Filed 8/20/26
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
MICHAEL MITCHELL et al.,
Plaintiffs and Respondents, A173736
v. (Alameda County
LILAC SOLUTIONS, INC., et al., Super. Ct. No. 24CV101375)
Defendants and Appellants.
Under the California Arbitration Act (Code Civ. Proc., § 1280 et seq.), a
party who is contractually entitled to compel arbitration of a dispute may
“waive[]” that right. (§ 1281.2, subd. (a).) The trial court found such a
waiver here, and we affirm.
Lilac Solutions, Inc. (Lilac), Gerald “Jerry” Sullivan, Matthew McCall,
David Grauer, Matthew Legaspi, and Susannah Blumenstock (the Lilac
Defendants) seek review of a trial court order denying their motion to compel
arbitration in a case brought by Michael Mitchell, Khiry Crawford, Tyler
Echevarria, and Anthony McCune (Plaintiffs) on claims of wrongful
termination, discrimination, and sexual harassment.
The Lilac Defendants argue that: (1) in finding a waiver of their right
to arbitrate, the trial court either failed to consider or misapplied the holding
in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562 (Quach)
and instead relied upon outdated case law that has been superseded by
Quach, and (2) when, as part of its waiver analysis, the court evaluated why
1
they initiated discovery and took various other steps to advance the judicial
proceedings, the trial court failed to take into account the “quandary” they
faced in dealing with the Ending Forced Arbitration of Sexual Assault and
Sexual Harassment Act of 2021 (9 U.S.C §§ 401–402) (EFAA), which
prevented them from seeking compelled arbitration immediately.
We see no reversible error. First, the court’s order denying compelled
arbitration based on waiver of the right to arbitrate is consistent with Quach.
Although the order makes no mention of Quach and cites precedent predating
it, we must presume the trial court was aware of governing legal principles
and correctly applied those principles absent some affirmative indication that
it ruled contrary to law. There is no such indication here; the court relied on
appropriate legal criteria in finding a waiver, and its pre-Quach citations do
not conflict with that case.
Second, the Lilac Defendants’ conduct in seeking extensive discovery
before filing a motion to compel arbitration supplies substantial evidence of
waiver, impliedly by a clear and convincing evidence standard—the
evidentiary standard Quach established for a waiver of arbitral rights—even
though the trial court never mentioned the applicable standard of proof.
Here, too, the Lilac Defendants fail to overcome the presumption of
correctness court rulings are given on review.
Third, we reject the contention that, in finding waiver, the trial court
erroneously failed to recognize and accommodate the cross-pressures the
Lilac Defendants faced in dealing with the EFAA. They invite us to conclude
that the trial court penalized them for failing to file an immediate motion to
compel arbitration in the face of impossible odds created by the presence of
what they see as a spurious sexual harassment cause of action pleaded solely
to evade arbitration by using the EFAA as a shield. But that is an
2
overreading of the trial court’s order. Rather, given the nature and sequence
of events in the first few months of the case, the trial court appears to have
concluded that the Lilac Defendants unequivocally manifested an intent to
litigate in a judicial forum—at least, until they were faced with an anti-
SLAPP motion, which prompted a defense motion to compel arbitration.
We explain each of these points further below.
I. BACKGROUND
A. Pleadings, Discovery, and the Motion To Compel Arbitration
Plaintiffs were once employed by Lilac, a company that manufactures
technology utilized in lithium extraction. Gerald “Jerry” Sullivan, Matthew
McCall, David Grauer, Matthew Legaspi, and Susannah Blumenstock were
managerial-level employees at Lilac with roles related to health and safety.
Plaintiffs filed a complaint on December 6, 2024, alleging various claims of
exposure to harmful chemicals, wrongful termination, gender and disability
discrimination, and sexual harassment. The complaint demands a jury trial
and alleges thirteen causes of action against the Lilac Defendants, including
five for alleged violation of the Fair Employment and Housing Act (Gov.
Code, § 12900 et seq.). The fifth cause of action is for sexual harassment.1
Upon accepting employment at Lilac, each of the Plaintiffs signed an
arbitration agreement requiring disputes arising out of their employment
with Lilac be arbitrated. In responding to the complaint, the Lilac
Defendants asserted their right to arbitrate under these agreements. They
filed answers to the complaint alleging affirmative defenses based on a right
to arbitrate. They filed a cross-complaint and an amended cross-complaint
1 Each of the other twelve causes of action is supported by a highly
detailed narrative recitation of factual background that, at least generally,
seems to tie the pleaded claims to the factual subject matter alleged. The
fifth cause of action, by contrast, is pleaded in a conclusory manner.
3
for violation of trade secrets in which they alleged that Plaintiffs were subject
to an arbitration agreement. And on March 18, 2025, they filed a motion to
compel arbitration.
