Court Opinion

ID: 9840952
Source: CourtListenerOpinion
Date Created: 2023-09-20 20:04:51.172222+00
Date Added: 2024-06-11T08:32:11.317348
License: Public Domain

Filed 9/20/23 Sampson v. GJ Gentry General Engineering CA4/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

 TONY SAMPSON et al.,                                                 D082215

           Plaintiffs and Respondents,

           v.                                                         (Super. Ct. No. CIVDS1926604)

 GJ GENTRY GENERAL
 ENGINEERING, INC. et al.,

           Defendants and Appellants.

         APPEAL from an order of the Superior Court of San Bernardino, David
S. Cohn, Judge. Affirmed.
         Prata & Daley, Robert J. Prata, and John F. Morning, for Defendants
and Appellants.
         Verum Law Group, Sam K. Kim, and Yoonish Han, for Plaintiffs and
Respondents.
                                               INTRODUCTION
         Over two years after plaintiffs Tony Sampson and Severo John
Hernandez filed suit against their former employer, GJ Gentry General
Engineering, Inc. (Gentry Engineering) and Garrett Gentry (collectively, the
Gentry Appellants), the Gentry Appellants moved to compel arbitration. The
trial court denied the motion, finding the Gentry Appellants waived their
right to invoke arbitration by unreasonably delaying their arbitration
demand and by acting inconsistently with an intent to arbitrate. We affirm.
              FACTUAL AND PROCEDURAL BACKGROUND
      Between 2017 and 2018, Gentry Engineering hired Severo John
Hernandez and Tony Sampson (collectively, the Employees). During their
employment, the Employees signed pages of an employee handbook in which
they “agree[d] that arbitration shall be the exclusive forum for resolving all
disputes arising out of or involving [their] employment with the Company or
the termination of that employment . . . .” Gentry Engineering maintained
the original signed documents in employment files that were kept in a locked
file cabinet at the company offices.
      In September 2019, Sampson filed a wage and hour class action lawsuit
against Gentry Engineering in San Bernardino Superior Court. The same
month, the trial court issued an “Initial Case Management Conference
Order,” which included an order that the parties prepare and file a joint
report that would include a statement as to “[w]hether there are applicable
arbitration agreements, and the parties’ views on their enforceability.” In
response, Sampson and Gentry Engineering, “through their attorneys of
record,” filed a joint initial status conference statement stating, “[t]he Parties
are not aware of any arbitration agreements. However, [Gentry Engineering]
contends that [Sampson’s] employment relationship with [Gentry
Engineering] is governed by the Southern California Master Labor
Agreement. This Agreement specifically provides a grievance process that
must be followed by all laborers who are part of the union.”

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      Shortly thereafter, Sampson and Hernandez filed an amended
complaint adding Hernandez as a plaintiff, and on June 1, 2020, the
Employees filed a second amended complaint adding Garrett Gentry as an
individual defendant. The Gentry Appellants’ answer to the second amended
complaint did not assert an affirmative defense referencing arbitration.
      The case moved forward in the Superior Court. At a case management
conference in August 2020, the trial court set a June 4, 2021 deadline for the
Employees’ motion for class certification. In September 2020, Gentry
Engineering served written responses to the Employees’ first sets of
discovery, and the parties agreed to set the Employees’ deposition of the
Gentry Appellants’ person most qualified for April 19, 2021. Four days before
that deposition, however, the Gentry Appellants notified the Employees that
they were substituting new counsel—Prata & Daley LLP—which they did on
April 20, 2021. For that reason, the parties agreed to reschedule the
deposition and to continue to October 2021 the Employees’ deadline to move
for class certification. In September 2021, the parties once again agreed to
continue the class certification motion deadline to February 2022.
      On October 8, 2021, the Gentry Appellants advised the Employees’
counsel for the first time that the Employees’ lawsuit was precluded because
they had signed arbitration agreements. Nonetheless, the parties decided to
move forward with their February 2022 mediation, which was unsuccessful.
      On March 21, 2022, the Gentry Appellants filed a motion to compel
arbitration and to stay the Employees’ lawsuit. As of that date, the Gentry
Appellants had not yet propounded written discovery in the case or filed any
other motions. The Employees opposed the Gentry Appellants’ motion,
contending that the Gentry Appellants had not established the existence of
valid arbitration agreements, that the agreements were unconscionable and

