Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. 30-2008-00114635, Peter J. Polos, Judge.
Law Office of Michael A. Conger and Michael A. Conger; Richard H. Benes, for Defendants and Appellants.
Law Offices of Jason L. Oliver and Jason L. Oliver; Law Offices of John W. Dalton and John W. Dalton, for Plaintiff and Respondent.
OPINION
MOORE, J.
Respondent Jennifer Burke filed a complaint in Orange County Superior Court alleging pregnancy and gender discrimination and retaliation after she was terminated from her job with Century 21 Award (Award). Award moved to compel arbitration, arguing that because Burke had signed an acknowledgment that she had received an employee handbook purporting to include an arbitration agreement, she was required to arbitrate. The trial court disagreed, and because we concur that no valid arbitration agreement existed, we affirm the court’s order.
I
FACTS
Burke began working at Century 21’s Temecula office as a call coordinator in 2005. Defendant Greg Britton was the branch manager. When Britton interviewed Burke, he asked her if she was married and planning on having children.
The appellants identified in the notice of appeal are Award, Inc., doing business as Century 21 Award, Award Superstars, and Century 21 Superstars. Defendants Century 21 Award Superstars and Gregory Britton are not parties to this appeal.
At the beginning of her employment with Award, Burke signed and/or initialed numerous documents. One of these documents was entitled “Award Employee Handbook” with the subtitle “Acknowledgement of Receipt and Agreement” (Acknowledgment). The first paragraph states: “I have received my copy of Award’s employee handbook and have reviewed portions of it with the Human Resources Department. The employee handbook contains the employment policies and practices of Award in effect at the time of publication. All previously issued handbooks and any inconsistent policy statements or memoranda are superseded by this handbook. I understand and agree that it is my responsibility to read and familiarize myself with the policies and procedures contained in the handbook and to abide by all policies. If I have further questions at any time, I will consult with the Human Resources Department.” Burke initialed each paragraph, including this one, and signed the document.
Pages 35 and 36 of the 37-page handbook include a section entitled “Arbitration Agreement” that requires the parties to mediate “all employment disputes” before submitting them to “binding arbitration, in accordance with California Code of Civil Procedure § 1280 et seq.”
In 2006, Burke informed Britton that she was pregnant. According to her complaint, Britton greeted this news with “a pained expression.” Burke alleged that Britton made harassing comments during her pregnancy, and prior to her maternity leave, he stated that her position would “not be available” when she returned. Her leave began on approximately February 28, 2007. On April 13, Burke contacted Award and said that she had been cleared by her doctor to return approximately 10 days later.
Britton contacted her a few days later and told Burke that her position was “no longer available” because it had been filled by someone else. He said that there was an administrative assistant position at the same pay available at another office. The new office would require a significantly longer commute for Burke at commensurately greater expense. Burke complained to the director of human resources for Century 21, but was told there was no pregnancy discrimination and that nothing could be done for her.
Upon arriving at the new branch, she was told the administrative assistant position was no longer available, but that she could have a call coordinator position. The hours were slightly altered, which Burke alleged caused her child care difficulties. On May 24, she was terminated by Britton.
In November 2008, Burke filed the instant suit alleging pregnancy and gender discrimination, failure to prevent pregnancy and gender discrimination, and retaliation. Relying on the “arbitration agreement” provision of the handbook, defendants moved to compel arbitration. They argued that by signing the acknowledgment at the end of the handbook, Burke had agreed to arbitrate all employment disputes. Burke opposed the motion, arguing that she was not provided with the handbook, nor was the arbitration provision ever pointed out to her.
The trial court denied the motion to compel arbitration on the grounds that “[w]hen the writing does not appear to be a contract and the terms are not called to the attention of the recipient, then no contract is formed....” During the hearing, the court amplified its reasoning: “Customarily... the arbitration agreement itself will have a separate section for initialing. And I think that’s what’s required by law, is to really point it out and have a separate section.” The trial court reemphasized this point later in the hearing: “And it’s not that it’s overly burdensome or oppressive to have someone initial the arbitration agreement or have them sign a separate arbitration agreement when you’re talking about giving up your right to trial by jury.” This appeal followed, pursuant to Code of Civil Procedure section 1294, subdivision (a).
