No Initials, No Problem: California Court of Appeal Holds Failure to Initial Not Enough to Prevent Arbitration

“What if neither party to an arbitration agreement places initials next to a jury waiver contained in the agreement, even though the drafter included lines for their initials?” asked the California Court of Appeal in Martinez v. BaronHR, Inc.,Cal. App. LEXIS 631 (2020).

The employee in Martinez was given several employment-related documents, including an arbitration agreement on the day he was hired. The employee later filed a lawsuit against his employer, asserting 18 employment-related causes of action. The employer moved to compel arbitration, but the trial court denied the motion.

The arbitration agreement included three separate sections acknowledging the parties’ mutual intent to arbitrate all disputes. Notably, one section stated, “Employer and Employee each agree that arbitration, as provided for in this Agreement, shall be the exclusive forum for the resolution of any covered dispute between the parties. In agreeing to arbitration, both Employer and Employee explicitly waive their respective rights to trial by jury.” Next to the margin of the final sentence was an area to be initialed by both parties. But neither the employee nor the employer initialed.

The Court of Appeal concluded that the arbitration agreement should nevertheless have been enforced by the trial court.  The Court of Appeal reasoned that the agreement’s language established the parties’ mutual assent to submit all employment-related disputes to arbitration and to waive the right to a jury trial.  Despite the lack of initials next to one of the jury waiver provisions, the Court of Appeal stressed that the parties manifested their assent to be bound by all the terms of the arbitration agreement because: (1) both parties signed at the signature block at the end of the arbitration agreement; and (2) the arbitration agreement explicitly stated that by signing the agreement, the parties agreed to be bound by all its terms.

Finally, the Court of Appeal stated the trial court should not have considered a declaration submitted by the employee, stating, “[U]nexpressed subjective intentions are irrelevant to the issue of mutuality.”  In other words, unspoken intentions do not affect whether the parties agreed to arbitrate when the language in the agreement is clear.

Jackson Lewis will continue to monitor legal updates pertaining to arbitration agreements. If you have questions about employment arbitration agreements contact a Jackson Lewis attorney to discuss.