Court Opinion

ID: 2669208
Source: CourtListenerOpinion
Date Created: 2014-04-08 23:34:20.677182+00
Date Added: 2024-06-11T13:02:58.462126
License: Public Domain

Filed 4/8/14 Roybal v. GSC Logistics CA1/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIRST APPELLATE DISTRICT

                                                  DIVISION ONE

RITA ROYBAL,
         Plaintiff and Respondent,
                                                                     A139236
v.
GSC LOGISTICS, INC., et al.,                                         (Alameda County
                                                                     Super. Ct. No. RG12633149)
         Defendants and Appellants.

         Defendants GSC Logistics, Inc. (GSC) and StaffChex, Inc. (StaffChex) appeal
from an order denying their motion to compel arbitration under a contractual provision
for binding arbitration. They contend the trial court erred in deciding that defendants,
who were not signatories to a contract containing an arbitration provision but were
originally sued along with another party who was a signatory, may not compel the other
signatory party, plaintiff Rita Roybal, to arbitrate the controversies raised in her
complaint. We affirm the order.
               FACTUAL BACKGROUND AND PROCEDURAL HISTORY
         On June 5, 2012, plaintiff filed a complaint against Select Staffing (Select), GSC,
and StaffChex. The complaint alleges the following:
         In August 2010, plaintiff was hired by a temporary staffing agency named
Accountability. She was placed as a warehouse worker at GSC’s cross-dock and
transload facility.
       On May 26, 2011, GSC entered into an agreement with Select in which Select was
to replace Accountability as one of its staffing agencies. The agreement does not contain
an arbitration clause. Instead, both parties agreed that “any dispute or claim that arises
under this Agreement would be settled by the Superior Court of California for Alameda
County.”
       In July 2011, plaintiff was told that Accountability was being eliminated, but that
she would nonetheless be retained by GSC through the new staffing agency, Select.
       On August 4, 2011, plaintiff signed an employment agreement with Select, which
contained the following language pertaining to arbitration: “If the Employer and I are
unable to resolve any dispute informally, I agree to having the dispute submitted and
determined by binding arbitration in conformity with the procedures of the Federal
Arbitration Act and the California Arbitration Act . . . .”
       Beginning in early August 2011, plaintiff was repeatedly verbally accosted and
sexually harassed by a StaffChex employee, Gerardo Gonzalez. StaffChex, like Select, is
a temporary staffing agency that placed workers at the GSC warehouse. The harassment
went on for several months until October 12, 2011, when Gonzalez sexually assaulted her
by forcibly placing her hand on his penis. Plaintiff immediately informed her Select
supervisor of the incident, which resulted in Gonzalez’s suspension. On October 17,
2011, plaintiff was informed that Gonzalez was being allowed to return to work.
Defendants refused to move Gonzalez to a different shift, and plaintiff became fearful
that his harassment would continue. She did not return to her job.
       The complaint alleges five separate causes of action under California’s Fair
Employment and Housing Act (Gov. Code, § 12940 et seq.; FEHA): Two causes of
action for hostile work environment (one claim against GSC and StaffChex, and one
claim against Select); a claim for failure to prevent sexual harassment (against all three
defendants); a claim for sex discrimination (against all three defendants); and a retaliation

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claim against GSC. The complaint also contains a sixth cause of action for negligent
hiring, supervision, and retention (against GSC and StaffChex).
       On October 19, 2012, Select filed a motion to compel arbitration.
       On November 6, 2012, StaffChex filed a joinder to Select’s motion to compel
arbitration.
       On November 16, 2012, GSC also filed a joinder to Select’s motion to compel
arbitration.
       On December 19, 2012, plaintiff’s attorney informed the trial court that she was
dismissing Select. The matter was continued to March 6, 2013.
       On February 21, 2013, plaintiff dismissed Select from the action.
       On March 6, 2013, the trial court found GSC’s joinder to Select’s motion moot in
light of plaintiff’s request for dismissal of Select.
       On March 7, 2013, GSC filed a motion to compel arbitration. GSC’s motion was
based on the grounds that an arbitration agreement may be enforced by a nonsignatory
under theories of agency, equitable estoppel, and the third party beneficiary exception.
       On March 20, 2013, StaffChex joined GSC’s motion to compel arbitration.
       On April 8, 2013, plaintiff filed her opposition. She noted she had not signed any
paperwork with either of the two remaining defendants, and asserted GSC was not
entitled to enforce arbitration in Select’s place.
       On May 17, 2013, the trial court denied GSC’s motion to compel arbitration. The
court found GSC, as a nonsignatory, had not shown that it satisfied the exceptions for
either agency, equitable estoppel, or as an intended third party beneficiary. This appeal
followed.
                                        DISCUSSION
I. Standard of Review
       This appeal raises issues of law that are subject to our de novo review and
independent judgment. (See 24 Hour Fitness, Inc. v. Superior Court (1998) 66

