SCFS
within the required one-year period, and Schmidt does not argue otherwise. Instead, he asserts his written consent to
opt in the Stickle litigation was
sufficient to give SCFS notice. This is
so, Schmidt urges, because SCFS was a defendant in that action and was advised
that he was joining the litigation for the purpose of seeking payment of wages
under federal and state law. We are not
persuaded. The arbitration agreement
requires actual, not constructive, notice of claims.
Participation in the Fair Labor Standards Act Litigation Did Not Toll the
One-Year Limitations Period
In
his reply brief, Schmidt, for the first time, cited Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th
665 and contended that his
participation in the Fair Labor Standards Act litigation tolled the one-year
limitations period in the arbitration clause.
The contention fails for two reasons:
(1) arguments raised for the first time in a reply brief will not be
considered (Reichardt v. Hoffman (1997)
52 Cal.App.4th 754, 764); and (2) Pearson
does not support Schmidt’s position.
In Pearson, the parties did
not dispute that Code of Civil Procedure section 1281.12 applied because the
plaintiff commenced a lawsuit based on the same claim that was the subject of
the proposed arbitration.
name="_ftnref4" title="">[4] (Id. at
p. 673.) Here, however, Schmidt does not
meet two of the requirements of section 1281.12. First, he did not initiate the action that he
now alleges tolled the limitations period.
He was a participant in litigation that was initiated by other
parties. Second, the civil litigation
Schmidt participated in was not based on the claims he now seeks to
arbitrate. In his petition to compel,
Schmidt alleged that he “has never raised the state law claims he asserts here
in any litigation.†As a result, the
one-year limitations period in the arbitration clause was not tolled by
Schmidt’s participation in the federal litigation.
The judgment (order of
dismissal) is affirmed. Respondents are
entitled to their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
SUZUKAWA,
J.
We concur:
EPSTEIN, P.
J.
WILLHITE,
J.
name="_ftn1" title="">[1] There are four groups of respondents:
(1) The parent company, Service Corporation
International (SCI), which allegedly owns the company that employed
Schmidt.
(2) The company that employed Schmidt, SCI
California Funeral Services, Inc. (SCFS), at its two locations: Pierce Brothers Valhalla San Fernando Valley
Care Center (Pierce Brothers) and Eternal Valley Memorial Park (Eternal
Valley). Both Pierce Brothers and
Eternal Valley are fictitious business names of SCFS.
(3) The three alleged affiliates of SCI: SCI Funeral and Cemetery Purchasing
Cooperative, Inc., SCI Western Market Support Center, L.P., also known as
(a/k/a) SCI Western Market Support Center, Inc., and California Cemetery and
Funeral Services, LLC.
(4) The two individual respondents, Jane D.
Jones and Thomas Ryan.
name="_ftn2" title="">[2] The arbitration clause stated as
follows:
“1. Matters Subject To Arbitration. Employee and the Company agree that, except
for the matters identified in Section 2 below and except as otherwise provided
by law, all disputes relating to any aspect of Employee’s employment with the
Company shall be resolved by binding arbitration. This includes, but is not limited to, any claims
against the Company, its affiliates or their respective officers, directors,
employees, or agents for breach of contract, wrongful discharge,
discrimination, harassment, defamation, misrepresentation, and emotional
distress, as well as any disputes pertaining to the meaning or effect of this
Agreement. The arbitration shall be
conducted in accordance with the procedures attached hereto as Exhibit
‘A.’ This agreement to arbitrate shall
cover disputes arising both before and after the execution of this document,
except to the extent that any litigation has already been filed as of the date
hereof.
“2. Exclusions. It is expressly agreed and understood that
this Agreement shall not govern the following:
(1) any claims brought under federal discrimination laws (including
Title VII of the Civil Rights Act) or any other federal laws administered by
the Equal Employment Opportunity Commission, (2) claims for workers’
compensation or unemployment benefits, or (3) claims brought to enforce any
noncompetition or confidentiality agreement which may exist between the
parties.
“3. Notification/Timeliness Of Claims. Any claim which either party has against the
other, other than a claim based on employment discrimination, must be presented
in writing by the claiming party to the other within one year of the date the
claiming party knew or should have known of the facts giving rise to the
claim. Otherwise, the claim shall be
deemed waived and forever barred even if there is a federal or state statute of
limitations which would have given more time to pursue the claim. Discrimination claims shall be subject to
state and federal laws prescribing the limitation period for filing such a
claim.
“4. Legal Counsel/Costs. Each party may retain legal counsel and shall
pay its own costs and attorneys’ fees, regardless of the outcome of the
arbitration, provided however, that the arbitrator may award attorneys’ fees
and/or costs to the prevailing party when expressly authorized by statute to do
so. All other costs pertaining to the
arbitration shall be paid by the Company.
“NOTICE
TO EMPLOYEE: BY SIGNING THIS
AGREEMENT, YOU ARE AGREEING TO HAVE ANY AND ALL DISPUTES BETWEEN YOU AND YOUR
COMPANY (EXCEPT THOSE SPECIFICALLY EXCLUDED IN SECTION 2 ABOVE AND THOSE
OTHERWISE EXCLUDED BY APPLICABLE LAW, IF ANY) DECIDED BY BINDING ARBITRATION
AND YOU ARE WAIVING YOUR RIGHT TO A JURY OR COURT TRIAL.
“AFFIRMATION
OF AT-WILL EMPLOYMENT STATUS: THE
PARTIES ACKNOWLEDGE AND AGREE THAT, UNLESS THEY ARE PARTIES TO A WRITTEN
EMPLOYMENT AGREEMENT WHICH GUARANTEES EMPLOYMENT FOR A DEFINITE PERIOD OF TIME,
EMPLOYEE IS AN EMPLOYEE TERMINABLE AT-WILL, AND THAT THE COMPANY MAY ALTER THE
TERMS OF, OR TERMINATE, EMPLOYEE’S EMPLOYMENT IN ITS SOLE DISCRETION, FOR ANY
REASON OR NO REASON. EMPLOYEEE FURTHER
ACKNOWLEDGES THAT HE/SHE IS EMPLOYED BY THE COMPANY IDENTIFIED BELOW AND NOT BY
SUCH COMPANY’S ULTIMATE PARENT COMPANY, SERVICE CORPORATION INTERNATIONAL, OR
ANY OTHER AFFILIATE OF THE COMPANY.
“MODIFICATIONS. NEITHER EMPLOYEE’S AT-WILL STATUS NOR ANY OF
THE ABOVE PROVISIONS PERTAINING TO ARBITRATION MAY BE MODIFIED EXCEPT BY A
WRITTEN AGREEMENT SIGNED BY BOTH EMPLOYEE AND THE COMPANY.
“I
have read the above, am familiar with its terms and agree that my relationship
with my employer shall be governed thereby.â€
