Filed 5/14 /21 Quiroz v. World Variety Produce CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

JUAN ANTONIO QUIROZ

,

P laintiff and Responden t
,

v.

WORLD VA RIETY PRODUCE, INC. et al

. ,

Defendant s and Appellants

. B 303012

(Los Angeles County Super. Ct. No. 19STC V 07024 )

APPEAL from a n order of the Superior Court of Los Angeles County. Michelle Williams Court , Judge

. Affirmed

. Michelman & Robinson

, Reuben A. Ginsburg , and Mona Z.
Hanna for Defendants and Appellant s

. Lavi & Ebrahimian

, N. Nick Ebrahimian, Jordan D. Bello

, and Tielle Shue ; The deRubertis Law Firm and David M.
deRubertis for Plain t iff and Respondent

.2 INTRODUCTION

Juan Antonio Quiroz sued his prior employer, World Variety Produce, Inc., and its owner, Joe Hernandez (collectively, World Variety)

, for various wage and hour violations. The trial court denied World Variety’s motion to compel arbitration, ruling World Variety failed to prove that Quiroz , by signing a form acknowledging receipt of an employee handbook that included a section containing an arbitration agreement, agreed to arbitrate
his claims. W e affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Quiroz Sues World Variety In March 2019 Quiroz filed this action against World Variety, a produce distributor. Quiroz alleged that World Variety employed him from 1985 to 2018 as a “buyer

, ” a position that involved “routine” wor k such as “travel[ ling ] to various regions of Mexico, collect[ ing ] certifications from farmers,” and tak ing “photos of the field and produc e ,” but that World Variety
misclassified him as an exempt employee for purposes of the California Labor Code. Quiroz also alleged World Variety failed to transfer or pay the value of shares of stock the company owed
him . Quiroz asserted causes of action for violations of Labor Code provisions governing wages, wage statements, and meal
and rest breaks ; a cause of action for breach of contract; and a cause of action for unfair competition

.3 B. World Variety Moves T o Compel Arbitration World Variety filed a motion to compel arbitration

, attaching its employee handbook from August 2017

. The
handbook ha d nine sections, including one titled “Arbitration Agreement

. ” This section state d , among other things, the empl oyee and World Variety agree to arbitrate all “disputes arising out of, relating to, and/or in connection with [the employee’s] employment

. ” T he final page of the arbitration
section state d : “ ENTERING THIS AGREEMENT IS NOT A
CONDITION OR REQUIREMENT OF EMPLOYMENT AND/OR
CONTINUED EMPLOYMENT . EMPLOYEE UNDERTSANDS THAT BY SIGNING BELOW, EMPLOYEE GIVES UP ALL
RIGHTS TO A JURY TRIAL .

. . AS TO CL AIMS COVERED BY

. . . THIS AGREEMENT.” The last page of the arbitration
section include d over half a page of blank space where the employee could sign, but t here was no printed signature line

. The last page of the handbook was a form titled “Receipt of
E mployee Handbook.” The form include d six bullet points, followed by a printed signature line at the bottom of the page. One bullet point state d the employee “is responsible for understanding and complying with the policies and procedures ”
in the handbook , while another bullet point similarly state d the employee “ agree[s] to read and abide by the policies in the
Handbook

. ” The h andbook receipt for m, however, did not stat e that the employee agrees to arbitration or that the employee agrees to the terms described in the arbitration section of the
handbook

. World Variety also submitted a copy of a handbook receipt
form signed by Quiroz in August 2017 and argued Quiroz agreed
to the terms described in the arbitration section of the handbook4

by signing the handbook receipt form. Quiroz argued in opposition to the motion he did not agree to the arbitration agreement when he sign ed the form

. He also submitted a declaration stating that

, when World Variety originally gave him
the handbook

, he did not sign the receipt form. World Variety subsequently told Quiroz to go to the office of Janene Allen, the company’s Senior Director of Human Resour ces. Allen gave Quiroz a copy of the receipt form

— not the entire handbook ( or the arbitration section )

. Quiroz signed the form acknowledging
he received the handbook.

C

. The Trial Court Denies the Motion
The trial court denied World Variety’s motion to compel arbitration, ruling World Variety failed to meet its burden to

prov e Quiroz agreed to arbitrate his claims. The c ourt ruled the signed handbook receipt form did not demonstrate Quiroz agreed
to arbitrate his claims because the form “does not address the
issue of arbitration at all

. ” The court also stated that

, while “the arbitration provision in the handbook clearly state [ s ] that arbitration is not mandatory,” the evidence was that, after Quiroz
received the handbook, “signing the acknowledgement of receip t of the handbook was mandatory

. ” World Variety timely appealed

.