But before seeking compelled arbitration, the Lilac Defendants took a
number of affirmative steps in the pending judicial proceedings. They served
Plaintiffs with 12 sets of written discovery; noticed depositions of each of the
Plaintiffs; and noticed two depositions of third parties. They served 11
subpoenas on nonparties for production of business records. They also
responded to 33 sets of Plaintiffs’ discovery requests, and filed seven motions
requesting action by the court on various procedural matters.2 They filed
their motion to compel arbitration shortly after plaintiffs filed an anti-SLAPP
motion seeking to strike the amended cross-complaint. (See Code Civ. Proc.,
§ 425.16.)
In their motion to compel arbitration, the Lilac Defendants argued that
the arbitration agreement is enforceable and that the EFAA does not apply
because Plaintiffs do not raise a plausible sexual harassment claim.3 In
opposition to compelled arbitration, Plaintiffs argued that the Lilac
Defendants waived their right to arbitrate by seeking to take discovery, by
filing several motions, and generally by availing themselves to rights unique
2 Specifically, the Lilac Defendants filed motions to seal portions of the
complaint, to designate the case as complex, for their attorneys to be
admitted pro hac vice, and for a protective order seeking to limit Plaintiffs’
interrogatories.
3 As the Lilac Defendants saw things, the fifth cause of action was
pleaded in a baseless attempt to block arbitration. (See Yost v. Everyrealm,
Inc. (S.D.N.Y. 2023) 657 F.Supp.3d 563, 588 [recognizing the potential for
“mischief” under the EFAA, insofar as it incentivizes “litigants bound by
arbitration agreements to append bogus” harassment claims “to their viable
claims, in the hope of end-running these agreements”].)
4
to a judicial proceeding. Plaintiffs also argued that the EFAA barred
arbitration due to their sexual harassment claim.
B. The Trial Court’s Denial of the Motion To Compel Arbitration
The trial court denied the Lilac Defendants’ motion to compel
arbitration on the ground that the Lilac Defendants had waived their right to
compel arbitration. The trial court made this finding based on factors
derived from Fleming Distribution Co. v. Younan (2020) 49 Cal.App.5th 73,
80 (Fleming) and Kokubu v. Sudo (2022) 76 Cal.App.5th 1074 (Kokubu).
First, the trial court found that the Lilac Defendants’ filing of the cross-
complaint and the amended cross-complaint without simultaneously seeking
a “stay of the case” was “inconsistent with invoking the right to arbitrate.”
Second, the trial court found that the Lilac Defendants had “substantially
invoked the litigation machinery before seeking arbitration” through their
pre-motion activities. Third, the trial court found that the Lilac Defendants
had “taken advantage of judicial discovery procedures not available in
arbitration.”
The Lilac Defendants timely filed a notice of appeal.4
4 Shortly before oral argument, and after the appellate briefing was
closed, the Lilac Defendants filed an unopposed request to augment the
record to include a stipulation and order entered in the trial court on May 13,
2026 pursuant to which (1) individual defendants Sullivan, McCall, Grauer,
Legaspi, and Blumenstock were dismissed, leaving Lilac as the only
remaining defendant in the proceedings below, and (2) five of the thirteen
claims alleged in the complaint (causes of action five, seven and eight, and
ten though thirteen) were dismissed. No request for dismissal of any parties
to this appeal has been presented in these appellate proceedings. By order
filed June 16, 2026, we denied the Lilac Defendants’ augmentation request,
indicated we would treat it as a request for judicial notice, and deferred to the
merits any ruling on the request as so construed. We now deny the judicial
notice request on relevance grounds. The dismissals in the trial court
5
II. DISCUSSION
A. Governing Law: Waiver of Contractual Right To Arbitrate
“On petition of a party to an arbitration agreement alleging the
existence of a written agreement to arbitrate a controversy and that a party
to the agreement refuses to arbitrate that controversy, the court shall order
the petitioner and the respondent to arbitrate the controversy if it determines
that an agreement to arbitrate the controversy exists, unless it determines
that: [¶] . . . [t]he right to compel arbitration has been waived by the
petitioner . . . .” (Code Civ. Proc., § 1281.2, subd. (a); Quach, supra,
16 Cal.5th at p. 572.)
The Lilac Defendants argue that the trial court applied an outdated
legal standard for determining waiver under St. Agnes Medical Center v.
