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Court Says Successor Employers Have Standing to Enforce Binding Arbitration Agreements – Glass & Goldberg | Financing, Property & Bankruptcy Law
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Court Says Successor Employers Have Standing to Enforce Binding Arbitration Agreements

Court Says Successor Employers Have Standing to Enforce Binding Arbitration AgreementsA California appeals court has determined that when an employer and employee execute a binding arbitration agreement, a successor employer has standing to enforce that agreement.

In Marenco v. DirecTV LLC, Francisco Marenco was an employee of 180 Connect, Inc., and, as a condition of his employment, executed an arbitration agreement that required both parties to arbitrate any claims arising from or related to his employment. DirecTV LLC acquired 180 Connect, assuming all of its assets, debts, rights, responsibilities, obligations and liabilities.

Following the acquisition, Marenco sued DirecTV for violation of unfair competition and state wage laws. DirecTV sought to compel arbitration as the successor to the original arbitration agreement. Marenco argued that DirecTV lacked standing to compel arbitration because it was not a signatory to the agreement.

A trial court found for DirecTV and ordered arbitration. Upon appeal, the Second Appellate District affirmed the trial court’s findings that DirecTV had standing to enforce the arbitration agreement.

In reaching its decision, the appeals court said there was undisputed evidence that DirecTV acquired all the assets and obligations of 180 Connect, including its employment agreements. Marenco continued to work as a DirecTV employee and filed wage claims against it as his employer. His continued employment created an implied consent to abide by the original terms of the employment agreement, including the arbitration provision.

The court also found that because Marenco relied on his employment agreement with 180 Connect to bring suit against DirecTV, he was equitably estopped from challenging the arbitration provision as part of that agreement.

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