Thursday, March 13, 2014

Don't Forget Your Interstate Commerce Evidence

Lane v. Francis Capital Management, No. B245661 (D2d4 Mar. 11, 2014)

Plaintiff’s employment agreement contains an arbitration clause. When he brings a wage and hour suit, his employer moves to compel. Plaintiff successfully opposes the motion, arguing that the agreement doesn’t cover the claims, that it is unconscionable, and that arbitration is precluded by Labor Code § 229. The court of appeal affirms as to one claim and reverses on the rest. The agreement is neither procedurally nor unconscionable. Plaintiff’s only argument is that it did not attach the AAA rules it incorporated by reference. But particularly given that plaintiff was a well-paid professional employee and that the rules were readily available on the Internet, that doesn’t hold water. And the agreement’s reference to wage and hour claims was sufficient to encompass plaintiff’s lawsuit, even if it did not spell out the exact statutes on which the suit was brought. Finally, Labor Code § 229—which says that an employee doesn’t need to arbitrate claims for unpaid wages—applies, but only to the cause of action actually demanding payment of unpaid wages. The other causes of action—for meal and break violations, waiting time penalties, and non-Labor code contract and wrongful termination theories—were not subject to § 229, so they were arbitrable. And although the Federal Arbitration Act preempts § 229 where it applies, defendant did not present any actual evidence to establish that. Viz., that the subject matter of agreement involved interstate commerce. Nor was an interstate nexus manifest from the face of the complaint. So even though one would think that plaintiff’s job as an account executive at a securities brokerage would tend to involve interstate commerce, there was no FAA preemption because defendant did not meet its burden to prove it.

Reversed in part.     

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