Unless otherwise indicated, subsequent statutory references are to the Code of Civil Procedure.
II
DISCUSSION
Section 1281.2 requires a court to order arbitration “if it determines that an agreement to arbitrate... exists....” (§ 1281.2.) On appeal, we review the enforceability of the arbitration agreement de novo, under general principles of California contract law. (Kleveland v. Chicago Title Ins. Co. (2006) 141 Cal.App.4th 761, 764.) California has a strong public policy in favor of arbitration as an expeditious and cost-effective way of resolving disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) Even so, parties can only be compelled to arbitrate when they have agreed to do so. (Westra v. Marcus & Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763.) “The strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement, and a party cannot be compelled to arbitrate a dispute that he has not agreed to resolve by arbitration. [Citation.]” (Benasra v. Marciano (2001) 92 Cal.App.4th 987, 990; see also § 1281 [right to arbitration depends on contract].)
In Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394 (Rosenthal), our Supreme Court stated, “[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists.... Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.” (Id. at p. 413; see also Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761-762 [enforceability determined in manner provided by law for the hearing of motions].) “‘Prima facie evidence is that degree of evidence which suffices for proof of a particular fact until contradicted and overcome, as it may be, by other evidence, direct or indirect.’” (People v. Van Gorden (1964) 226 Cal.App.2d 634, 636-637, quoting 18 Cal.Jur.2d, Evidence, § 13, p. 435.) Once the moving party has established the existence of the arbitration agreement, the burden shifts to the party opposing arbitration to establish, by a preponderance of the evidence, the factual basis for any defense to enforcement. (Rosanthal, supra, 14 Cal.4th at p. 413.)
The evidence presented here was the Acknowledgment, the handbook, and Burke’s employment application. The employment application is of no import here. The question of whether the Acknowledgment, taken together with the arbitration section of the handbook, is sufficient to create a binding contract is the question before us.
We also note that an evidentiary issue is potentially present, as it does not appear that any of defendants’ exhibits were properly authenticated in the trial court. (See Evid. Code, § 702; see also Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, 1230 [attorney declaration “authenticating” arbitration agreement without personal knowledge “no evidence at all”].) This issue, however, has not been raised on appeal, and we therefore deem it waived.
A contract may include the provisions of a document that is not physically part of the contract pursuant to the doctrine of incorporation by reference. “‘For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.’” (Williams Constr. Co. v. Standard-Pacific Corp. (1967) 254 Cal.App.2d 442, 454 (Williams).)
In its ruling, the trial court cited Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696 (Metters). In Metters, the employee had received a “Notice of Dispute and Request for Resolution” form after he had complained about on-the-job harassment and discrimination. This dispute resolution form contained the arbitration provision that Ralphs later sought to enforce. The trial court denied Ralphs’ motion, noting that “the dispute form did not look like a contract” and therefore did not alert the employee that he was agreeing to binding arbitration. (Id. at p. 702.) This court agreed. “[T]he agreement to arbitrate was not contained in an employment contract, where it might have been expected, but in a form on which [the employee] was directed to submit his grievance. The context of this form did not alert him he was agreeing to anything, let alone arbitration.” (Id. at p. 703.)
Although the Acknowledgement at issue here was entitled “Acknowledgement of Receipt and Agreement” the relevant provision stated that the handbook contained Award’s policies and practices and acknowledges that it is the signer’s responsibility “to read and familiarize [herself] with the policies and procedures contained in the handbook and to abide by all policies.” (Italics added.) Nowhere does it state that the handbook included a contractual provision that would require her to forego her constitutional right to a jury trial. We cannot construe a provision acknowledging a handbook’s policies and procedures as sufficiently incorporating a contractual provision relating to arbitration. Even assuming that Burke was given a copy of the handbook at the time she signed the Acknowledgment, it did nothing to give her notice that she was agreeing to a contractual provision.
