Court Opinion

ID: 8406201
Source: CourtListenerOpinion
Date Created: 2022-10-27 20:02:01.2347+00
Date Added: 2024-06-11T16:47:09.936334
License: Public Domain

Filed 10/27/22 Towell v. O’Gara Coach Co. CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 ONE

 SELENA TOWELL,                                                     B310742

           Plaintiff and Respondent,                                (Los Angeles County
                                                                    Super. Ct. No. 19STCV45961)
           v.

 O’GARA COACH COMPANY, LLC
 et al.,

           Defendants and Appellants.

     APPEAL from an order of the Superior Court of Los
Angeles County, William F. Highberger, Judge. Affirmed.
     Kolar & Associates, Elizabeth L. Kolar and Benjamin T.
Runge for Defendants and Appellants.
     Berenji Law Firm, Shadie L. Berenji and Kristopher N.
Tayyeb for Plaintiffs and Respondents.
                      ______________________
       Before plaintiff and respondent Selena Towell began
working at a car dealership owned by defendant and appellant
Westlake Coach Company, LLC (Westlake), an affiliate of
defendant and appellant O’Gara Coach Company, LLC (O’Gara),
she digitally signed an employment application that contained a
clause requiring her to pursue any claims against defendants in
individual arbitration. Two days later, Towell signed an at-will
employment agreement in which Westlake offered her an option
to opt out of a waiver of her right to pursue class actions in court.
Towell checked the box indicating that she opted out of the class
action waiver. Two weeks after that, on her first day on the job,
Towell physically signed the employment application, certifying
that she was the person who submitted the application in the
first place.
       Towell subsequently filed a class-action complaint against
defendants, and the question in this case is which of the two
documents she signed controls. The trial court concluded that
the opt-out provision in the at-will employment agreement
superseded the arbitration agreement in the employment
application, and on that basis denied defendants’ motion to
compel arbitration. Defendants contend this was error, but we
disagree and affirm.
            FACTS AND PROCEEDINGS BELOW
      Because this case revolves almost entirely around the
interpretation of the two documents Towell signed, we quote
them at length.
A.   The Employment Application
     The first document is titled “Application for Employment.”
On the first four pages of the document, Towell entered the

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information typical of an employment application, such as her
name and address, the position she was applying for (new car
sales), and her employment history, in the spaces provided on the
form.
       The fifth page of the document is titled “Applicant
Statement and Agreement” and consists of several paragraphs of
very small text,1 with a space for Towell to sign at the bottom.
Near the top of the page is a paragraph reading, “The Company
and Employee (hereinafter collectively referred to as the ‘Parties’)
hereby agree to use a system of alternative dispute resolution
which involves binding arbitration to resolve all disputes which
may arise out of the employment context. Because of the mutual
benefits . . . which private binding arbitration can provide both
the Company and Employee, Employee and the Company both
agree that any claim, dispute, and/or controversy arising from, or
relating in any way to, Employee’s employment relationship or
application or consideration for employment with the company
. . . shall be submitted to, and shall be resolved through, final and
binding arbitration before an arbitrator selected in accordance
with the procedures of the arbitration service selected by the
party against whom the claim is brought . . . . This agreement
shall be governed by the Federal Arbitration Act (9 U.S.C. § 1, et
seq.) (‘FAA’) and to the extent not inconsistent with the FAA, the

      1 The trial court concluded that the font size was less than
seven points, and found Towell’s estimate of 5.5 points
“plausible.” The copy of the document in the appellate record
appears to have been shrunk down somewhat from its original
size, but even if it were increased to full size, the text of the
arbitration provisions would be very small.

                                  3
procedures set forth in the California Code of Civil Procedure
[section] 1280[ ] et seq.”
       The next paragraph provides that, “[i]n order to provide for
the efficient and timely adjudication of claims, the Parties agree
that the arbitrator is prohibited from consolidating the claims of
others into one proceeding, and thus, the arbitrator will hear only
the Employee’s individual claims and does not have the authority
to fashion a proceeding as a class or collective action or to award
relief to a group of employees in one proceeding. Thus, the
Company has the right to defeat any attempt by me to file or join
other employees in a class, collective, or joint action lawsuit or
arbitration (collectively ‘class claims’).”
       Below this paragraph, the document states, in all capital
letters: “THE COMPANY AND EMPLOYEE HEREBY WAIVE
ANY RIGHT ANY OF US MAY HAVE TO A JURY TRIAL OF
ANY CLAIM OR CONTROVERSY COVERED BY THIS
AGREEMENT.” Then, further down the page, another all-caps
warning: “WHETHER TO AGREE TO ARBITRATION IS AN
IMPORTANT BUSINESS DECISION. IT IS YOUR DECISION
TO MAKE, AND YOU SHOULD TAKE CARE TO CONDUCT
FURTHER RESEARCH AND TO CONSULT WITH OTHERS—
INCLUDING BUT NOT LIMITED TO AN ATTORNEY—
REGARDING THE CONSEQUENCES OF YOUR
DECISION . . . .”
       Finally, near the bottom of the page, a last warning in all
capital letters: “DO NOT SIGN UNTIL YOU HAVE READ THE
ABOVE STATEMENT & AGREEMENT.”
       Beneath this warning appears Towell’s electronic signature
dated July 6, 2018. Immediately below the electronic signature is
another statement: “I hereby certify that this application was