PacifiCare of California (2003) 31 Cal.4th 1187 (St. Agnes), and failed to
appreciate that St. Agnes was partially overruled in Quach. (See Quach,
supra, 16 Cal.5th at pp. 582 & fn. 4, 584–585.) Before Quach, California
courts applied a six-factor waiver test enunciated as follows in St. Agnes, at
page 1196: “ ‘In determining waiver, a court can consider “(1) whether the
party’s actions are inconsistent with the right to arbitrate; (2) whether ‘the
litigation machinery has been substantially invoked’ and the parties ‘were
well into preparation of a lawsuit’ before the party notified the opposing party
of an intent to arbitrate; (3) whether a party either requested arbitration
enforcement close to the trial date or delayed for a long period before seeking
a stay; (4) whether a defendant seeking arbitration filed a counterclaim
without asking for stay of the proceedings; (5) ‘whether important
intervening steps [e.g., taking advantage of judicial discovery procedures not
occurred long after the order at issue in this appeal, and thus can have no
bearing on the correctness of that order at the time it was entered.
6
available in arbitration] had taken place’; and (6) whether the delay ‘affected,
misled, or prejudiced’ the opposing party.” ’ ” St. Agnes further provides that
for a plaintiff to prove waiver, they must show prejudice. (Id. at pp. 1203–
1204.) As our high court later explained in Quach, the sixth St. Agnes
factor—the prejudice requirement—was designed to ensure consistency with
federal law. (Quach, at pp. 581–583.)
The six St. Agnes factors were relied upon in Fleming, and some of
these factors were cited by the trial court in denying the Lilac Defendants’
motion to compel arbitration. But Quach did not overrule the St. Agnes
waiver test in its entirety. Based on an intervening change in federal
arbitration case law (Morgan v. Sundance, Inc. (2022) 596 U.S. 411; see
Quach, supra, 16 Cal.5th at pp. 581–583), the Quach court abandoned the
arbitration-specific prejudice factor in the St. Agnes test. Without the
prejudice requirement, the Quach court explained, the St. Agnes waiver test
placed arbitration contracts on equal footing with other types of contracts and
thus was consistent with federal law after Morgan. (Quach, at p. 569.)
The Quach court emphasized that, going forward, waiver
determinations should be solely focused on the waiving party’s conduct rather
than any resulting harm to the party opposing arbitration. (Quach, supra,
16 Cal.5th at p. 585.) The court further explained that the St. Agnes factors
should not be viewed as a “single multifactor test” for determining whether
the right to compel arbitration has been lost through litigation, as some of the
factors are relevant to other defenses such as forfeiture, estoppel, or laches,
rather than waiver. (Quach, at p. 584.) Instead, courts should consider “only
those factors that are relevant to the specific state law defense the party
resisting arbitration has raised.” (Ibid.) In this case, the court applied the
generally applicable law of waiver. (Ibid.)
7
Summing up its holding, the Quach court restated the St. Agnes waiver
test, recasting it in the following terms: “To establish waiver under generally
applicable contract law, the party opposing enforcement of a contractual
agreement must prove by clear and convincing evidence that the waiving
party knew of the contractual right and intentionally relinquished or
abandoned it.” (Quach, supra, 16 Cal.5th at p. 584.) “The waiver inquiry is
exclusively focused on the waiving party’s words or conduct; neither the effect
of that conduct on the party seeking to avoid enforcement of the contractual
right nor that party’s subjective evaluation of the waiving party’s intent is
relevant. [Citations.] This distinguishes waiver from the related defense of
estoppel, ‘which generally requires a showing that a party’s words or acts
have induced detrimental reliance by the opposing party.’ [Citations.] To
establish waiver, there is no requirement that the party opposing
enforcement of the contractual right demonstrate prejudice or otherwise show
harm resulting from the waiving party’s conduct.” (Id. at p. 585.)
B. Standard of Review
At the threshold, before turning to how that trial court conducted its
waiver analysis, the parties dispute whether we should conduct a de novo or
substantial evidence review. The Lilac Defendants argue that since the trial
court applied the wrong legal standard, we should review its order denying
compelled arbitration de novo, without giving any deference to the trial
court’s ruling. Plaintiffs, on the other hand, argue that the standard of
review is for substantial evidence, which is highly deferential. On this issue,
we side with Plaintiffs. The primary case the Lilac Defendants rely upon for
de novo review involved a trial court order denying compelled arbitration
under the St. Agnes test prior to the issuance of the Supreme Court’s Quach
opinion (see Hofer v. Boladian (2025) 111 Cal.App.5th 1, 9–10), which of
8
necessity means it was impossible for the trial court there to have been aware
of the change in the law Quach brought about. Not so here.
Normally, a trial court determination that the right to compel
arbitration has been waived is a question of fact subject to substantial
evidence review on appeal. (Davis v. Blue Cross of Northern California (1979)
25 Cal.3d 418, 426; Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956,
962.) Although we must bear in mind the clear and convincing burden of
proof (Conservatorship of O.B. (2020) 9 Cal.5th 989, 1005–1012) and affirm
only if we conclude it is “ ‘highly probable’ ” the Lilac Defendants waived
their arbitral rights knowingly (Quach, supra, 16 Cal.5th at p. 586), nothing
in Quach effects a change in the nature of substantial evidence review so long
as, legally, the updated waiver test enunciated by the Supreme Court was
correctly applied. Because we believe the trial court analyzed the waiver
issue in a manner that is consistent with Quach, we see no reason to apply de
novo review.
