Judicial Council of California Issues Opinion in Fiona Trinity Vs. Life Insurance Co. of North America Case

SACRAMENTO, California, May 25 (TNSsro) -- The Judicial Council of California issued the following opinion (No. B312302):

FIONA TRINITY, Plaintiff and Respondent, v. LIFE INSURANCE COMPANY OF NORTH AMERICA et al., Defendants and Appellants.

APPEAL from an order of the Superior Court of Los Angeles County, Michelle Williams Court, Judge. Affirmed.

Littler Mendelson, Tanja L. Darrow and Sheerin Mehdian for Defendants and Appellants.

Shegerian & Associates, Carney R. Shegerian and Jill McDonell for Plaintiff and Respondent.

Fiona Trinity sued Life Insurance Company of North America (LINA), Zenfira Kadzhikyan and Lucine Nikogosian (collectively LINA parties) for discrimination, harassment and wrongful termination. The LINA parties moved to compel arbitration based on an agreement they alleged Trinity had electronically acknowledged in 2014 during her employment with LINA. The trial court denied the motion, finding the LINA parties had not established the existence of an agreement to arbitrate and, even if they had, the purported agreement could not be enforced because it was procedurally and substantively unconscionable. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Parties and the Complaint

LINA, a subsidiary of Cigna Corporation, is an insurance company that underwrites indemnity, disability, accident and health insurance plans. Trinity worked for LINA as a claims associate and then a senior claims associate from November 2008 until she was fired in January 2020. Kadzhikyan was Trinity's direct supervisor beginning in 2015. Trinity indirectly reported to Nikogosian.

On March 12, 2020 Trinity filed this lawsuit alleging 15 causes of action, including for discrimination and harassment based on disability by association and age in violation of California's Fair Employment and Housing Act (Gov. Code, Sec. 12900 et seq.) and wrongful termination in violation of public policy. The complaint sought economic, noneconomic and punitive damages, as well as attorney fees.

2. The Motion To Compel Arbitration

On May 14, 2020 the LINA parties moved to compel arbitration based on an arbitration provision in the Cigna Corporation employee handbook that was distributed by email to employees of all Cigna Corporation's subsidiaries, including LINA, in November 2013. The arbitration provision, which appears on page 37 of the 44-page handbook, states, "By accepting employment, compensation and/or benefits, you have agreed to arbitrate serious employment-related disagreements between you and the company. Notwithstanding any other provision in this handbook, the duty to arbitrate employment-related disagreements is a contractual obligation that both you and the company are required to adhere to." The provision continues, "The arbitration process is administered by the American Arbitration Association (AAA) using the company's Employment Dispute Arbitration policy and Employment Dispute Arbitration Rules and Procedures. . . . [

] . . . Copies of these documents can be found in the 'Workplace & Culture' section of the Your Cigna Life intranet under 'Workplace Policies and Programs.' If you are unable to locate the information you are seeking on the intranet, please contact the Your Cigna Life Service Center . . . ." The final two pages of the handbook contain a section titled, "Acknowledgement and Agreement," which states, "By returning to the Employee Handbook page on Your Cigna Life and clicking the box next to the Acknowledgement statement, then clicking the 'Done' button to record my acceptance of these company policies: . . . I understand and agree any dispute between Cigna and me arising out of or relating to my candidacy for employment, my employment or termination of my employment with Cigna . . . including claims of discrimination or claims related to wage and hour issues, shall be resolved under Cigna's Employment Dispute Arbitration Program, which includes final mandatory binding arbitration. I also understand the Cigna Companies Employment Dispute Arbitration Policy and the Cigna Companies Employment Dispute Rules and Procedures form a legally enforceable contract between Cigna and me."/1

In support of its motion to compel arbitration, the LINA parties submitted the declaration of Michael Reagan, the employee relations managing director of Cigna Corporation, who stated he was familiar with the personnel policies and practices of Cigna Corporation and its subsidiaries, including LINA, and was responsible for overseeing the roll-out of the 2013 employee handbook and tracking employee acknowledgement of the handbook. According to Reagan, "As part of the distribution of its 2013 Employee Handbook, an email was sent to Cigna employees at each covered subsidiary, including LINA, in late 2013. Each covered employee would have been required to log into the website using the employee's unique username and password. Once logged into the website using these unique credentials, the employee would have been prompted to the 'Take Action' section. Employees were then required to make affirmative actions to specifically acknowledge their agreement to be bound by these policies, by marking the box next to 'acknowledgement,' and then affirmatively clicking 'Done.'" Reagan's department would at some point receive a report listing employees who had not completed this process and those employees would be informed their employment would be terminated if they did not execute the acknowledgement. Attached to Reagan's declaration was a twopage document containing the same "Acknowledgement and Agreement" language contained in the final two pages of the handbook. Above that language the document stated, "Trinity, Fiona, employee id 307893 has acknowledged the following and clicked the box next to the Acknowledgement statement, then clicked the 'Done' button on 06-JAN-2014." Reagan stated this record was created by "Cigna's internal system" and it signified Trinity had agreed to the policies in the handbook, including the arbitration agreement, on January 6, 2014.

