In Roberts v. El Cajon Motors, Inc., — Cal.Rptr.3d —-, 2011 WL 5343692 (2011), the California Court of Appeal found that an automobile dealer waived enforcement of an arbitration clause in the Law Printing RISC because it has substantially participated in the litigation as well as attempting outside the litigation to reach individual settlements directly with potential classmembers. The Court of Appeal explained:
Indeed, if El Cajon either had promptly moved to compel arbitration at or near the time it answered the complaint or informed Roberts at that time of its intention to compel arbitration (such as in its answer to the complaint), Roberts likely would not have propounded extensive written discovery involving the class action allegations in her complaint. Of course, if Roberts had been given timely notice by El Cajon of its intent to arbitrate and propounded the discovery in any event, it would have been at her peril. ¶ However, because the record shows El Cajon waited months after Roberts propounded extensive written discovery (undoubtedly at great expense) to notify Roberts of its intent to arbitrate and because most, if not all, of this discovery would—under El Cajon’s own analysis of Concepcion—be useless in arbitration, we conclude there is ample evidence in the record showing El Cajon’s conduct (including in responding to this discovery) was inconsistent with the intent to arbitrate and that Roberts was prejudiced by that conduct. (See St. Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p. 1196.) ¶ In addition, we conclude El Cajon acted inconsistent with an intent to arbitrate and that such conduct prejudiced Roberts when, during the “modest” five-month delay between El Cajon’s answer and its motion to compel, El Cajon identified putative class members (in Class 1), contacted them and offered to settle with them for $50 in return for a dismissal of all claims in this lawsuit. ¶ El Cajon argues its conduct in identifying and contacting putative class members and seeking to resolve their claims was “completely outside the litigation system” and thus does not support waiver. We disagree. ¶ Instead, the record shows El Cajon offered the putative class members $50 to settle their claims in this lawsuit in order to mitigate their damages in this lawsuit. What’s more, El Cajon conditioned settlement on the putative class members’ release of their claims against El Cajon stemming from this lawsuit, a settlement it undoubtedly would enforce, if necessary, in this lawsuit. FN11 The record also shows about 30 putative class members accepted the settlement and ostensibly released their claims against El Cajon in this lawsuit.¶ For this separate and independent reason, we conclude there is sufficient evidence in the record to support the findings that El Cajon acted inconsistent with an intent to arbitrate and that its conduct prejudiced Roberts and her case by, among other things, reducing the size of the putative class.
The Court of Appeal also rejected the argument that El Cajon did not waive arbitration because it was waiting for the outcome of Concepcion. The Court of Appeal stated that “if El Cajon wanted to arbitrate the dispute involving Roberts, it should have promptly invoked arbitration regardless of the validity of the waiver provision in the arbitration provision. After all, Concepcion was not decided until April 2011, more than a year after El Cajon moved to compel arbitration.”