Arbitration is a creature of agreement, and no right or obligation to arbitrate exists without a mutual agreement. Is an electronic acknowledgement on an employer’s web platform enough to prove the agreement?
Is There an Agreement Reading Between the LINAs?
Cigna Corporation’s employee handbook, which contains an arbitration agreement, was distributed by e-mail to employees of all company subsidiaries, including the Life Insurance Company of North America (LINA), in November 2013. The arbitration provision appears on page 37 of the 44-page handbook and states:
By accepting employment, compensation and/or benefits, you have agreed to arbitrate serious employment-related disagreements between you and the company. Notwithstanding any other provision in this handbook, the duty to arbitrate employment related disagreements is a contractual obligation that both you and the company are required to adhere to. . . . The arbitration process is administered by the American Arbitration Association (AAA) using the company’s Employment Dispute Arbitration policy and Employment Dispute Arbitration Rules and Procedures. . . . Copies of these documents can be found in the “Workplace & Culture” section of the Your Cigna Life intranet under “Workplace Policies and Programs.”
The handbook’s final two pages contain an “acknowledgement and agreement” indicating employees should return to the handbook page on the intranet and click the box next to the acknowledgement statement and then the “Done” button to record their acceptance of Cigna’s policies. Essentially, they understood and agreed any disputes arising out of or relating to their job candidacy, employment, or termination (including discrimination or wage and hour claims) would be resolved under the employment dispute arbitration program, which includes final mandatory binding arbitration. They also agreed the arbitration policy and dispute rules and procedures formed a legally enforceable contract with the company.
The arbitration policy and the rules and procedures weren’t provided to employees contemporaneously with the handbook. The policy generally contained much of the same information provided in the handbook. The rules and procedures described additional requirements, including time limits within which an arbitration demand must be filed:
Any demand for arbitration must be sent within the time limits that would apply to the party’s claim if it were being resolved in court and not by arbitration. . . . If the Arbitration is an appeal from [an internal grievance process], the demand must be submitted within thirty (30) calendar days after receiving the final decision in the internal [process].
The rules and procedures also specified the scope of discovery (or pretrial fact-finding) that would apply to the arbitration, which violated many of the due process protections imposed by California courts:
A party will be entitled to take no more than three days of depositions. . . . A party may not depose any employee of any Cigna company who certifies in writing to the arbitrator that he/she has no direct knowledge of the facts surrounding the dispute. [In addition,] the scope, timing, and procedure for discovery may be expanded, altered, amended or otherwise changed to accommodate the circumstances of a particular arbitration upon a showing of good cause as determined by the arbitrator.
Facts
A LINA HR official testified that as part of the handbook distribution in 2013, an e-mail was sent to Cigna employees at each covered subsidiary, including LINA, in the latter part of the year. Each covered employee would have been required to log into the website using their own unique username and password. Once logged into the site, they would have been directed to the “Take Action” section, where they were then required to specifically acknowledge the agreement to be bound by the policies, by marking the box next to “acknowledgement” and then affirmatively clicking “Done.”
At some point, the HR department would receive a report listing employees who hadn’t completed the process. Then, those individuals were informed they would be terminated if they didn’t sign the acknowledgement.
LINA employee Fiona Trinity filed a discrimination and harassment lawsuit based on disability by association and age in violation of California’s Fair Employment and Housing Act (FEHA) and wrongful termination in violation of public policy. The complaint sought economic, noneconomic, and punitive damages as well as attorneys’ fees. She testified:
I am certain that I never saw, reviewed, received, submitted, agreed, consented, or signed—electronically, manually or otherwise—Cigna’s Arbitration Agreement, Cigna Company’s Employment Dispute Arbitration Policy, nor the Cigna’s Employment Dispute Arbitration Rules and Procedures neither in 2008 or in 2014 or ever thereafter. . . . I never signed off on any arbitration agreement, electronically or otherwise.
Court, Not Arbitrator, Decides If There Is Agreement to Arbitrate
First, LINA argued the arbitration agreement left it to the arbitrator to decide whether the dispute was arbitrable, saying, “The arbitrator will have discretion to resolve any question or dispute that may arise before, during and after the arbitration hearing.” The rules and procedures also stated:
When a party asserts in a timely fashion that the matter(s) raised by any other party is (are) not arbitrable, the arbitrator will render a decision on the arbitrability of that issue before the parties conduct discovery or proceed with the claims on the merits. The arbitrator shall have the power to rule on his/her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.
But that reference comes into play only after deciding the “threshold question” presented by every petition to compel arbitration, i.e., whether an agreement to arbitrate exists. The overarching principles include:
- Arbitration is a matter of contract;
- Parties can’t be required to submit to arbitration any dispute they haven’t agreed to put forward; and
- A strong public policy favors contractual arbitration, but it doesn’t extend to parties who haven’t agreed to arbitrate.
The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence an agreement to arbitrate a dispute exists. Despite the shifting burden of production, “[t]he burden of proving the agreement by a preponderance of the evidence remains with the moving party.” Notwithstanding a provision that clearly and unmistakably delegates arbitrability issues to the arbitrator, if a party “is claiming that it never agreed to the arbitration clause at all—e.g., if it is claiming forgery or fraud in the factum—then the court must consider that claim.” A court should order arbitration only if it is convinced an agreement has been formed.
LINA Doesn’t Carry Its Burden of Proving Agreement to Arbitrate
The trial court held an evidentiary hearing on the factual issue. The court wrote:
Because there are conflicting facts in terms of whether Ms. Trinity executed the acknowledgement and agreement [in] January 2014, I’m not entirely certain what would be most beneficial to the court in terms of establishing the credibility issue that you want to have determined for the evidentiary hearing. . . . I need to be able to assess the credibility of the witnesses, in particular to make a determination as to whether or not there was an agreement to arbitrate.
After the hearing, the trial court denied LINA’s motion to compel arbitration, finding it had failed to prove Trinity agreed to the relevant provision in the employee handbook. Despite the company’s testimony an e-mail confirmation would have been sent to Trinity upon her agreement to the handbook’s terms, the court emphasized no such message was produced, and the employee denied receiving one.
Though LINA argued the trial court erred in ruling there was no agreement to arbitrate, the court of appeal may not reweigh the evidence and is bound by the lower court’s credibility determinations. The employer’s evidence was neither uncontradicted nor of such character and weight as to leave no room for a judicial determination that it was insufficient.
Because of the finding there was no agreement to arbitrate, the court of appeal didn’t reach the issue of whether the arbitration terms were too unconscionable to enforce. The trial court was upheld, and arbitration was denied. Trinity v. Life Insurance Company of North America (LINA), B312302, Court of Appeal, Second Appellate District Division 7.
Bottom Line
The employer has the burden to prove the existence of an agreement to arbitrate, and the best proof is a signed, integrated agreement. Don’t rely on lesser proof, such as handbook language or a digital “I agree” box. Unless the court affirmatively finds an agreement to arbitrate, no arbitration will be compelled.
Mark Schickman is the editor of California Employment Law Letter and the founder of Schickman Law in Berkeley. You can reach him at mark@schickmanlaw.com.
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