DISCUSSION

A. Applicable Law and Standard of Review

“‘ Whether an agreement to arbitrate exists is a threshold
issue of contract formation and state contract law. ’ ” ( Cohen v. TNP 2008 Participating Notes Program, LLC ( 2019 )5

31 Cal.App.5th 840 , 859; see Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835 , 843

- 844.) “The party seeking arbitration bears the bu rden of proving the existence of an arbitration agreement

. . . . ” ( Pinnacle Museum
Tower Assn. v. Pi nnacle Market Development (US ), LLC (2012)
55 Cal.4th 223, 236 ( Pinnacle ) ; accord, Garcia v. KND Development 52

, LLC (2020) 58 Cal.App.5th 736 , 743

- 744 ; Swain v. LaserAway Medical Group, Inc

. ( 2020 ) 57 Cal.App.5th 59

, 65

- 66

. ) “ ‘When “ the language of an arbitration provision is not in dispute,”’” and “ ‘ “ no conflicting extrinsic evidence is introduced to aid the interpretation of an agreement to arbitrate, the Court of Appeal reviews de novo a trial court ’ s ruling on a petitio n to compel arbitration.”’ ” ( Esparza v. Sand & Sea, Inc. (2016)

2 Cal.App.5th 781, 787 ( Esparza ) ; accord, Brinkley v. Mo nterey Financial Services, Inc. ( 2015 ) 242 Cal.App.4t h 314, 325; see Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866 [where there is “ no conflict in the extrinsic evidence ,” we “ make an independent determination of the meaning of the contract ”]

. )

“ A lthough both California and federal law recognize the important policy of enforcing arbitration agreements ” ( Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 313), that policy “ is based on the assumption that ‘ parties have elected to use [arbitration] as an alternative to the judic ial process ’”; therefore, the policy “ does not extend to those who

. . . have not
consented to arbitration ” ( Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P. ( 2008 ) 44 Cal.4th 528 , 539; see Garcia , at p. 744 [“‘“ public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement ” ’” ] )

.6 B

. Quiroz Did Not Agree T o Arbitrate His Claims by Signing the Receipt Form
“I n California, ‘ [g]eneral principles of contract law
determine whether the parties have entered a binding agreement
to arbitrate. ’ ” ( Pinn acle

, supra , 55 Cal.4th at p. 236; accord, Martinez v. BaronHR, Inc. ( 2020 ) 51 Cal.App.5th 962 , 967; see Lamps Plus, Inc. v. Varela (2019) ___ U.S. ___, ___ [139 S.Ct. 1407, 1415, 203 L.Ed.2d 6 36] [under the Federal Arbitration Act, courts ordinarily enforce arbitration agreements “by relying on state contract principles”]; Sandquist v. Lebo Automotive, Inc. ( 2016 ) 1 Cal.5th 233 , 244 [ “ ‘ When deciding whether the parties agreed to arbitrate a cer tain matter

, ’” courts generally “‘ apply ordinary state

- law principles that govern the formation of

contracts. ’ ” ] .) As with any contract, “ ‘[a]n essential element’ ” of

an arbitration a greement “‘ is the consent of the parties, or
mutual assent .’” ( Martinez

, at p. 967; see Esparza

, supra , 2 Cal.App.5th at pp. 787

- 788.) “‘ Mutual assent is determined under an objective standard applied to the outward manifestations or expres sions of the parties, i.e., the reasonable meaning of their words and acts, an d not their unexpressed intentions or understandings .’ ” ( Martinez , a t p. 967; accord

, Esparza , at p. 788.)
We first consider the language of the handbook and receipt
form to determine whether Quiroz agreed to arbitrate his claims. (S ee Civ. Code, § § 1638, 163 9 ; State of California v. Continental
Ins. Co. ( 2012 ) 55 Cal.4th 186 , 195; Martinez v. BaronHR, Inc.