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Cal.App.4th 1199, 1212.) To the extent the trial court resolves factual disputes in
denying arbitration, we review its determinations for the existence of substantial
evidence. (Hotels Nevada, LLC v. L.A. Pacific Center, Inc. (2012) 203 Cal.App.4th 336,
348 (Hotels Nevada).) But if there is no disputed extrinsic evidence, the lower court's
arbitrability determination is reviewed de novo. (Suh v. Superior Court (2010) 181
Cal.App.4th 1504, 1511-1512 (Suh).) Because plaintiff’s allegations and the language of
the relevant arbitration provision are undisputed, we independently review the trial
court’s determination that defendants were not entitled to enforce the arbitration clause.
II. Governing Principles
       Our analysis follows established principles. Public policy favors contractual
arbitration as a means of resolving disputes. (Mercury Insurance Group v. Superior
Court (1998) 19 Cal.4th 332, 342.) However, “[g]enerally speaking, one must be a party
to an arbitration agreement to be bound by it or invoke it. ‘ “The strong public policy in
favor of arbitration does not extend to those who are not parties to an arbitration
agreement, and a party cannot be compelled to arbitrate a dispute that he has not agreed
to resolve by arbitration. [Citation.]” ’ [Citations.]” (Westra v. Marcus & Millichap
Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763 (Westra).)
The rule that only parties to an arbitration agreement may be compelled to arbitrate is
subject to several exceptions. (Suh, supra, 181 Cal.App.4th at p. 1513 [discussing
theories under which nonsignatories may be bound to arbitrate claims].) When a
nonsignatory seeks to enforce an arbitration provision, the nonsignatory bears the burden
of establishing it must be treated as a party to the arbitration provision covering the
dispute. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15 (Jones).) Thus, it was
defendants’ burden to establish that they were entitled to invoke the Select arbitration
agreement against plaintiff.
       A petition to compel arbitration is a suit in equity seeking specific performance of
an arbitration agreement. (Hotels Nevada, supra, 203 Cal.App.4th at p. 347.) Code of

                                              4
Civil Procedure section 1281.2 provides that “[o]n petition of a party to an arbitration
agreement alleging the existence of a written agreement to arbitrate a controversy and
that a party thereto refuses to arbitrate such controversy, the court shall order the
petitioner and the respondent to arbitrate the controversy if it determines that an
agreement to arbitrate the controversy exists, unless it determines that: [¶] . . . [¶]
[g]rounds exist for the revocation of the agreement.”
III. Equitable Estoppel
       Defendants first assert that plaintiff should be compelled to arbitrate her claims
against them under the doctrine of equitable estoppel. “Under this theory, ‘ “a
nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff
to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately
founded in and intertwined’ with the underlying contract obligations.” ’ [Citations.] The
reason for this equitable rule is plain: One should not be permitted to rely on an
agreement containing an arbitration clause for its claims, while at the same time
repudiating the arbitration provision contained in the same contract.” (DMS Services,
LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1354.) “Because equitable estoppel
applies only if plaintiffs’ claims against the nonsignatory are dependent upon, or
inextricably bound up with, the obligations imposed by the contract plaintiff has signed
with the signatory defendant, we examine the facts alleged in the complaints.” (See
Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 229-230 (Goldman).)
       Contrary to defendants’ assertions on appeal, plaintiff is not making claims
against either defendant based on the agreement that she had with Select. She is not
asserting claims that “ ‘rely upon, make reference to, or are intertwined with claims’ ”
based on her original employment contract. (Jones, supra, 195 Cal.App.4th at p. 20.)
Rather, her complaint is based on sex discrimination that she experienced while working
at the GSC warehouse. Thus, she is not unfairly asserting claims against the defendants
that are based on her employment contract, while inequitably refusing to arbitrate

