Litigation originated against Sierra Pacific Industries in October 2018 when plaintiff Quinton McDonald, a former nonexempt employee at one of Sierra Pacific’s California sawmills, filed a class action complaint alleging various wage and hour violations under the Labor Code and related unfair competition claims under the Business and Professions Code. The complaint sought to represent eight classes of current and former nonexempt employees, without excluding those who had signed arbitration agreements.

Sierra Pacific, a lumber manufacturer operating facilities across California, answered the initial complaint without asserting arbitration as an affirmative defense. Although it briefly raised arbitration in its response to the first amended complaint in 2019, it omitted the defense from its answer to the operative second amended complaint filed in 2021.

Discovery proved contentious. In December 2018, McDonald requested production of documents, including arbitration agreements applicable to nonexempt employees. Sierra Pacific objected on grounds of overbreadth and third-party privacy. The trial court granted McDonald’s motion to compel in February 2020, ordering production of the agreements without confidentiality restrictions absent a protective order.

Sierra Pacific’s supplemental response provided only an unsigned form agreement and stated that approximately 2,000 nonexempt employees had signed it, without producing signed copies or identifying signatories. Despite multiple instances of monetary sanctions for other discovery violations in 2022, Sierra Pacific did not produce signed agreements until after class certification.

Plaintiffs,including Gary W. Dunehew and Robert L. Sherrill, moved for class certification in October 2021, proposing classes that included signatory employees. Sierra Pacific opposed, noting the existence of arbitration agreements but producing only one unsigned form. The trial court certified eight classes in November 2022. Shortly thereafter, in response to a new production request, Sierra Pacific disclosed over 3,400 signed agreements between January and March 2023. It immediately moved to compel arbitration against absent class members who had signed the agreements, arguing the Federal Arbitration Act governed and that the motion was timely under Sky Sports, Inc. v. Superior Court (2011) 201 Cal.App.4th 1363, as it could not enforce arbitration against unnamed class members pre-certification.

Plaintiffs opposed on waiver grounds and separately moved for sanctions based on Sierra Pacific’s failure to comply with the February 2020 order. They highlighted Sierra Pacific’s extensive participation in classwide discovery involving signatories (e.g., producing records for 642 signatories in a sample of 1,388 putative members without differentiation), reliance on signatory declarations to oppose certification, and involvement in two mediations aimed at classwide settlements.

The trial court denied the motion to compel in August 2023, applying the multifactor test from St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187 and finding Sierra Pacific’s conduct inconsistent with an intent to arbitrate. It also granted sanctions, precluding Sierra Pacific from introducing evidence of the agreements or arguing that class members signed them.

On appeal, the appellate court reviewed the waiver finding de novo under the updated standard from Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, which requires clear and convincing evidence that the party knew of its arbitration right and intentionally relinquished it through inconsistent conduct, without requiring prejudice.

The Court of Appeal affirmed the trial court’s denial of defendant Sierra Pacific Industries’ motion to compel arbitration and dismissed the appeal from the trial court’s order imposing evidentiary and issue sanctions.In the published case of Sierra Pacific Industries Wage and Hour Cases -C099436 (December 2025).

The court concluded Sierra Pacific waived its rights, emphasizing its years-long litigation without asserting arbitration, defiance of the discovery order, undifferentiated class discovery, mediation participation, and deletion of the arbitration defense. It distinguished cases like Sky Sports, Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, and Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281, where delays were justified by intervening legal changes, and drew support from Hill v. Xerox Business Services, LLC (9th Cir. 2023) 59 F.4th 457, holding that pre-certification conduct can establish waiver.
Regarding sanctions, the court dismissed the appeal for lack of jurisdiction, as no statute authorizes direct appeal from evidentiary or issue sanctions orders (Code Civ. Proc., § 904.1). It rejected Sierra Pacific’s argument that the order was effectively an arbitration denial appealable under section 1294 or ancillary under section 1294.2, noting the motions’ distinct purposes and logical separateness.