Filed 11/15/18 Wallace v. Advantage Sales & Marketing CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from an order of the Superior Court of Orange County, Mary Fingal Schulte, Judge. Affirmed.

Fisher & Phillips, Wendy McGuire Coats and Tyler T. Rasmussen for Defendant and Appellant.

Law Offices of David S. Secrest and David S. Secrest for Plaintiff and Respondent.

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INTRODUCTION

Defendant Advantage Sales & Marketing, LLC (Advantage) appeals from the trial court’s order denying its motion to compel arbitration of the employment-related claims of its former employee, plaintiff Michelle Wallace. Advantage produced evidence that when Wallace began her employment with Advantage, she had electronically signed a binding arbitration agreement, along with several other documents,. Wallace filed a declaration in support of her opposition to the motion to compel arbitration in which she categorically denied ever seeing, much less signing, the arbitration agreement. The trial court concluded that its ruling on the motion would hinge on the court’s credibility determination as to whether Wallace electronically signed the document or not, and scheduled an evidentiary hearing to explore that credibility issue. After the hearing, the court denied the motion, having found credible Wallace’s testimony she never signed the arbitration agreement.

We affirm. Wallace’s direct testimony that she never saw or signed the arbitration agreement, which the trial court believed, constitutes substantial evidence to support the trial court’s denial of the motion. We wish to make clear that this appeal is not about the legal effect of electronic signatures; the legal effect of electronic signatures is well-established.

BACKGROUND

A.

Wallace’s Complaint

In October 2016, Wallace filed a complaint against Advantage containing claims for (1) discrimination based on disability, gender, age, national origin, and religion, in violation of the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.); (2) harassment in violation of FEHA; (3) retaliation in violation of FEHA; (4) failure to accommodate a disability; (5) failure to engage in the interactive process; (6) failure to investigate or prevent harassment, retaliation or discrimination in violation of FEHA; (7) violation of rights under the California Family Rights Act (Gov. Code, § 12945.2); (8) wrongful termination in violation of public policy; (9) violation of the Confidentiality of Medical Information Act (Civ. Code, § 56 et seq.) and Labor Code section 3762; (10) invasion of privacy; (11) intentional infliction of emotional distress; and (12) declaratory relief.

B.

Advantage’s Motion to Compel Arbitration and Wallace’s Opposition

Advantage filed a motion to compel arbitration based on evidence Wallace had “electronically signed and agreed to the terms of a Mutual Agreement to Arbitrate Claim (‘Arbitration Agreement’), which unequivocally requires [Wallace] to ‘resolve in binding arbitration all claims or controversies [] that the Company may have against [her] or that [she] [] may have against any of the following: (1) the Company, [and] (2) its officers, directors, employees or agents in their capacities as such or others.’” Advantage argued in its motion: “[Wallace] freely accepted and agreed to be bound by the terms of the Arbitration Agreement in conjunction with her hire at [Advantage]. Because [Wallace]’s lawsuit and each of the causes of action alleged in it are predicated entirely on alleged acts and omissions arising out [Wallace]’s employment with [Advantage, Wallace] cannot reasonably dispute that they are encompassed within the scope of the Arbitration Agreement.”

The motion was supported by the declaration of Willis Preston, Advantage’s Senior Manager of Talent Acquisition, who oversees the onboarding process for all new employees, “including the process by which employees electronically view, acknowledge, and accept new hire documents such as the Mutual Agreement to Arbitrate Claims.” Preston’s declaration summarized the protocol that was in place at the time Wallace was hired that enabled new employees to utilize a password protected online portal called Virtual Edge to access certain employment policies, employee records and forms, and information, including the arbitration agreement. In his declaration, Preston stated that he reviewed the individual online portal account created by Wallace and confirmed that the arbitration agreement was electronically presented through that account and that Advantage’s records showed she selected the option “I agree” with regard to the arbitration agreement and clicked a button labelled “Confirm.” Attached to Preston’s declaration was a copy of the arbitration agreement which states under the phrase, “Acknowledgement Agreement-Mutual Agreement to Arbitrate Claims,” the words “I agree.” Wallace’s name appears following the title “Acknowledgement name.”