This case bears similarity to Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164 (Mitri). In Mitri, the defendants’ employee handbook stated: “‘[a]s a condition of employment, all employees are required to sign an arbitration agreement’ and further states, ‘[e]mployees will be provided a copy of their signed arbitration agreement.’” (Id. at p. 1166.) The defendants did not produce a signed copy of the arbitration agreement, but contended the handbook’s reference was sufficient to force the plaintiffs to arbitrate because the plaintiffs had signed copies of an acknowledgment of receipt of the employee handbook. (Id. at pp. 1166, 1168.)
This court held that acknowledging receipt of the handbook was insufficient: “Conspicuously absent from the acknowledgment receipt form is any reference to an agreement by the employee to abide by the employee handbook’s arbitration agreement provision. Indeed, the line preceding each plaintiff’s signature on his or her respective acknowledgment receipt form explains, ‘[m]y signature acknowledges that I have read and understood the statements above as well as the contents of the Handbook, and will direct any questions to my supervisor or the Director of Human Resources.’” (Mitri, supra, 157 Cal.App.4th at p. 1173.) “We cannot and will not create a term of a contract between the parties that the evidence does not show was ever agreed upon by the parties. [Citation.] Taken as a whole, the documents submitted by defendants in support of their motion do not constitute an arbitration agreement.” (Ibid.) While the facts of Mitri are not identical — the handbook itself clearly contemplates a separate arbitration agreement — the general principle is controlling here. Like the acknowledgment in Mitri, the Acknowledgement in this case fails to include any reference to an agreement to abide by the handbook’s arbitration provision.
Some cases outside of the employment context have been fairly lenient in construing the incorporation by reference requirement when it comes to arbitration clauses. (See Boys Club of San Fernando Valley, Inc. v. Fidelity & Deposit Co. (1992) 6 Cal.App.4th 1266, 1271 [arbitration provision in construction contract incorporated by reference into performance bond; no reference to arbitration in bond documents]; see also Slaught v. Bencomo Roofing Co. (1994) 25 Cal.App.4th 744, 748-749 [arbitration clause in construction contract incorporated by reference into subcontractors’ agreements].)
But this case is in employment context, and arbitration agreements in the employment setting are nearly always contracts of adhesion, which is “‘“a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.”’ [Citation.]” (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) In such a context, that party should not be permitted or even encouraged to “hide the ball.” If an employer wishes to require its employees to adhere to an arbitration clause, it should make that clause explicit, preferably as explicit as possible, and clear to a layperson who is not represented by an attorney.
In Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632 (Chan), the agreement Chan signed required her to abide by the statutes, constitutions, rules, by-laws and amendments of the three organizations to which her application was submitted, none of which was Drexel. (Id. at pp. 635-636.) One of these organizations was the New York Stock Exchange (Exchange), and one of its rules required arbitration. It was the Exchange’s arbitration rule that Drexel sought to enforce. The court held that this convolution did not meet the requirement for incorporation by reference that the “‘incorporated document must be known or easily available to the contracting parties.’” (Id. at p. 641, quoting Williams, supra, 254 Cal.App.2d at p. 454.)
Chan is applicable here because while the incorporated document itself might have been available to Burke, the nature of that document — contractual and binding rather than simply company “policies and procedures” — was not called to her attention. While the agreement in Chan was too convoluted, the Acknowledgment here is too nonspecific for a reader to understand that a binding contractual agreement is at issue.
We do not ignore the doctrine of incorporation by reference, we simply interpret it strictly rather than leniently. While it is certainly preferable on every level for an employer to use a separate arbitration agreement, an Acknowledgement such as the one here might be valid if, at a minimum, it calls attention to the fact that the employee is agreeing to a binding legal contract, not simply company “policies and procedures.” But the Acknowledgement did not do so, and it was therefore fatally unspecific and uncertain. It is not a “clear and unequivocal” reference to the incorporated document. (Williams, supra, 254 Cal.App.2d at p. 454.) The trial court therefore properly denied Award’s motion to compel arbitration.
III
DISPOSITION
The order is affirmed. Burke is entitled to her costs on appeal.
I CONCUR: O’LEARY, J.
