A California court has ruled against a company's attempt to compel arbitration in a dispute involving wage and unfair competition claims. The complaint was filed by Darcel Stoner in the Court of Appeal of the State of California, Sixth Appellate District, on September 19, 2024, against SCA of CA, LLC.
The case centers around an arbitration agreement that SCA claims Stoner agreed to during his onboarding process. According to SCA, Stoner electronically acknowledged the company's dispute resolution policy by checking a box on a website screen. However, the trial court found that this action did not constitute acceptance of the arbitration agreement itself. Instead, it was merely an acknowledgment of the company’s policy regarding dispute resolution.
SCA's "Mutual Arbitration Agreement—California" stipulates that employees must sign the agreement to accept its terms. The agreement covers various employment-related claims and mandates arbitration administered by the American Arbitration Association (AAA). It also waives employees' rights to bring multi-plaintiff or class actions. Despite this clear requirement for a signature, SCA argued that Stoner's electronic acknowledgment was sufficient to bind him to the arbitration agreement.
Stoner's lawsuit alleges that SCA failed to pay prevailing wages and engaged in unfair competition practices. He filed these claims under Labor Code section 1720 et seq. and Business & Professions Code sections 17200-17209. Later, he amended his complaint to include violations under the Private Attorneys General Act of 2004 (PAGA). In response, SCA moved to compel arbitration for Stoner’s individual claims and sought to strike class claims while staying representative PAGA claims.
The trial court denied SCA’s motion, reasoning that checking an acknowledgment box did not equate to signing the arbitration agreement as required by its terms. The court emphasized that Stoner had merely accepted and acknowledged SCA’s policy on dispute resolution but had not agreed to arbitrate disputes by signing the Mutual Arbitration Agreement.
SCA appealed this decision but faced similar reasoning from the appellate court. The appellate court noted that under both federal and state law principles of contract interpretation, mutual assent is required for contract formation. The court highlighted multiple instances within the arbitration agreement where it explicitly stated that employees agree by signing it. Therefore, clicking an acknowledgment box could not substitute for a signature.
The appellate court further dismissed SCA's argument about context—specifically that Stoner had electronically acknowledged other policies and forms with identical boxes on the same day—as irrelevant since those acknowledgments did not necessarily involve enforceable agreements.
Ultimately, Judge Bromberg affirmed the trial court's decision denying SCA’s motion to compel arbitration. Judges Bamattre-Manoukian and Danner concurred with this ruling.
This case underscores the importance of clear contractual agreements and proper methods of acceptance in employment disputes involving arbitration clauses.