Filed 6/27/13 Avery v. Integrated Healthcare Holdings CA4/3 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication 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 

FOURTH APPELLATE DISTRICT 

DIVISION THREE 

ALEXANDRA AVERY et al., 

 Plaintiffs and Respondents, 

 v. 

INTEGRATED HEALTHCARE 

HOLDINGS, INC., et al., 

 Defendants and Appellants. 

 G046202 

 (Super. Ct. No. 30-2009-00274060) 

 O P I N I O N 

Appeal from an order of the Superior Court of Orange County, Nancy 

Wieben Stock, Judge. Affirmed. 

Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Derek R. 

Havel and Daniel J. McQueen for Defendants and Appellants. 

Cotchett, Pitre & McCarthy, Niall P. McCarthy, Justin T. Berger, Eric J. 

Buescher; Coughlin Law Firm, Frank J. Coughlin, Kim-Thao T. Le; Jerry K. Cimmet; 
2

Law Offices of John M. Kelson, John M. Kelson; and Gerald M. Werksman for Plaintiffs 

and Respondents. 

* * * 

Defendants and appellants appeal from an order denying their motions to 

compel plaintiffs and respondents to individually arbitrate the wage and hour claims they 

allege in this class action.1 Integrated relies on an arbitration policy contained in an 

employee handbook issued by Tenet Healthcare Corporation (Tenet), the previous owner 

of the four hospitals where Plaintiffs work, and a revised arbitration policy Integrated 

issued as part of a new employee handbook. Integrated contends Plaintiffs agreed to the 

arbitration policy by signing various documents acknowledging and agreeing to the 

policy. 

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 

 1 Defendants and appellants are Integrated Healthcare Holdings, Inc., 

WMC-SA, Inc., Chapman Medical Center, Inc., Coastal Communities Hospital, and 

WMC-A, Inc. We will refer to them collectively as Integrated. 

 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. 
3

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. 

I 

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 (Western Med 

Anaheim); and (4) Coastal Communities Hospital (Coastal; collectively Hospitals). 

Calderon, Gebler, Ross, and Zarrinnegar each worked at one of these Hospitals both 

before and after Integrated acquired them. Aguilar, Avery, Cade, and Nolfo each worked 

at one of these Hospitals only after Integrated acquired them. Avery worked at Western 

Med Santa Ana; Aguilar, Nolfo, and Ross worked at Chapman; Cade, Calderon, and 

Zarrinnegar worked at Coastal; and Gebler worked at Western Med Anaheim. All 

Plaintiffs still work at one of these Hospitals except Aguilar and Avery. 

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 
4

for Employment”; and (3) the so-called “‘New Hire’” or “Transition Letter.’”2 

According to Integrated, “[t]he details of the arbitration policy (called the Fair Treatment 

Process, or FTP)” were set forth in Tenet’s employee handbook, which Integrated 

adopted as its own when it acquired the Hospitals (Tenet Employee Handbook). Cade 

did not sign any of these documents or any other document referring to the Fair 

Treatment Process or arbitration. 

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. . . .” 

 2 We quote the relevant provisions of these documents in the following 

paragraphs. We acknowledge some Plaintiffs signed slightly different versions of these 

documents. The differences between the versions are minor and in no way affect our 

analysis. For example, the Applications for Employment signed before Integrated 

acquired the Hospitals refer to “Tenet” while the ones signed after the acquisition refer to 

“IHHI.” No one disputes Integrated’s standing to enforce the documents referring to 

Tenet. 
5

The Employee Acknowledgment Form further stated (1) the arbitration 

would be conducted under the Federal Arbitration Act and the American Arbitration 

Association’s procedural rules; (2) the “Company” agreed to submit any dispute it had 

with the employee to final and binding arbitration; and (3) the maximum amount the 

employee would be responsible to pay toward the arbitrator’s fees and administrative 

costs. 

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 
6

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 representative action against Integrated.3 Integrated contends it made no 

other significant changes to the Fair Treatment Process. 

