Mitchell v. Lilac Solutions: Extensive Litigation Conduct Waived the Right to Compel Arbitration

Review the primary official source.

In published Mitchell v. Lilac Solutions, Inc., No. A173736, the First District affirmed an order denying a motion to compel arbitration. Applying Quach v. California Commerce Club, Inc., the court held that clear and convincing evidence supported an intentional abandonment of the known contractual right. The analysis focused on the defendants’ conduct—including affirmative cross-claims, extensive party and nonparty discovery, and procedural motions—rather than prejudice to the employees.

The complaint, arbitration defense, and three months of court litigation

Former employees sued Lilac Solutions and individual defendants in December 2024, asserting employment-related claims including a sexual-harassment cause of action. The defendants knew of and pleaded contractual arbitration rights in their answers and cross-pleadings. Yet before moving to compel, they served 12 sets of written discovery, noticed party and third-party depositions, served 11 nonparty subpoenas, responded to 33 discovery sets, and filed seven procedural motions.

They moved to compel in March 2025, shortly after the plaintiffs filed an anti-SLAPP motion against the amended cross-complaint. The defendants argued the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act did not apply because the harassment claim was implausible. The trial court instead denied arbitration on waiver, finding that the cross-claims and extensive litigation machinery were inconsistent with invoking arbitration.

Quach changed the test, but not the result

Quach removed the arbitration-specific prejudice requirement formerly included in the St. Agnes factors. Under generally applicable contract law, the opponent must prove by clear and convincing evidence that the party knew of the contractual right and intentionally relinquished or abandoned it. The inquiry centers exclusively on the allegedly waiving party’s words and conduct, not the opposing party’s harm or subjective understanding.

The appellate court rejected the claim that the trial judge necessarily used obsolete law merely because the order cited pre-Quach decisions. Courts are presumed to know and apply governing law absent an affirmative indication otherwise. The trial court’s actual reasoning focused on litigation conduct relevant to intentional abandonment and did not require prejudice.

Why the conduct supported intentional abandonment

Substantial evidence, viewed through the clear-and-convincing burden, supported waiver. The defendants pursued affirmative cross-claims, used broad judicial discovery, and actively moved the court process forward for months before seeking arbitration. The appellate court treated that total pattern as a deliberate choice of judicial forum, not merely unavoidable responsive pleading.

The opinion stated: “The problem for the Lilac Defendants here is not why they moved to compel when they did.” Mitchell v. Lilac Solutions, Inc., No. A173736, slip op. at 22 (Cal. Ct. App. Aug. 20, 2026). The problem was their change of course after significant litigation activity. The appellate court also found that debate over whether comparable discovery might be available in arbitration did not erase the evidence that defendants chose to litigate in court.

Holding, disposition, and what the opinion does not decide

The court affirmed the denial of the motion to compel and awarded appellate costs to plaintiffs. Because waiver resolved the motion, the decision did not need to decide whether the pleaded sexual-harassment claim made the federal EFAA applicable or whether the arbitration agreement was otherwise enforceable.

The holding is contextual, not a mechanical three-month rule. Mitchell directs courts to the totality of conduct and the defense actually raised. Prompt assertion and implementation of arbitration rights matter; filing an arbitration defense while simultaneously pursuing affirmative judicial relief and wide-ranging discovery may still support a clear inference of intentional abandonment.

What this means in practice

• A party seeking arbitration should assess and act on the right before pursuing merits discovery or affirmative judicial relief.
• Pleading arbitration as a defense does not necessarily preserve it when later conduct is inconsistent.
• The post-Quach waiver inquiry does not require prejudice, but it does require clear and convincing proof of knowing intentional abandonment.
• The record should identify pleadings, discovery, subpoenas, motions, timing, and any litigation event preceding the motion to compel.

Related reading: Employment litigation practice; Employment claims FAQ; Personnel and payroll records guide.