Thousands of agreements couldn’t save this employer – see the compliance traps HR missed
On December 9, 2025, a California appeals court held Sierra Pacific waived arbitration in a wage-and-hour class action.
The California Court of Appeal, Third Appellate District, affirmed a trial court’s refusal to send a certified wage-and-hour class case against Sierra Pacific Industries to arbitration. The court concluded Sierra Pacific’s litigation conduct – over several years – was inconsistent with enforcing employee arbitration agreements, resulting in waiver. The court also dismissed the company’s separate appeal of evidentiary and issue sanctions as nonappealable.
The case began in 2018 when a former hourly, nonexempt employee sued on behalf of eight putative classes. Sierra Pacific used two arbitration agreements (from 2016 and 2022), and many nonexempt employees had signed them. The named plaintiffs had not. In 2020, the trial court ordered Sierra Pacific to comply with discovery requests related to arbitration agreements. The record shows discovery disputes continued, and the court imposed monetary sanctions more than once for noncompliance with discovery obligations.
In November 2022, the trial court certified eight classes. Between January 27 and March 8, 2023, Sierra Pacific produced more than 3,400 signed arbitration agreements. On March 10, 2023, it moved to compel arbitration as to absent class members who had signed agreements. Plaintiffs opposed, arguing Sierra Pacific had waived arbitration by withholding signed agreements despite the 2020 order, engaging in extensive discovery involving signatories, relying on signatories’ declarations in opposing class certification, and participating in mediations aimed at classwide resolution.
The trial court denied the motion to compel arbitration based on waiver and granted evidentiary and issue sanctions that barred Sierra Pacific from introducing the signed agreements or arguing that class members had signed them. On appeal, the Third District applied the California Supreme Court’s waiver analysis and focused on Sierra Pacific’s conduct. The appellate court highlighted the company’s extended refusal to produce signed agreements after the 2020 order, its inclusion of signatory employees in discovery as putative class members, its classwide mediation efforts, and the omission of arbitration as an affirmative defense in the operative answer – collectively inconsistent with an intent to arbitrate. The appellate court affirmed the denial of arbitration. It dismissed the appeal from the sanctions order because such orders are not directly appealable and were separate from the arbitration ruling.
For HR leaders, the implications are concrete. Preserving arbitration depends on conduct during litigation. If a court orders production of signed agreements or identification of signatories, compliance must be timely and complete. Privacy concerns should be addressed through protective orders rather than withholding compelled documents. Treating signatory employees as members of the putative class in discovery and mediation while planning to compel their claims to arbitration can undercut an employer’s position.
The decision underscores the operational importance of maintaining accessible, auditable archives of signed agreements, aligning pleadings and discovery with arbitration strategy, and coordinating HR and legal responses from the outset of class litigation.