In general, waiver determinations consider the totality of the parties’
actions and specifically whether their combined actions “ ‘ “indicate a
conscious decision . . . to seek judicial judgment on the merits of the
arbitrable claims, which would be inconsistent with a right to arbitrate.” ’ ”
(Sierra Pacific Industries Wage & Hour Cases (2025) 116 Cal.App.5th 1038,
1055.) Under this totality analysis, trial courts have “considerable flexibility
to determine when waiver occurs” in the particular circumstances presented.
(Kokubu, supra, 76 Cal.App.5th at p. 1083.) That was the case before Quach,
and it continues to be the case after Quach. The Lilac Defendants now offer
various reasons why they undertook litigation activities in court that they
portray as either routine or mandatory, but conflicting inferences may be
9
drawn from the sum total of their conduct, and it is not our role on appeal to
resolve those conflicts.
Under the deferential standard we apply in evaluating inferences
drawn by the trial court, “ ‘all factual matters will be viewed most favorably
to the prevailing party [citations] and in support of the judgment . . . .’ ”
(Campbell v. Southern Pacific Co. (1978) 22 Cal.3d 51, 60; see Nissan Motor
Acceptance Cases (2021) 63 Cal.App.5th 793, 818 [“We must not review the
evidence to determine whether substantial evidence supports the losing
party’s version of the evidence. Instead, we must determine if there is any
substantial evidence, contradicted or uncontradicted, to support the trial
court’s findings”].) That standard dictates affirmance on this record.
C. The Trial Court’s Waiver Analysis
The Lilac Defendants argue that the trial court applied the wrong legal
standard by relying on Fleming instead of Quach. We are not persuaded.
Preliminarily, we note that the Lilac Defendants’ suggestion that the
trial court relied on a pre-Quach understanding of the six-factor St. Agnes
test is not accurate. In fact, the court cited both Fleming and Kokubu, first
relying on Fleming for a background recitation of the St. Agnes factors
regarding waiver, and then relying on Kokubu in specifically analyzing and
finding waiver on the facts presented. The trial court at one point did make a
general statement that “under the factors discussed in Fleming, supra,
49 Cal.App.5th at 80, [the Lilac Defendants] . . . have waived the right to
arbitrate[,]” but it did not specify which of these factors it meant. Notably,
however, in the court’s analysis of waiver on the facts presented, there is no
citation to any of the specific passages in either Kokubu or Fleming that
apply the prejudice component of the multifactor St. Agnes test. (See
Kokubu, supra, 76 Cal.App.5th at p. 1091; Fleming, supra, 49 Cal.App.5th at
pp. 83–84.) Legally, that matters.
10
It is true that the trial court did not cite Quach in its April 2025 order
denying compelled arbitration—Quach came down in July 2024—but that
does not mean we must infer it was ignorant of the governing law or unaware
of Quach at the time of its order. At the hearing on the motion to compel
arbitration, the parties discussed Quach extensively. And in accord with our
usual presumption of regular performance of judicial duty, we always
presume a trial judge knows the law (see People v. Coddington (2000)
23 Cal.4th 529, 644) absent some affirmative indication in the record to the
contrary, which is not present here. Nothing in the court’s order mentions
prejudice, which is the crucial aspect of St. Agnes that Quach abandoned.
According to the Lilac Defendants, the trial court “overlooked the
principles” established in Quach, as shown by its failure to say anything
about the clear and convincing proof burden that now governs whether
arbitral rights have been knowingly and intentionally relinquished. But the
Lilac Defendants’ knowledge and understanding of the arbitration
agreements is indisputable, since they raised their contractual right to
arbitrate expressly in their responsive pleadings. It does not matter that the
trial court never mentioned the term “clear and convincing” in its assessment
of the evidence. In our substantial evidence review, we are charged with
ensuring that the evidence supporting any implied findings is strong enough
to meet the applicable burden of proof. (Conservatorship of O.B., supra,
9 Cal.5th at pp. 1005–1012.) And on this record, we believe the Plaintiffs met
their burden by the requisite standard of clarity.
Legally, three aspects of the court’s reasoning are most salient, each
taken from passages in Kokubu that remain good law following Quach. A
close examination of these aspects of the court’s reasoning demonstrates that,
in finding waiver, the court only considered things that bear upon whether
11
the Lilac Defendants knowingly waived their contractual arbitration rights.
It did not undertake an analysis of prejudice to the Plaintiffs or apply any
other St. Agnes factor in a manner that took the focus away from the driving
consideration under Quach—the Lilac Defendants’ intent in litigating
vigorously for more than three months before seeking to arbitrate.
