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Ortiz v. Nellson Nutraceutical, LLC

California Court of Appeals, Fourth District, Third Division
Aug 23, 2023
No. G061411 (Cal. Ct. App. Aug. 23, 2023)




ADRIAN ORTIZ, Plaintiff and Respondent, v. NELLSON NUTRACEUTICAL, LLC, Defendant and Appellant.

Fisher & Phillips, Aaron F. Olsen, Christopher H. Conti, Megan E. Walker and Steven D. Eheart for Defendant and Appellant. Eldessouky Law, Mohamed Eldessouky, Grach Bekaryan; Law Office of Maximilian Lee and Maximilian Lee for Plaintiff and Respondent.


Appeal from an order of the Superior Court of Orange County, No. 30-2021-01238881 Gregory H. Lewis, Judge. Affirmed.

Fisher & Phillips, Aaron F. Olsen, Christopher H. Conti, Megan E. Walker and Steven D. Eheart for Defendant and Appellant.

Eldessouky Law, Mohamed Eldessouky, Grach Bekaryan; Law Office of Maximilian Lee and Maximilian Lee for Plaintiff and Respondent.



This appeal arises from the trial court's order denying a former employer's motion to compel arbitration. It is undisputed the employer drafted an agreement to arbitrate, presented it to its former employee who signed it and returned it, and that the employer did not countersign.

The trial court denied the motion based on the lack of the countersignature and the employer contends the court reached the wrong result. Based on the unambiguous contract language prefacing the absent countersignature, we affirm.


I. The Arbitration Agreement, Ortiz's Signature, and His Lawsuit

In 2015, Adrian Ortiz began working for Nellson Nutraceutical, LLC. That same year, Nellson presented Ortiz the six-page document central to this appeal, titled the "Arbitration and Class Waiver Agreement" (capitalization omitted). Among other provisions, the arbitration agreement stated its enforcement would be "governed by the Federal Arbitration Act" and "[i]f there is any dispute or claim of any kind between [Ortiz] and Nellson . . . arising from employment, the [p]arties agree to submit such dispute or claim to final and binding arbitration." On its final page, two paragraphs before respective signature blocks for Ortiz and Nellson, there is the following singlesentence paragraph about signatures (the signature paragraph): "THE PARTIES UNDERSTAND THAT BY SIGNING THIS AGREEMENT, THEY GIVE UP THEIR RIGHT TO A CIVIL TRIAL AND THEIR RIGHT TO A TRIAL BY JURY."

Ortiz signed the arbitration agreement and delivered it to Nellson's human resources department the same month it was presented to him, in 2015. In 2020, Nellson terminated its employment of Ortiz, who then filed the lawsuit underlying this matter, alleging Nellson pretextually terminated the employment after Ortiz raised concerns about "unsafe working conditions."

II. Nellson's Motion to Compel Arbitration and the Trial Court's Denial Order

Nellson filed a motion to compel arbitration based on the arbitration agreement signed by Ortiz. Nellson supported its motion with a declaration by its human resources manager that presented factual context for Ortiz signing the agreement, including his subsequent delivery of it to Nellson.

The entirety of factual assertions surrounding the signing of the agreement stated as follows: "I was the Human Resources Manager who oversaw the onboarding of . . . employees [like Ortiz] in the spring of 2015. One of my key responsibilities was to orient prospective employees . . . into their positions with Nellson. I was also required to ensure that each prospective employee received Nellson's new hire documents, understood their contents, and acknowledged receipt of each document, such the Agreement [sic]. [¶] As part of the onboarding process, Nellson held orientation meetings with all prospective employees to discuss its new hire documents. During orientation meetings, me and other [sic] Human Resources employees reviewed and explained the significance of the Agreement. Prospective employees were also instructed to closely read the Agreement and were encouraged to raise any questions or concerns that they may have had. Prospective employees, such as [Ortiz], were permitted as much time as was reasonably necessary to review and sign the Agreement. [¶] . . . [¶] . . . Consistent with Nellson's general hiring practice, in April 2015, [Ortiz] was provided a copy of Nellson's Arbitration Agreement. On April 14, 2015, Plaintiff executed a copy of the Arbitration Agreement and returned it to Human Resources."

Ortiz filed an opposition brief but no declaration. He did not dispute any factual allegation but contended Nellson failed to carry its burden to show mutual consent to the arbitration agreement because it was undisputed Nellson never countersigned it.

The trial court agreed Nellson had failed to show mutual consent and denied its motion. The court found "the [a]rbitration [a]greement envisioned that each side would physically sign the agreement," based on the signature paragraph. The court explained the paragraph's "language is evidence of the parties['] intent [to] bind the parties based on their signatures" and so Nellson's failure to countersign the agreement showed no mutual consent was reached. Nellson timely appealed. (Code Civ. Proc., § 1294, subd. (a).)