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 

 3 Specifically, this provision stated, “[B]oth you and the facility forego and 

waive any right to join or consolidate claims in arbitration with others or to make claims 

in arbitration as a representative or as a member of a class or in a private attorney general 

capacity, unless such arbitration procedures are agreed to by all parties to the arbitration.” 
7

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. 

II 

DISCUSSION

A. Relevant Legal Principles Regarding Compelling Arbitration 

Both the California Arbitration Act (Code Civ. Proc., § 1280 et seq.) and 

the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) recognize “‘“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.]” 
8

(St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1204; 

AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___, ___; 131 S.Ct. 1740, 1745 

(AT&T Mobility).) The fundamental policy underlying both Acts “is to ensure that 

arbitration agreements will be enforced in accordance with their terms.” (Vandenberg v. 

Superior Court (1999) 21 Cal.4th 815, 836, fn. 10, original italics; AT&T Mobility, at 

p. 1748.) 

Arbitration is therefore a matter of contract. (Sparks v. Vista Del Mar 

Child & Family Services (2012) 207 Cal.App.4th 1511, 1517-1518 (Sparks).) The 

“‘“‘“. . . policy favoring arbitration cannot displace the necessity for a voluntary 

agreement to arbitrate.”’ [Citation.] ‘Although “[t]he law favors contracts for arbitration 

of disputes between parties” [citation], “‘there is no policy compelling persons to accept 

arbitration of controversies which they have not agreed to arbitrate . . . .’” [Citations.]’” 

[Citation.] “Absent a clear agreement to submit disputes to arbitration, courts will not 

infer that the right to a jury trial has been waived.” [Citation.]’ [Citation.]” (Id. at 

p. 1518, original italics.) 

Code of Civil Procedure section 1281.2 requires a trial court to grant a 

petition to compel arbitration “if [the court] determines that an agreement to arbitrate the 

controversy exists.” (Code Civ. Proc., § 1281.2.) Accordingly, “‘when presented with a 

petition to compel arbitration the trial court’s first task is to determine whether the parties 

have in fact agreed to arbitrate the dispute. . . .’ [Citation.]” (Gorlach v. Sports Club Co.

(2012) 209 Cal.App.4th 1497, 1505 (Gorlach); see also Sparks, supra, 207 Cal.App.4th 

at p. 1517.) “A party seeking to compel arbitration has the burden of proving the 

existence of a valid agreement to arbitrate. [Citations.] Once that burden is satisfied, the 

party opposing arbitration must prove by a preponderance of the evidence any defense to 

the petition. [Citations.]” (Sparks, at p. 1518.) 

Although the FAA preempts any state law that stands as an obstacle to its 

objective of enforcing arbitration agreements according to their terms, such as a rule 
9

requiring classwide arbitration (see AT&T Mobility, supra, 131 S.Ct. at p. 1748), we 

apply general California contract law to determine whether the parties formed a valid 

agreement to arbitrate their dispute (Sparks, supra, 207 Cal.App.4th at p. 1518; see also 

Gorlach, supra, 209 Cal.App.4th at p. 1505). “General contract law principles include 

that ‘[t]he basic goal of contract interpretation is to give effect to the parties’ mutual 

intent at the time of contracting. [Citations.] . . .’ [Citation.]” (Mitri v. Arnel 

Management Co. (2007) 157 Cal.App.4th 1164, 1170 (Mitri).) Contract law also requires 

the parties agree to the same thing in the same sense. (Civ. Code, §§ 1550, 1565, 1580; 

Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811 (Weddington).) 

“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.) 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 (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 (Craig); see also Metters v. 

Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 701.) 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; 
10

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 Tenet 

Employee Handbook, and (2) the Alternative Dispute Resolution Process in the 

Integrated Employee Handbook. We conclude Integrated is limited to the Fair Treatment 

Process because (1) it issued the Integrated Employee Handbook and its Alternative 

Dispute Resolution Process after Plaintiffs’ claims accrued, and (2) it failed to notify 

Plaintiffs or any other employees about the Integrated Employee Handbook. 