Wallace filed written opposition to the motion to compel arbitration. Wallace filed a declaration in support of her opposition, stating that she was hired in July 2013 by Advantage as a divisional controller. She also stated in her declaration that she “reviewed the papers filed in support of the motion to compel” and the Mutual Agreement to Arbitrate Claims attached to Preston’s declaration, and that, “I have never seen the Agreement to Arbitrate before, and did not see, review or access that document when I applied for employment with defendant [Advantage] in July 2013.” She further stated, “I did not agree to arbitrate the claims presented in this case.”

In her declaration, Wallace described instances in which she believed employees at Advantage had “falsely input[ted] [her] electronic signature” on documents contained within her personnel file.

C.

The Evidentiary Hearing

The trial court stated it “was necessary to conduct an evidentiary hearing on the existence of an arbitration agreement. Whether or not plaintiff actually executed the arbitration agreement appeared to be a matter of credibility, which the Court could not determine merely on the papers.”

At that evidentiary hearing, the trial court heard the testimony of Preston and Wallace. Preston offered no testimony that he had direct knowledge Wallace actually signed the arbitration agreement; his testimony was limited to describing the electronic practices and procedures he understood were in place at the time she was hired. Preston testified he believed Wallace executed the arbitration agreement: “Because this paperwork has her name on it, and at the end of it there is an electronic stamp that states that the person—the name of the person acknowledged it, as well as the date and time that that individual acknowledged the paperwork.”

During Preston’s testimony, Wallace’s attorney objected to Preston testifying about other “onboarding documents” that appear to have been electronically signed by Wallace on the same date and within the same time period as the arbitration agreement on the ground they were not included in the moving or reply papers. The court sustained the objection as to admitting the documents themselves into evidence, but allowed Preston to testify about them, stating: “I don’t know if I have to have all these forms in evidence. He can testify to whatever he testifies to, I suppose. But giving me a lot of new exhibits wasn’t what I anticipated.” Preston then testified that on the same date and within a short period of time of about an hour that the arbitration agreement was electronically signed under Wallace’s name, Wallace signed other documents electronically, such as the W-4 form and a direct deposit form.

Wallace testified that prior to receiving Advantage’s motion to compel arbitration, she had never seen, reviewed, or had access to the subject arbitration agreement. When asked why she was so sure that she did not sign the arbitration agreement, Wallace responded: “I question everything I sign. I wouldn’t sign anything that would give away my legal rights. There was a photo release document that I was requested to sign. And I had conversations with Daniel Simmons, and we went back and forth because I was trying to understand how are you going to use my—my photograph, you know, and—you know, I don’t want anything that’s out there that’s disparaging to—to my credibility or to my—my professionalism. [¶] So I actually left that blank. And Daniel Simmons and I went back and forth, and then finally I think it was after I got home from work . . . I actually signed the photo release for him.” She continued: “So that’s just—I looked at the document. And if I’m not going to sign a photo release without asking questions, there’s—there’s no way that I would sign my—this—this—the arbitration agreement that you’re saying that I reviewed and signed. There’s just no way.”

She testified she did sign forms, other than the arbitration agreement, electronically using Advantage’s computer system, including her W-4 form, direct deposit form, and Immigration and Naturalization form I-9, although she did not believe she signed them at the time the date stamp reflected.

D.

The Trial Court Denies the Motion to Compel Arbitration and Issues a Statement of Decision; Advantage Appeals.

Following the hearing, the trial court issued a minute order stating the court denied the motion to compel arbitration. The court noted in its minute order that the matter presented a “very close question for the Court.” The court concluded Advantage failed to meet its evidentiary burden that an arbitration agreement in fact existed between Advantage and Wallace.

