Arbitration Agreements

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The legal pot is really boiling these days when it comes to civil penalty claims under the Labor Code Private Attorneys General Act. Many, if not most, California class action complaints contain PAGA claims, and plaintiffs increasingly are filing so-called “pure PAGA actions” that purport to seek only civil penalties under PAGA and not wages, premiums or statutory penalties that typically are sought in class actions. Some plaintiffs reason that if they can first get a judgment for PAGA penalties, they can then invoke “collateral estoppel” to collect other remedies in a second action. This is quite an evolution from the conventional wisdom that a PAGA cause of action in a class action complaint is simply a fail-safe in the event the court refuses to certify a class.
Continue Reading PAGA’S Many Unanswered Questions

In a recent opinion affirming an arbitrator’s judgment in favor of an employer on various employment law claims, the California Court of Appeal held that an employee agreed to arbitrate all claims against her former employee when she signed an arbitration policy contained in an easy-to-read document distinct from any other document the she signed at the time of her hiring.  In doing so, the Court clarified important aspects of the test for enforcing an arbitration agreement signed by a company’s employees. 
Continue Reading California Appeals Court Affirms that Employee Signature Acknowledging Clear Arbitration Policy Makes Policy Binding

On February 27, 2015, the California Court of Appeal determined that arbitration could not be compelled in Securitas Security Services USA, Inc. v. Superior Court (Edwards). Securitas’ arbitration agreement contained a waiver provision, waiving both class actions and representative Private Attorney General Act (PAGA) actions. In addition to waiving these claims, the waiver provision expressly stated that the waiver could not be severed from the agreement. In a separate paragraph, the Agreement contained a general severability clause, providing that “in the event any portion of this Agreement is deemed unenforceable, the remainder of this Agreement will be enforceable. If the Class Action Waiver is deemed to be unenforceable, [the parties] agree that this Agreement is otherwise silent as to any party’s ability to bring a class, collective, or representative action in arbitration.”
Continue Reading No Arbitration if Invalid PAGA Waiver Cannot be Severed

On February 26, 2015, in Franco v. Arakelian Enterprises, Inc., Case No. B232583, the California Court of Appeal, Second Appellate District held that trial court proceedings on claims pursuant to the California Private Attorney General Act (“PAGA”) (Labor Code § 2698 et seq.) must be stayed pending individual arbitration of the underlying individual wage and hour claims (originally pled as classwide claims) pursuant to an arbitration agreement containing a classwide arbitration waiver.
Continue Reading California Court of Appeal Rules PAGA Claims Must Be Stayed Pending Outcome of Individual Arbitration on Underlying Individual Wage and Hour Claims

The battle over whether employees may waive the right to pursue claims under California’s Private Attorneys General Act (PAGA) in arbitration continues. The Supreme Court of the United States recently requested a response from ex-Bridgestone Retail Operations LLC employees to Bridgestone’s January 5, 2015 petition for a writ of certiorari challenging the California Supreme Court’s refusal to enforce an arbitration agreement waiving PAGA claims.
Continue Reading Enforceability of PAGA Waivers in Arbitration Agreements – The Battle Continues

A new case from the California Court of Appeal, Fourth Appellate District, Division Two, Ruiz v. Moss Bros. Auto Group, Inc., was certified for publication on December 23, 2014, and addresses an area of interest for many employers – electronic signatures on arbitration agreements. Employers must build safeguards into such systems  to be able to prove the employee electronically signed the document. To view the Court’s opinion, click here.

In the Ruiz case, an employer filed a petition to compel arbitration of the employment-related claims.  The trial court denied the petition on the ground that the employer failed to meet its burden of proving the parties had an agreement to arbitrate the controversy. The employer could not establish to the court’s satisfaction that the employee signed the agreement.  (Code Civ. Proc., § 1281.2.)  
Continue Reading Employer Could Not Establish Sufficient Evidence to Prove Employee Signed an Arbitration Agreement through an Electronic Signature

Whether the parties to an arbitration agreement agreed to class arbitration is a question for the arbitrator, not the trial court, the California Court of Appeal has ruled, reversing an order dismissing class claims alleging violations of California’s Fair Employment and Housing Act and Unfair Competition Act. Sandquist v. Lebo Automotive, Inc., No. B244412 (Cal. Ct. App. July 22, 2014).
Continue Reading Arbitrator, Not Court, Decides Whether Arbitration Agreement Applies to Class Claims, California Court Rules

A clause delegating to an arbitrator the authority to decide questions of an arbitration agreement’s enforceability was not unconscionable under California law, the California Court of Appeal has ruled. Malone v. Superior Court, No. B253891 (Cal. Ct. App. June 17, 2014). The Court affirmed an order enforcing the delegation clause and compelling arbitration. Significantly,…

In a decision that should not go unnoticed in the wake of the California Supreme Court’s ruling in Iskanian v. CLS Transp. Los Angeles, LLC which rejected prior limitations on class action waivers but held representative actions under California’s Private Attorneys General Act cannot be waived, the California Court of Appeal in Malone v. Superior Court (California Bank & Trust), Case No. B253891 (June 17, 2014) upheld an employer’s delegation clause requiring issues relating to the enforceability of an employer’s arbitration agreement to be sent to the arbitrator for resolution. While the U.S. Supreme Court continues to uphold arbitration provisions pursuant to the Federal Arbitration Act (FAA), California courts have been reluctant to follow the Supreme Court’s clear guidance. Malone suggests the California tide is beginning to turn in favor of arbitration.
Continue Reading California Tide is Turning in Favor of Arbitration

Overruling Gentry v. Superior Court, 42 Cal. 4th 443 (2007) as preempted by the Federal Arbitration Act (“FAA”), the California Supreme Court upheld the validity of class action waivers in employment arbitration agreements. Iskanian v. CLS Transportation Los Angeles, LLC, No. S204032  (Cal. Jun. 23, 2014).  Declining to follow D.R. Horton, 357 NLRB No. 184 (Jan. 3, 2012), the Court also rejected that class action waivers are unlawful under the National Labor Relations Act (“NLRA”).  However, the Court further ruled that employers could not require waivers of representative actions under the California Private Attorney General Act (“PAGA”) as contrary to public policy and unwaivable as a matter of state law and were not preempted by the FAA.  Accordingly, the Court reversed the judgment of the Court of Appeal and remanded the case for further proceedings.
Continue Reading California Supreme Court Okays Class Action Waivers and Overrules Gentry v. Superior Court, but Bans Waivers of Representative Actions Under the PAGA