First, and most important, the court considered “whether the party’s
actions are inconsistent with the right to arbitrate.” (See Kobuku, supra,
76 Cal.App.5th at p. 1084.) In applying this factor, the trial court found that
“Lilac’s filing a Cross-Complaint, then a (First) Amended Cross-Complaint,
without simultaneously seeking a stay of the case pending completion of
arbitration is inconsistent with invoking the right to arbitrate.” This factor is
directly relevant to an analysis of waiver as it echoes generally applicable
contract principles laid out in Quach. (Quach, supra, 16 Cal.5th at p. 584.)
Quach requires that a finding of waiver be supported by an “intentional
relinquishment” of a known right to compel arbitration. (Ibid.)
Applying this first factor, there is substantial evidence that the Lilac
Defendants intentionally relinquished their right to arbitrate. Not only did
they file a cross-complaint and an amended cross-complaint seeking
affirmative relief, but they engaged in extensive discovery over a span of
three months. During this period, they served extensive discovery, first party
as well as third party, and several procedural motions. The extent and depth
of their discovery efforts may be fairly construed to indicate a deliberate
choice of a judicial forum. The Lilac Defendants try to explain away all of
this litigation activity by contending that the rules of civil procedure made it
compulsory for them to assert their own claims arising out of the same
factual circumstances alleged by Plaintiffs. We recognize the difficult
position the Lilac Defendants were in when faced with a decision whether to
12
file compulsory cross-pleadings before moving to compel arbitration, but the
central problem they have here is not just with their responsive pleadings.
Rather, they have failed to persuade us why the trial court erred in
finding, as a factual matter, that the pattern of their words and conduct in
the three months following the filing of the complaint, in its totality, was
inconsistent with their claimed entitlement to arbitrate. The Lilac
Defendants answered, filed a series of cross-pleadings seeking affirmative
relief, and launched a full-fledged discovery campaign covering every aspect
of the case, all the while proceeding with notable dispatch over the course of
three months—until the Plaintiffs filed an anti-SLAPP motion, which the
Lilac Defendants quickly countered with a motion to compel arbitration,
automatically freezing all discovery by the Plaintiffs. (See Code Civ. Proc.
§ 425.16, subd. (g).) On this record, we decline to second-guess the court’s
finding that, in light of this series of moves and countermoves, what Lilac
Defendants did was inconsistent with an intent to arbitrate.
Second, the trial court considered “ ‘ “ ‘whether “the litigation
machinery has been substantially invoked” and the parties “were well into
preparation of a lawsuit” before the party notified the opposing party of an
intent to arbitrate.’ ” ’ ” (Kokubu, supra, 76 Cal.App.5th at p. 1084, italics
added.) This factor focuses on the extent of the Lilac Defendants’ conduct
during litigation. (See Quach, supra, 16 Cal.5th at p. 585.) It looks to
whether the Lilac Defendants’ conduct in invoking “substantial litigation
machinery” is inconsistent with the right to arbitrate, which is what Quach
contemplates. (See id. at p. 584.) The same factual considerations taken into
account with respect to the first waiver factor, discussed above, support a
finding of waiver here as well.
13
The situation presented on the facts before us is broadly similar to
Quach, where the defendant company waived its right to arbitrate because it
filed an answer, initiated discovery, filed a case management statement
requesting a jury trial, and posted jury fees. (See Quach, supra, 16 Cal.5th at
p. 570.) In Quach, to be sure, the party claiming entitlement to arbitrate
engaged in more extensive in-court litigation activity than simply taking
discovery, but factually the comparison is a matter of degree. The difference
between Quach and this case simply underscores that, in the circumstances
presented, the trial court assessed the record in its entirety and drew a
reasonable factual inference that the Lilac Defendants’ conduct manifested
an intent to litigate in court.
Third and finally, the trial court considered whether “Lilac has taken
advantage of judicial discovery procedures not available in arbitration by
propounding 12 sets of written discovery, 4 depositions notices on parties to
this case, and 11 deposition subpoenas on nonparties.” (See Kokubu, supra,
76 Cal.App.5th at p. 1090.) It found that they did. The Lilac Defendants
contend that as a result of recent amendments to Code of Civil Procedure
section 1283.05, discovery methods in arbitration are now the same as
discovery in an unlimited civil action. But that argument is beside the point
here. Whether judicial and arbitration procedures are the same, or different,
is not dispositive.
On this threefold analysis, the trial court found, in substance, that the
Lilac Defendants elected to avail themselves of the judicial process and took
clear and unmistakable steps to move the case forward in court, primarily by
launching a wide-ranging discovery campaign. For us to affirm, it is enough
that, factually, the record supports this determination. By making a
comparison to what it viewed as more limited arbitral discovery, the trial
14
court did not frame the issue as one implicating prejudice to the Plaintiffs,
but rather as a determination that the Lilac Defendants chose to make use of
discovery tools available under judicial auspices. Whether the court was
right or wrong about the uniqueness of the type and extent of discovery
available in court has no bearing on whether the Lilac Defendants elected to
proceed judicially—until they had a change of mind.
