Gutierrez v. Carmax Auto Superstores Cal., No. F073215 (D5 Jan. 30, 2018)
The trial court granted a demurrer in a UCL and CLRA claim about used car warranties. In claiming that a warranty claim was sufficient, Plaintiff advances a new theory that wasn’t raised in the trial court. But that doesn’t preclude a reversal.
Although failure to raise an issue before the trial court generally precludes its consideration on appeal, that rule is subject to exceptions. One of them is that in reviewing a demurrer, an appellate court looks de novo at whether the complaint states facts sufficient to sustain a cause of action on any possible legal theory. According to the Court here, the Supreme Court cases that states that rule—see e.g., City of Dinuba v. County of Tulare, 41 Cal. 4th 859, 870 (2007)—don’t limit their review to theories raised in the trial court. Some earlier Court of Appeal cases bear that out.
Justice Poochigian dissents, but only on the merits of a CLRA issue.
Reversed in part.
Showing posts with label carmax. Show all posts
Showing posts with label carmax. Show all posts
Friday, March 30, 2018
Tuesday, March 25, 2014
Big Blue Pencil Saves Carmax's Day
Casas v. Carmax Auto Superstores California LLC, No. B246392 (D2d1 Mar. 20, 2014)
This is an appeal of a denial of a motion to compel arbitration over the same Carmax employment arbitration agreement that was at issue in a case decided a few weeks ago. Unsurprisingly, the court reaches the same result and reverses, although the issues addressed in this appeal are somewhat different. Here, the crux of the plaintiff’s argument is that the agreement—contained in Carmax’s employee handbook—is illusory and thus unenforceable because it permits Carmax to unilaterally modify it. He relies on Sparks v. Vista Del Mar Child & Family Services, 207 Cal. App. 4th 1511, 1522 (2012), which in a single sentence without further elaboration states that “[a]n agreement to arbitrate [contained in an employee handbook] is illusory if, as here, the employer can unilaterally modify the handbook.”
But the court distinguishes Sparks, because unlike the handbook in Sparks, the Carmax handbook could only be modified on thirty days written notice, so the agreement is not illusory. And even were the handbook silent as to notice, under Peleg v. Neiman Marcus Group, Inc., 204 Cal. App. 4th 1425, 1463–64 (2012)—a case decided by this same division a three months before Sparks— the implied covenant of good faith and fair dealing would read in a notice requirement, which would prevent the agreement from being illusory. (This seems like more a rejection of Sparks than a way to distinguish it, since presumably the Sparks handbook was also subject to the implied covenant.)
Finally, the court notes that the handbook does expressly permit Carmax to make unilateral rule changes applying to already-accrued claims. Generally, that would make the agreement illusory under Peleg, as it would let Carmax pierce the veil of procedural ignorance and write rules to its advantage on particular known claims. That flaw can’t be fixed by the implied convent because it would rewrite the express terms of the agreement. The agreement, however, contains a savings clause that authorizes the modification of any unlawful rule in it to conform with the law until a formal amendment is made. Because that clause would prevent enforcement of retroactive rule changes, the agreement would stand under Peleg.
Reversed.
This is an appeal of a denial of a motion to compel arbitration over the same Carmax employment arbitration agreement that was at issue in a case decided a few weeks ago. Unsurprisingly, the court reaches the same result and reverses, although the issues addressed in this appeal are somewhat different. Here, the crux of the plaintiff’s argument is that the agreement—contained in Carmax’s employee handbook—is illusory and thus unenforceable because it permits Carmax to unilaterally modify it. He relies on Sparks v. Vista Del Mar Child & Family Services, 207 Cal. App. 4th 1511, 1522 (2012), which in a single sentence without further elaboration states that “[a]n agreement to arbitrate [contained in an employee handbook] is illusory if, as here, the employer can unilaterally modify the handbook.”
But the court distinguishes Sparks, because unlike the handbook in Sparks, the Carmax handbook could only be modified on thirty days written notice, so the agreement is not illusory. And even were the handbook silent as to notice, under Peleg v. Neiman Marcus Group, Inc., 204 Cal. App. 4th 1425, 1463–64 (2012)—a case decided by this same division a three months before Sparks— the implied covenant of good faith and fair dealing would read in a notice requirement, which would prevent the agreement from being illusory. (This seems like more a rejection of Sparks than a way to distinguish it, since presumably the Sparks handbook was also subject to the implied covenant.)
Finally, the court notes that the handbook does expressly permit Carmax to make unilateral rule changes applying to already-accrued claims. Generally, that would make the agreement illusory under Peleg, as it would let Carmax pierce the veil of procedural ignorance and write rules to its advantage on particular known claims. That flaw can’t be fixed by the implied convent because it would rewrite the express terms of the agreement. The agreement, however, contains a savings clause that authorizes the modification of any unlawful rule in it to conform with the law until a formal amendment is made. Because that clause would prevent enforcement of retroactive rule changes, the agreement would stand under Peleg.
Reversed.
Friday, March 7, 2014
Nothing to See Here. Move Along (to Arbitration).
Sanchez v. Carmax Auto Superstores, No. B244772 (D2d1 Mar. 4, 2014)
This is an employment dispute that the defendant moved to compel into arbitration based on an arbitration agreement with its employee. The trial court denied the motion because it found that the agreement was “permeated with unconscionabililty. But Justice Johnson and two of his colleagues in Division One disagree. Because entering the agreement was a take-it-or-leave-it condition of employment, the court agrees that it is mildly procedurally unconscionable. When it comes to substantive unconscionabilty, however, none of the issues raised by the plaintiff or the trial court meet the mark. Mild limitations on discovery, a requirement that plaintiff fill out a claim form, the fact that arbitrated claims would be preclusive on future lawsuits, a requirement that the arbitrator apply the law of at-will employment to the at-will employed plaintiff’s claim, the arbitrator’s discretion to make factual findings, a confidentiality provision, and a prohibition on consolidation of different plaintiffs’ claims were all run-of-the-mill arbitration provisions that did not render the agreement substantively unconscionable. So the agreement should have been enforced by the trial court.
Reversed.
This is an employment dispute that the defendant moved to compel into arbitration based on an arbitration agreement with its employee. The trial court denied the motion because it found that the agreement was “permeated with unconscionabililty. But Justice Johnson and two of his colleagues in Division One disagree. Because entering the agreement was a take-it-or-leave-it condition of employment, the court agrees that it is mildly procedurally unconscionable. When it comes to substantive unconscionabilty, however, none of the issues raised by the plaintiff or the trial court meet the mark. Mild limitations on discovery, a requirement that plaintiff fill out a claim form, the fact that arbitrated claims would be preclusive on future lawsuits, a requirement that the arbitrator apply the law of at-will employment to the at-will employed plaintiff’s claim, the arbitrator’s discretion to make factual findings, a confidentiality provision, and a prohibition on consolidation of different plaintiffs’ claims were all run-of-the-mill arbitration provisions that did not render the agreement substantively unconscionable. So the agreement should have been enforced by the trial court.
Reversed.
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