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pursuant to provisions of the same contract. In fact, she is not asserting any contractual
causes of action. “The sine qua non for allowing a nonsignatory to enforce an arbitration
clause based on equitable estoppel is that the claims the plaintiff asserts against the
nonsignatory are dependent on or inextricably bound up with the contractual obligations
of the agreement containing the arbitration clause.” (Goldman, supra, 173 Cal.App.4th
at pp. 213-214, italics added.)
       Defendants rely on Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262
(Boucher). That case is distinguishable in that the plaintiff in that case had stated claims
arising out of an alleged wrongful termination. In Boucher, the plaintiff entered into a
written contract with an employer for the position of senior vice-president and division
president for a three-year term. (Id. at p. 265.) The employment agreement stated that it
could not be modified, waived, or discharged except in a writing signed by plaintiff and
the employer. Shortly thereafter, the employer’s operations were transferred to another
entity, the nonsignatory defendant. The defendant refused to honor the plaintiff’s
contract with his original employer, and he refused to enter into a new agreement with the
nonsignatory defendant. Thereafter, he was terminated. He sued both employers,
alleging causes of action for nonpayment of wages, waiting time penalties, breach of the
employment contract, breach of the covenant of good faith and fair dealing, unfair
business practices, interference with contractual and prospective economic relations. (Id.
at pp. 265-266.) Because his claims were based on the original contract (which contained
an arbitration clause), the appellate court held the plaintiff was equitably required to
arbitrate his causes of action against the nonsignatory defendant. (Id. at p. 273.)
       Defendants assert that here, as in Boucher, “[i]t would be inequitable to allow
[plaintiff] to use the terms or obligations of [her] employment contract with Select as the
basis for her claims against GSC and StaffChex while simultaneously refusing to arbitrate
under another clause of that same employment contract.” However, unlike Boucher,
almost all of plaintiff’s claims are based on violations of FEHA. None are based on

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violations of the terms of her employment contract with Select. Specifically, her claims
do not rely on, presume the existence of, nor are they intertwined with any of the written
contractual obligations. Accordingly, we hold plaintiff is not equitably estopped from
avoiding arbitration.1
IV. Agency Relationship
       Defendants next claim they may enforce the arbitration agreement because GSC
and Select were in an agency relationship. “A nonsignatory to an agreement to arbitrate
may be required to arbitrate, and may invoke arbitration against a party, if a preexisting
confidential relationship, such as an agency relationship between the nonsignatory and
one of the parties to the arbitration agreement, makes it equitable to impose the duty to
arbitrate upon the nonsignatory.” (Westra, supra, 129 Cal.App.4th at p. 765.) “To
invoke the agency exception, [defendants] had to show that they ‘represent[ed] another,
called the principal, in dealings with third persons.’ (Civ. Code, § 2295.)” (Ronay
Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838.)
       In Westra, the plaintiffs sued a real estate agent for fraud in connection with their
purchase of a gas station. The purchase agreement identified the plaintiffs as the buyers,
and named the seller as well as the agent. It included an arbitration provision that stated
“Buyer, Seller and Agent” agreed to arbitrate controversies “aris[ing] with respect to the
subject matter of this Purchase Agreement or the transaction contemplated . . . .”

1
  We also disagree with defendants’ contention that plaintiff’s special employer/employee
relationship with GSC, standing alone, requires her to submit her claims to arbitration.
As noted above, where the parties are not in a contractual relationship, the public policy
favoring arbitration does not apply. In the absence of such a relationship, the general rule
is that arbitration may not be compelled absent extenuating circumstances. (See County
of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 244-
245 [“The fundamental assumption of arbitration is that it may be invoked as an
alternative to the settlement of disputes by means other than the judicial process solely
because all parties have chosen to arbitrate them.”].) The special employment
relationship arises out of the special employer’s right to exercise control over the
employee’s activities. (Mathieu v. Norrell Corp. (2004) 115 Cal.App.4th 1174, 1183.) It
does not arise out of the contractual relationship that exists between the employee and his
or her general employer.

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(Westra, supra, 129 Cal.App.4th at p. 762.) The plaintiffs and the seller signed the
agreement and initialed the arbitration provision; the agent did not. The agent’s petition
to compel arbitration was denied by the trial court. On appeal, the agent contended it was
entitled to enforce the arbitration provision because it had an agency relationship with
both of the signatories. The appellate court ruled the agent was acting as the agent of
both parties in a preexisting agency relationship, and the language of the arbitration
provision indicated all three parties agreed to arbitration. (Id. at p. 766.) Additionally,
the complaint alleged that the agent was acting as the agent of the seller and the plaintiffs
in the transaction. (Id. at pp. 766-767.) The court concluded (1) the language of the
arbitration provision was binding on the agent, (2) the plaintiffs were bound by their
judicial admission, and (3) the agent was entitled to enforce the arbitration agreement.
(Id. at p. 766.)
       In the present case, we note the arbitration agreement does not reference either of
the two appealing defendants. Nor did the defendants have a preexisting agency
relationship with either Select or plaintiff. This is especially clear in the case of
StaffChex, the temporary agency that employed Gonzalez. And GSC was merely one of
Select’s business clients. Accordingly, we conclude the exception for agency
relationships does not apply.
       Finally, while it is true the complaint alleges that all the defendants were acting as
the agents of each other, this is a standard boilerplate allegation that does not specifically
pertain to the contractual relationships any of the parties may have had with each other.
“Complaints in actions against multiple defendants commonly include conclusory
allegations that all of the defendants were each other’s agents or employees and were
acting within the scope of their agency or employment. Prominent treatises, while
recognizing that the Supreme Court has described such allegations as ‘egregious
examples of generic boilerplate’ [citation], still advise that ‘such allegations may be
necessary,’ especially ‘at the outset of a lawsuit, before discovery.’ [Citations.] If the . . .

