INSURANCE-RELATED COURT CASES
Digested from case reports published online
Arbitration agreement put to the test
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 that Trinity had electronically acknowledged in 2014 during her employment with LINA. The trial court denied the motion, finding that 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.
Trinity worked for LINA as a claims associate and then as 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 a 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 and wrongful termination in violation of public policy. The complaint sought economic, noneconomic, and punitive damages as well as attorney fees.
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 stated: “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.”
In addition to arguing that Trinity had agreed to and was bound by the arbitration provision of the employee handbook, the LINA parties asserted that any “gateway” issues concerning the arbitrability of the dispute must be decided by an arbitrator rather than the court.
In opposition to the motion to compel arbitration, Trinity contended that she had never agreed to arbitrate claims against LINA. She also argued that, even if the court found that an agreement to arbitrate had been entered, the arbitration provision was procedurally and substantively unconscionable and therefore unenforceable.
Trinity requested that the court hold an evidentiary hearing to hear testimony from Trinity and Michael Reagan, Cigna’s employee relations managing director, before ruling on the motion.
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.”
The LINA parties argued that Trinity’s failure to recall clicking on the acknowledgement was not sufficient to rebut Reagan’s testimony that the auto-generated acknowledgement form containing Trinity’s name and employee identification number indicated that she had assented to the terms of the employee handbook, including the agreement to arbitrate disputes. The LINA parties also argued that the arbitration agreement was neither procedurally nor substantively unconscionable and opposed the request for an evidentiary hearing.
At a hearing on August 10, 2020, the court heard argument regarding whether an evidentiary hearing was warranted. The court indicated that it was inclined to hold such a hearing.
The court granted Trinity’s request for an evidentiary hearing, and it was held on January 15, 2021. Both Reagan and Trinity testified.
On April 21, 2021, the trial court denied the LINA parties’ motion to compel arbitration, finding that the LINA parties had failed to prove that Trinity agreed to the arbitration provision in the employee handbook. The court emphasized that, despite Reagan’s testimony that 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 that the agreement would have been unenforceable even if it had been entered because it was procedurally and substantively unconscionable.
The LINA parties contended that the trial court had no authority to determine whether Trinity agreed to the arbitration provision in the handbook. Rather, they argued, any dispute regarding whether an agreement to arbitrate exists must be decided by the arbitrator.
Notwithstanding a provision that clearly and unmistakably delegates arbitrability issues to the arbitrator, if a party “is claiming that it never agreed to the arbitration clause at all, then the court must consider that claim.” The LINA parties appealed.
On appeal, the LINA parties argued that the trial court erred in ruling that there was no agreement to arbitrate. Yet, whether the auto-generated acknowledgement presented by the LINA parties was generated as a result of Trinity’s actions was precisely the issue before the trial court: Trinity stated unequivocally in her declaration that she never saw or consented to the arbitration agreement.
Trinity having carried her burden to challenge the authenticity of the agreement, the burden shifted back to the LINA parties to prove by a preponderance of the evidence that a contract was formed. The court did not err in finding that they had failed to do so.
No testimony was presented that Trinity’s own actions were the exclusive way that an acknowledgement form bearing her credentials could be created.
The court affirmed the order that denied the motion to compel arbitration and said that Trinity was to recover her costs on appeal.
Trinity v. Life Insurance Company of North America—California Courts of Appeal, Second Appellate District—May 23, 2022—No. B312302.