Nelson v. Service Corp. International
Filed 7/29/13 Nelson v. Service Corp. International CA4/1
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
CHERISE NELSON,
Plaintiff and Appellant,
v.
SERVICE CORPORATION
INTERNATIONAL, et al.,
Defendants and Respondents.
D061861
(Super. Ct. No. 37-2011-00101261-
CU-PA-CTL)
APPEAL from
an order of the Superior Court
of
County, William H. Kronberger, Jr., Judge. Affirmed.
Thomas
& Solomon, Annette M. Gifford and Sarah E. Cressman for Plaintiff and
Appellant.
Gurnee
& Daniels, John A. Mason; Stinson Morrison Hecker and Lonnie J. Williams
for Defendants and Respondents.
This appeal
presents the unique situation where a former employee is seeking to arbitrate
her dispute with her former employer, and the employer refuses to arbitrate,
arguing the employee waived her contractual
right to arbitrate. From May 2004 to
December 2004, Cherise Nelson was employed by a company involved in providing
funeral related services.
name="_ftnref1" title="">[1] As part of Nelson's employment, she signed an
agreement containing an arbitration clause that covered claims arising out of
her employment.
Nelson
elected to pursue potential class actions in federal court in Arizona
instead of demanding arbitration. These class actions concerned wage and hour
claims stemming from Nelson's employment from May 2004 to December 2004. After litigating for over three years in
these various actions, Nelson demanded arbitration against her former employer
and related entities. When the entities
did not respond to the arbitration demand, Nelson filed a
SCI; CCFS; SCI Funeral and Cemetery Purchasing Cooperative, Inc.; SCI
Western Market Support
Center, L.P.; SCI California
Funeral Services, Inc., Greenwood Memorial
Park; Jane D. Jones; and Thomas Ryan
(collectively Respondents). The superior
court denied Nelson's petition, finding she had waived her right to arbitrate.
Nelson
appeals, claiming the court erred in finding waiver. We determine substantial evidence supports
the court's finding of waiver and thus affirm.
FACTS
AND PROCEDURAL HISTORY
In May
2004, Nelson began working at Greenwood
Memorial Park in San
Diego County. As part of her employment, Nelson signed a
document entitled "Principles of Employment and Arbitration
Procedures" (the Agreement). The
Agreement required the parties to submit to arbitration any dispute regarding
Nelson's employment. Further, the
Agreement provided that any claim must be brought "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 . . . ."
Nelson's
employment with the company ended in December 2004.
On January 15, 2008, a purported class
action lawsuit entitled Stickle v.
Service Corporation International, case No. 08-cv-PHX-MHM/JWS (
District Court of the District of Arizona.
The plaintiffs asserted various federal claims (including Fair Labor
Standards Act (FLSA) violations related to the nonpayment of purported overtime
wages) against Respondents, except CCFS and SCI. On February
8, 2008, Nelson filed her consent to become a named party in
In the consent, Nelson stated that she was "seeking payment of
unpaid wages under Federal or State law, including overtime wages, and related
relief against" her employer.
Nelson
continued participating in the Stickle
matter, focusing on obtaining class certification. After over a year of litigation, the court in
Stickle granted conditional
certification in September 2009.
Between September 30, 2009 (the date of the
conditional certification) and April 1,
2011, 665 additional filings were made in Stickle. Nelson's efforts to
maintain class certification ended on April 25, 2011 when the court granted
Respondents' motion for decertification of the conditionally certified
class. Between September 30, 2009 and
April 1, 2011 (the date Respondents filed their motion to decertify),
Respondents in Stickle conducted
discovery and prepared its motion to decertify.
Over 60 depositions were taken.
Respondents also issued over 1,000 sets of interrogatories and reviewed
over 740 answers to discovery. Because
of incomplete interrogatory responses by the plaintiffs in Stickle, Respondents filed motions to compel further responses,
which the court granted. Ultimately,
Respondents filed a successful motion to decertify the class in
claims of all opt-in plaintiffs from the action.
In addition
to her participation in Stickle,
Nelson is a current opt-in plaintiff in another federal proceeding in the
Arizona District Court:
case No. 10-cv-01265-PHX-MHM/JWS (Riggio). On June 17, 2010, Nelson filed her consent to
become a party plaintiff in Riggio. Nelson admits that her claims in
dismissal of the action to the Ninth Circuit.
Nelson
demanded arbitration against Respondents on April 1, 2011. After Respondents did not respond to the
demand, Nelson filed her petition to compel arbitration in San Diego County
Superior Court on November 17, 2011. In
her petition, she stated that she is seeking her "individual claims for
unpaid overtime and other wages and compensation . . . " under California
law. Respondents filed answers to the
petition and subsequently opposed Nelson's petition.