, supra , 51 Cal.App.5th at p. 967 .) We consider the handbook “ as a whole, and interpret contested provisions in their context, not in isolation, with the aim of giving effect to all provisions, if doing so is reasonably possible. ” ( Camacho v. Target Corp. (2018)7

24 Cal.App.5th 291, 306; see Civ. Code, § 1641 ; Mitri v. Arnel Management Co. ( 2007 ) 157 Cal.App.4th 1164 , 1170; Romo v. Y

- 3 Holdings, Inc. ( 2001 ) 87 Cal.App.4th 1153 , 1158 .) If “ the meaning a layperson would ascribe to contract language is not

a mbiguous, we apply that meaning.” ( AIU Ins. Co. v. Superior
Court ( 1990 ) 51 Cal.3d 807 , 822; see Cuenca v. Cohen ( 2017 )
8 Cal.App.5th 200 , 222; RealPro, Inc. v. Smith Residual Co., LLC ( 2012 ) 203 Cal.App.4th 1215 , 1221 .) Considering the language of the handbook as a whole, we conclude Quiroz did not agree to arbitrate his claims. As World Variety points out, the final page of the arbitration section state d
that an employee c ould agree to arbitration “by signing below

, ”
and although Quiroz did not sign below on that page, he did sign
the handbook receipt page, which was at the end of the handbook
and after the arbitration se ction , and therefore technically (although not immediately) “below.” But the language of the receipt page shows Quiroz did not agree to the arbitration terms by signing the receipt page. The receipt form was titled “Receipt of Employee Handbook,” indicat ing that the primary purpose of signing the form was, as Quiroz contends, to acknowledge that he
received the handbook, not that he agreed to arbitration

. (See Building M

aintenance Service Co. v. AIL S y s tems, Inc. (1997)
55 Cal.App.4th 1014, 103 0 [to interpret contracts we give

“‘ consideration to the ordinary meaning of the words used [citation] together with the subject matter heading ’”]; Myers Buldings Industries, Ltd. v. Interface Technology, Inc. (1993)
13 Cal.App.4th 949, 974 [same] .) The receipt form did not say Quiroz was agreeing to arbitration.
The receipt form also required Quiroz to make several acknowledgments, but none of th o se acknowledgments referred to8

the arbitration agreement. Generally, where an employee signs a
form acknowledging receipt of a handbook, “‘[t]o support a conclusion that an employee has relinquished his or her right to assert an employment

- related claim in court,” at “ a minimum, there should be a specific reference to the duty to arbitrate employment

- rel ated disputes in the acknowledgment of receipt form signed by the employee

. . . . ’ ” ( Esparza

, supra , 2 Cal.App.5th at p. 791; accord, S parks v. Vista del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1522.) Here , the form required Quiroz to acknowledge that he received the handbook, that World Variety had the right to modify the handbook, that Quiroz had the right to discuss the handbook with his supervisor or human resources personnel , and that the
handbook did not limit the at

- wil l nature of the employment. But

“ [c] onspicuously absent from the acknowledgment receipt form [wa s ] any reference to an agreement by the employee to abide by
the employee handbook’ s arbitration agreement provision. ” ( Mitri v. Arnel Management Co.

, supra , 157 Cal.App.4th at

p. 1173.)
It is t rue, as World Variety repeatedly mentions

, one of the bullet points on the receipt page made a passing reference to arbitration, but it did not state the employee agreed to arbitration by signing the receipt page. The bullet point state d the employee “understand[s] that the company has the right to modify, amend, or withdraw any and all of the policies and

proc edures described in this Employee Handbook at any time,
with o r without cause, except .

. . any arbitration agreement I may have with the company.” But this language supports Quiroz, not World Variety. By referring to an y arbitration agreement the employee may have with the company, the receipt9

form assumes and sug gests the employee is not agreeing to arbitrate any claims by signing the form. Had the parties intended the receipt form to be an arbitration agreement, any reference to arbitration should have clearly stated the employee was agreeing to arbitration. (S ee Espar za , supra , 2 Cal .App.5th at p. 790 [ “‘ “a bsent a clear agreement to submit disputes to arbitration, courts will not infer that the right to a jury trial has
been waived ” ’” ].) The receipt form included bullet points stating the employee agreed to comply with the “policies” and “procedures” in
the handbook

, which, according to World Variety, included the
arbitration terms. Again, the language of the handbook does not support World Variety’s position

. First, t he handbook used different language whe n describing the arbitration agreement and describing the company’s policies and procedures. (See , e.g., Romo v. Y

- 3 Holdings, Inc.