In addition to arguing Trinity had agreed to and was bound by the arbitration provision of the employee handbook, the LINA parties asserted any "gateway" issues concerning the arbitrability of the dispute must be decided by an arbitrator rather than the court. In support of this argument LINA relied on the following language in the Employment Dispute Arbitration Rules and Procedures: "The arbitrator will have discretion to resolve any question or dispute that may arise before, during and after the arbitration hearing." The rules and procedures also state, "When a party asserts in a timely fashion that the matter(s) raised by any other party is (are) not arbitrable, the arbitrator will render a decision on the arbitrability of that issue before the parties conduct discovery or proceed with the claims on the merits. The arbitrator shall have the power to rule on his/her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement."

3. Trinity's Opposition to the Motion

In opposition to the motion to compel arbitration, Trinity contended she had never agreed to arbitrate claims against LINA. She also argued that, even if the court found an agreement to arbitrate had been entered, the arbitration provision was procedurally and substantively unconscionable and therefore unenforceable.

In a declaration submitted with her opposition, Trinity stated, "I am certain that I never saw, reviewed, received, submitted, agreed, consented, or signed--electronically, manually or otherwise--Cigna's Arbitration Agreement, Cigna Company's Employment Dispute Arbitration Policy, nor the Cigna's Employment Dispute Arbitration Rules and Procedures neither in 2008 or in 2014 or ever thereafter. . . . [

] . . . I never signed off on any arbitration agreement, electronically or otherwise." Trinity also stated that, at the time she initially accepted employment at LINA in 2008, "Had I been told that I would be required to enter a contract waiving all my legal rights and access to courts as a condition of my employment with defendants, I would not have accepted that job."

Trinity's opposition also included excerpts from a deposition taken of Reagan, who had been identified by LINA as the person most knowledgeable regarding the arbitration agreement applicable to LINA employees between 2014 and 2019. In his deposition Reagan had provided additional detail surrounding the dissemination of the employee handbook in 2013. He testified each employee was sent an email explaining that he or she needed to "take action." The email included a link to the employee handbook, which the employee was required to click on before he or she could access the intranet page containing the required acknowledgement. Once the employee had opened the handbook and clicked on the acknowledgement, he or she would receive an email confirming their assent to the terms of the handbook. Employees did not have the ability to negotiate terms contained in the handbook; and, if they declined to agree, their employment would be terminated.

Trinity requested the court hold an evidentiary hearing to hear testimony from Trinity and Reagan before ruling on the motion.

4. The LINA Parties' Reply in Support of Their Motion

In reply the LINA parties submitted excerpts from Trinity's deposition in which she stated she did not recall receiving the employee handbook in late 2013 or clicking the "Done" button on the acknowledgement on January 6, 2014./2

The LINA parties argued Trinity's failure to recall clicking on the acknowledgement was not sufficient to rebut Reagan's testimony that the autogenerated acknowledgement form containing Trinity's name and employee identification number indicated she had assented to the terms of the employee handbook, including the agreement to arbitrate disputes. The LINA parties also argued the arbitration agreement was neither procedurally nor substantively unconscionable and opposed the request for an evidentiary hearing.

5. The Evidentiary Hearing

At a hearing on August 10, 2020 the court heard argument regarding whether an evidentiary hearing was warranted. After the court indicated it was inclined to hold an evidentiary hearing, LINA's counsel requested guidance from the court regarding what testimony would be helpful, stating, "Both sides have conducted depositions. We both submitted deposition testimony and declarations. . . . Because there are conflicting facts in terms of whether Ms. Trinity executed the acknowledgement and agreement [in] January 2014, I'm not entirely certain what would be most beneficial to the court in terms of establishing the credibility issue that you want to have determined for the evidentiary hearing." The court explained, "Because of the fact that there has been some discovery done, I need to be able to assess the credibility of the witnesses, in particular to make a determination as to whether or not there was an agreement to arbitrate."