After
considering the pleadings and hearing oral
argument, the court denied Nelson's petition. In doing so, the court noted: "In this Court's view the considerable
discovery, protracted Arizona proceedings, appeal and delay all combine in a
way which leads to the denial of this petition.
Two lawsuits, prolonged proceedings, discovery and an appeal all combine
to require a denial."
Nelson
timely appealed.
DISCUSSION
I
SUBSTANTIAL EVIDENCE
SUPPORTS THE
SUPERIOR COURT'S
FINDING OF WAIVER
Nelson
asserts the court committed reversible
error in denying her petition to compel arbitration. Specifically, she contends Respondents did
not meet their burden of proving by a preponderance of the evidence that
Nelson's state law claims were part of the two federal actions. She also insists that her limited
participation in the federal actions was not inconsistent with her right to
arbitrate.
A. Standard of Review
"Generally,
the determination of waiver is a question of fact, and the court's finding, if
supported by evidence, is binding on the appellate court." (St.
Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187,
1196 (St. Agnes); see
193 Cal.App.4th 331, 337 (Augusta)
[applying substantial evidence review to the issue of waiver of the right to
arbitrate]; Burton v. Cruise (2010)
190 Cal.App.4th 939, 946 (Burton)
[same].)
However,
relying on St. Agnes,
that we should apply a de novo standard of review because the question before
us is whether the superior court properly applied the correct legal standard to
the undisputed facts. In
in reviewing an order denying a petition to compel arbitration, " '[w]hen
. . . the facts are undisputed and only one inference may reasonably be drawn,
the issue is one of law and the reviewing court is not bound by the trial
court's ruling.' " (
is only one inference that may reasonably be drawn from the undisputed
facts.
Because we
determine the undisputed facts do not compel only one inference on the record
before us, we apply a substantial evidence standard of review. (See Augusta,
supra, 193 Cal.App.4th at p. 337;
The superior court's "determination of [waiver], ' "if
supported by substantial evidence, is binding on an appellate court."
' [Citations.] Only ' "in cases where the record before
the trial court establishes a lack of waiver as a matter of law, [may] the
appellate court . . . reverse a finding of waiver made by the trial court."
' [Citation.]" (Adolph
v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1450 (
We imply
all necessary findings supported by substantial evidence (Berman v. Health Net (2000) 80 Cal.App.4th 1359, 1364 (
reasonable inference in the manner most favorable to the judgment, resolving
all ambiguities to support an affirmance."
(Burton, supra, 190 Cal.App.4th at p. 946.)
B. Arbitration and Waiver
Federal and
state law reflects a strong public policy favoring arbitration as " '
"a speedy and relative inexpensive means of dispute resolution." '
" (St. Agnes, supra, 31
Cal.4th at p. 1204; AT&T Mobility LLC
v. Concepcion (2011) ___ U.S. ___, ___; 131 S.Ct. 1740, 1745.) Nonetheless federal and California courts may
refuse to enforce an arbitration agreement "upon such grounds as exist at
law or in equity for the revocation of any contract," including
waiver. (9 U.S.C. § 2; see also Code
Civ. Proc., § 1281; St. Agnes,
1194-1195.) Based on the public policy
favoring arbitration, claims of waiver receive "close judicial
scrutiny" and the "party seeking to establish a waiver bears a heavy
burden of proof." (
"Although
the statute[s and case law] speak[] in terms of 'waiver,' the term is used '
"as a shorthand statement for the conclusion that a contractual right to
arbitration has been lost." ' [Citation.] This does not require a voluntary
relinquishment of a known right; to the contrary, a party may be said to have
'waived' its right to arbitrate by an untimely demand, even without intending
to give up the remedy. In this context,
waiver is more like a forfeiture arising from the nonperformance of a required
act. [Citations.]" (Burton,
supra, 190 Cal.App.4th at p. 944; see
also Zamora, supra, 186 Cal.App.4th at pp. 15-16 [federal law similarly uses the
term waiver as a shorthand statement for the conclusion a contractual right to
arbitration has been lost].)
Here, the
arbitration provision declares that the arbitrator is to apply the laws of the
state in which Nelson was employed (California) and/or under federal law, if
applicable. Here, our analysis does not
differ if we apply California or federal law.
