Arbitration
Mitchell v. Lilac Solutions (1st Dist., 2026): Litigation Before Motion to Compel Waives Arbitration
Updated
In Mitchell v. Lilac Solutions, Inc., the First District Court of Appeal affirmed a trial court order denying a motion to compel arbitration on the ground that the defendants had waived their right to arbitrate. Applying the framework the California Supreme Court restated in Quach v. California Commerce Club, Inc., the court held that substantial evidence supported the finding that the defendants intentionally relinquished that right by litigating in court for three months before moving to compel. The order was affirmed.
Background
Four former employees of Lilac Solutions, a lithium-extraction technology company, sued the company and several managers alleging wrongful termination, gender and disability discrimination, and sexual harassment, among other claims. Each plaintiff had signed an arbitration agreement covering employment disputes, and the defendants raised their arbitration rights in their responsive pleadings.
Before moving to compel arbitration, though, the defendants litigated actively for roughly three months. They filed a cross-complaint and an amended cross-complaint seeking affirmative relief, served 12 sets of written discovery, noticed depositions, served 11 nonparty subpoenas, responded to the plaintiffs’ discovery, and filed several procedural motions.
The defendants filed their motion to compel arbitration on March 18, 2025—five days after the plaintiffs filed an anti-SLAPP motion targeting the amended cross-complaint. The Alameda County Superior Court found a waiver and denied the motion, and the defendants appealed.
What the Court Held on Waiver
The defendants argued that the trial court applied an outdated waiver standard, pointing out that its order cited pre-Quach cases and never mentioned Quach itself, the clear-and-convincing burden, or the abandoned prejudice factor. The Court of Appeal was not persuaded, presuming that the trial judge knew and correctly applied the governing law absent an affirmative indication otherwise—and finding none.
Because the trial court applied the correct legal test, the appellate court reviewed the waiver finding for substantial evidence rather than de novo, mindful of the clear-and-convincing standard Quach established. It concluded that the defendants’ cross-pleadings, wide-ranging discovery, and steady advancement of the case in court supplied strong evidence that they knowingly chose a judicial forum before changing course.
A trial court’s finding that a party waived its right to arbitrate is reviewed for substantial evidence, and a defendant’s decision to file cross-pleadings and conduct extensive discovery before moving to compel can support a waiver under the standard set in Quach, even where the order does not cite that case by name.
The EFAA “Quandary” Argument
The defendants also argued that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 put them in a bind: because the complaint included a sexual harassment claim, they contended they had to develop facts to challenge that claim before a motion to compel could succeed, and that their delay reflected that effort rather than an intent to litigate.
The court found that the record did not match this explanation. The scope of the discovery went well beyond what would be needed to attack the harassment claim, and the motion to compel followed the plaintiffs’ anti-SLAPP motion rather than any dispositive filing aimed at that claim. The court noted the defendants could have sought a stay or sequenced the proceedings instead of litigating broadly, and it affirmed the judgment.
What This Means for You
This decision confirms that a party can waive its contractual right to arbitrate by substantially engaging in court litigation—such as filing cross-pleadings and conducting extensive discovery—before moving to compel, under the clear-and-convincing standard from Quach. It also addresses how the federal sexual-harassment arbitration law factors into that analysis when a complaint mixes covered and non-covered claims.
I write these summaries as general information about developments in California employment law. They are not legal advice and don’t create a mediator–client relationship. For guidance on a specific matter, consult a qualified attorney.