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. 

An arbitration agreement between an employer and an employee may 

reserve to the employer the unilateral right to modify the agreement. (24 Hour Fitness, 

supra, 66 Cal.App.4th at pp. 1214-1215.) But the covenant of good faith and fair dealing 

implied in every contract requires the employer to exercise that right fairly and in good 

faith so as not to deprive the employee of his or her reasonable expectations under the 

agreement. (Ibid.; see also Digerati Holdings, LLC v. Young Money Entertainment, LLC
11

(2011) 194 Cal.App.4th 873, 885 [“Every contract contains an implied covenant of good 

faith and fair dealing providing that no party to the contract will do anything that would 

deprive another party of the benefits of the contract. [Citations.] The implied covenant 

protects the reasonable expectations of the contracting parties based on their mutual 

promises”].) Accordingly, an employer may not make unilateral changes to an arbitration 

agreement that apply retroactively to “accrued or known” claims because doing so would 

unreasonably interfere with the employee’s expectations regarding how the agreement 

applied to those claims. (Peleg v. Neiman Marcus Group, Inc. (2012) 204 Cal.App.4th 

1425, 1465 (Peleg).) Similarly, the employer must give the employee reasonable notice 

regarding changes the employer makes so the employee is aware of his or her rights 

under the agreement. (Serpa v. California Surety Investigations, Inc. (2013) 

215 Cal.App.4th 695, 706-708 (Serpa).) Both of these rules prevent Integrated from 

applying the Alternative Dispute Resolution Process to Plaintiffs’ claims. 

Integrated contends these rules exempt only Avery’s claims from the 

Alternative Dispute Resolution Process because all other Plaintiffs filed their judicial 

complaints and joined this action after Integrated issued the Integrated Employee 

Handbook. Integrated is mistaken. The implied covenant prevents Integrated from 

applying the Alternative Dispute Resolution Process to all claims that accrued before 

Integrated issued the new handbook. The critical point in time is when the claims 

accrued, not when the employee filed his or her judicial complaint. (Peleg, supra, 

204 Cal.App.4th at p. 1465.) All Plaintiffs allege Integrated engaged in the conduct 

giving rise to their claims before it issued the Alternative Dispute Resolution Process. 

Consequently, the Alternative Dispute Resolution Process does not apply because 

Plaintiffs’ claims had accrued by the time Integrated issued the change.4 

 4 Integrated’s argument also ignores that the initial complaint Avery filed 

before Integrated issued the Alternative Dispute Resolution Process was a class action 

complaint filed on behalf of employees at all four Hospitals. Accordingly, the claims of 
12

Integrated also argues we should apply the Alternative Dispute Resolution 

Process to Plaintiffs’ claims because its class arbitration waiver simply made explicit 

what the United States Supreme Court’s decision in Stolt-Nielsen S.A. v. AnimalFeeds 

International Corp. (2010) 559 U.S. 662, ___ [130 S.Ct. 1758, 1773] already required, 

that is, the parties to an arbitration agreement must arbitrate their claims on an individual 

basis unless they expressly agree to classwide arbitration. This argument misses the 

point. Regardless of what changes an employer makes to an arbitration agreement, it 

may not apply those changes to existing claims or without giving employees reasonable 

notice of the changes. Whether the law already requires the changes Integrated sought to 

impose is irrelevant to whether it could apply them to existing claims.5 

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.) 

 

all Plaintiffs’ were on file before Integrated issued the Alternative Dispute Resolution 

Process. Applying that process and its class arbitration waiver to claims of all Plaintiffs 

except Avery would allow Integrated to unilaterally limit an existing action by modifying 

its employee handbook. The implied covenant of good faith and fair dealing prevents 

Integrated from doing so. (Peleg, supra, 204 Cal.App.4th at p. 1465.) 