Nothing in the court’s order denying compelled arbitration indicates
that it considered anything other than “factors that are relevant to the
specific state law defense the party resisting arbitration has raised” (Quach,
supra, 16 Cal.5th at p. 584)—which in this case was waiver. And overall, the
focus of the trial court’s waiver analysis, as Quach explained it should be,
was on the Lilac Defendants’ conduct insofar as it bore on their intent. Had
the trial court shown concern for the detriment or disadvantage to the
Plaintiffs of compelling arbitration versus remaining in court—considerations
that might be relevant to defenses such as estoppel or laches, as distinct from
waiver—the position taken by the Lilac Defendants would have greater force
here. But that is not how we read the court’s order, and that is not what the
order says. The three aspects of Kokubu that the trial court invoked are fully
consistent with Quach’s reframing of the St. Agnes test to place the focus on
voluntary relinquishment of known contractual rights.
The Lilac Defendants’ argument to the contrary relies heavily on
Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651, which
reversed a waiver finding after the employer defendants in that case engaged
in discovery and waited 14 months before moving to compel arbitration. As
Plaintiffs point out, however, the determinative factor there—that the
plaintiff failed to “demonstrate prejudice from the delay” (id. at p. 654)—has
been superseded by Quach. Ironically, given the Lilac Defendants’ repeated
15
citations to Khalatian, they seem to be inviting us to do exactly what they
charge the trial court with having done—rely on outdated case law for a
holding that has been impliedly overruled by Quach.
D. The EFAA “Quandary” Faced by the Lilac Defendants
Based on the presence of a potential EFAA5 issue raised by a single
claim in the complaint—the fifth cause of action alleging sexual harassment
—the Lilac Defendants seek to downplay the significance of the multi-faceted
discovery they pursued at the outset of the case. They point to case law
holding that where one claim among several pleaded claims in a complaint
falls within the scope of the EFAA, the single nonarbitrable claim renders all
other pleaded claims nonarbitrable under the EFAA along with it. (See
Quilala v. Securitas Security Services USA, Inc., supra, 117 Cal.App.5th at
pp. 88–90; Casey v. Superior Court (2025) 108 Cal.App.5th 575, 588; Liu v.
Miniso Depot CA, Inc. (2024) 105 Cal.App.5th 791, 800; Doe v. Second Street
Corp., supra, 105 Cal.App.5th at pp. 573–577.)
Given these cases, the Lilac Defendants argue, their delay in moving to
compel arbitration simply reflected their “efforts to grapple with the
quandary created by [the] EFAA, recognizing they could not successfully
compel arbitration until they were in a position to mount a credible challenge
5 Congress passed the EFAA as an amendment to the Federal
Arbitration Act (FAA). (Doe v. Second Street Corp. (2024) 105 Cal.App.5th
552, 564; 9 U.S.C § 402.) The EFAA provides a narrow exception to the
FAA’s section 2, which states that an agreement to arbitrate “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract or as otherwise provided in [the
EFAA].” (9 U.S.C § 2; Quilala v. Securitas Security Services USA, Inc. (2025)
117 Cal.App.5th 75, 83 (Quilala).) The EFAA applies when the plaintiff
sufficiently pleads a sexual harassment or sexual assault claim, which then
renders a predispute arbitration agreement unenforceable. (9 U.S.C § 402
(a).)
16
to the harassment claim’s merits.” Their claimed strategy was to “briefly
defer a motion to compel so they could develop facts to challenge the viability
of Plaintiffs’ sexual harassment claim (the idea being that, once [they] were
in a position to show the harassment claim was baseless, the EFAA would no
longer apply and arbitration would be back on the table).”6
While there is some surface logic to this proffered excuse, it does not
square with the record of contemporaneous events. First of all, the scope of
the Lilac Defendants’ discovery went well beyond what they claim was
necessary to position the fifth cause of action for a dispositive motion. The
chronology, alone, is suspicious. The complaint was filed on December 6,
2024, and the motion to compel arbitration was filed on March 18, 2025.