, supra , 87 Cal.App.4th at p. 1159 [court’s conclusion the employee did not agree to arbitrate claims by signing a handbook receipt form was “ based upon the disparate language between [the arbitration s ection ] and the remaining portions of the employee h andbook ”].) The arbitration
section refer red to the arbitration terms as an “agreement,” not a policy or procedure ; in fact, the arbitration section did not use the term “policy” or “ procedure .” On the other hand, the handbook
contained sections titled “Employment Policies” and “Wage and Salary Policies,” and regularly use d the terms “policy” and “policies” to refer to other (non

- arbitration) provisions in the
handbook.
Second , the arbitration section, unlike the policies
described els ewhere in the handbook, state d that agreeing to
arbitration was not a mandatory condition of employment. For10

example, the handbook include d mandatory policies and prohibitions concerning how employees may use company cell phones, computers, and email, and how they may access electronic communications . The handbook require d employees to consent to World Variety conducting video surveillance of its premises. The handbook include d a “Harassment, Discrimination and Retaliation Prevention Policy” that prohibi t ed various types of harassment and discrimination and
instituted a “‘zero tolerance’ policy” on workplace violence. And the handbook prohibit ed using alcohol and drugs while working and prohibit ed smoking on World Variety premises.
The facts of this case are similar to the facts in Sparks v.
Vista Del Mar Child & Family Services

, supra , 207 Cal.App.4th
1511. In Sparks the employer distributed to all employees a handbook containing an arbitration clause. ( See id. at p. 1519 .) Like the handbook here, the handbook in Sparks did not contain a printed signature line immediately after the arbitration provision where the em ployee could indicate he or she agreed to arbitration. (See ibid .) And like Quiroz, the employee in Sparks signed only a form acknowledging receipt of the handbook that
stated h e agreed to be “governed” by the employee’s personnel policies. ( See id. at p. 1516.) The court in Sparks held that, because “ the acknowledgment form did not reference the arbitration clause, much less advise [the employee] that he would be bound by it ,” the form did not show the employee had agreed to arbitration. ( Id. at p. 15 22.) Similarly

, the acknowledgment of receipt form here did not state the employee was agreeing to arbitration ( although it i ncluded a number of different acknowledgments) . In addition , the handbook treated the arbitration terms differently from other policies by using11

different language to describe the terms of arbitration and the employer’s policies, and the only reference to arbitration on the receipt form suggested the employee was not bound by an arbitration agreement

. Quiroz

, eve n more than the employee in Sparks

, did not agree to arbitration by signing the receipt f orm. T he relevant extrinsic evidence supports the conclusion Quiroz did not agree to arbitrate his claims. T he trial court
found t hat

, after World Variety provided Quiroz the handbook

, World Variety required him to sign the receipt form as a condition of employment

. Substantial evidence supported the trial court’s finding. (See Garcia v. KND Development 52, LLC

, supra , 58 Cal.App.5th at p. 7 44 [“[w]e review the court’ s factual
conclusions under th e substantial evide nce standard” when reviewing “a trial court’ s denial of a petition to compel
arbitration ”]; Martinez v. BaronHR, Inc.

, supra , 51 Cal.App.5th at p. 966 [where the trial court relies on “ extrinsic evidence

. . . and [ ma kes] an implied credibility finding from that evidence ” to determine whether there was an agreement to arbitrate, “ ‘ “[w]e must accept the trial court’ s resolution of disputed facts when

su pported by s ubstantial evidence”’” ] ; Burch v. Premier Homes,
LLC (2011) 199 Cal.App.4th 730, 742 [“ On an appeal challenging the interpretation given to a writing

. . . the substantial evidence rule will apply in cases where the parties present conflicting extrinsic evidence to aid in the interpretation .”].) Quiroz stated in his declaration that he initially did not sign the receipt form after he received the employee handbook, but that World Variety subsequently directed him to go to Allen’s office, where Allen gave Quiroz a new copy of the receipt form (only) and asked him to sign it . It was reasonable for the court to
find , based on th is testimony , that Quiroz did n ot intend to sign12

the receipt form, but that World Variety told him he had to sign
it to continue working. ( See Holmes v. California Victim Compensation & Government Claims Bd. (2015) 239 Cal.App.4th
1400 , 1406 [“ ‘ Inferences may constitute substantial evi dence as long as they are the product of logic and reason rather t han speculation or conjecture. ’ ”] ; Maaso v. Signer (2012)
203 Cal.App.4th 362, 371 [“S ubstantial evidence includes
reasonable inferences drawn from the evidence in favor of the judgment. ”].) As discussed, t he arbitration section stated that agreeing to arbitration was “ not a condition or requirement of employment and/or continued employment ” with World Variety

. That World Variety required Quiroz to sign the handbook receipt
for m confirms he was not agreeing to arbitration, which, according to the arbitration agreement in the handbook, was not mandatory. Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373 ( Harris ) , on which World Variety primarily relies, is distinguishable. In Harris a new employee acknowledged he
receiv ed a handbook from his employer

, which contained an arbitration agr eement . ( I d. at p. 381.) But that is where the
similarities between Harris and this case end. The arbitration
section of the handbook in Harris stated arbitration was “ an absolute prerequisite ” to “ hiring by , and continued employment
with