The court granted Trinity's request for an evidentiary hearing, which was held on January 15, 2021. Both Reagan and Trinity testified. Reagan's testimony was generally consistent with his declaration and deposition testimony regarding the process by which LINA employees received and acknowledged the employee handbook. He confirmed that, after an employee clicked the button agreeing to the terms outlined in the handbook, an email would be sent to the employee confirming his or her action. When asked whether such an email exists confirming Trinity agreed to the terms in the 2013 handbook, Reagan answered, "I recall that they were looked for, and I don't believe they were found. If she deleted them, they'd be gone. They're so old, they may not be attainable." In regard to the auto-generated confirmation pages indicating the handbook had been acknowledged by a particular employee, Reagan testified he did not know the name of the computer program that generated the confirmations, where or how they were stored, who had access to the program or how a particular record could be accessed or retrieved.

Trinity testified in the afternoon session of the hearing. Her testimony is not in the record on appeal because no court reporter was present and the LINA parties have not provided an agreed or settled statement./3

6. The Court's Order Denying the Motion To Compel Arbitration

After taking the matter under submission, on April 21, 2021 the trial court denied the LINA parties' motion to compel arbitration, finding the LINA parties had failed to prove Trinity agreed to the arbitration provision in the employee handbook. The court emphasized that, despite Reagan's testimony an email confirmation would have been sent to Trinity upon her agreement to the handbook's terms, no such email was produced by LINA, nor could Reagan confirm whether such an email existed. The court further found the agreement would have been unenforceable even if it had been entered because it was procedurally and substantively unconscionable.

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Footnotes:

1/ The Employment Dispute Arbitration Policy and Employment Dispute Arbitration Rules and Procedures were not provided to employees contemporaneously with the handbook. The policy generally contained much of the same information provided in the handbook. The rules and procedures described additional requirements, including time limits within which an arbitration demand must be filed: "Any demand for arbitration must be sent within the time limits that would apply to the party's claim if it were being resolved in court and not by arbitration. . . . If the Arbitration is an appeal from [an internal grievance process], the demand must be submitted within thirty (30) calendar days after receiving the final decision in the internal [process]." The rules and procedures also specified the scope of discovery that would apply to the arbitration: "A party will be entitled to take no more than three days of depositions . . . . A party may not depose any employee of any Cigna company who certifies in writing to the arbitrator that he/she has no direct knowledge of the facts surrounding the dispute." In addition, "The scope, timing, and procedure for discovery may be expanded, altered, amended or otherwise changed to accommodate the circumstances of a particular arbitration upon a showing of good cause as determined by the arbitrator . . . ."

2/ After Trinity testified she had no recollection of having clicked the box on the acknowledgement statement on January 6, 2014, LINA's counsel asked, "And again, is that something that you just don't have a recollection one way or the other, or are you stating affirmatively that this never happened and it was--and this is fraudulent?" After an objection from her counsel, Trinity answered, "No, I do not recall clicking the 'Done' box." LINA's counsel again asked, "Are you denying that that happened, or you simply don't recall it?" After an additional objection from Trinity's counsel, Trinity responded, "I don't recall clicking the 'Done' button." LINA's counsel tried again, "Is it something that you just don't recall what you did in January of 2016 [sic], or are you denying that you did it?" Trinity's counsel objected and, after some colloquy between counsel, Trinity said, "I don't. I just don't recall."

3/ Trinity has moved to dismiss the appeal based on the LINA parties' failure to include an agreed or settled statement containing a description of Trinity's testimony--indeed, the LINA parties' opening and reply briefs fail to even mention that Trinity testified at the hearing. In its opposition to the motion the LINA parties argue the testimony is immaterial because there are no disputed issues of fact upon which Trinity's testimony could bear, a somewhat surprising (not to mention disingenuous) contention given LINA's counsel's observation in August 2020 that there were "conflicting facts" and the trial court's statement it needed to make a credibility determination. The LINA parties also argue Trinity's testimony during the hearing is immaterial because there is already evidence in the record that Trinity denied agreeing to arbitrate her claims. The LINA parties have cited to no authority, nor are we aware of any, that excuses inclusion in the appellate record of material evidence because it is arguably cumulative. While the LINA parties' omissions and lack of candor are troubling, we exercise our discretion to address the appeal on the merits and decline to dismiss.

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View full opinion at https://www.courts.ca.gov/opinions/documents/B312302.PDF