While the Lilac Defendants claim that the Plaintiffs’ initial interrogatory and
document requests responses in early January 2025 revealed no evidence
supporting the fifth cause of action, by early March 2025 they had not filed a
motion for summary adjudication aimed at the fifth cause of action or
6 In the trial court, the Lilac Defendants advanced a much more
aggressive form of this argument. In the reply brief in support of their
motion to compel arbitration and at the hearing on the motion, they
contended that the trial court was obligated to decide as a threshold matter
whether EFAA applies to the complaint and if so to what extent. As their
counsel explained at the hearing, “we can’t get to a waiver analysis before
deciding whether there is a valid and enforceable arbitration agreement to
begin with.” In this view, it was analytically necessary to decide the EFAA
issue before deciding anything else; that was so, the Lilac Defendants argued,
because if the EFAA bars arbitration of the entire complaint they “could not
have waived as a matter of law because there was nothing to waive.” The
trial court declined to address this version of their EFAA argument because it
was raised too late. The argument has not been renewed on appeal, so we,
too, have no occasion to address it. We assume arguendo, however, that the
EFAA applies due to the presence of the fifth cause of action in the complaint,
and that, under the Quilala line of cases, the presence of that claim renders
the entire case nonarbitrable.
17
indicated that such a motion was forthcoming in order to clear the way for
arbitration. It was the filing of the anti-SLAPP motion on March 13, 2025
that appears to have spurred the filing of their motion to compel five days
later. A perfectly reasonable reading of this sequence of events is that, in the
face of the anti-SLAPP motion, forum shopping motivated the motion to
compel arbitration as a litigation countermove.
The Lilac Defendants urge us to read things differently. They argue
that “[i]mplicit in the trial court’s order is the assumption that Defendants,
facing a mix of EFAA and non-EFAA claims, were required to move to compel
arbitration right after the Complaint was filed, even if that motion was
doomed to fail because the merits of Plaintiffs’ harassment claim were
unknown and could not credibly be challenged without some initial fact
discovery.” But nothing in the trial court’s order denying the motion to
compel arbitration and nothing mentioned by the court at the hearing on that
motion suggests that the court believed an immediate motion to compel
arbitration was necessary. If the Lilac Defendants genuinely believed they
needed time to work on developing a motion to surgically excise the sexual
harassment allegations from the case before seeking compelled arbitration,
they could have taken procedural steps to alleviate their dilemma.
For example, the Lilac Defendants could have filed a motion seeking
leave to extend the time for responsive pleadings while simultaneously
asking a stay of proceedings except for defense-initiated discovery that was
laser-focused on the sexual harassment allegations.7 The trial court appears
7 The Lilac Defendants did, to be sure, take some steps to demonstrate
that they were entitled to arbitrate. They point out, for instance, that they
pleaded their right to arbitrate in the answer, the cross-complaint, and the
amended cross-complaint. But that was not sufficient to avoid waiver. The
“ ‘[m]ere announcement of the right to compel arbitration is not enough. To
18
to have recognized that such an option was available. In announcing its
ruling at the hearing on the motion to compel arbitration, the court brought
up the Lilac Defendants’ failure to seek a stay “even before answers were
filed.” Because the court had also raised the stay issue in its tentative ruling,
Lilac Defendants, in their argument at the hearing, tried to explain why they
failed to pursue such a course. They pointed out that they sought a stay
along with their motion to compel arbitration, and that they had no
obligation to seek one sooner. The court, quite plainly, was unconvinced.
The Lilac Defendants contend that a stay was not available to them
under Code of Civil Procedure section 1281.2, the provision in the California
Arbitration Act conferring authority on courts to stay some aspects of ongoing
litigation while other aspects of the litigation are sent to arbitration. But on
its face, this provision presupposes that a motion to compel arbitration has
been filed; it provides authority to grant such a motion as to claims that have
been found to be arbitrable, while denying it and issuing a stay as to
nonarbitrable claims. (Code Civ. Proc., § 1281.2, subd. (d); Association for
Los Angeles Deputy Sheriffs v. County of Los Angeles (2015) 234 Cal.App.4th
459, 468.) That was not the procedural posture of this case in the period
before the Lilac Defendants filed their motion to compel arbitration. They
designated the case to be complex. And in the months preceding their
decision to file the motion to compel, nothing stopped them from invoking the
trial court’s inherent authority to pause or sequence the proceedings in
properly invoke the right to arbitrate, a party must (1) timely raise the
defense and take affirmative steps to implement the process, and
(2) participate in conduct consistent with the intent to arbitrate the dispute.”
(Fleming, supra, 49 Cal.App.5th at p. 81, italics added; see also Hofer v.
Boladian, supra, 111 Cal.App.5th at p. 16 [“merely mentioning a desire to
arbitrate does not indicate an intent to arbitrate absent some action”].)
19
whatever manner it deemed to be most efficient. (Rutherford v. Owens-
Illinois, Inc. (1997) 16 Cal.4th 953, 967; see Cohn v. Corinthian Colleges, Inc.
(2008) 169 Cal.App.4th 523, 531 [trial court was within its discretion to
“expedite and specify limited discovery to be done before . . . motions for
summary judgment”].)