The Federal Arbitration Act (9 U.S.C. § 1 et seq.) and the California
Arbitration Act (Code Civ. Proc., § 1280 et seq.) apply the same standards
in determining waiver claims. (
"Both state and federal law emphasize that no single test
delineates the nature of the conduct that will constitute a waiver of
arbitration." (St. Agnes, supra, 31
Cal.4th at pp. 1195-1196.) In
adopted as the California standard the same multifactor test employed by
federal courts for evaluating waiver claims.
(Id. at p. 1196;
Specifically,
the court in St. Agnes identified the
following as "factors [that] are relevant and properly considered in
assessing waiver claims":
" ' "(1) whether the party's actions are
inconsistent with the right to arbitrate; (2) whether 'the litigation machinery
has been substantially invoked' and the parties 'were well into preparation of
a lawsuit' before the party notified the opposing party of an intent to
arbitrate; (3) whether a party either requested arbitration enforcement close
to the trial date or delayed for a long period before seeking a stay; (4)
whether a defendant seeking arbitration filed a counterclaim without asking for
a stay of the proceedings; (5) 'whether important intervening steps [e.g.,
taking advantage of judicial discovery procedures not available in arbitration]
had taken place'; and (6) whether the delay 'affected, misled, or prejudiced'
the opposing party." '
[Citations.]" (
No one of these factors predominates and each case must be examined in
context. (Burton, supra, 190
Cal.App.4th at pp. 944-945.)
C. Analysis
Here, the
court found Nelson waived her right to arbitrate her claims by (1) engaging in
"considerable discovery"; (2) participating in the "protracted
Arizona proceedings"; (3) appealing the adverse ruling in
demand. The court also found Nelson's
delay in demanding arbitration and her participation in the "Arizona
litigation" prejudiced Respondents.
These findings justify the court's ruling and substantial evidence
supports each finding. As such, we
affirm the superior court's waiver finding.
In its
order denying Nelson's petition to compel arbitration, the court did not make
its findings within the context of the factors set forth in
Nevertheless, the court's findings do correspond with several of the
1. Unreasonable Delay
" '[A]
demand for arbitration must not be unreasonably delayed. . . . [A] party who does not demand arbitration
within a reasonable time is deemed to have waived the right to arbitration.' " (Sobremonte,
supra, 61 Cal.App.4th at p.
992.) As the court explained in
delay in demanding or seeking arbitration, in and of itself, may constitute a
waiver of a right to arbitrate." (
"[A]
party may [not] postpone arbitration indefinitely by delaying the
demand . . . . [¶]
When no time limit for demanding arbitration is specified, a party must
still demand arbitration within a reasonable time. [Citation.]
. . . '[W]hat constitutes a
reasonable time is a question of fact depending upon the situation of the
parties, the nature of the transaction, and the facts of the particular case.'
" (Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41
Cal.4th 19, 29-30.)
Here, there
was considerable delay in Nelson demanding arbitration. Her employment ended in December 2004. She did not demand arbitration until April 1,
2011, almost six and one-half years later.
The record, however, is not clear when Nelson first became aware or
should have been aware of her wage and hour claims against Respondents. At the very least, Nelson was aware of her
claims against Respondents when she filed her consent to become a named
plaintiff in Stickles on February 8,
2008.
arbitration for over three years after becoming a named plaintiff in
for this delay.
Nelson's
failure to provide any justification or even an excuse makes this case one of
those rare instances where we would be satisfied that a party's unreasonable
delay in demanding arbitration by itself supports a finding of waiver. Nelson litigated her wage and hour claims
against Respondent, although predominately seeking to certify a class and
ultimately failing to do so, for three years prior to demanding
arbitration. This unexplained delay
justifies a finding of waiver. (See
conduct by which a [litigant] repeatedly uses the court proceedings for its own
purposes . . . all the while not breathing a word about the existence of an
arbitration agreement, or a desire to pursue arbitration . . . ."].)
purpose of arbitration to provide a relatively quick and cost-effective means
to resolve disputes. (
Cal.4th 1, 9.) Her failure to provide
three-year delay in demanding arbitration results in a waiver of her contractual
right to arbitrate.
2. Conduct Inconsistent with an Intent to
Arbitrate
"A
waiver of the right to arbitrate may properly be implied from any conduct which
is inconsistent with the exercise of that right. [Citation.]
Partial or piecemeal litigation of issues in dispute, through pretrial
procedures, may in many instances justify a finding of waiver. . . ." (McConnell
v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1980) 105 Cal.App.3d
946, 951.) "The trial court must .
. . view the litigation as a whole and determine if the parties' conduct is
inconsistent with a desire to arbitrate."
(Id. at p. 952, fn. 2.)