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unenforceable, and that the Gentry Appellants had waived their right to
arbitrate. In reply, the Gentry Appellants argued that they had not waived
arbitration because their participation in mediation was not inconsistent
with seeking arbitration, they had not propounded any discovery or filed a
counterclaim, their assertion of their right to arbitrate did not occur near a
scheduled trial date, and the Employees’ incurred fees and costs did not
support a finding of prejudice or waiver.
      On June 2, 2022, the trial court issued an initial tentative order but
continued the motion hearing and requested supplemental briefing regarding
(1) the authenticity of the arbitration agreements and (2) the impact of the
U.S. Supreme Court’s recent decision in Morgan v. Sundance, Inc. (2022) ___

U.S. ___ [142 S.Ct.1708, 212 L.Ed.2d 753] (Morgan).1 In their supplemental
brief, the Employees asserted that Morgan had eliminated any requirement
that a plaintiff show prejudice to establish a defendant’s waiver of
arbitration. The Gentry Appellants’ supplemental brief did not dispute that
under Morgan, the court need not find that a party had been prejudiced by a
claimed waiver; instead they argued that Morgan did not impact the
standard for evaluating whether a waiver had occurred and thus, did not
bear meaningfully on whether they had waived arbitration. The Gentry
Appellants further contended that any delay in asserting their right to
arbitration was caused, at least in part, by their “prior counsel’s mistaken

1     The court additionally requested evidence concerning the signing of the
agreements. In its August 26, 2022 order, the court found that Gentry
Engineering had carried its initial burden of establishing the existence of the
arbitration agreements and that the Employees failed to carry their burden
of challenging the agreement’s validity. Because this finding was in the
Gentry Appellants’ favor and is not at issue in this appeal, we do not consider
the issue.
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failure to discover the arbitration agreement” and not because of any
“know[ing] waive[r] [of] such an agreement.”
      Prior to the continued hearing, the court published a new tentative
ruling, which referenced its prior tentative ruling. It then concluded that
“Gentry Engineering carried its initial burden of establishing the existence of
arbitration agreements with [the Employees]” and that the Gentry
Appellants had waived their right to arbitrate.
      In the tentative, the court reasoned in part that the Gentry Appellants
were “obviously aware” of the existence of the arbitration agreements when
they hired the Employees, and it noted the Gentry Appellants had provided
“no meaningful explanation [for] their unreasonable delay in seeking
arbitration.” The court acknowledged the Gentry Appellants’ allegation that
their former counsel had mistakenly failed to discover the arbitration
agreements but rejected this argument because the Gentry Appellants had
offered no evidence to support it. The court further reasoned that the Gentry
Appellants had unreasonably delayed for more than two years in moving to
compel arbitration and that during those two years, they acted inconsistently
with an intent to arbitrate, including by answering, representing to the court
that they were unaware of any arbitration agreements, responding to
discovery, and participating in mediation. After hearing argument at the
hearing on the motion, the court adopted its written tentative as its final

ruling and denied the motion.2 The Gentry Appellants appealed.

2     The Gentry Appellants opted to proceed with their appeal without a
transcript of that August 26, 2022 hearing.
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                                 DISCUSSION
A.      Standard of Review and Legal Principles
        We first consider the applicable standard of review—an issue that the
parties dispute. “Generally, the determination of waiver [of arbitration] is a
question of fact” requiring the appellate court to review that finding for
substantial evidence. (St. Agnes Medical Center v. PacifiCare of California
(2003) 31 Cal.4th 1187, 1196 (St. Agnes).)
        The Gentry Appellants seek de novo review of the trial court’s order
denying their motion to compel arbitration. They contend the facts are
undisputed and therefore we can substitute our view for that of the trial
court. They cite Desert Regional Medical Center, Inc. v. Miller (2022) 87
Cal.App.5th 295, 307 (Desert Regional): “ ‘When, however, the facts are
undisputed and only one inference may reasonably be drawn, the issue is one
of law and the reviewing court is not bound by the trial court’s ruling.’ ”
(Ibid., quoting Platt Pacific Inc. v. Andelson (1993) 6 Cal.4th 307, 319.) In
Desert Regional, however, “the issue of waiver of the right to compel
arbitration turn[ed] on questions of law.” Desert Regional, at p. 307. Not so
here.
        Further, although the facts may be undisputed, the record permits
conflicting reasonable inferences about whether the Gentry Appellants
waived arbitration. For example, the trial court rejected the Gentry
Appellants’ unsupported contention that their prior attorneys’ purported
failure to discover the arbitration agreements partially caused their delay in