, ” the employer

. ( Id. at p. 377.) It stated : “ ‘ I f for any reason, an applicant fails to execute the Agreement to Arbitrate yet begins employment, that employee will be deemed to have consented to the Agreement to Arbitrate by virtue of receipt of13

this Handbook. ’ ” ( Id. at p. 378. ) There was no similar provision in the arbitration section of the handbook Quiroz received

. 1

C. Qui roz Did Not Implied ly Agree T o Arbitrate His
Claims World Variety also argues that , even if Quiroz did not expressly agree to arbitrate his claims by signing the handbook receipt page, Quiroz impliedly agreed to arbitrate his claims by continuing to work for World Variety and failing to object after receiving the handbook containing the arbitration agreement. “A party’s acceptance of an agreement to arbitrate .

. . may be implied in fact .” ( Pinnacle

, supra , 55 Cal.4th at p. 2 36 ; accord,
Harris

, supra , 248 Cal.App.4th at p p. 383

- 384 .) For example, in some situations, “ w hen an employee continues his or her employment after notification that an agreement to arbitration is a condition of continued employment, that employee has impliedly consented to the arbitration agreement .” ( Diaz v. Sohnen Enterprises (2019) 34 Cal.App.5th 126, 130 ; see Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416 , 420 .) As World Variety recognizes, however, courts have generally found an employee impliedly agreed to arbitrate only where accepting a

1 On December 16, 2020 t he Supreme Court ordered not published the other case World Variety primarily relie s on , Co n yer v. Hula Media S ervices, LLC (Aug. 26, 2020, B29 6738)

, review di smissed as moot March 24, 2021, S264821. In the other

case World Variety cites

, Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165

, the employee, unlike Quiroz, did not sign a form acknowledg ing receipt of an employer ’s handbook that contained both an arbitration agreement and other policies

. The employee in Serafin exe cuted a two

- page agreement entitled “MANDATORY ARBITRATION POLICY

. ” ( I d . at p. 171.)14

proposed arbitration agreement w as a mandatory condition of employment . World Variety asserts, however, that “[t]he same rule should apply when an employer proposes a voluntary
arbitration policy .

. . .” Assuming World Variety has not forfeited this argument, 2
it is meritless . Where an employer requires an employee to agree to arbitration before beginning or continuing employment , the employ ee has “ ‘ knowledge of the arbitration agreement, ’ ” and the employee “ ‘ continue [s] to work after receipt of the arbitration agreement
, ’ ” a factfinder may infer that the employee has consented to the mandatory arbitration agreement by beginning or continuing employment

. ( Gorlach v. Sports Club Co. (2012)
209 Cal.App.4th 1497, 1507; see id. at p. 1508 [“ California law permits employers to implement policies that may become unilateral implied

- in

- fact contracts when employees accept them by continuing their employment. ”].) The rational e is that, if the employee did not agree to the proposed arbitration agreement, he or she would have not accepted or would have discontinued the employment. But where, as here, the employer doe s not require
the employee to accept a proposed arbitration ag reement to continue the employment relationship , that the employee continues working for the employer after receiving the proposed agreement
, without more

, says nothing about whether the employee has (impliedly) agreed to arbitration

. (See id. , at

p. 1507 [“‘“ Although an implied in fact contract may be inferred
from the ‘ conduct, situation or mutual relation of the parties, the

2 World Variety did not raise this argument in its motion to compel arbitration in the trial court . B ut in his opposition Quiroz for some reason raised the issue and a rgued there was no implied agreement.15

very heart of this kind of agreement is an intent to promise. ’ ” ’” ] ; see also Southern California Acoustics Co. v. C. V. Holder , Inc. (1969) 71 Cal.2d 719, 722 [“ Silence in the face of an offer is not an acceptance, unless there is a relationship between the parties or a previous course of dealing pursuant to which silence would be understood as acceptance. ”] ; C9 Ventures v. SVC

- West , L.P. ( 2012 ) 202 Cal.App.4th 1483 , 1500 [same]

. ) World Variety again
relies on Harris, supra , 248 Cal.App.4 th 373 . But as discussed, unlike World Variety, the employer in Harris required employees to agree to arbitration as a mandatory condition of employment,
and the arbitration agreement state d the employee w ould be deemed to have accepted the agreement by continuing employment, even if he or she d id not sign the agreement. (See
id. at p. 381.) Neither was the case here.

DISPOSITION

The order is affirmed

. Quiroz is to recover his costs on appeal.

SEGAL

, J.

We concur:

PERLUSS

, P. J. FEUER

, J.