Here, the
court found Nelson participated in two federal cases in the District of Arizona
involving her wage and hour claims and engaged in substantial discovery as part
of her litigation efforts. In addition,
Nelson, as one of the plaintiffs in Riggio,
appealed a dismissal to the Ninth Circuit.
We agree with the superior court that these facts show conduct
inconsistent with an intent to arbitrate.
Moreover, each of the court's findings is supported by substantial
evidence.
Nelson does
not dispute that substantial evidence supports these factual findings, but
argues that these facts do not support the conclusion that she acted
inconsistently with her right to arbitrate because the Arizona federal cases
concerned claims under federal law while she seeks to arbitrate only her claims
under California law. We are not
persuaded.
Nelson
contends the facts giving rise to the federal claims pursued in the Arizona
cases are factually and legally distinct from the
arbitrate. For example, Nelson notes
that the FLSA provides overtime pay for all hours worked after 40 in one week
while California law requires overtime pay after eight hours of work in a
single day. (Compare 29 U.S.C.,
§ 207(a)(1) with Lab. Code, § 510.)
Nelson also points out that California law mandates that all hours
worked in excess of 12 per day must be paid at double time, and the FLSA
contains no analogous provision. (See
Cal. Code Regs., tit. 8, § 11040, subd. (3)(A)(1)(b).) Based on these differences, Nelson insists "the
facts necessary to establish California wage and hour claims differ from the facts
necessary to establish FLSA claims."
Nelson's
argument overlooks that both the FLSA and California law claims rely on the
same essential facts: Nelson's
employment from May 2004 to December 2004, her wages during this period, her
break and meal times, the number of hours she worked, and Respondents'
employment policies. These core facts
would then be applied to the elements of a specific cause of action whether
federal or state.
title="">[5]
In
addition, Nelson's contention ignores the language of the Agreement. Under the Agreement, "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 [employer], its
affiliates or their respective officers, directors, employees, or agents for
breach of contract, wrongful discharge, defamation, misrepresentation, and
emotional distress . . . ."
Moreover, the Agreement specifically excluded "(1) any claims
brought under federal discrimination laws (including Title VII of the Civil
Rights Act) or any federal laws [sic] 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." The Agreement did not remove claims under the
FLSA, and Nelson does not argue such.
Thus, under the Agreement, both the federal and state claims could have
been arbitrated.
Further,
when Nelson filed her consent to be a named plaintiff in both Arizona cases,
she indicated she was "seeking payment of unpaid wages under Federal or
State law" leaving open the question whether she would litigating her
claims under California law. The fact
that Nelson sought to litigate a claim that was subject to arbitration and did
so over several years strongly supports the finding that Nelson acted
inconsistently with her right to arbitrate.
Merely because she now claims she never pursued a state cause of action in
the Arizona cases does not render her conduct any less inconsistent with her
right to arbitrate because both her federal and state law claims are based on
the same basic facts.
name="_ftnref6" title="">[6]
If Nelson
intended to preserve her right to arbitrate, we would expect to see something
in the record to show this intent, perhaps a letter to opposing counsel, a
statement of claim, or an actual arbitration demand with a request to stay
pending the outcome of the federal class actions. Here, there is no such evidence in the record. Instead, Nelson remained silent about
arbitration and litigated her wage and hour claims against Respondents as a
purported class member for over three years.
It appears that she only demanded arbitration when it was clear
Respondents would move to decertify the conditional class. Simply put, there is nothing in Nelson's
conduct that indicates an intent to arbitrate and her actions suggest a desire
to litigate her claims in federal court instead of arbitration.
3. Prejudice
" 'In
California, whether or not litigation results in prejudice also is critical in
waiver determinations.' [Citation.] 'The moving party's mere participation in
litigation is not enough; the party who seeks to establish waiver must show
that some prejudice has resulted from the other party's delay in seeking
arbitration.' [Citation.]" (Augusta,
supra, 193 Cal.App.4th at p. 340;
"[C]ourts
assess prejudice with the recognition that California's arbitration statutes
reflect ' "a strong public policy in favor of arbitration as a speedy and
relatively inexpensive means of dispute resolution" ' and are intended '
"to encourage persons who wish to avoid delays incident to a civil action
to obtain an adjustment of their differences by a tribunal of their own
choosing." ' [Citation.] Prejudice typically is found only where the
petitioning party's conduct has substantially undermined this important public
policy or substantially impaired the other side's ability to take advantage of
the benefits and efficiencies of arbitration." (St.
Agnes, supra, 31 Cal.4th at p.
