When a contract (i) involves a consumer or other sympathetic plaintiff, and (ii) that plaintiff is agreeing to arbitration, it behooves the other party to make sure a complete signed copy of the arbitration agreement is available in the record. Otherwise, the plaintiff might well deny having signed the arbitration agreement.
Exactly that happened in Ashburn v. AIG Financial Advisors, Inc., No. A138620 (Cal. App. Feb. 6, 2015). In that case, five early-retiree employees of Pacific Bell signed on with an investment-advisory firm to help them figure out what to do with their lump-sum payment. Unhappy with their investment results, the retirees sued the investment firm, which moved to compel arbitration.
The investment-advisory firm's files for the retirees was, shall we say, streamlined; the account manager stated in a written declaration:
As part of my practice when working with a client to fill out new account forms and account worksheets, such as those signed by plaintiffs in this matter, I would typically place the client's signature page in in the file, but I would not necessarily place all of the pages with the standard arbitration language in the file. This was because these pages were standard forms that could be reproduced by reprinting the applicable version of the form. [Emphasis added.]
The retirees, of course, denied having signed an arbitration agreement; for example, one of them stated in a declaration:
6. After Ms. Kearney had convinced me to take early retirement, elect the lump sum cash-out, and invest the cash-out with her, Ms. Kearney gave me numerous forms, and instructed me to sign them.
Ms. Kearney did not explain the forms to me.
Ms. Kearney did not tell me anything about arbitration.
Kearney did not tell me what arbitration meant.
Kearney did not tell me that, by signing the forms, I was giving up my right to a jury trial in the event of a dispute, and agreeing to binding arbitration with no right of appeal.
Ms. Kearney did not tell me that, not only was I losing my right to a jury trial, by signing the forms as instructed, but that I would also be forced to arbitrate in a forum where one of the arbitrators is affiliated with the securities industry.
7. I did not read the forms before signing them, because I trusted Ms. Kearney.
Ms. Kearney did not give me sufficient time to read the forms.
My meeting with Ms. Kearney was approximately 30-45 minutes. There were too many forms for me to read in that time.
I relied upon Ms. Kearney's honesty, and signed the forms where she told me to sign.
8. I understand that Ms. Kearney claims that she gave me a Customer Agreement, with language describing arbitration. She did not. I kept all of the paperwork Ms. Kearney gave to me. I do not have a Customer Agreement.
9. I understand that Ms. Kearney claims that I signed an agreement containing an arbitration provision, March 17, 2004, in her presence. That would have been impossible. I did not meet with Ms. Kearney in 2004, let alone sign anything in her presence.
[Extra paragraphing added.]
The district court granted the investment firm's motion to compel arbitration, without holding an evidentiary hearing.
The appellate court reversed and remanded, directing the district court to hold an evidentiary hearing and remarking that "[t]here certainly was abundant evidence that there was no enforceable agreement to arbitrate. Likewise abundant evidence that could support a fiduciary duty." Id. at text accompanying n.4.