Nellson contends the trial court incorrectly concluded mutual consent was lacking. We are not persuaded, based on the signature paragraph.

I. Standard of Review and Governing Law

Given the undisputed record, we review the trial court's ruling de novo. (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173 (Serafin).) Section 2 of the Federal Arbitration Act (the FAA) provides: "A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2.)

The United States Supreme Court has explained that "[w]hen deciding whether the parties agreed to arbitrate a certain matter . . ., courts generally . . . should apply ordinary state-law principles that govern the formation of contracts." (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; accord, Granite Rock Co. v. Teamsters (2010) 561 U.S. 287, 296; cf. Lamps Plus, Inc. v. Varela (2019) 587 U.S. ___, 139 S.Ct. 1407, 1415 ["Although courts may ordinarily accomplish that end by relying on state contract principles, [citation], state law is preempted to the extent it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives' of the FAA"]; id. at pp. 1417-1419 [California statutory rule of contra proferentem preempted by the FAA for class arbitrability contract term].)

"'The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. [Citations.]'" (Rebolledo v. Tilly's, Inc. (2014) 228 Cal.App.4th 900, 913.) Central to the dispute here, "[i]t is essential to the existence of a contract that there should be," among other elements, "consent" by the contracting parties (Civ. Code, § 1550, item 2), which "must be: [¶] 1. Free; [¶] 2. Mutual; and, [¶] 3. Communicated by each to the other." (§ 1565; accord, § 1580 ["Consent is not mutual, unless the parties all agree upon the same thing in the same sense"].)

All further statutory references are to the Civil Code unless otherwise indicated.

"The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe. [Citation.] Accordingly, the primary focus in determining the existence of mutual consent is upon the acts of the parties involved." (Meyer v. Benko (1976) 55 Cal.App.3d 937, 942-943; accord, Reigelsperger v. Siller (2007) 40 Cal.4th 574, 579-580 ["'mutual consent is gathered from the reasonable meaning of the words and acts of the parties, and not from their unexpressed intentions or understanding'"].)

II. Analysis

Unambiguous contract language about the meaning of a countersignature can justify a conclusion that the absence of the signature shows the negotiating parties never reached mutual consent. (See Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 359 (Banner Entertainment) ["'when the parties to a proposed contract have themselves fixed the manner in which their assent is to be manifested, an assent thereto, in any other or different mode, will not be presumed'" (italics omitted)].) At the same time, as the trial court noted, an absence of a countersignature can coexist with the possibility that mutual consent occurred through another form of communication. The touchstone is the contractual language at issue (see §§ 1638 ["The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity"], 1639 ["When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; subject, however, to the other provisions of this Title"]), outside of specific legislation controlling the subject matter (see, e.g., Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002) 103 Cal.App.4th 30, 37 [party seeking enforcement of settlement agreement pursuant to governing statute must demonstrate signature of all parties]).

Here, it is undisputed Nellson's offered arbitration agreement contained a line for its own signature that was preceded by the signature paragraph-i.e., stating, "THE PARTIES UNDERSTAND THAT BY SIGNING THIS AGREEMENT, THEY GIVE UP THEIR RIGHT TO A CIVIL TRIAL AND THEIR RIGHT TO A TRIAL BY JURY"-and Nellson at no time countersigned the agreement or otherwise communicated about it after Ortiz's return of his signature to Nellson. Given this record, we agree with the trial court that mutual consent was not reached because the words of the signature paragraph unambiguously showed the parties intended for Nellson to communicate its consent through a countersignature.

The parties' conduct objectively manifested a lack of communicated mutual consent about arbitration. The signature paragraph made each party's signature a condition of waiving that party's right to resolve a legal dispute through judicial litigation, which went to the heart of what an agreement to arbitrate means. (§ 1644 [unless otherwise indicated, "words of a contract are to be understood in their ordinary and popular sense"].) The agreement to arbitrate proposed by Nellson is not reasonably susceptible of a contrary interpretation, and, notwithstanding a general policy in favor of arbitration, that policy does not override the need for a specific agreement to arbitrate. (Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 227.)

