Mitchell v. Lilac Solutions: When Litigation Conduct Waives Employment Arbitration

Read the source decision.

Signing an arbitration agreement does not always mean a later employment dispute will be sent to arbitration. In Mitchell v. Lilac Solutions, Inc., a published California Court of Appeal decision, the defendants waited while actively litigating and then moved to compel arbitration. The trial court found waiver, and the appellate court affirmed.

How the dispute reached court

Four former employees sued a lithium-extraction technology company and individual managers. Their allegations included wrongful termination, discrimination, harmful chemical exposure, and sexual harassment. Each employee had signed an arbitration agreement.

The defendants referred to arbitration in their pleadings, but they also filed cross-complaints, pursued court discovery, responded to discovery, and sought procedural relief. They did not move to compel until after the plaintiffs filed an anti-SLAPP motion. The trial court concluded that this litigation conduct was inconsistent with preserving the contractual arbitration right.

California’s post-Quach waiver test

The Court of Appeal applied the California Supreme Court’s decision in Quach v. California Commerce Club, Inc. The central question is whether clear and convincing evidence shows that a party intentionally relinquished the known right to arbitrate through words or conduct. The opposing party no longer must prove prejudice as a separate element.

Merely answering a complaint or taking a necessary step does not automatically establish waiver. The court examines the total course of conduct, including delay, invocation of judicial procedures, discovery unavailable in arbitration, requests for merits-related rulings, and whether the party acted consistently with an intent to arbitrate.

In Mitchell, substantial evidence supported the trial court’s finding. The defendants did more than preserve an affirmative defense. They chose and used the litigation forum before asking to leave it.

Why the EFAA issue did not control

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act can make predispute arbitration agreements unenforceable at the election of a person alleging qualifying conduct. The parties disputed the Act’s application and timing, but the California courts did not need to resolve that issue because waiver independently supported denial of the motion.

That distinction is important. Mitchell is a waiver case; it does not define the full reach of the federal Act or determine the truth of the employees’ substantive allegations.

What employees and employers should document

• the arbitration agreement and any delegation provision;
• the dates each party first invoked or resisted arbitration;
• court motions, cross-claims, discovery requests, and completed depositions;
• whether the same discovery would have been available in arbitration; and
• any sexual-harassment or assault allegations potentially implicating federal law.

A party seeking arbitration should act consistently and promptly. A worker opposing arbitration should analyze the entire litigation history, not only the agreement’s wording.