California car salesman fired one day after medical leave extended

Toyota of Downtown LA sued over alleged discrimination, retaliation, wrongful termination

California car salesman fired one day after medical leave extended

A car salesman injured his knee while working for the defendants – LAD-T, LLC, doing business as Toyota of Downtown Los Angeles, and Lithia Motors Inc., its parent company – and was diagnosed with a torn meniscus in February 2018.

The plaintiff in the case of Villareal v. LAD-T, LLC. et al. had difficulty walking after the injury. He received an injection for pain then returned to work. In June 2018, he took a leave due to recurring pain. In August 2018, he underwent knee surgery and went on medical leave for two months.

In October 2018, he informed the defendants that his medical provider extended his medical leave for three more months. The next day, the defendants terminated his employment.

Read more: Insurance company seeks arbitration of ex-employee's discrimination, harassment claims

In 2020, the plaintiff filed an action alleging the following:

  • discrimination, retaliation, failure to prevent discrimination, failure to provide reasonable accommodation, and failure to engage in a good faith interactive process under California’s Fair Employment and Housing Act
  • retaliation under California’s Family Rights Act
  • wrongful termination in breach of public policy
  • refusal to permit inspection of personnel and payroll records in violation of California’s Labor Code

The defendants filed a motion to compel arbitration. They claimed that, at the time the plaintiff began his employment with LAD-T, he electronically signed an agreement to resolve employment disputes through binding arbitration.

In 2021, the trial court denied the motion to compel arbitration. The trial court found that section 17918 of California’s Business and Professions Code barred the defendants from enforcing an arbitration agreement made in the name of an unregistered fictitious business, “DT Los Angeles Toyota.”

The defendants appealed. While the appeal was pending, the defendants filed a motion requesting that the appellate court take judicial notice that LAD-T filed a fictitious business name statement registering the names “DT Los Angeles Toyota” and “Toyota Downtown LA” last May.

The California Court of Appeal for the Second District granted the motion and took judicial notice of the fictitious business name registration.

However, the appellate court agreed with the trial court’s finding that section 17918 barred the defendants from enforcing the arbitration agreement. While the provision most commonly applied to bar an action on a contract in the name of the fictitious business, the appellate court found that it also barred a party from maintaining a motion to compel arbitration, which was essentially a lawsuit seeking to compel the performance of a contract, specifically the arbitration agreement.

Read more: California court applies payment deadline for arbitration fees

Next, the appellate court ruled that the plaintiff timely raised his defense to the motion to compel arbitration and that the filing of a fictitious business name statement for “DT Los Angeles Toyota” did not render the appeal moot.

Ultimately, the appellate court vacated the trial court’s order denying the motion to compel arbitration and returned the matter to the trial court, which should consider the question of whether the defendants waived their right to compel arbitration.

If the trial court determines that there was a waiver, it should again deny the defendants’ motion to compel arbitration, but if it finds no waiver, it should grant the motion, the appellate court explained.

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