seeking arbitration.3 Accordingly, in conducting our review, we “infer all

3     As we discuss in greater detail below, the court instead reasonably
found the Gentry Appellants knew of the arbitration agreements at the
beginning of litigation, noting that Garrett Gentry’s declaration described
how Gentry Engineering, at his direction, had audited employee files in 2017.
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necessary findings supported by substantial evidence and construe any
reasonable inferences in the manner most favorable to the ruling, resolving
all ambiguities to support an affirmance.” (Davis v. Shiekh Shoes, LLC
(2022) 84 Cal.App.5th 956, 962-963 [applying substantial evidence review
where “the essential facts may not be in dispute, in the sense that no one
doubts that party X did or did not do act Y on date Z[,]” but “even if there is
no difference in opinion on such events or non-occurrences, the inferences to
be drawn from the essential facts are conflicting”].)
      Next, we determine whether our review is governed by the Federal
Arbitration Act (FAA) or instead, California law. In its order denying the
Gentry Appellants’ motion to compel arbitration, the trial court accepted the
Gentry Appellants’ argument that the FAA applied, a position they supported
with a declaration establishing Gentry Engineering’s engagement in
interstate commerce. (See Woolls v. Superior Court (2005) 127 Cal.App.4th
197, 212 (“For the FAA to apply, a contract must involve interstate
commerce.”].) We agree with the Employees that the FAA applies. Moreover,
even if the Gentry Appellants now dispute the FAA’s application, that
argument is forfeited. (See Nellie Gail Ranch Owners Assn. v. McMullin
(2016) 4 Cal.App.5th 982, 997 (Nellie) [“ ‘As a general rule, theories not raised
in the trial court cannot be asserted for the first time on appeal.’ ”].)
      Regardless of the FAA’s application, “[b]oth state and federal law
emphasize that no single test delineates the nature of the conduct that will
constitute a waiver of arbitration.” (St. Agnes, supra, 31 Cal.4th at p. 1196;
see also id. at p. 1194 [noting that “the federal and state rules applicable [to
waiver] are very similar”].) In determining waiver, a court can consider the
following factors: “ ‘ “(1) whether the party’s actions are inconsistent with the
right to arbitrate; (2) whether ‘the litigation machinery has been

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substantially invoked’ and the parties ‘were well into preparation of a
lawsuit’ before the party notified the opposing party of an intent to arbitrate;
(3) whether a party either requested arbitration enforcement close to the trial
date or delayed for a long period before seeking a stay; (4) whether a
defendant seeking arbitration filed a counterclaim without asking for a stay
of the proceedings; (5) ‘whether important intervening steps [e.g., taking
advantage of judicial discovery procedures not available in arbitration] had
taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the
opposing party.” ’ ” (Id. at p. 1196.) “No one of these factors predominates,
and each case must be examined in context.” (Lewis v. Fletcher Jones Motor
Cars, Inc. (2012) 205 Cal.App.4th 436, 444 (Lewis).)
      In Morgan, supra, ___ U.S. at page ___ [142 S. Ct. 1708], the United
States Supreme Court recently held that under federal law, plaintiffs are not
required to show prejudice in order to establish a defendant’s waiver of the

right to arbitrate.4 Rather, the Morgan court highlighted the importance of
focusing on the defendant’s conduct: “Did [the defendant] knowingly
relinquish the right to arbitrate by acting inconsistently with that right?”
(Id. at p. 1714.)
B.    Analysis
      The Gentry Appellants contend no factors supported the trial court’s
finding that they waived their right to arbitrate. We disagree. Because we
conclude substantial evidence supports the trial court’s findings that the