1204.) In Burton, the court explained "a petitioning party's conduct in
stretching out the litigation process itself may cause prejudice by depriving
the other party of the advantages of arbitration as an 'expedient, efficient
and cost-effective method to resolve disputes.'
[Citation.]" (
"[C]ourts
will not find prejudice where the party opposing arbitration shows only that it
incurred court costs and legal expenses."
(St. Agnes,
courts " 'may consider . . . the expense incurred by that party from
participating in the litigation process' " and the length of delay as
factors bearing on whether the opposing party has been prejudiced. (Sobremonte,
supra, 61 Cal.App.4th at p.
995.) "[T]he critical factor in
demonstrating prejudice is whether the party opposing arbitration has been
substantially deprived of the advantages of arbitration as a ' " 'speedy
and relatively inexpensive' " ' means of dispute resolution. [Citation.]" (Burton,
supra, 190 Cal.App.4th at p. 948.)
Here,
substantial evidence supports the trial court's finding that Nelson prejudiced
Respondents by delaying her arbitration demand for at least three years and
litigating class claims in multiple courts, including one appeal. The parties engaged in substantial discovery,
involving more than 60 depositions and extensive written discovery. Respondents successfully moved to compel further
discovery responses. (See
(2012) 206 Cal.App.4th 1193, 1205 (Hoover)
["Prejudice sufficient for waiver will be found where instead of seeking
to compel arbitration, a party proceeds with extensive discovery that is
unavailable in arbitration proceedings."].) Respondents filed pleadings to oppose
conditional certification of a class in Stickles
and subsequently moved to decertify the conditional certification. Nelson's arbitration demand coincided with
Respondents' effort to decertify the conditional class. "[Nelson's] actions substantially
impaired [Respondents'] ability to obtain the cost savings and other benefits
provided by arbitration." (
Cal.App.4th at pp. 1451-1452.)
Nelson
contends Respondents were not prejudiced because she did not attempt to
litigate her state law claims. We reject
this argument for the same reasons we discuss above: Nelson's wage and hour claims, whether based
in federal or state law, emanate from the same basic facts.
Nelson also
insists Respondents' participation in the federal class action cases for three
years actually benefited not prejudiced them because "Nelson and the other
employees who were part of that action lost the benefits of proceeding
collectively." Nelson fails to
consider that while Respondents were mired in three years of class action
litigation in federal court, they were denied their bargained for benefit of
arbitration of Nelson's claims. This
denial was the result of Nelson's and other employees' conduct and decision to
pursue a class action in federal court.
The fact that Nelson's efforts ultimately proved unsuccessful does not
somehow lessen the prejudicial impact of her actions. Her actions whether successful or unsuccessful
denied Respondents the benefits of arbitration and allowed her to take
advantage of discovery to which she would not have been entitled to in
arbitration. (See Hoover, supra, 206
Cal.App.4th at p. 1205; see Adolph,
Finally, we
are not persuaded by Nelson's assertion that her participation in the Arizona
cases did not prejudice Respondents because other former employees were
involved in those cases and Respondents would have had to defend the litigation
in any event. Nelson sought the
advantage of litigating her wage and hour claims against Respondents as part of
a purported class. Had she been
successful, she would have benefited from being part of the class. Indeed, at
had the class remained certified, Nelson would not have sought
arbitration. Her efforts proved
unsuccessful, however, and she cannot now hide behind the fact that other
plaintiffs participated in the actions to avoid the consequence of her
decision: prejudice to Respondents
resulting in the waiver of her contractual
right to arbitrate.
D. Conclusion
In summary,
the record before us does not establish a lack of waiver as a matter of
law. (See Adolph, supra, 184
Cal.App.4th at p. 1450.) We are
satisfied substantial evidence supports the court's finding of waiver.
DISPOSITION
The order
is affirmed. Respondents are awarded
their costs of appeal.
HUFFMAN, Acting P. J.
WE CONCUR:
HALLER,
J.
AARON,
J.
name="_ftn1" title="">[1] The record is unclear what entity actually employed
Nelson. Nelson alleged that she was an
employee of "Respondents" but later stated Service Corporation
International (SCI) was her employer.
Respondents contend California Cemetery and Funeral Services, LLC (CCFS)
was Nelson's employer. The identity of
the actual employer does not impact our analysis here.
name="_ftn2" title="">[2] Although the record is somewhat incomplete on this point,
Nelson apparently was an unnamed class member in another purported class action
filed in the Northern District of California:
Bryant v. Service Corporation
International, case No. 08-1190-SI (Bryant).
