Silvia Morales worked for San Diego Gas & Electric Company (SDG&E) for nearly 20 years, hired in September 2005 as a Human Resources Coordinator. When she was hired, Morales signed an offer letter and a formal acceptance, both stating her employment was “at-will” and both containing an arbitration clause covering “[a]ny dispute regarding any aspect of this letter of agreement or any action that allegedly violates any provision of this agreement.” About a week later, as a non-negotiable condition of employment, SDG&E had her sign a separate nine-page Employment, Confidential Information, and Invention Assignment Agreement containing nearly identical language, requiring arbitration of “[a]ny dispute regarding any aspect of this Agreement or any act which allegedly has or would violate any provision of this Agreement.” That later Agreement contained an integration clause stating it was “the entire Agreement and understanding” between the parties “relating to the subject matter herein” and that it “merges all prior discussions.”

In September 2024, SDG&E terminated Morales, citing a loss of confidence in her ability to work productively with leadership. Morales sued in January 2025, alleging disability discrimination, failure to accommodate, failure to engage in the interactive process, and retaliation under California’s Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.) and the California Family Rights Act (CFRA; Gov. Code, § 12945.2), and asserting those statutory violations as the basis for a common law claim that she was terminated in violation of public policy under Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167.

SDG&E moved to compel arbitration, arguing the parties had agreed to arbitrate “all employment-related disputes” arising from Morales’s employment. The San Diego County Superior Court granted the motion. Although it acknowledged the Agreement was a contract of adhesion, the court reasoned that because the Agreement characterized Morales’s employment as “at-will,” any claim invoking a recognized exception to at-will employment — including her statutory and Tameny claims — necessarily concerned “an aspect of” the Agreement and so fell within the arbitration clause. Morales petitioned for a writ of mandate, and the Court of Appeal issued an order to show cause.

In the published case of Morales v. The Superior Court of San Diego County, No. D087448 (August, 2026) — the Court of Appeal granted Morales’s petition, directing the trial court to vacate its order compelling arbitration and enter a new order denying SDG&E’s motion.

The unanimous panel first resolved which document controlled. Because the later-signed Agreement contained an integration clause limited to “the subject matter herein,” the court held it was a partial integration that superseded the earlier offer and acceptance letters specifically as to arbitration, even though it left other employment terms like compensation untouched.

Turning to the Agreement’s arbitration language itself, the panel distinguished it from the broad, frequently enforced arbitration clauses covering any dispute “arising from, related to, or having any relationship or connection whatsoever with” a plaintiff’s employment, of the kind at issue in Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233 and Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, as well as the recently decided Fuentes v. Empire Nissan, Inc. (2026) 19 Cal.5th 93. The Agreement here instead used narrower language, requiring arbitration only of disputes “regarding any aspect of” the Agreement or acts that would “violate” it — wording the court found comparable to other agreements California courts have construed narrowly, limited to disputes over the interpretation or performance of the contract itself rather than every dispute connected to the employment relationship generally.

Applying that narrower scope, the panel held Morales’s FEHA, CFRA, and Tameny claims did not concern “any aspect of” the Agreement and did not allege any “violation” of it. Her claims rested entirely on statutory protections and public policy limitations on at-will employment that exist independently of, and are not created by, the parties’ contract, citing Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66 and Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083. Morales did not dispute that the Agreement classified her as an at-will employee; she instead invoked recognized statutory and public-policy exceptions to that at-will status, claims the court found had “nothing to do with” the Agreement’s own terms. The panel noted SDG&E could easily have drafted broader language tying arbitration to Morales’s employment generally, as the employers in Fuentes and comparable cases had done, but did not do so here.

The panel further held that even if the clause’s scope were considered ambiguous, that ambiguity would not favor SDG&E. While California law generally favors arbitration, courts cannot compel arbitration of disputes the parties did not actually agree to arbitrate, citing Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, and any ambiguity in an employer-drafted adhesion contract must be construed against the drafting employer, citing Sandquist. The court found it particularly unreasonable to expect a newly hired, legally unsophisticated employee, handed a stack of required paperwork, to anticipate that language limited to disputes over an “aspect” of the Agreement would reach statutory discrimination and public-policy wrongful-termination claims entirely independent of the contract. Having concluded the arbitration clause did not apply on its own terms, the panel found it unnecessary to reach Morales’s alternative arguments for unenforceability, granted the petition, and directed entry of a new order denying arbitration, with costs to Morales.