BEDSWORTH, ACTING P. J., Dissenting:
I respectfully dissent. I cannot subscribe to the majority’s underlying premise, which is, in effect, that arbitration agreements in the employment context must conform to special formatting requirements in order to be enforceable. I can find no support in the law for this proposition, and I do not believe the majority has provided any. Arbitration agreements are contracts, and they are enforced or not enforced according to principles applicable to all contracts. (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972; Toal v. Tardiff (2009) 178 Cal.App.4th 1208, 1221 [“‘An “arbitration agreement is subject to the same rules of construction as any other contract”’ [Citation.]”]; Maggio v. Windward Capital Management Co. (2000) 80 Cal.App.4th 1210, 1214; Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1119.) California law permits contract provisions to be incorporated by reference, as happened here. I would reverse and remand.
Respondent Burke was employed by appellant Award, Inc., at Century 21 Award between 2005 and 2007. She alleged she was subjected to harassment when she became pregnant and was fired shortly after returning to work after her maternity leave. She sued Award, Inc., and three related entities, as well as her former supervisor, Gregory Britton, for pregnancy and gender discrimination, for failure to prevent pregnancy and gender discrimination, and for retaliation.
While my colleagues recite in great detail Burke’s allegations regarding her supervisor, those seem to me largely irrelevant at this stage. Whether or not Britton acted churlishly – or even illegally – with respect to Burke’s pregnancy has no bearing on the issue of enforcing the arbitration agreement.
All three appellants, the other corporate defendant, and Britton moved to compel arbitration pursuant to the provisions of the Century 21 Award employee handbook. They asserted that, by signing an acknowledgment of receipt and agreement (acknowledgment) at the end of the handbook, Burke had agreed to arbitrate all employment disputes.
The paragraph in the acknowledgment having most relevance to this appeal provides as follows:
“I have received my copy of Award’s employee handbook and have reviewed portions of it with the Human Resources Department. The employee handbook contains the employment policies and practices of Award in effect at the time of publication. All previously issued handbooks and any inconsistent policy statements or memoranda are superseded by this handbook. I understand and agree that it is my responsibility to read and familiarize myself with the policies and procedures contained in the handbook and to abide by all policies. If I have further questions at any time, I will consult with the Human Resources Department.” The one-page acknowledgement was page 37 of the handbook.
Pages 35 and 36 of the handbook contained an “Arbitration Agreement” that required the parties to mediate “all employment disputes” before submitting them to “binding arbitration in accordance with Code of Civil Procedure section 1280 et seq.” The last page of the handbook contained the acknowledgement, which Burke does not dispute that she signed and initialed by each paragraph.
The trial court denied the motion to compel arbitration on the grounds that “[w]hen the writing does not appear to be a contract and the terms are not called to the attention of the recipient, then no contract is formed....” During the hearing, the court amplified its reasoning: “Customarily... the arbitration agreement itself will have a separate section for initialing. And I think that’s what’s required by law, is to really point it out and have a separate section.”
The trial court reemphasized this point later in the hearing: “And it’s not that it’s overly burdensome or oppressive to have someone initial the agreement or have them sign a separate arbitration agreement when you’re talking about giving up the right to trial by jury.”
Code of Civil Procedure section 1281.2 requires a court to order arbitration “if it determines that an agreement to arbitrate... exists....” (Code Civ. Proc., § 1281.2.) The trial court refused to enforce the arbitration agreement because it did not include separately initialed arbitration provisions or take the form of a separate, stand-alone agreement, separately signed. Contrary to the trial court’s belief, this is not “required by law.” California law is, in fact, just the opposite.
The majority recognizes that a contract may include the provisions of a document not physically part of the basic contract through incorporation by reference, provided that the reference is clear and unequivocal, it is called to the attention of the party not seeking incorporation, the party consents, and the terms of the incorporation are known or easily available to the party. (Williams Constr. Co. v. Standard-Pacific Corp. (1967) 254 Cal.App.2d 442, 454.) But once recognized, the principle is ignored.
In this case, the first paragraph of the acknowledgment declares that the handbook contains Award’s policies and practices and acknowledges that it is the signer’s responsibility “to read and familiarize [herself] with the policies and procedures contained in the handbook and to abide by all policies.” This paragraph is individually initialed – indicating that the reference to the handbook was called to Burke’s attention – and she consented thereto by initialing and signing the acknowledgment.
