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Arbitration Class Action Defense Cases-Aguilar v. BLH Construction: California Court Affirms Trial Court Order Denying Petition To Compel Arbitration Of Class Action Thereby Permitting Labor Law Class Action To Proceed In State Court

In an Unpublished Opinion, California Appellate Court Holds that Trial Court did not Abuse Discretion in Denying Petition to Compel Arbitration of Labor Law Class Action on Ground that Defense Attorneys Failed to Prove that Plaintiffs Signed Arbitration Agreement

Plaintiffs filed a class action lawsuit against their employer, BLH Construction alleging labor law wage and hour claims. Aguilar v. BLH Construction Co., 2007 WL 4418105, *1 (Cal.App. December 19, 2007). Defense attorneys moved to compel arbitration, but the court opinion is silent on the arbitration clause purported to bar class actions or whether the defense sought to enforce a class action arbitration waiver. Id. The trial court denied the motion, finding that plaintiffs had not signed the arbitration agreement, id. The defense appealed, arguing that the trial court abused its discretion “by not continuing the hearing to permit oral testimony and cross-examination of witnesses on the issue.” Id. The Court of Appeal affirmed.

BLH hired plaintiffs as construction workers in February 2005 and, on the day they were hired, provided each plaintiff with an employee handbook, a form entitled “Receipt of Handbook and Acknowledgement of At-Will Employment,” and a form entitled “Mutually Binding Arbitration Agreement.” Aguilar, at *1. “Each form had lines for the employee’s signature and the date of signing.” Id. As part of the petition to compel arbitration, defense attorneys submitted signed copies of the “Mutually Binding Arbitration Agreement.” Id. Plaintiffs, however, insisted that they had not signed this document and by declaration claimed that their signatures had been forged, id. In response, defense attorneys submitted (1) the declaration of a supervisor stating that he had given plaintiffs the employee documents referenced above and that plaintiffs “signed and dated the two signature pages contained within the Employee Handbook,” (2) the declaration of BLH’s chief operations officer stating that plaintiffs had signed the mutually binding arbitration agreement, and (3) the declaration of BLH’s counsel stating that the signed documents had been obtained from the BLH custodian of records, “and that it was BLH’s custom and practice to have each employee sign the arbitration agreement.” Id.

The trial court’s tentative ruling was to deny arbitration and allow the class action to proceed because BLH had failed to introduce admissible evidence that plaintiffs had signed the arbitration agreement. Aguilar, at *1. At oral argument, the defense sought leave to conduct discovery, to present testimony and to cross-examine witnesses “to determine whether [plaintiffs] authorized someone else to sign the agreements.” Id. The trial court denied defendant’s request and found that the signatures on the agreements submitted by BLH did not match the signatures on plaintiffs’ declarations in opposition to the motion, id. BLH appealed, arguing that the trial court erred in failing to hold an evidentiary hearing before ruling on the motion, id., at *2. The Court of Appeal disagreed.

The appellate court noted that as the moving party BLH bore the burden of establishing the existence of an enforceable arbitration agreement. Aguilar, at *2 (citing Flores v. Evergreen at San Diego, LLC, 148 Cal.App.4th 581, 586 (Cal.App. 2007)). The Court further noted that under California law petitions to compel arbitration are to be “heard in a summary way.” Id. (quoting Cal. Code Civ. Proc., § 1290.2). Finally, the Court of Appeal recognized that Rule 3.1306 of the California Rules of Court permits the trial court, in its discretion, to receive oral testimony and cross-examination. Id.

At bottom, the appellate court rejected the defense theory that the trial court had failed to hold an “evidentiary hearing”: “in this case, the trial court did hold an evidentiary hearing * * *, here the court considered the declarations filed by both parties before denying the motions.” Aguilar, at *2. The Court further rejected the defense argument that the trial court was required to receive oral testimony in order to resolve the dispute created by the declarations, and quoted California Supreme Court authority to the contrary. Id. (quoting Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394, 414 (Cal. 1996)). In support of the trial court’s resolution of the factual dispute, the Court of Appeal found the defense evidence “weak” when compared with plaintiffs’ evidence “that they did not sign the agreements, that Aguilar’s name was misspelled on the agreement and that the signatures on their declarations bore no resemblance to the signatures on the agreements submitted by BLH.” Id. Moreover, California case law holds that “trial court sitting as trier of fact can compare signature with exemplar to determine whether signature was a forgery.” Id. (citing People v. Rodriguez, 133 Cal.App.4th 545, 554 (Cal.App. 2005)).

Finally, the Court of Appeal noted that defense attorneys “had an opportunity to present evidence at the arbitration hearing” but failed to do so. Aguilar, at *3. Specifically, defense attorneys did not present “any credible documentary evidence, such as employment applications or driver’s licenses, to show that the signatures appearing on arbitration agreements were those of Aguilar and Garcia.” Id. Because the trial court was not “required” to give BLH a second hearing or a further opportunity to present such evidence, it did not abuse its discretion in denying the petition to compel arbitration. Id. Accordingly, the appellate court affirmed the lower court’s order. Id.

NOTE: Because this opinion was not certified for publication, it is governed by California Rules of Court Rule 8.1115, which restricts citation of unpublished opinions in California courts.

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