DONDERO, J.—
After plaintiff M. Todd Jenks resigned from his position as an associate attorney, he sued his employer, defendant DLA Piper Rudnick Gray Cary US LLP (DLA Piper), alleging the law firm had violated the terms
On May 8, 2000, the law firm Gray Cary Ware & Friedenrich (Gray Cary) sent plaintiff a letter offering him employment as an associate attorney with the firm (Offer Letter). The Offer Letter included a provision requiring both parties to submit all disputes or claims relating to or arising out of their employment relationship to binding arbitration.
On May 12, 2000, plaintiff accepted Gray Cary's offer.
On January 1, 2005, Gray Cary merged into DLA Piper.
On February 19, 2006, plaintiff signed a "Confidential Resignation Agreement and General Release of Claims" (Termination Agreement). Under the Termination Agreement, DLA Piper agreed to "continue to provide [plaintiff] with insurance coverage and other benefits, insurance and otherwise, currently provided by the Firm to [him]" until August 2006, when his employment with DLA Piper would officially terminate. The Termination Agreement is silent with respect to dispute resolution.
In October 2006, DLA Piper published a document entitled, "Wraparound Plan Document and Summary Plan Description for the Piper Rudnick LLP Welfare Benefit Plan" (Wraparound Plan).
On March 11, 2010, DLA Piper filed a petition to compel arbitration.
On March 23, 2010, plaintiff filed his opposition to the petition. In his opposition, he asserted the Termination Agreement constituted a novation of the Offer Letter, thereby extinguishing the arbitration provision. He also argued that even if the arbitration provision had survived, claims involving the STD plan were not subject to arbitration.
On May 13, 2010, the trial court entered its order granting defendant's petition to compel arbitration. The court found the Termination Agreement was a separate agreement applying to issues of termination only, and that it did not supersede the arbitration agreement contained in the Offer Letter. The court also found all of plaintiff's claims were subject to arbitration. Judicial proceedings were stayed pending resolution of arbitration.
On July 7, 2010, plaintiff filed a first amended complaint (FAC) in the arbitration proceeding, alleging eight causes of action.
On August 22, 2013, after 11 hearing days of arbitration, the arbitrator issued an award. The arbitrator determined DLA Piper had breached the Termination Agreement, finding plaintiff was entitled to compensatory damages for STD payments of which he was deprived as a result of the reduced salary figure used to compute his benefits. The arbitrator also concluded plaintiff had suffered some degree of emotional distress caused by DLA Piper's conduct. The arbitrator awarded $41,000 in contract damages plus interest from the date of the breach, and $45,000 in emotional distress damages. Plaintiff was awarded $7,535.67 in costs. All his other claims were denied.
On November 20, 2013, plaintiff filed a petition in federal district court to confirm in part, vacate in part, and/or modify the arbitration award.
On December 11, 2013, DLA Piper filed a petition in federal district court to dismiss plaintiff's petition.
On December 31, 2013, plaintiff filed a demurrer to DLA Piper's state court petition to confirm the arbitration award.
On February 4, 2014, the trial court filed its order granting DLA Piper's petition to confirm the arbitration award. The court overruled plaintiff's demurrer, and denied a motion for an order staying the proceedings.
On May 14, 2014, the trial court filed its statement of decision confirming the arbitration award. The court first found it lacked jurisdiction to vacate the arbitration award, because plaintiff's opposition was untimely filed. The court also concluded plaintiff had forfeited his argument that DLA Piper, as a nonsignatory, lacked standing to enforce the Offer Letter's arbitration agreement, observing that even if the argument was not forfeited, it failed on its merits because DLA Piper had succeeded to Gray Cary's contractual rights.
On June 26, 2014, plaintiff filed objections to the proposed judgment.
On July 10, 2014, the district court dismissed plaintiff's federal petition for lack of federal jurisdiction. (Jenks v. DLA Piper (US) LLP (N.D.Cal., July 10, 2014, No. 13-cv-05381-VC) 2014 U.S.Dist. Lexis 94680.)
On August 26, 2014, the trial court filed an amended judgment. In conformity with the arbitration award, judgment was entered in favor of plaintiff in the sum of $120,112, plus $12,142 in postaward interest. He was also awarded costs.