The Lilac Defendants insist their delay in moving to compel arbitration
was not only justified by tactical necessity, but compelled by their ethical
responsibilities. “Penalizing [them] for their reasonable choice” to withhold a
motion to compel arbitration until it had a plausible chance of success, they
say, is “untenable both legally and in practice.” If, in resolving this appeal,
we were to affirm a trial court waiver ruling premised on the idea that they
should have pulled the trigger earlier on a motion to compel arbitration, that
“would mean that waiver-conscious defendants in [their] position [in other
cases] have no choice but to clutter already over-crowded trial court dockets
with motions to compel the moment they are served with a complaint that
contains a mix of EFAA and non-EFAA claims.” “This,” the Lilac Defendants
tell us, “serves no one and would put defense counsel in the uneasy position of
filing motions solely to avoid a waiver finding, knowing that the motions will
fail on the merits. (See, e.g., Shalant v. Girardi (2011) 51 Cal.4th 1164, 1176
[as officers of the court, attorneys serve as gatekeepers against frivolous
litigation]).”
The Lilac Defendants also suggest that the rules of civil procedure
dictated their course. The trial court took them to task for failing to seek
dismissal of the fifth cause of action by demurrer, and Plaintiffs echo that
criticism in their responding brief here on appeal. While federal procedural
law might have given the Lilac Defendants more flexibility under the facial
plausibility standard that governs motions to dismiss in federal court (see
20
Ashcroft v. Iqbal (2009) 556 U.S. 662, 678; Bell Atlantic Corp. v. Twombly
(2007) 550 U.S. 544), they claim to have been in a straitjacket here. The
Lilac Defendants explain their decision to bypass a demurrer by pointing out
that, under California notice pleading standards, Plaintiffs had no obligation
to plead the sexual harassment claim specifically. Faced with a conclusory
claim that fell within the EFAA, the Lilac Defendants contend that a
demurrer was futile, so they needed time for discovery in order to set up the
fifth cause of action for eventual summary adjudication.
Here, too, there is superficial appeal to the Lilac Defendants’
explanation of their hesitancy to seek compelled arbitration right away, but
the logic quickly breaks down. Without delving into whether the fifth cause
of action was or was not potentially vulnerable to a demurrer—an issue
neither party addresses in specific terms, and we see no need to address—the
problem with this entire line of argument, whether pitched at a policy level or
at the level of day-to-day procedure, is that unlike the case the Lilac
Defendants rely upon for support, Piplack v. In-N-Out Burgers (2023)
88 Cal.App.5th 1281, we cannot say on this record that they filed a motion to
compel arbitration “as soon as it had any chance of success” (id. at p. 1289).
The scope and timing of the Lilac Defendants’ discovery appears to be wholly
unconnected to the timing of their motion to compel arbitration on March 18,
2025. That fundamentally undermines any tactical necessity argument. All
of the elaborate EFAA-based arguments presented here ring hollow in the
face of what the Lilac Defendants actually did.
Other than some hand-waving about the difficulty of navigating the
procedural cross-pressures they faced, the Lilac Defendants are left with
nothing to refute the most natural reading of the record: That their motion to
compel arbitration was filed in reaction to the Plaintiffs’ anti-SLAPP motion
21
in an apparent effort to forum shop. To find a waiver on this record, there
was no need to charge the Lilac Defendants with gamesmanship or improper
motives; the trial court did not do so; nor do we. Litigants seek more
advantageous forums all the time, and as a general matter there is often
nothing nefarious about the practice. The problem for the Lilac Defendants
here is not why they moved to compel when they did. It is their change of
course after engaging in significant litigation activity in a judicial forum.
As we read its order, all the trial court did was draw the permissible
inference that the Lilac Defendants made a choice to join issue as a pleading
matter and begin litigating on the merits, before suddenly changing course
and seeking another forum. Because we are satisfied that “[t]he record . . .
demonstrates by clear and convincing evidence” the Lilac Defendants’
“intentional abandonment of the right to arbitrate” (Quach, supra, 16 Cal.5th
at p. 586) in these circumstances, we must sustain that finding.
III. DISPOSITION
The trial court’s order is affirmed. Plaintiffs are entitled to their costs
on appeal.
STREETER, J.
WE CONCUR:
BROWN, P. J.
SWEET, J.*
* Judge of the Marin Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
22
Trial Court: Superior Court of California, County of Alameda
Trial Judge: Hon. Joscelyn Jones
Counsel: Troutman Pepper Locke, Nina Huerta, Matthew H. Ladner
and Elizabeth Holt Andrews for Defendants and
Appellants.
West Coast Trial Lawyers, Neama Rahmani, Ronald
Leonardo Zambrano, H. Dean Aynechi, Nicholas A.
Yasman, Antonia Holguin; Orbit IP, David Randall and
Michael Tomasulo for Plaintiffs and Respondents.
Mitchell et al. v. Lilac Solutions, Inc., et al. – A173736