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previously submitted by me online and that the information is
accurate,” followed by Towell’s signature and the date, July 18,
2018.
B.     The At-will Employment Agreement
       The second document is titled “At-Will Employment and
Arbitration Agreement.” It begins by defining Towell’s
employment as at-will and subject to termination at any time by
either party. It then includes several paragraphs similar to those
quoted above in the employment application requiring the parties
to resolve their claims in arbitration rather than in court.
Paragraph 4 of the document states, “Unless I have exercised my
right to opt out of the terms of this Paragraph as provided for
herein, I agree that any claim brought under this binding
arbitration Agreement shall be brought in the individual capacity
of myself or the Dealership. This binding arbitration Agreement
shall not be construed to allow or permit the consolidation or
joinder of other claims or controversies involving any other
employees or parties, or permit such claims or controversies to
proceed as a class or collective action. No arbitrator shall have
the authority under this agreement to order any such class or
collective action. Any dispute regarding the scope or
enforceability of this Agreement shall be resolved by a court, not
by the arbitrator. By signing this agreement, I am agreeing to
waive any substantive or procedural rights that I may have to
bring or participate in an action brought on a class or collective
basis. . . .”
       The following paragraph, however, allows the employee to
opt out of the arbitration requirement in cases involving class
claims. It states, “Due to the nature of the Class-Collective
Action Waiver set forth in paragraph 4 above, the Dealership has

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provided me with the ability to opt out of the Class-Collective
Action Waiver. Accordingly, I acknowledge and understand that
my agreement to waive the right to pursue or participate in the
consolidation or joinder of other claims or controversies involving
any other employees or parties, or have such claims or
controversies proceed on a class or collective action, is voluntary
and that execution of this document is not a condition of
employment. I understand that I may elect to opt out of the
Class-Collective Action Waiver and retain any right I may have
to bring an action in court and bring an action on a class or
collective basis by checking this box.” A checkmark appears in
the box immediately following.
       Towell signed the document and dated it July 8, 2018.
C.    Lawsuit and Motion to Compel Arbitration
      On December 23, 2019, Towell filed a class action
complaint against O’Gara, alleging several violations of
employment law. Towell claimed that she worked on behalf of
O’Gara as a lease retention manager at a car dealership in
Thousand Oaks from approximately July 18, 2018 to
December 18, 2018. Towell was paid on a commission basis for
selling cars, and she alleged that O’Gara failed to pay at least the
minimum wage, and failed to pay for required non-commission
work, among other claims. She later amended the complaint to
include Westlake, the O’Gara affiliate that owned the dealership
where she had worked.2

      2 The record does not establish the exact relationship
between O’Gara and Westlake. Defendants’ brief states that
“O’Gara is an affiliate of Westlake in that they indirectly,
th[r]ough one or more intermediaries, share common control.”

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      On November 16, 2020, defendants filed a motion to compel
arbitration, alleging that by signing the employment application,
Towell agreed to address all disputes regarding her employment
in individual arbitration. Towell opposed the motion on the
ground that the opt-out provision in the at-will employment
agreement superseded the employment application. In the
alternative, she argued that the arbitration agreement in the
employment application was unenforceable because it was
procedurally and substantively unconscionable. Finally, Towell
argued that any arbitration agreement was unenforceable to the
extent that Towell’s claims fell within Labor Code section 229,
which bars the enforcement of arbitration agreements in cases
seeking the recovery of unpaid wages.
      The trial court denied the motion, finding that Towell’s
decision to opt out of the class action waiver was controlling. The
court did not reach the issues of unconscionability or Labor Code
section 229. Defendants filed a timely notice of appeal of the trial
court’s order denying the motion.
                          DISCUSSION
      “Arbitration agreements are ‘valid, enforceable and
irrevocable, save upon such grounds as exist for the revocation of
any contract.’ (Code Civ. Proc., § 1281.) ‘California law, like
federal law, favors enforcement of valid arbitration agreements.’ ”

The employment application listed Towell’s employer as “O’Gara
Coach – Westlake,” and the at-will employment agreement
identified Westlake as the employer. This opinion addresses only
the question of whether Towell agreed to arbitrate her claims,
and we need not and do not decide which defendant is potentially
liable to Towell under any theory.