The handbook contains the arbitration provision, and it is the handbook that is incorporated by reference into the acknowledgment. The reference to the handbook is precise; it was called to Burke’s attention by requiring the paragraph to be initialed; by signing the acknowledgment, she agreed to be bound, and the incorporated document (the handbook) was at least easily available to her. Even if Burke did not actually receive a copy when she began working for Century 21 Award – and the evidence is equivocal on that subject – she could easily have obtained one. The document was specifically identified as the employee handbook, and its importance was indicated by the fact that she had initialed a paragraph agreeing to abide by its policies and signed an “Agreement” containing this paragraph.
A case that closely resembles this one is Wolschlager v. Fidelity National Title Ins. Co. (2003) 111 Cal.App.4th 784. In Wolschlager, the plaintiff filed suit against a title insurance company after discovering an unreported lien on his property. The title insurance company moved to compel arbitration based on a provision contained in the title insurance policy referred to in the preliminary title report that the plaintiff had received and approved. The preliminary report did not state that the title policy contained an arbitration clause. (Id. at p. 787.)
As the court pointed out, “Because it is undisputed that the preliminary report does not itself contain an arbitration clause, the critical question is whether the arbitration clause was sufficiently incorporated into the preliminary report by reference to bind the plaintiff contractually.” (Wolschlager v. Fidelity National Title Ins. Co., supra, 111 Cal.App.4th at p. 790.) Using the factors identified above, the court determined that the arbitration clause was incorporated by reference. The preliminary report referred to the title policy several times and specifically identified the policy involved. (Id. at p. 791.) Although it was undisputed the plaintiff did not actually know about the arbitration clause, “the Policy with the clause was easily available to him. The preliminary report identified the Policy by name and directed the plaintiff to where he could inspect it. Nothing further was needed to bind the plaintiff.” (Ibid.)
The court further held: “Plaintiff argues, and the trial court agreed, that because the right to a jury trial is a substantive right, plaintiff was entitled to some kind of specific warning in the preliminary report that by accepting it he was agreeing to give up his rights. There is no authority requiring the defendant to specify that the incorporated document contains an arbitration clause in order to make the incorporation valid. All that is required is that the incorporation be clear and unequivocal and that the plaintiff can easily locate the incorporated document.” (Wolschlager v. Fidelity National Title Ins. Co., supra, 111 Cal.App.4th at p. 791.)
In this case, by contrast, the trial court imposed an extra condition on incorporation by reference of an arbitration agreement and, by extension, on enforcing an agreement to arbitrate: the arbitration provision itself had to be separately initialed or set out in a separately signed document. Unquestionably, this would be good practice. But under California contract law, it cannot be the sine qua non of enforceability for an arbitration agreement. Ordinary contract principles do not require an arbitration provision to be referred to separately. All that is required is that the document containing the arbitration provision be clearly identified and available to the contracting parties. The handbook meets these criteria. (See Boys Club of San Fernando Valley, Inc. v. Fidelity & Deposit Co. (1992) 6 Cal.App.4th 1266, 1271 [arbitration provision in construction contract incorporated by reference into performance bond; no reference to arbitration in bond documents]; see also Slaught v. Bencomo Roofing Co. (1994) 25 Cal.App.4th 744, 748-749 [arbitration clause in construction contract incorporated by reference into subcontractors’ agreements].)
The majority justifies this departure from settled California law on the grounds that the Award arbitration provision is contained in an employment contract, and these contracts are nearly always contracts of adhesion. Contracts of adhesion, in or out of the employment context, are fully enforceable according to their terms (including arbitration provisions) unless they have some defect, such as unconscionability, that would render any contract unenforceable. (See Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 819-820; Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 415-416 fn. 9; Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576, 597-598, overruled on other grounds in Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362.) The majority offers no authority whatsoever for singling out employment contracts and requiring them to conform to a certain format in order to be enforceable. And the trial court never got to the unconscionability issue, because it ruled that the arbitration provision was incorrectly formatted.
