Foundation!

Gamboa v. N.E. Cmty. Clinic, No. B304833 (D2d7 Nov. 30, 2021)

This is an appeal of the denial of a motion to compel arbitration. But it is really about a basic point of evidence.

A party seeking to compel arbitration bears the burden of proving that “an agreement to arbitrate the controversy exists[.]” Code Civ. Proc. § 1281.2. As the Court explains here, that’s done on a motion, using a three-step process. First, the moving party needs to come forward with a prima facie case that an agreement to arbitrate exists. Usually that entails attaching the agreement to the petition. At that stage, there’s no formal evidentiary requirements, such as a requirement to authenticate the contract. Second, if a prima facie case is made, the opposing party needs to come forward with evidence that there was no, in fact, an agreement. And then if that happens, the framework falls away and the movant needs to prove the existence of an agreement by a preponderance of the evidence. 

Here, the movant (an Employer) submitted a declaration of its HR Director with its motion. The declaration stated, in a conclusory manner, that the opponent (an Employee) signed an arbitration clause as part of her employment agreement, and purported to attach a contract containing an arbitration clause that appeared to be signed by a representative of the Employer and an Employee. Employee, however, put in a declaration stating that she had never seen the contract, that she had no recollection of discussing arbitration, and that she would not have signed an arbitration agreement if she had seen it and it were explained to her. Employer did not put in a supplemental declaration with its reply.

Employee objected to the HR Director’s declaration on foundation grounds, which the trial court sustained. It then found that Employer failed to meet its burden to prove an agreement, and thus denied the motion. Employer appealed.

I’m hunching that there’s a pretty good chance that Employee really did sign the document that Employer submitted. Her declaration notably did not deny that it bore her signature, which is something she would ordinarily say if she could. (As a jury instruction given in every case explains, when “a party provided weaker evidence when it could have provided stronger evidence,” the trier of fact can “distrust the weaker evidence.” See CACI 203.)

In an ordinary litigation, this could have been cleared up with a single request for admission or depo question: Is that your signature? But what makes a motion to compel arbitration tricky is that the moving party generally needs to forego taking any discovery, because taking discovery risks waiver of the right to arbitrate. So, once Employee denied being party to the contract, Employer here couldn’t rely on the most common rejoinder: that notwithstanding her recollection, she had signed the document.

The Court notes, however, that Employer didn’t need to authenticate the signature to authenticate the document. What it did need to provide was admissible evidence that the contract was authentic and that Employee was party to it. So, for instance, a declaration from a custodian of records that says:

I am the Head of HR at Employer. I am aware of Employer’s record-keeping practices when it comes to employment documents. Accurate maintenance and updating of personnel files is a requirement of my employment duties and the duties of those who report to me. Employer requires all employees to sign Employment Agreements, which include an arbitration agreement. It then provides the Employee with a copy and puts the original of the signed agreements in the employee’s personnel file. The Employment Agreements of other employees would not be contained in that file. I accessed Employee’s personnel file and obtained a copy of an Employment Agreement, which appears to have been executed by Employee and a representative of Employer, a true and correct copy of which is attached as Exhibit A.

But what Employer did, instead, was:

I am the head of HR at Employer. Employee signed an Employment Agreement containing an arbitration clause when she was hired, a true and correct copy of which is attached as Exhibit A.

See the difference? We have no way of knowing how HR Head knows Employee signed the contract. Did she see her? Did Employee admit it? Was HR Head’s knowledge based on some unstated record keeping practice? Without that information, we don’t actually know that HR Head knows. 

That’s what trial lawyers call foundation. Under Evidence Code § 403(a)(2), you need to provide the preliminary facts that establish a witness’s personal knowledge of the subject matter of her testimony. Otherwise, the testimony is rendered inadmissible under § 702(a). It is not an incredibly heavy burden. Personal knowledge does not need to be proven—there just needs to be enough evidence to give the trier of fact a basis to find that the witness does, in fact, know of what she speaks. And notably, § 702(a) specifically says you don’t need to lay that foundation until someone objects. (Otherwise, trials would be incredibly tedious.) So Employer could even have fixed it on reply with a supplemental declaration. 

But it didn’t. So Employee gets her day in court.

Affirmed.