Advantage requested that the court issue a statement of decision. The trial court issued a statement of decision explaining its ruling on the motion as follows: “a. The Court, sitting as the trier of fact when determining whether an arbitration agreement exists, weighed the affidavits, declarations, oral testimony and documentary evidence presented at the hearing. [¶] b. The burden of proof as to the existence of an arbitration agreement is on Defendant as the moving party. [¶] c. Plaintiff, opposing the motion, . . . did not simply say she did not ‘recall’ electronically signing the document, but testified affirmatively that the first time she saw the agreement was when the demand to arbitrate was made, and that she would never a sign a document such as this, wherein she would be giving up her right to a jury trial, without some questions on her part or discussion with the employer. [¶] d. Plaintiff testified, via Declaration, and live testimony (where the Court carefully observed her manner and demeanor) that she had never seen the agreement to arbitrate before there was a demand to arbitrate, and that she did not see, review or access that document when she applied for employment with defendant in July 2013. [Citation.] [¶] e. Defendant failed to meet [its] evidentiary burden—preponderance of the evidence—that an arbitration agreement in fact exists between Defendant and Plaintiff under CCP 1281.1. [Citation.] [¶] f. The Court finds that Plaintiff did not, in fact, electronically execute the arbitration agreement during her employment with Defendant. [¶] g. The Court makes no determination as to whether the arbitration agreement proffered by Defendant as evidence of Plaintiff’s electronic signature during the evidentiary hearing on Defendant’s motion to compel arbitration [citation] was executed by any party and/or individual other than Plaintiff. [¶] h. The Court determined there was proper grounds to exclude, or to admit, evidence and documentation not originally attached to the parties’ moving [and] responding papers in Defendant’s motion to compel arbitration.” (Italics added.)

Advantage appealed.

DISCUSSION

I.

Generally Applicable Legal Principles and Standard of Review

“[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

We review an order denying a petition to compel arbitration under the substantial evidence standard unless the trial court considered no extrinsic evidence, in which case we review the order de novo. (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 683.)

II.

Substantial Evidence Supported The Trial Court’s Order Denying the Motion To Compel Arbitration.

The trial court denied the motion to compel arbitration based on the court’s finding that Wallace never saw and thus never executed the arbitration agreement in question. During her testimony, which was “carefully observed” by the court, Wallace directly and unequivocally denied ever seeing or signing the arbitration agreement before receiving the motion to compel arbitration. That testimony constitutes substantial evidence to support the court’s finding. Contrary to Advantage’s suggestions in its appellate briefing, Wallace’s testimony on this point is not inherently incredible. Nothing in our record suggests the trial court relied on any improper criterion in making its finding. We reject Advantage’s argument that the court’s finding was in any way based on any misapprehension by the court that electronic signatures lack the same legal effect as handwritten signatures. The issue before the court was not the form of the arbitration agreement itself, but whether it was Wallace who executed it. The court found it was not Wallace who executed the arbitration agreement, and substantial evidence supported that finding.

III.

Even if Advantage’s Contention of Evidentiary Error Had Merit, It Did Not Constitute Prejudicial Error.

Advantage argues the trial court erred when it refused to admit into evidence onboarding documents that were electronically signed on the same date and within the same time period as it believed Wallace signed the arbitration agreement. Advantage asserts those proffered documents were executed by Wallace on July 8, 2013 between 4:42 p.m. and 5:10 p.m. Advantage describes those documents in its appellate opening brief as including a “Fair Credit Reporting” policy, “Consumer Disclosure” policy, “Consent” form, state tax form, direct deposit policy, “Handbook & Assoc. Acknowledgement Policy,” “Confidentiality, Prop. Protection & Non-solicitation Policy”, “Safety & Hazard Orientation Policy,” and “CA MPN Initial Notice Policy.” According to Advantage’s records, Wallace signed the arbitration agreement last, at 5:10 p.m.

Even assuming the court’s refusal to admit those documents into evidence at the evidentiary hearing constituted an abuse of discretion, Advantage has failed to show it was prejudiced by that ruling. The court expressly invited Advantage to elicit testimony from Preston about the contents of those documents. Preston testified that Wallace electronically executed those onboarding documents on the same date and during the same time period as Advantage contends she signed the arbitration agreement. Wallace herself acknowledged in her testimony that she at least signed other documents electronically (e.g. the form I-9 and the direct deposit form), although she disputed the accuracy of the electronic timestamp as to when she signed them. Advantage fails to show how the court’s refusal to admit the documents into evidence, given Preston’s and Wallace’s respective testimony about them, prejudiced Advantage in any way.

DISPOSITION

The order is affirmed. Respondent shall recover costs on appeal.

FYBEL, J.

WE CONCUR:

O’LEARY, P. J.

BEDSWORTH, J.