February 11, 2025|Franchise Frontlines
February 11, 2025 | California Court of Appeal, Second District | Unpublished Opinion
Executive Summary
In Turner v. All American Healthcare Services, Inc., 2025 WL 453285 (Cal. Ct. App. Feb. 11, 2025), the California Court of Appeal affirmed the denial of a motion to compel arbitration in a wage-and-hour and PAGA action. The employee had resigned months before signing an arbitration agreement through a third-party mobile application when logging in for unrelated reasons. The court held that the agreement was unenforceable because there was no consideration, no mutual assent, and no ongoing employment relationship at the time of execution. The court emphasized that “logging into the application did not create or extend any employment relationship,” Id. at *3, and that “there was no consideration given” for the agreement executed nine months post-employment. Id. The case provides meaningful guidance for employers—including franchisors and multi-unit operators—who rely on electronic systems to update arbitration programs.
Relevant Background
According to the record, the employer operated a healthcare staffing business that placed workers at skilled nursing facilities. The employee worked for the company beginning in October 2021 and completed approximately twenty shifts before resigning in January 2022. She filed a class action in June 2022 alleging wage-and-hour violations, later adding a PAGA claim. Several months after her resignation, while working for a new employer, she logged into a scheduling and document-management mobile application used by her former employer and electronically signed several updated documents, including a dispute resolution agreement. The agreement stated that employee and company would “utilize binding individual arbitration to resolve all disputes” and included claims the employee “might bring against any person or entity [she] allege[d] to be a joint employer with the Company.” Turner, 2025 WL 453285, at *1. The employer filed an answer asserting arbitration as an affirmative defense and, roughly one year later, moved to compel arbitration. The employee opposed, asserting she never signed an arbitration agreement during employment and that any document signed after her resignation lacked consideration. She also argued waiver based on the employer’s active litigation of the case, though the trial court ultimately rejected the waiver argument. After a hearing—of which no reporter’s transcript was included in the appellate record—the trial court denied the motion, finding that the employee had “not executed an arbitration agreement prior to, or during the course of, her employment,” that her October 2022 login was irrelevant, and that the agreement was “illusory” because it was not supported by consideration. Id. at *2.
Decision
The Court of Appeal held that the employer could not overcome the presumption of correctness due to an inadequate record. The absence of a hearing transcript meant the appellate court was required to “presume the trial court’s findings are supported by substantial evidence.” Id. at *3 (citing Ketchum v. Moses, 24 Cal. 4th 1122, 1140–41 (2001)). The court stated that without an adequate record, it “cannot evaluate issues requiring a factual analysis,” and that “the evidence is presumed sufficient to support the judgment.” Turner, 2025 WL 453285, at *3.
Even assuming the record were adequate, the court held the trial court’s findings were supported by substantial evidence. The employee’s last day worked was undisputed, and she resigned months before signing the purported arbitration agreement. The trial court found—and the appellate court accepted—that the employee “executed the arbitration agreement after her employment relationship ended,” while “working for another employer,” and after she had “filed an action against [the company] through counsel.” Id. at *3. The court underscored that “logging into the [mobile] application did not create or extend any employment relationship.” Id. at *2. Because the employee had already resigned, there was no continued employment to serve as consideration. As the court explained, “the arbitration agreement provided no consideration” and the employer’s “mutual promise to arbitrate” was “illusory” because there was no remaining employment relationship and no pending claim by the company against the former employee. Id. at *3. The court also reiterated that California’s strong policy favoring arbitration “does not extend to parties who have not agreed to arbitrate.” Id. (citing Esparza v. Sand & Sea, Inc., 2 Cal. App. 5th 781, 787 (2016)). Finding no enforceable arbitration agreement, the court affirmed the denial of the motion to compel.
Looking Forward
This decision illustrates several procedural and operational risks for employers, including franchisors and multi-unit operators who rely on electronic onboarding or document-update platforms. When an arbitration agreement is presented long after employment ends, courts will closely examine whether any consideration supports the agreement and whether the circumstances create a genuine meeting of the minds. The opinion also highlights the vulnerability of post-employment click-through processes; requiring users to accept updated documents to gain access to an account does not create an employment relationship or supply consideration. Employers who update dispute-resolution programs through mobile or web-based systems may wish to ensure that arbitration agreements are tied to either initial hire or continued employment rather than passive document updates. The case further underscores the importance of building an adequate record when moving to compel arbitration, as the absence of a hearing transcript contributed materially to the outcome. Finally, because arbitration agreements often seek to cover claims involving alleged joint employers, franchisors may benefit from reviewing how their workforce-management platforms are used by franchisees and whether arbitration updates are deployed in a manner that satisfies contract-formation requirements.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