4      In their reply brief, the Gentry Appellants appear to concede that
under Morgan, a prejudice showing is not required to establish waiver.
Regardless, the Gentry Appellants forfeited any argument to the contrary by
failing to raise it before the trial court. (See Nellie, supra, 4 Cal.App.5th at
p. 997.)
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Gentry Appellants unreasonably delayed in demanding arbitration and acted

inconsistently with an intent to arbitrate, we affirm.5
      First, substantial evidence supports the trial court’s finding that the
Gentry Appellants waived their right to arbitrate through unreasonable
delay. As the trial court observed, the Gentry Appellants waited more than
two years after being served with the initial complaint to move to compel
arbitration. We have no difficulty concluding such a lengthy period qualifies
as a delay.
      Nor do we have difficulty concluding that delay was “unreasonable.”
The Gentry Appellants did not offer any rational justification to the trial
court for their delay. And although they attempted to blame their prior
attorneys’ “mistaken failure to discover the arbitration agreement[ ]” for the
delay, they offered no evidence for this position. Moreover, the evidence they
did provide supported a strong inference that the Gentry Appellants were
aware of the arbitration agreements from the very beginning of the lawsuit in
2019. In Garrett Gentry’s declaration, he described creating the employment
documentation procedures—including an arbitration agreement—and he
stated that Gentry Engineering had audited employee files in 2017 “to ensure

5     The Employees additionally contend that the Gentry Appellants fail to
address on appeal “one of the trial court’s reasons for its decision”—that the
arbitration agreements were unconscionable and unenforceable. We disagree
with the Employees’ reading of the trial court’s order denying the motion to
compel arbitration and instead, construe the order as relying only on the
Gentry Appellants’ waiver. (See August 26, 2022 order at p. 9 [“Given
Defendants’ unreasonable delay in seeking arbitration, and that prejudice is
no longer a factor in considering waiver of arbitration under the FAA, the
court finds that Defendants waived their right to arbitrate. Therefore, the
motion to compel arbitration is denied.”].) Our disagreement with the
Employees on this point is of no moment, however, because we nonetheless
affirm.
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that all necessary employee paperwork (including, among other things,
Employee handbook acknowledgments) had been signed.” According to his
declaration, the Employees’ signed arbitration agreements were kept in the
company’s physical employment files in locked filing cabinets at the company
offices. Thus, at all times during the litigation, Garrett Gentry and other
company officials would have been well aware that Gentry Engineering had
arbitration agreements that were presented to employees for signature and
that the signed originals were maintained securely by the company. No one
else would have been in a better position to know of and to assert the

existence of the agreements.6
      The Gentry Appellants additionally argue on appeal that their delay
was not “unreasonable” because the lawsuit was a class action assigned to
the superior court’s complex litigation program and required more “extensive”
pretrial procedures. If anything, however, this argument further supports an
unreasonable delay finding. Indeed, the strong public policy favoring
arbitration as “ ‘ “ ‘a speedy and relatively inexpensive means of dispute
resolution’ ” ’ ” is only undermined by waiting to invoke arbitration until after
two years of such “extensive” pretrial procedures. (Lewis, supra, 205
Cal.App.4th at p. 443; see also Sobremonte v. Superior Court (1998) 61
Cal.App.4th 980, 996 (Sobremonte) [“Arbitration is an expedient, efficient and
cost-effective method to resolve disputes. If we consider the amount of time
and money they have already spent in the judicial system, any benefits they
may have achieved from arbitration have been lost.”].) We likewise find
unpersuasive the Gentry Appellants’ argument that the COVID-19 pandemic