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defendants’ argument were sound, then in every multidefendant case in which the
complaint contained such boilerplate allegations of mutual agency, as long as one
defendant had entered into an arbitration agreement with the plaintiff, every defendant
would be able to compel arbitration, regardless of how tenuous or nonexistent the
connections among the defendants might actually be.” (Barsegian v. Kessler & Kessler
(2013) 215 Cal.App.4th 446, 451.)2 This is an absurd result, and supports our
conclusions here.
V. Third Party Beneficiary
       Finally, defendants claim they may enforce the arbitration agreement because they
were intended third party beneficiaries to the original employment contract.
       Under Civil Code section 1559, a contract expressly made for the benefit of a third
person may be enforced by that individual. The word “expressly” in this section means
the negative of incidentally. (Spinks v. Equity Residential Briarwood Apartments (2009)
171 Cal.App.4th 1004, 1022 (Spinks).) Beneficiaries can be either incidental or intended
beneficiaries, but only the latter qualify as third party beneficiaries who can enforce an
agreement. (Ibid.)
       Determining whether a contract was made for the benefit of a third person turns on
the terms of the contract. If the terms necessarily require one party to confer a benefit on
another, then the contract and the parties to it intend to benefit that person. (Spinks,
supra, 171 Cal.App.4th at p. 1022.) It is not enough that the third party would
incidentally benefit from performance—the parties must have intended to confer a
benefit. As a result, those who are benefitted only incidentally or remotely are not third
party beneficiaries. (Ibid.) However, the third person need not be named and may be a

2
 We further note that it is likely both GSC and StaffChex will seek to contest the truth of
plaintiff’s allegations of mutual agency as this litigation progresses.

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member of a class of persons who the contracting parties intended to benefit. (Id. at
p. 1023.)
       Here, GSC was one of presumably many employers who Select contracted with to
provide temporary staffing. In this regard, the situation is not unlike that of a buyer who
intends to resell goods to a third party. In such cases, the buyer’s eventual customers are
not third party beneficiaries of the buyer’s contract with the seller. (Eastern Aviation
Group, Inc. v. Airborne Express, Inc. (1992) 6 Cal.App.4th 1448, 1453, citing
Corrugated Paper Products, Inc. v. Longview Fibre Co. (7th Cir. 1989) 868 F.2d 908,
912.) Similarly, here GSC is not a third party beneficiary of Select’s contract with
plaintiff. The situation with StaffChex is, again, even more attenuated. Defendants do
not explain how StaffChex, the employer of plaintiff’s alleged abuser, can be deemed
even an incidental beneficiary of the Select agreement. We conclude neither GSC nor
StaffChex are intended third party beneficiaries of the arbitration agreement between
plaintiff and Select.3 In light of our conclusions, we need not address plaintiff’s
argument that the arbitration clause is unconscionable.
                                      DISPOSITION
       The order is affirmed.4 Plaintiff is entitled to her costs on appeal.

3
  Defendants argue that our ruling here “would permit a party’s complete and utter
avoidance of its agreement to arbitrate claims by dismissing just the signatory to such
agreement, and ignoring the . . . strong policy supporting arbitration.” However, such a
result is not necessarily contrary to public policy: “Although California has a strong
policy favoring arbitration [citations], our courts also recognize that the right to pursue
claims in a judicial forum is a substantial right and one not lightly to be deemed waived.
[Citations.] Because the parties to an arbitration clause surrender this substantial right,
the general policy favoring arbitration cannot replace an agreement to arbitrate.”
(Marsch v. Williams (1994) 23 Cal.App.4th 250, 254, italics added.)
4
 Defendants’ request that, having affirmed the trial court’s order, we should remand this
case with an order to dismiss plaintiff’s complaint in its entirety on the ground that she
does not have a basis to maintain her employment-related claims against GSC and
StaffChex is denied.

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                                               _________________________
                                               Dondero, Acting P.J.

We concur:

_________________________
Banke, J.

_________________________
Becton, J.*

*
 Judge of the Contra Costa County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

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