On September 22, 2014, plaintiff filed a motion for a new trial.
On November 20, 2014, the trial court filed its order denying the motion for a new trial.
On December 24, 2014, plaintiff filed a notice of appeal from the judgment and the order denying the motion for a new trial.
An order denying a motion for new trial will not be set aside unless there was an abuse of discretion that resulted in prejudicial error. (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 871-872 [135 Cal.Rptr. 647, 558 P.2d 545].)
On appeal, plaintiff renews his argument that DLA Piper did not have standing to enforce the arbitration agreement because the firm was not a signatory to the Offer Letter containing the arbitration provision.
We agree with DLA Piper that plaintiff forfeited his nonsignatory argument by failing to raise it below in opposition to the petition to compel arbitration. Although plaintiff resisted the petition to compel, he did so on the ground that the Termination Agreement extinguished the arbitration agreement because it operated as a novation of the Offer Letter. He also contended that under the Wraparound Plan, disputes relating to STD benefits were to be resolved by litigation in state or federal court. He did not make any arguments based on DLA Piper's status as a nonsignatory to the arbitration agreement, even though this circumstance is apparent on the face of the Offer Letter. Nor did he raise this issue at any point during the arbitration proceeding, even though he reserved the issue of arbitrability in his FAC. We therefore conclude plaintiff has forfeited this argument. (See, e.g., Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 328-329 [27 Cal.Rptr.3d 10] [party to arbitration agreement is generally obliged to raise unconscionability issues in court at the time she initially resists arbitration]; see also Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30-31 [10 Cal.Rptr.2d 183, 832 P.2d 899] [a party contending the entire arbitration agreement is unlawful generally must raise the issue at the outset in the trial court].)
Marenco is dispositive of plaintiff's argument. In that case, 180 Connect had entered into an employment arbitration agreement with the plaintiff employee. DirecTV later acquired 180 Connect and retained its employees, including the plaintiff. (Marenco, supra, 233 Cal.App.4th at pp. 1412-1413.) After he filed a class action alleging violations of state wage and unfair competition laws, DirecTV moved to compel arbitration. (Id. at p. 1414.) In support of its motion, the company submitted the declaration of its assistant secretary who attested that during the acquisition of 180 Connect, DirecTV had assumed all of 180 Connect's rights and obligations, including those arising from 180 Connect's employment relationships.
Plaintiff next claims the arbitration agreement is expressly limited to matters arising out of his employment relationship with Gray Cary because every reference to "the Firm" is intended as a reference to the former law firm, and the agreement does not mention any potential successors, assignors, or merger partners. He asserts "no reasonable construction of the 2000 Offer Letter supports the trial court's ruling that the Gray Cary contract controlled DLA Piper's post-merger contracts and conduct." However, in Marenco the court ordered arbitration of claims relating to post-merger conduct by the acquiring company. (Marenco, supra, 233 Cal.App.4th at p. 1422.) The lawsuit was brought against the successor DirecTV based on its practice of issuing debit cards that effectively deprived the plaintiff of wages he was entitled to under Labor Code section 212. (Marenco, at p. 1414 ["In the operative pleading ..., he alleged that DirecTV had issued `ADP TotalPay debit cards' ... in payment of wages to the putative class of employee plaintiffs.... These ... resulted in DirecTV's failure to pay plaintiffs' full wages ...."].)
Plaintiff further argues that surviving entities under California and Maryland corporate merger law do not acquire the "underlying terms and conditions of those employment relationships" that were negotiated by the disappearing entity. He claims the surviving entity only succeeds to "`the rights and property'" of its predecessor, and contends that a successor may not unilaterally bind its predecessor's employees to continue their employment under the terms and condition of their prior employment relationship without their consent. However, the partnership statutes that apply to the instant case parallel the corporate statute at issue in Marenco, supra, 233 Cal.App.4th 1409,
In asserting DLA Piper did not automatically succeed to the arbitration agreement, plaintiff cites to a string of cases, only one of which involves a statutory merger. In Delmore v. Ricoh Americas Corp. (N.D.Cal. 2009) 667 F.Supp.2d 1129 (Delmore), the court enforced a pre-merger arbitration agreement where the parties, unlike the parties in Marenco, supra, 233 Cal.App.4th 1409, framed the issue as one of express assignment rather than automatic transfer of rights pursuant to a merger. The plaintiff's former employer had merged with the defendant successor corporation and the former employer's employees became the employees of the defendant. (Delmore, at p. 1134.) Subsequently, the plaintiff sued the defendant, which moved to compel arbitration. The district court granted the motion to compel. (Id. at pp. 1132-1133.)