5 Of course, the inapplicability of the Alternative Dispute Resolution Process 

and its class arbitration waiver to Plaintiffs’ claims do not prevent Integrated from 

arguing the Stolt-Nielsen decision prevents classwide arbitration of Plaintiffs’ claims. 

We do not address what the Stolt-Nielsen case requires because we affirm the trial court’s 

ruling based on Integrated’s failure to establish an enforceable arbitration agreement 

existed. 
13

Accordingly, Integrated’s motions to compel Plaintiffs to arbitrate their 

claims must succeed or fail based solely on the Fair Treatment Process set forth in the 

Tenet Employee Handbook. 

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. 

“California law permits employers to implement policies that may become 

unilateral implied-in-fact contracts when employees accept them by continuing their 

employment.” (Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 11; see also Schachter v. 

Citigroup, Inc. (2009) 47 Cal.4th 610, 620 (Schachter) [“An ‘employee who continues in 

the employ of the employer after the employer has given notice of changed terms or 

conditions of employment has accepted the changed terms and conditions’”].) 

A unilateral, implied-in-fact arbitration agreement may be enforced against an employee 

to require the employee to arbitrate all claims against his or her employer. (Craig, supra, 

84 Cal.App.4th at p. 420.) 

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 
14

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.) 

The Craig court explained general contract law principles governed 

whether the parties entered into a binding arbitration agreement and therefore the 

employee’s acceptance of the arbitration policy “may be express [citations] or 

implied-in-fact where, as here, the employee’s continued employment constitutes her 

acceptance of an agreement proposed by her employer.” (Craig, supra, 84 Cal.App.4th 

at p. 420.) Because substantial evidence supported the trial court’s factual finding the 

employee continued working for the employer after receiving the arbitration policy, the 

appellate court concluded the employee and employer had an implied-in-fact arbitration 

agreement. (Id. at pp. 421-422.) 

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.6 The only documents Integrated presented 

 6 After Cade filed her trial court opposition stating she never signed an 

Application for Employment or received a Tenet Employee Handbook, her supervisor 
15

specifically relating to Cade are (1) a “General Orientation” form Cade signed listing 

14 broad topics on which she “received information and instruction” during her employee 

orientation when she started working at Coastal, and (2) an unsigned “Personnel File 

Checklist” listing 35 documents. One of the topics listed on the General Orientation form 

is “Human Resources” and one of the eight subtopics under Human Resources is 

“employee handbook.” “Employee Handbook” also is one of the documents listed on the 

Personnel File Checklist. 

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 handbook. Cade also declares she 

never discussed an arbitration policy or agreement with anyone from Integrated’s 

management. 

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 [substantial evidence “is evidence of 

 

approached her during one of her shifts and asked her to sign an Application for 

Employment containing an arbitration clause. Cade declined. 
16

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. 

Integrated also contends an implied-in-fact arbitration agreement does not 

require the employee receive notice of the employer’s policy making arbitration a 

condition of employment. Integrated is mistaken. Case law clearly requires an employee 

receive notice of a condition the employer places on the employee’s employment before 

the employee can impliedly accept that condition by beginning or continuing to work for 

the employer. (Schachter, supra, 47 Cal.4th at p. 620; c.f. Serpa, supra, 215 Cal.App.4th 

at pp. 706-708 [implied covenant of good faith and fair dealing requires employer to give 

employee reasonable notice of changes in the terms or conditions of employment].) We 

do not suggest an employee may avoid an employer’s arbitration policy imposed as a 

condition of employment by remaining willfully, or even negligently, ignorant of the 

policy. For example, an employee may not avoid an implied-in-fact arbitration 
17

agreement by failing to read a notice the employer sent to notify the employee about the 

employer’s arbitration policy. (See 24 Hour Fitness, supra, 66 Cal.App.4th at p. 1215 

[employee who signed acknowledgment that she received an employee handbook 

containing an arbitration provision cannot avoid arbitration by failing to read the 

handbook; “‘“[a] party cannot use his own lack of diligence to avoid an arbitration 

agreement”’”].) Here, however, Integrated failed to show it gave Cade notice of its 

arbitration policy imposed as a condition of employment. 

