Last Thursday, a Taco Bell franchisee lost its bid to arbitrate a former worker’s wage claims brought in a putative class action when a California appellate panel found the franchisee didn’t prove it was a “related company” to the fast food giant’s arbitration agreement.
Previously, a lower court told Century Fast Foods Inc. that it couldn’t compel arbitration in a putative unpaid wages class action brought by ex-worker Jesus Mendoza. Century then appealed, arguing that Mendoza signed an arbitration agreement with “Taco Bell and its related companies.”
The appellate panel, however, supported the ruling, stating that Century did not show how Mendoza understood that “related companies” was to apply to Century, or whether the term included franchisees.
The panel went on to say: “Here, due to the ambiguity in the arbitration provision in the Taco Bell application form that Century used, and due to Century’s failure to offer evidence showing Mendoza’s understanding of the arbitration provision, we can find no error in the trial court’s ruling that Century did not meet its ‘burden of proof’ to demonstrate that Mendoza agreed to arbitration”.
Mendoza filed his original complaint two years after he was hired to work at the defendant’s Taco Bell, on behalf of current and former employees of Century Fast Foods. He alleged the franchise owner shorted workers on overtime and meal and rest breaks, among other claims, and sought relief under California’s Private Attorney General Act.
Century then filed a motion to compel arbitration, saying Medoza had signed a Taco Bell application that included an arbitration provision. But Los Angeles Superior Court Judge Elihu M. Berle denied the motion in September 2015, finding Century did not prove that Mendoza had agreed to arbitration, as there was no evidence that Century is a “related company” to Taco Bell.
All in all, Thursday’s decision, correctly noted that “related companies” is an ambiguous term.
“We hold only that we agree with the trial court in this case that Century did not prove in this case that it was intended by the mutual assent of the parties to be included within the meaning of the term ‘related companies’ as that term was used in the Taco Bell application form,” the panel said.
For your reference, the case is listed under Mendoza v. Century Fast Foods Inc., case number B267158, in the Court of Appeal of the State of California, Second Appellate District.