6     For these same reasons, we are unpersuaded by the Gentry Appellants’
related contention that they could not waive a right they did not know they
had. The prior substantial evidence supports a finding that they knew of the
agreements.
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delayed the trial date in this case and thus, that their two-year delay in
seeking arbitration was not unreasonable. That argument again lacks any
evidentiary support and regardless, does not justify the length of the delay at
issue here.
      Put simply, the Gentry Appellants’ extensive delay in seeking
arbitration was an appropriate factor for the court to consider in evaluating
waiver. (St. Agnes, supra, 31 Cal.4th at p. 1196.) Considering the delay’s
length of more than two years and the Gentry Appellants’ failure to show a
compelling justification for that delay, substantial evidence supported the
court’s finding that the delay was unreasonable. (See e.g., Garcia v.
Haralambos Beverage Co. (2021) 59 Cal.App.5th 534, 542-543 [affirming trial
court’s finding of 24-month delay to be unreasonable, even when considering
the case’s nine-month stay for mediation]; Augusta v. Keehn & Associates
(2011) 193 Cal.App.4th 331, 338 [six-and-one-half-month delay
unreasonable]; Sobremonte, supra, 61 Cal.App.4th at p. 996, [10-month delay
unreasonable].) For the same reasons, we are not persuaded by the Gentry
Appellants attempts to distinguish Desert Regional, supra, 87 Cal.App.5th
295 on the basis that it involved a four-year delay. (See id. at p. 317 [noting
that, even accepting defendant’s position that the delay was only one year,
that delay supported the court’s waiver finding].)
      We further conclude substantial evidence supported the trial court’s
finding that the Gentry Appellants’ conduct in the two years before filing
their motion to compel arbitration was “inconsistent with seeking the right to
arbitrate.” (St. Agnes, supra, 31 Cal.4th at p. 1196.) Specifically, in a filed
joint statement, the Gentry Appellants represented to the court that the
parties were “not aware” of any arbitration agreements. They answered the
Employees’ second amended complaint without asserting an affirmative

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defense regarding arbitration. They responded to the Employees’ written
discovery requests and agreed to set a deposition, all without objecting based
on the existence of arbitration agreements. They engaged in private
mediation. The trial court’s finding that such actions were inconsistent with
invoking a right to arbitrate was not unreasonable. (See e.g., Sobremonte,
supra, 61 Cal.App.4th at p. 994 [identifying as examples of conduct
inconsistent with arbitration to include the defendant’s failure to object based
on arbitration to discovery requests, discovery protective orders, or
oppositions to motions to compel].)
      Although the Gentry Appellants seek to portray their actions as
consistent with seeking a right to arbitrate, their arguments are
uncompelling. The Gentry Appellants complain that they did not represent to
the court an unawareness of the arbitration agreements; this representation
was instead made by their attorneys. Yet, they offer no authority or
reasonable explanation for why their attorneys’ representations to the court
should not be attributed to them or why their attorneys purportedly did not
know about the arbitration agreements. The Gentry Appellants further
contend that in their joint statement, they stated their intention to enforce
the “grievance process” in a collective bargaining agreement. They allege
that their answer also asserted this defense as well as defenses based on the
trial court’s lack of jurisdiction and the Employees’ failure to exhaust
available remedies under “internal policies and procedures.” But we cannot
conclude these other defenses—which make no mention of arbitration—are
consistent with seeking to compel arbitration, particularly when considering
the Gentry Appellants’ failure to demand arbitration for over two years and

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their clear statement at the beginning of the litigation that they were “not
aware” of any arbitration agreement.
      The Gentry Appellants’ remaining arguments are similarly unavailing.
For instance, they argue that they did not file a counterclaim and never
substantially invoked “litigation machinery” because they never propounded
discovery requests or filed any motions. However, because some factors may
not support waiver does not mean that no factors support waiver or that the
trial court’s order was not supported by substantial evidence. (See Lewis,
supra, 205 Cal.App.4th at p. 444 [“No one of these factors predominates and
each case must be examined in context.”].) As discussed above, we conclude
substantial evidence supported the trial court’s finding that other relevant
factors—unreasonable delay and the Gentry Appellants’ inconsistent
conduct—established the Gentry Appellants’ waiver. Therefore, we affirm.
                                DISPOSITION
      The order denying the motion to compel arbitration is affirmed.
Respondents are entitled to recover their costs on appeal.

                                                                   KELETY, J.

WE CONCUR:

O’ROURKE, Acting P. J.

DATO, J.

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