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. 

“‘“‘It is, of course, the law that the parties may incorporate by reference 

into their contract the terms of some other document. [Citations.] But each case must 

turn on its facts. [Citation.] For the terms of another document to be incorporated into 

the document executed by the parties the reference must be clear and unequivocal, the 
18

reference must be called to the attention of the other party and he must consent thereto, 

and the terms of the incorporated document must be known or easily available to the 

contracting parties.’” [Citations.]’ [Citation.]” (Wolschlager v. Fidelity National Title 

Ins. Co. (2003) 111 Cal.App.4th 784, 790 (Wolschlager).) “The contract need not recite 

that it ‘incorporates’ another document, so long as it ‘guide[s] the reader to the 

incorporated document.’ [Citations.]” (Shaw v. Regents of University of California

(1997) 58 Cal.App.4th 44, 54.) If these conditions are met, an employee may agree to 

arbitrate claims against his or her employer by signing an acknowledgment form that 

incorporates the employer’s employee handbook and the arbitration policy it contains. 

(Serpa, supra, 215 Cal.App.4th at p. 705; see also 24 Hour Fitness, supra, 

66 Cal.App.4th at p. 1205.) 

The party seeking to enforce an arbitration provision incorporated by 

reference must establish the provision it seeks to enforce is the same provision to which 

the parties agreed. (Kleveland v. Chicago Title Ins. Co. (2006) 141 Cal.App.4th 761, 765 

(Kleveland).) In Kleveland, a title insurance company provided the plaintiff with a 

preliminary title report offering to insure the plaintiff’s property on the terms provided in 

the report, including the terms of the standard American Land Title Association policy 

form (ALTA policy) the report incorporated by reference. The report did not include an 

arbitration provision, but the ALTA policy did. The plaintiff accepted the offer in the 

title report and purchased insurance from the insurer on those terms. The insurer, 

however, issued the plaintiff a standard California Land Title Association form policy 

(CLTA policy) rather than the ALTA policy agreed to in the preliminary title report. 

When the plaintiff later filed suit against the insurer regarding an easement the 

preliminary title report failed to identify, the insurer petitioned to compel arbitration 

based on an arbitration provision in the CLTA policy. The trial court denied the petition 

and the Court of Appeal affirmed. (Id. at pp. 763-764.) 
19

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.) 

The Kleveland decision emphasizes mutual consent is an essential element 

of any contract. (See Weddington, supra, 60 Cal.App.4th at p. 811.) “Consent is not 

mutual, unless the parties all agree upon the same thing in the same sense.” (Civ. Code, 

§ 1580.) Indeed, “[t]he parties’ outward manifestations must show that the parties all 

agreed ‘upon the same thing in the same sense.’ [Citation.] If there is no evidence 

establishing a manifestation of assent to the ‘same thing’ by both parties, then there is no 

mutual consent to contract and no contract formation. [Citations.]” (Weddington, at 

p. 811.) 

Here, we affirm the trial court’s order denying the motions to compel 

arbitration because Integrated failed to show Plaintiffs and Integrated agreed upon the 

same thing in the same sense — that is, to arbitrate Plaintiffs’ claims under the specific 

Fair Treatment Process that Integrated presented to the trial court as the controlling 

arbitration provision. As Kleveland demonstrates, it is not sufficient for the party seeking 
20

to compel arbitration to show the parties generally agreed to arbitrate their disputes by 

incorporating some arbitration provision into their contract. Rather, the party must 

establish the precise arbitration provision which the parties incorporated into their 

agreement to govern their disputes. 

