The California Court of Appeal’s published decision in Sierra Pacific Industries Wage and Hour Cases (Dec. 9, 2025, No. C099436) provides important clarification on arbitration waiver in the wake of the California Supreme Court’s 2024 opinion in Quach v. California Commerce Club, Inc. and also addresses the limits of appellate jurisdiction over discovery sanctions. In a detailed opinion, the Third Appellate District affirmed a trial court’s order denying Sierra Pacific’s motion to compel arbitration and separately dismissed the company’s appeal from an evidentiary and issue-sanctions order. The combined rulings underscore how an employer’s litigation conduct may unintentionally forfeit arbitration rights and how discovery misuse can have substantial consequences even before a case proceeds to trial.
The litigation began in 2018 when a former hourly employee filed a wage-and-hour class action against Sierra Pacific. Although thousands of Sierra Pacific employees had signed arbitration agreements, the company did not produce those agreements when plaintiffs sought them in discovery. In February 2020, the trial court ordered Sierra Pacific to produce responsive records, including the signed agreements. Despite this directive, Sierra Pacific continued to withhold the documents for almost three years, even as it participated extensively in discovery involving employees who had actually signed arbitration agreements. During this period, the company produced payroll and timekeeping records for signatory employees, obtained declarations from them, and interviewed them using materials that suggested they might share in any classwide recovery. Sierra Pacific also participated in two mediations aimed at resolving the claims of the full putative class. None of these activities acknowledged the existence of arbitration agreements or the possibility that the signatory employees’ claims might fall outside the litigation entirely.
Class certification was granted in November 2022. Only after the eight classes were certified did Sierra Pacific produce more than 3,400 signed arbitration agreements. Two days after completing that production, the company moved to compel arbitration as to absent class members who had signed the agreements. Plaintiffs opposed the motion on the ground of waiver and moved separately for evidentiary and issue sanctions based on the years-long failure to comply with the 2020 discovery order.
Because the trial court ruled before the California Supreme Court decided Quach, the appellate court applied Quach’s updated waiver analysis in conducting its independent review. Under that standard, waiver turns on whether a party knew of its contractual right and then intentionally relinquished it through conduct “so inconsistent with an intent to enforce the contractual right” that a reasonable factfinder would conclude the right had been abandoned. Prejudice to the opposing party is no longer part of the inquiry. Applying this test, the Court of Appeal held that the undisputed record demonstrated “markedly inconsistent” conduct by Sierra Pacific. The company resisted discovery of arbitration agreements for years, violated a court order requiring their production, treated signatory employees as ordinary class members in discovery and mediation, and omitted arbitration from its answer to the operative complaint. These actions signaled an intent to litigate rather than arbitrate, and the court found clear and convincing evidence of intentional waiver.
The opinion also rejects Sierra Pacific’s argument that it could not have waived arbitration prior to class certification. The court explained that although a motion to compel may not have been viable before certification, waiver is a unilateral concept that focuses exclusively on the waiving party’s conduct. The inability to file a motion earlier does not excuse actions inconsistent with an intent to arbitrate. The court relied in part on Hill v. Xerox Business Services, LLC, a Ninth Circuit decision holding that waiver can occur even before unnamed class members become parties capable of being compelled to arbitrate. Nothing in the timing of class certification altered the longstanding reality that Sierra Pacific knew of the agreements yet chose to conduct litigation for years in a way fundamentally incompatible with later reliance on arbitration.
In addition to affirming the order denying arbitration, the Court of Appeal addressed the trial court’s decision imposing evidentiary and issue sanctions for Sierra Pacific’s failure to comply with the February 2020 discovery order. The sanctions barred Sierra Pacific from introducing arbitration agreements or arguing that employees had signed them. Sierra Pacific attempted to appeal this ruling, but the appellate court concluded the sanctions order was not independently appealable. Unlike monetary sanctions exceeding $5,000, which are expressly appealable under Code of Civil Procedure section 904.1, evidentiary and issue sanctions are not. The court further held that such sanctions are not transformed into appealable orders merely because they relate tangentially to arbitration. Nor did the order fall within the appellate court’s limited ancillary jurisdiction under section 1294.2, because review of the sanctions order was not necessary to effectuate the court’s decision on arbitration. As a result, the appeal from the sanctions order was dismissed for lack of jurisdiction.