Metropolitan News-Enterprise


Thursday, October 18, 2012


Page 1


C.A. Rejects Claim of ‘Implied-in-Fact’ Agreement to Arbitrate

Employee Assigned to Collect Signed Pacts From Co-Workers Did Not Agree to One Herself, Panel Says




An employee who was assigned to collect signed arbitration agreements from her co-workers, and who informed her superiors that a handful of them had not signed—but failed to mention that she had not done so herself—was not required to arbitrate her own claims, the Court of Appeal for this district has ruled.

Div. Four Tuesday affirmed Los Angeles Superior Court Judge Susan Bryant-Deason’s ruling that Susan Gorlach did not have, and was not estopped to deny having, a binding arbitration agreement with The Sports Club Company.

Gorlach quit the company, for which she had worked as human resources manager, in August 2010 and sued it the following January. She charged the company with wrongful termination, retaliation, paramour sexual harassment, intentional infliction of emotional distress, defamation, breach of contract, and negligence.

The company filed a general denial and pled 26 affirmative defenses, including that the plaintiff was required to arbitrate.

Updated Handbook

Evidence presented in support of the company’s motion to compel arbitration showed that Gorlach had been responsible for preparing an updated company handbook containing an arbitration agreement and was in charge of getting every employee to sign it as a condition of new or continued employment.

Gorlach made numerous presentations regarding the handbook and the arbitration pacts, and when employees did not sign immediately, she followed up with them. This activity continued over the course of several months, and Gorlach periodically reported as to how many of the more than 400 employees had attended presentations, how many had signed, and how many had not signed.

One week before resigning, Gorlach sent her superiors an email message, saying she was going to give the remaining unsigned employees “time to seek counsel prior to signing to prevent any forced agreement.”

Trial Court Ruling

In denying the motion to compel, Bryant-Deason said she believed that Gorlach made “omissions which intentionally misled” company officials “to believe that she was on board and she said she had signed.” But because she had quit without signing and “clearly didn’t want to go to arbitration,” the judge concluded, there was no agreement.

Justice Steven Suzukawa, writing for the Court of Appeal, agreed there was no binding agreement, rejecting the company’s equitable estoppel argument as well as its claim of an implied agreement.

Sports Club, he said, never relied on Gorlach’s implied representations that she had signed. The process of obtaining signatures had not been completed, and there had been no terminations of non-signing employees and no decision made on how to handle refusals to sign, he said, so it could not be concluded that she would have been terminated prior to her resignation date if the company knew she had not signed.

Nor, the justice went on to say, was there an implied contract under Civil Code Sec. 1621. The statute requires that “the existence and terms” of such a contract be “manifested by conduct,” and that did not happen, Suzukawa concluded.

For a contract to be implied in fact, the justice explained, there must be mutual intent. Gorlach’s conduct, he said,  made it clear that her intent was to avoid a binding arbitration agreement, not to enter into one.

Attorneys on appeal were William O. Stein and Eric A. Cook of Epstein Becker & Green for Sports Club and Carney R. Shegerian for Gorlach.

The case is Gorlach v. The Sports Club Company, B233672.


Copyright 2012, Metropolitan News Company