As in the present case, the operative arbitration agreement in Delmore was between the plaintiff and his former employer. (Delmore, supra, 667 F.Supp.2d at p. 1135.) The court found the agreement had been assigned to the defendant when the companies merged, observing the agreement specifically stated, "`Disputes subject to binding arbitration pursuant to this section also include claims against the Company's parent and subsidiaries, and affiliated and successor companies ....'" (Ibid.) In addition, the agreement specifically provided: "`Employee acknowledges and agrees that in the event of the sale of the Company, or any business of the Company, this Agreement shall be assignable to any successor company, without any further consideration
Plaintiff contends the parties did not agree to be bound by the terms and conditions of Gray Cary's employment contracts after the merger, but the evidence he relies on is not persuasive. He first cites to a provision in the law firms' plan of affiliation, which states that DLA Piper "ha[d] agreed to hire Gray Cary of counsel attorneys, associates and paralegals, as set forth herein, as well as certain staff, effective in each case as of January 1, 2005 ...." Assuming plaintiff is correct that this passage reflects DLA Piper's intent to exercise its "prerogative to pick and choose its new workforce," there is no evidence such a practice would be inconsistent with plaintiff's Offer Letter, particularly as the document explicitly provided that his employment was at will. He also suggests that after retaining him, DLA Piper nullified the Offer Letter by distributing its own set of workplace rules, policies, and procedures governing compensation, partnership eligibility, and benefits. In support of this factual claim, he relies on a brief reference to these rules that appears in an e-mail message. The record on appeal does not contain the rules themselves. Nor does plaintiff claim these rules eliminated or modified the arbitration provision in the Offer Letter.
Plaintiff further asserts the Wraparound Plan superseded the arbitration provision by acknowledging an employee's right to sue in federal court. Significantly, the document was published after plaintiff's employment had ended and its relevance to this appeal is therefore questionable. Moreover, the plan's description of benefits does not appear to be an employment contract. In particular, we note the plan states: "Participation in this Plan does not constitute a contract of employment between the Firm and any employee or partner." While the document does reference the right to litigate claims in a state or federal court, contrary to plaintiff's assertions, this reference is clearly intended to apply to claims brought under ERISA only.
At oral argument, plaintiff focused on the contention that the Termination Agreement superseded the arbitration clause in the Offer Letter. This claim was raised in opposition to the motion to compel, essentially maintaining the right to enforce the arbitration agreement was trumped by the 2006 Termination Agreement. The argument relies on the following integration clause contained in the Termination Agreement: "This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations and agreements, whether written or oral [with the exception of the prior confidentiality agreements]." We conclude this clause does not apply to the forum for resolution of disputes, as the Offer Letter does, and therefore does not cancel the Offer Letter's arbitration feature.
As DLA Piper observes, the integration clause is explicitly limited to "the subject matter hereof," namely, the terms of plaintiff's resignation. The Termination Agreement does not mention arbitration at all, and contains no
The leading case on this point is Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625 [68 Cal.Rptr.2d 167] (Cione).
The appellate court in Cione held the employer was a third party beneficiary of the NASD arbitration clause: "Cione contends the superior court properly concluded his arbitration agreement with NASD ... was rendered unenforceable by FESCO by virtue of the `integration' clause of his written employment agreement with FESCO lacking any provision for arbitration. However, Cione's contention betrays a misunderstanding of the contract FESCO sought to enforce. FESCO did not seek to enforce its written employment agreement with Cione. Instead, as an intended third party beneficiary, FESCO sought enforcement of Cione's ... agreement with NASD." (Cione, supra, 58 Cal.App.4th at p. 636.)