The majority defends this position by expressing its concern that an employer not be allowed to “hide the ball” from an employee. Award did not hide the ball from Burke; it told her precisely where to look for the ball. The ball was in the handbook, and Award took the precaution of having Burke sign an acknowledgement that she had read the handbook and agreed to abide by its policies. The arbitration provisions in the handbook were on the two pages preceding the page that Burke signed and initialed.
The case on which the majority chiefly relies, Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, presents an entirely different fact situation. The employees were clearly supposed to sign a separate arbitration agreement, and the employer failed to produce any such signed agreement at the hearing. (Id. at pp. 1170-1171). Under “general principles of contract law, ” (id. at p. 1170), the employer could not make the necessary showing that an agreement to arbitrate existed. (See Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) In this case, however, there was no stand-alone arbitration agreement that Burke would have had to sign separately. Moreover, Burke agreed to abide by the handbook’s policies, one of which was arbitration.
Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, the case on which the trial court based its ruling, is also distinguishable. In Metters, the employee had received a “Notice of Dispute and Request for Resolution” form after he had complained about on-the-job harassment and discrimination. This dispute resolution form contained the arbitration provision that Ralphs later sought to enforce. The trial court denied Ralphs’ motion, noting that “the dispute form did not look like a contract” and therefore did not alert the employee that he was agreeing to binding arbitration. (Id. at p. 702.) This court agreed. “[T]he agreement to arbitrate was not contained in an employment contract, where it might have been expected, but in a form on which [the employee] was directed to submit his grievance. The context of this form did not alert him he was agreeing to anything, let alone arbitration.” (Id. at p. 703.) Moreover, consenting to arbitration was, in effect, an extra condition that Ralphs imposed on the employee in order to have his grievance heard, not one that had been presented to him when he applied to work for Ralphs.
Award’s document was clearly labeled “Agreement” and contained contracting language: “I understand and agree that it is my responsibility to... abide by all policies.” The acknowledgment certainly looks like a contract, and it was, by Burke’s admission, presented at the start of her employment. The context also alerted Burke that she was entering into an agreement. It was not an extra condition imposed on her after she had complained about her treatment on the job.
Likewise, Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, presents a different set of circumstances. The court refused to enforce the agreement because the “‘incorporated document must be known or easily available to the contracting parties.’” (Id. at p. 641, quoting Williams Constr. Co. v. Standard-Pacific Corp., supra, 254 Cal.App.2d at p. 454.) The court found that the exchange rule Chan had agreed to when she signed up with Drexel did not fit this description.
The layers described in Chan are not found in this case. The acknowledgment referred explicitly, repeatedly, and exclusively to the handbook. If Burke did not get a copy of the handbook when she signed the acknowledgment, she had to be aware of where one could be found. Under California law, it was not necessary that the handbook be given to her to be properly incorporated by reference.
Chan holds that “an agreement need not expressly provide for arbitration, but may do so in a secondary document which is incorporated by reference....” (Chan v. Drexel Burnham Lambert, Inc., supra, 178 Cal.App.3d at p. 639.)
I conclude the trial court erred when it determined the arbitration agreement was unenforceable because it was not separately initialed or signed or did not exist as a stand-alone agreement. It was properly incorporated by reference under settled California law. Because of this initial error, the trial court evidently did not consider the other issues raised in the motion to compel arbitration and in the opposition, as it should have done.
This is not the end of the road, however. The notice of appeal in this case specified only three of the five defendants as appellants. Award’s counsel indicated at oral argument that this was an error; all parties were intended to be included in the appeal. Regardless of Award’s intentions, however, it is too late to appeal the order denying the motion to compel as to Gregory Britton and Century 21 Award Superstars. (Cal. Rules of Court, rule 8.104, subd. (a).) Had the trial court’s error been corrected on appeal, they would still have had to proceed in court, where the agreement could have turned out to be enforceable as to the three other entities. They would then have proceeded in arbitration.
The possibility of conflicting rulings on common issues of law or fact (Code Civ. Proc., § 1281.2, subd. (c)), which did not exist when the trial court made its decision, certainly would exist under these circumstances. I would therefore remand to the trial court with instructions to evaluate the current situation with respect to Code of Civil Procedure section 1281.2, subdivision (c), and then, if arbitration would still be appropriate, to consider the merits of the petition to compel arbitration.