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 Plaintiffs 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.7

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 

 7 Any argument that an implied-in-fact arbitration agreement required 

Plaintiffs to arbitrate their claims also would fail for the same reasons. Although all 

Plaintiffs except Cade acknowledged Integrated had an arbitration policy and continued 

working for Integrated, Integrated failed to establish the terms of that policy and therefore 

it may not be enforced against Plaintiffs. 
21

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 the Fair 

Treatment Process, including its binding arbitration provisions. The Transition Letter 

another five Plaintiffs signed simply states those Plaintiffs agreed to utilize the existing 

Fair Treatment Process to resolve all disputes relating to their employment, but does not 

mention arbitration. Despite these clear references to a Fair Treatment Process as the 

exclusive means for resolving all disputes, neither the Application nor the Letter guides 

the reader to any particular document where that Fair Treatment Process can be found. In 

particular, the Application and Letter do not refer to the Western Med Santa Ana 

Employee Handbook, which contained the controlling Fair Treatment Process. (Chan v. 

Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 641, 643-644 (Chan) 

[refusing to enforce an arbitration provision purportedly incorporated into the parties’ 

contract because the contract failed to clearly identify by title the specific document 

containing the arbitration provision].) Accordingly, the Application and Letter also fail 

to establish Plaintiffs agreed to the Fair Treatment Process described in the Western Med 

Santa Ana Employee Handbook. 

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 
22

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 and unequivocally identifies where 

that process is set forth, and therefore fails to adequately incorporate it by reference. 

(Chan, supra, 178 Cal.App.3d at pp. 641, 643-644.) 

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. 
23

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.8 We nonetheless decline to enforce these documents as stand-alone arbitration 

agreements because they are incomplete without the Fair Treatment Process, which each 

document incorporated as the governing process for resolving all disputes. Without the 

incorporated Fair Treatment Process, we cannot determine the terms under which any 

arbitration must be conducted. There simply would be no basis to enforce the agreement. 

 8 Although Integrated initially contends the Transition Letter also should be 

enforced as a stand-alone arbitration agreement, it fails to point to any language in the 

Transition Letter expressing an intent to arbitrate any claims other than the language 

incorporating the Fair Treatment Process. Indeed, the Transition Letter merely states 

Integrated and Plaintiffs agree to utilize the Fair Treatment Process to resolve all disputes 

relating to Plaintiffs’ employment. The Transition Letter fails to even mention 

arbitration. 
24

A petition to compel arbitration “‘“‘is in essence a suit in equity to compel 

specific performance of a contract.’”’ [Citations.]” (Mansouri v. Superior Court (2010) 

181 Cal.App.4th 633, 641-642; see also Gorlach, supra, 209 Cal.App.4th at p. 1505.) As 

with any other specific performance claim, a party seeking to enforce an arbitration 

agreement must show the agreement’s terms “‘are sufficiently definite to enable the court 

to know what it is to enforce.’” (Real Estate Analytics, LLC v. Vallas (2008) 

160 Cal.App.4th 463, 472; 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, 

§ 42, p. 334.) Indeed, a petition to compel arbitration must set forth the provisions of the 

arbitration agreement verbatim or attach a copy of the agreement and incorporate it by 

reference. (Cal. Rules of Court, rule 3.1330; Condee v. Longwood Management Corp.

(2001) 88 Cal.App.4th 215, 218.) “‘Only the valid and binding agreement of the parties, 

including all material terms well-defined and clearly expressed, may be ordered 

specifically performed.’ [Citation].” (Weddington, supra, 60 Cal.App.4th at p. 817.) 

Because the Employee Acknowledgment Form and Application for Employment are 

incomplete without the incorporated Fair Treatment Process, we may not enforce them as 

stand-alone arbitration agreements. (See id. at pp. 816-817.) 

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. 
25

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. 

III 

DISPOSITION

The order is affirmed. Plaintiffs shall recover their costs on appeal. 

 

 ARONSON, J. 

WE CONCUR: 

RYLAARSDAM, ACTING P. J. 

FYBEL, J.