In Reynoso v. Bayside Management Company, LLC (N.D.Cal., Nov. 25, 2013, 13-CV-4091 YGR) 2013 WL 6173765 (Reynoso), the plaintiff sued his employer based on Labor Code violations (Lab. Code, §§ 201, 203), wrongful termination, as well as age and national origin discrimination. In 2011, the defendant required the plaintiff to sign an employment contract that included an arbitration agreement calling for binding arbitration on all "`claims arising out of Employee's employment or cessation of employment....'" (Reynoso, at p. *2.) More than one year later, the plaintiff signed a new agreement which concluded with the following: "`Employee understands and acknowledges that [the new agreement] constitutes the entire agreement regarding the terms of his employment and that this agreement may not be altered, amended ... [,] modified or otherwise changed except in writing with the signed approval of the Employer.'" (Id. at p. *3, italics added.) This 2012
In rejecting the plaintiff's argument that the 2012 integration clause superseded the 2011 arbitration agreement, the district court determined the integration clause applied only to the subject matter of the 2012 agreement, such as his at-will employment status. Following Cione, supra, 58 Cal.App.4th 625, the court decided the 2012 agreement did not render the arbitration agreement unenforceable because the language of the 2012 agreement "`was reasonably susceptible to the meaning that it did not supersede the [arbitration agreement].'" (Reynoso, supra, 2013 WL 6173765 at p. *4, quoting Cione, at pp. 637-640.)
Finally, the recent decision of Ryan v. BuckleySandler, LLP (D.D.C. 2014) 69 F.Supp.3d 140 (Ryan) further supports reliance on Cione's rationale, and is factually similar to our case. In Ryan, the plaintiff, an attorney, sued his current employer for age discrimination. Originally, the plaintiff was hired in 2008 to work in the Washington, D.C., law firm of Buckley Kolar, LLP, as a temporary attorney. As a condition of employment, the plaintiff signed an agreement calling for "`final and binding arbitration'" as the "`sole and exclusive remedy'" for claims and disputes relating to employment at the firm. Eventually the firm became BuckleySandler, LLP. (Id. at p. 142.)
After being passed over for promotions, the plaintiff was informed in January 2013 that he was being terminated. He was presented with a separation agreement, which granted him continued medical benefits and severance pay, provided he signed a release of claims against his current employer. The agreement also contained a merger clause that stated: "`This Agreement sets forth the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior agreements and understandings between them pertaining to such subject matter.'"
After suing the defendant, the plaintiff claimed the separation agreement superseded the former firm's arbitration clause. The district court determined the integration clause in the separation agreement was "expressly limited to the `subject matter' of the Separation Agreement." (Ryan, supra, 69 F.Supp.3d at pp. 145-146.) That agreement "is silent as to the forum for resolution of those claims. In this sense, the Arbitration Agreement (which mandates the forum for the resolution of claims) concerns a distinct subject matter from the
Plaintiff relies on Grey v. American Management Services (2012) 204 Cal.App.4th 803 [139 Cal.Rptr.3d 210] (Grey,), but that case is distinguishable. In Grey, the appellate court considered whether an employment contract containing an integration clause operated to negate an arbitration provision contained in a document the employee had signed when he submitted his job application. (Id. at pp. 805-806.) The Grey court held the later contract superseded the previous agreement, explaining that because "the [employment] contract says it is the entire agreement, common sense dictates that it supersedes other prior agreements related to Grey's employment." (Id. at p. 807.)
As is apparent, Grey is distinguishable from the present case, and from Cione, in that the relevant contract at issue in Grey did not contain the limiting "with respect to the subject matter of" language found in both the Cione NASD contract and the Termination Agreement here. (Compare Cione, supra, 58 Cal.App.4th at p. 631 ["`This Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to in this Agreement.'" (italics added)] with Grey, supra, 204 Cal.App.4th at p. 807 ["`This Agreement is the entire agreement between the parties in connection with Employee's employment with [employer], and supersedes all prior and contemporaneous discussions and understandings.'" (italics added)].) Plaintiff's efforts to distinguish Cione ignore this limiting language. Further, that Cione concerned a securities industry registration form, rather than a bilateral employment agreement, is a distinction without a difference with respect to whether the parties intended to preclude enforcement of the arbitration provision.
Plaintiff also asserts the trial court relied on improper procedural grounds in confirming arbitration and denying his new trial motion. We need not consider this point as we have already concluded his arguments against arbitrability fail on their merits.
The judgment is affirmed.