The parties dispute whether the doctrine of implied findings should be applied to this appeal because of the manner in which Nellson's counsel requested the trial court to issue a statement of decision at the hearing on Nellson's motion. (See Code Civ. Proc. § 1291 [statement of decision generally available for order denying petition to compel arbitration]; see also id., § 632 [relevant here, "the request must be made prior to the submission of the matter for decision"].) "'[F]ailure to request a statement of decision when one is available has two consequences. First, the party waives any objection to the trial court's failure to make all findings necessary to support its decision. Second, the appellate court applies the doctrine of implied findings and presumes the trial court made all necessary findings supported by substantial evidence. [Citations.]'" (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 237.) The dispute is immaterial to our disposition because Nellson's evidence, even if entirely credited, was insufficient as a matter of law to override the effect of the signature paragraph. (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955 ["when the competent extrinsic evidence is not in conflict, the appellate court independently construes the contract"]; Cal. Const., art. VI, § 13 [reversal requires prejudice].).

III. Nellson's Contentions

Nellson argues we should reverse the trial court's order because case law supports a conclusion that Nellson's countersignature was not necessary. Among its cited cases is Serafin, supra, 235 Cal.App.4th 165, where an appellate court affirmed, among other things, an enforcement of an employment arbitration agreement that did not contain the employer's signature. In contrast to the proposed agreement here, the agreement analyzed in Serafin contemplated only one signature. (Id. at p. 171 ["Serafin's signature . . . appears at the bottom of page 2 stating, 'I have read and understand this policy'"].)

Given that none of Serafin's analysis rested on contractual language analogous to the signature paragraph here (Serafin, supra, 235 Cal.App.4th at pp. 174177), the case simply stands for the well-established general principle that "'it is not the presence or absence of a signature [on an agreement] which is dispositive; it is the presence or absence of evidence of an agreement to arbitrate which matters.'" (Id. at p. 176, quoting Banner Entertainment, supra, 62 Cal.App.4th at p. 361.) The difference in results between Serafin and this appeal is the specific contract language under review. Nellson presents no case law with contract language analogous to the signature paragraph that is helpful to its position here.

At oral argument in this court, in addition to discussing Serafin, Nellson's counsel cited Pacific Corporate Group Holdings, LLC v. Keck (2014) 232 Cal.App.4th 294, which centered on the following contract language about signatures: "'If this letter meets with your approval, we request that you indicate such approval by returning the enclosed copy of this letter, appropriately signed.'" While the appellate court in that case concluded the language did not preclude other means of communicating assent (id. at pp. 311-314), we are not persuaded the language is "similar," as Nellson contends. (Cf. Banner Entertainment, supra, 62 Cal.App.4th at p. 354 [concluding mandatory means of assenting established by two sentences: "'Until such time, if ever, as such more formal agreement i[s] . . . concluded, this agreement when signed by the parties hereto will constitute a legal and binding obligation of the parties. [¶] Please acknowledge your approval of the foregoing terms by signing a copy of this letter in the space indicated below' (Italics added)"].).

Finally, Nellson also argues that section 3388, a statute about the equitable remedy of specific performance, supports a reversal of the trial court's order. That statute provides: "A party who has signed a written contract may be compelled specifically to perform it, though the other party has not signed it, if the latter has performed, or offers to perform it on his part, and the case is otherwise proper for enforcing specific performance." (Ibid., italics added.) The italicized portion of its language explains why the statute is not dispositive of the mutual consent issue at the core of this case. That is, although the statute authorizes an equitable remedy against a party to a contract who has not signed it, it does not override the need for contract formation to be supported by free, mutual consent, communicated between the parties. (§§ 1550 &1565; see Rose v. State (1942) 19 Cal.2d 713, 724 ["A specific [statutory] provision relating to a particular subject will govern in respect to that subject, as against a general provision, although the latter, standing alone, would be broad enough to include the subject to which the more particular provision relates"]; see also Juen v. Alain Pinel Realtors, Inc. (2019) 32 Cal.App.5th 972, 983 ["The offer to perform referenced in [section 3388] is not a substitute for the mutual assent required to form a bilateral contract; the remedy requires the existence of an agreement"].) Given our conclusion that no agreement to arbitration was reached in this case, we need not address Ortiz's appellate arguments the arbitration agreement is unconscionable.


The trial court's order denying Nellson's motion to compel arbitration is affirmed. Ortiz is entitled to his costs on appeal.


Summaries of

Ortiz v. Nellson Nutraceutical, LLC

California Court of Appeals, Fourth District, Third Division
Aug 23, 2023
No. G061411 (Cal. Ct. App. Aug. 23, 2023)
Case details for

Ortiz v. Nellson Nutraceutical, LLC

Case Details

Full title:ADRIAN ORTIZ, Plaintiff and Respondent, v. NELLSON NUTRACEUTICAL, LLC…

Court:California Court of Appeals, Fourth District, Third Division

Date published: Aug 23, 2023


No. G061411 (Cal. Ct. App. Aug. 23, 2023)