Michael Mitchell, Khiry Crawford, Tyler Echevarria, and Anthony McCune formerly worked for Lilac Solutions, Inc., a company that manufactures lithium-extraction technology. Each had signed an arbitration agreement upon accepting employment. On December 6, 2024, the four plaintiffs sued Lilac and five managerial employees with health-and-safety-related roles (collectively, the Lilac Defendants), alleging thirteen causes of action arising from claimed exposure to harmful chemicals, wrongful termination, and gender and disability discrimination, including five Fair Employment and Housing Act claims. The fifth cause of action, pleaded far more conclusorily than the other twelve, alleged sexual harassment.

Rather than immediately moving to compel arbitration, the Lilac Defendants answered the complaint, asserted their arbitration right only as an affirmative defense, and filed a cross-complaint and amended cross-complaint for trade secret violations, neither of which sought a stay of the case. Over the following three months, they served 12 sets of written discovery, noticed depositions of each plaintiff plus two third parties, served 11 nonparty subpoenas, responded to 33 sets of the plaintiffs’ own discovery requests, and filed seven procedural motions, including motions to seal, to designate the case complex, and for a protective order. Only after the plaintiffs filed an anti-SLAPP motion targeting the amended cross-complaint did the Lilac Defendants, five days later, file their motion to compel arbitration on March 18, 2025, arguing the EFAA did not apply because the sexual harassment claim was not plausibly pled.

The Alameda County Superior Court denied the motion to compel arbitration, finding the Lilac Defendants had waived their contractual right to arbitrate. Drawing on factors from Fleming Distribution Co. v. Younan (2020) 49 Cal.App.5th 73 and Kokubu v. Sudo (2022) 76 Cal.App.5th 1074, the court found the Lilac Defendants’ filing of a cross-complaint and amended cross-complaint without seeking a stay was inconsistent with invoking arbitration, that they had substantially invoked the litigation machinery before seeking arbitration, and that they had taken advantage of judicial discovery procedures unavailable in arbitration. The Lilac Defendants appealed.

In the published case of Mitchell et al. v. Lilac Solutions, Inc., et al., No. A173736 (Cal. Ct. App., 1st Dist., Div. 4, August 2026) — the Court of Appeal affirmed the trial court’s order denying the Lilac Defendants’ motion to compel arbitration.

Writing for a unanimous panel, Justice Streate first addressed the Lilac Defendants’ argument that the trial court relied on outdated law. Before the California Supreme Court’s 2024 decision in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, California courts applied a six-factor test from St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187 that required the party opposing arbitration to show prejudice. Quach, following the U.S. Supreme Court’s reasoning in Morgan v. Sundance, Inc. (2022) 596 U.S. 411, abandoned that arbitration-specific prejudice requirement, holding waiver instead requires clear and convincing evidence that a party knew of its contractual right and intentionally relinquished it, based solely on the waiving party’s own words and conduct.

The panel held the trial court’s order was consistent with Quach even though it never cited the decision and predated it only by a matter of months, since courts presume a trial judge knows the governing law absent an affirmative indication otherwise, and nothing in the order relied on the prejudice component Quach eliminated. Because the trial court’s approach was legally sound, the panel applied deferential substantial evidence review rather than the de novo review the Lilac Defendants sought, distinguishing a case where a trial court’s order necessarily predated Quach and thus could not have applied it.

Applying that deferential standard, the panel found each of the three factors the trial court relied on well supported. Filing a cross-complaint and amended cross-complaint without seeking a stay reflected an intentional relinquishment of the right to arbitrate, particularly given the Lilac Defendants’ extensive discovery campaign over three months, which the panel found factually comparable to the litigation conduct that supported waiver in Quach itself. The panel rejected the argument that filing compulsory cross-claims excused this conduct, since the Lilac Defendants’ overall pattern of words and conduct, not just their pleadings, supported the trial court’s finding.

The panel devoted particular attention to the Lilac Defendants’ argument that the EFAA put them in an impossible bind, since existing authority holds that a single viable sexual harassment claim within a complaint renders an entire case nonarbitrable, and they needed time to develop facts undermining the harassment claim before a motion to compel could succeed. The panel found this explanation did not match the record: the scope of discovery went well beyond what a motion targeting the fifth cause of action alone would have required, and the Lilac Defendants never filed or signaled a forthcoming motion for summary adjudication on that claim during the three months before their motion to compel, which followed the plaintiffs’ anti-SLAPP motion by only five days. The panel noted the Lilac Defendants could have sought a stay of proceedings except for narrowly tailored discovery aimed at the harassment allegations, or invoked the trial court’s inherent authority to sequence the case efficiently, but did neither. On this record, the panel found the more natural reading was that the motion to compel arbitration was a reactive litigation countermove to the anti-SLAPP motion rather than a considered EFAA strategy, though the panel emphasized no finding of gamesmanship was necessary to affirm.

Concluding that clear and convincing evidence supported the trial court’s finding that the Lilac Defendants intentionally abandoned their right to arbitrate through their conduct in the case’s early months, the panel affirmed the order denying arbitration and awarded the plaintiffs their costs on appeal.