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(Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th
713, 721.) The denial of a motion to compel arbitration is an
appealable order (Code Civ. Proc., § 1294, subd. (a)), and “ ‘ “ ‘we
review the arbitration agreement de novo to determine whether it
is legally enforceable, applying general principles of California
contract law.’ ” ’ ” (Baxter, supra, at p. 722.)
       Defendants argue that if we apply the general principles of
contract law, we must conclude that there is a binding arbitration
agreement between the parties. In particular, defendants point
to the rule that “[i]n the absence of fraud, mistake, or another
vitiating factor, a signature on a written contract is an objective
manifestation of assent to the terms set forth there. [Citation.]
If the terms are unambiguous, there is ordinarily no occasion for
additional evidence of the parties’ subjective intent.” (Rodriguez
v. Oto (2013) 212 Cal.App.4th 1020, 1027.) On July 18, 2018,
Towell signed the employment application, which included a
provision stating that “[t]his agreement is the entire agreement
between the Company and the employee regarding the rights of
the Company or employee to terminate employment with or
without good cause and this agreement takes the place of all
prior and contemporaneous agreements, representations, and
understandings of the employee and the Company.” Thus,
according to defendants, Towell’s signature created a new
contract that voided all prior contracts with defendants,
including the at-will employment agreement in which Towell
opted out of the waiver of her right to file a class-action
employment claim. (See Thiele v. Merrill Lynch, Pierce, Fenner &
Smith (S.D.Cal. 1999) 59 F.Supp.2d 1060, 1064 [“In California, a
subsequent written contract alters the terms of a previous
contract”].)

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       If the July 18 “wet-ink” signature were the only signature
on the at-will employment agreement, defendants’ argument
might be persuasive. But when Towell was presented with the
employment application as she began work at the car dealership
on July 18, her electronic signature was already present on the
document, along with the date she first signed it, July 6, 2018.
Below that first signature was the statement, “I hereby certify
that this application was previously submitted by me online and
that the information is accurate.” Below that single line, Towell
signed the document a second time.
       In this context, it is not at all clear that Towell’s July 18
signature served to create a new contract and supersede all prior
agreements. Towell proposes another plausible interpretation:
that the purpose of signing the document a second time was
merely to authenticate her original electronic signature. (See,
e.g., Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th
836, 842 [motion to compel arbitration denied because the
defendant failed to prove authenticity of the plaintiff’s electronic
signature].)
       We find Towell’s interpretation of the July 18 signature
more persuasive than defendants’ interpretation. First, it is
consistent with the statement immediately above the second
signature, “I hereby certify that this application was previously
submitted by me online and that the information is accurate.”
Second, as the trial court noted, the text pertaining to a waiver of
class-action claims was printed in very small type and
interspersed among several other provisions on the page above
the signatures, with no place for Towell to sign her initials to
indicate that she agreed to waive her class-action rights. If the
parties meant for Towell’s second signature to void the opt-out

                                 9
clause that she had signed merely 10 days earlier, we would
expect that intention to be stated clearly and unequivocally.3
       Another consideration supporting Towell’s interpretation is
the principle that, if the meaning of a standardized contract
cannot be resolved through other means, it must be construed
against the drafter. (Civ. Code, § 1654; Badie v. Bank of America
(1998) 67 Cal.App.4th 779, 798.) Defendants prepared both of the
contracts in this case and controlled the sequence in which Towell
signed them. According to a declaration from a human resources
employee who worked on behalf of Westlake, Towell’s experience
was consistent with Westlake’s standard procedures. If
defendants’ interpretation of the documents were correct, it
would mean that defendants’ policy was to offer their new
employees an opportunity to opt out of waiving their class-action
rights, but then to require the employees to void that waiver
when they began work and signed the employment application
for a second time. This is an absurd outcome. Defendants had
the ability to design their employment contracts as they wished.
If they did not mean for employees like Towell to have the right

      3 Defendants object to the trial court’s reasoning, claiming
that there is no legal authority establishing a minimum text size
or requirement to sign one’s initials in order to establish a valid
arbitration agreement. This misses the point. The question is
not whether the employment application created a valid
arbitration agreement in the first place, but whether Towell’s
second signature on the document should be interpreted as
voiding her subsequent decision to opt out. In these
circumstances, the size of the text and the lack of initials are a
reasonable factor in determining the meaning of Towell’s second
signature.

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to opt out of the class-action waiver, they could have declined to
offer the option in the first place.
       In the absence of a clear indication to the contrary, we will
not interpret Towell’s second signature on the employment
application as a decision to surrender an option defendants had
explicitly offered her merely 10 days earlier. By opting out of the
class action waiver, Towell retained her right to file a class action
suit. There is no agreement between the parties to arbitrate
Towell’s class-action claims, and the trial court did not err by
denying defendants’ motion.
                          DISPOSITION
      The trial court’s order is affirmed. Towell is awarded her
costs on appeal.
      NOT TO BE PUBLISHED

                                            BENKE, J.*

We concur:

             ROTHSCHILD, P. J.

             BENDIX, J.

      * Retired Associate Justice of the Court of Appeal, Fourth
Appellate District, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

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