Sunshine Behavioral Health, LLC employed Britnee Campbell as an hourly, nonexempt worker from approximately October 2018 to March 2019. Sunshine contends that when Campbell began her employment, she signed an arbitration agreement that included a class action waiver.
On May 23, 2022, Campbell, as the lead plaintiff in a putative class action, filed the instant complaint. The complaint alleged a single cause of action for violations of Business and Professions Code section 17200, et seq., based on violations of employment law. Among other things, the complaint alleged employees had not been paid proper overtime compensation, had been required to work through meal and rest breaks without compensation, had not been paid minimum wage, and had not been paid in a timely manner.
Sunshine filed an answer on August 3, 2022. The answer included an affirmative defense that “one or more of the putative class members” signed an arbitration agreement that precluded them from participation.
According to Campbell’s counsel, prior to the initial status conference, which was set for September 15, 2022, defense counsel proposed the idea of early mediation to explore settling the case. Campbell’s counsel represents that in the joint status conference statement, Sunshine represented to the court that “formal discovery is premature at this time, as Defendant believes that the parties would benefit from early informal settlement discussions, including attending private mediation” Sunshine also stated: “Defendant is amenable to private mediation and a stay of the case pending the completion of mediation. Participation in private mediation would include an informal exchange of data and information sufficient to prepare for settlement negotiations.” The status conference was continued to December 14.
The parties agreed to mediate the case. On October 27, 2022, they entered into a detailed agreement entitled “Joint Stipulation Regarding Discovery and Mediation” (the joint stipulation). The joint stipulation stated, among other things, that the parties agreed to participate in private mediation on April 18, 2023, and to stay discovery. Sunshine agreed to produce documents and data prior to the mediation and to refrain from certain conduct with regard to potential class members. The parties also agreed that if mediation was unsuccessful, the parties had met and conferred on an appropriate notice to the class pursuant to Belaire-West Landscaping, Inc. v. Superior Court (2007) 149 Cal.App.4th 554 (a Belaire-West notice), which would be mailed out by an agreed-upon company seven days after the failed mediation. According to Campbell’s attorney, reaching the joint stipulation required “substantial negotiations,” including “weeks” spent on the Belaire-West notice.
On November 22, 2022, Sunshine asserted it located, for the first time, an arbitration agreement in Campbell’s personnel file. No explanation was offered as to why this document was not or could not have been located earlier. Sunshine did not inform Campbell of this discovery until December 7, 2022, when preparing the status conference report for the court.
Months later, on May 3, 2023, Sunshine filed its motion to compel arbitration. The motion was not particularly complex or voluminous.
At the May 10 status conference, the court noted the failure to participate in mediation was “a violation by defendant of the Court’s stipulation and order which was filed on [March 24, 2023].”
The court held a hearing on the motion to compel arbitration on July 14, 2023. The court, after discussion, found that Sunshine, “under an analysis of the St. Agnes factors, . . . waived its right to compel Plaintiff’s claims to arbitration. Sunshine appealed.
The court of appeal affirmed in the published case of Campbell v. Sunshine Behavioral Health -G062886 (September 2024).
“Like the trial court, we do not unquestioningly accept Sunshine’s representation that it discovered the arbitration agreement for the first time on November 22, 2022. The trial court was highly skeptical, using quotations around the word “discovered” at several points in the minute order denying the motion to compel.”
As in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, the defense raised by Campbell was waiver. “The waiver inquiry is exclusively focused on the waiving party’s words or conduct; neither the effect of that conduct on the party seeking to avoid enforcement of the contractual right nor that party’s subjective evaluation of the waiving party’s intent is relevant. [Citations.] This distinguishes waiver from the related defense of estoppel, ‘which generally requires a showing that a party’s words or acts have induced detrimental reliance by the opposing party.’ [Citations.] To establish waiver, there is no requirement that the party opposing enforcement of the contractual right demonstrate prejudice or otherwise show harm resulting from the waiving party’s conduct.”