In law school, aspiring attorneys are taught fundamental concepts related to contracts, including “agency”, “third party beneficiary”, and “equitable estoppel”, terms which relate to determining who should be subject to the terms of a contract. In Hernandez v. Meridian Management Services, LLC, the California Court of Appeals referred back to these law school basics in denying a motion to compel arbitration brought by a number of companies who were alleged to be “joint employers” of an employee, but who were not signatories to an arbitration agreement between the employee and her primary employer.
Specifically, the employee (Hernandez) was directly employed by Intelex, a medical supply distribution company, with which she signed an agreement to submit disputes to binding arbitration. Intelex allegedly shared office space with six other companies that were “jointly owned and operated.” To that end, Hernandez alleged that she was jointly employed by these six other companies, with whom she did not sign arbitration agreements. Hernandez then brought a lawsuit alleging wage and hour violations against the six companies but excluded Intelex, a move which the Court of Appeals deemed a “tactical bargain.” By leaving out Intelex from the lawsuit, both the trial court and Court of Appeals agreed that there was no basis to compel arbitration.
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