Arbitration must be initiated by the plaintiff, not the defendant
Arzate against Ace American Insurance Company — Cal. Rptr. 3d — 2025 began as a common case: plaintiffs had signed arbitration agreements (“Agreement”), which contained a waiver of class action, with their employers. When a dispute arose the plaintiffs ignored their Agreements and filed class action lawsuits. The defendant filed a request to compel arbitration. The trial court granted the motion, enforced the class action waiver, and stayed the action pending arbitration.
However, plaintiffs did not initiate arbitration. It is not surprising that neither the plaintiffs nor defendant initiated arbitration. Who sues themselves, after all? The trial court found that, based on the Agreement’s terms, the defendant, and not the plaintiffs, was required to initiate arbitration. The express terms of the Agreement provide useful guidance. The Agreement stated that “the party who wants to initiate the
rbitration procedure [a] should submit a request,” which must be submitted “within thirty (30 calendar days) of the date of entry by the court order.” The court ruled that it was the defendant who “wanted to” arbitrate. The California Court of Appeal reversed the decision of the trial court and sided with defendant/employer. When doing so, the Court of Appeal explained that contract interpretation rules required that the arbitration-initiation provisions be read in the context of the Agreement as a whole, not in isolation.[p]The Court of Appeal explained that, in the context of an arbitration agreement, the provision for “wanting” arbitration could not “refer to a preference for arbitration over litigation becausethe parties already ruled out litigation as an option in any dispute governed by the arbitration agreements.” Instead, “wanting” arbitration could only refer to a desire to seek redress for an employment-related claim. The Court of Appeal noted that the Agreement included the American Arbitration Association Employment Arbitration Rules and Mediation Procedures which defined the “claimant”, as the initiating party. The Court of Appeal reasoned that because the employees initiated the lawsuit, they were the claimant and were responsible for initiating arbitration.
Arzate stands for the proposition that–where valid and enforceable arbitration agreements exist–employees bringing claims against their employers must initiate arbitration. Employers should, to avoid any doubt, consider drafting their agreements so that they expressly state who must initiate arbitration.
