OTO, LLC v. Kho, No. S244630 (Cal. Aug. 29, 2019)
A little late on this one. As I noted in my write up of the Court of Appeal decision in this case, the result—upholding an arbitration clause in an employment contract in the face of an unconscionability challenge—felt a little sideways with a Supreme Court decision generally referred to as Sonic II. So I was hardly surprised by the grant of review.
These are all wage-and-hour cases where an employee is entitled to an administrative remedy called a Berman hearing, which is “designed to give claimants a ‘speedy, informal, and affordable method’ for resolving wage disputes.” Sonic II suggested, but did not decide, that the waiver of a Berman hearing in a wage and hour case would be substantively unconscionable unless the arbitration procedure itself incorporated procedural elements of a Berman hearing.
The agreement in this case foresees an arbitration that would be very much like a state court trial. Indeed, it provides for full discovery and adopts a number of law and motion and trial procedures that are not required in an arbitration. But it does not incorporate the elements that make a Berman hearing easy for an employee to litigate. As the Court explains in an opinion by Justice Corrigan, in isolation, a trial-like arbitration isn’t substantively unconscionable. But an analysis of substantive unconscionability needs to look to the parties’ options but for the arbitration as a point of comparison. Here, that’s not a court trial, it’s a Berman hearing.
The agreement here was a “paragon of prolixity”—“only slightly more than a page long but written in an extremely small font.” (The parties fight over whether it was 7 or 8.5 point.) It made numerous opaque and sometimes ambiguous references to legal jargon such that a lay person would have difficulty in deciphering key terms.” It was offered on a take it or leave it basis, the employee was given only a few minutes to sign, and he wasn’t even provided a copy. Given the overwhelming procedural unconscionability entailed, the Court—using a “sliding scale”—finds that although giving up the Berman procedures is close call on substantive unconscionability, it is enough to make the agreement unenforceable.
Court of Appeal reversed.
Justice Chin dissents, at length. He dissented in Sonic II too. Among other things, he generally believes that the standard set up by the Court is discriminatory against arbitration and thus preempted by the FAA under the logic of U.S. Supreme Court cases like AT&T v. Concepcion. He also takes issue with the sliding scale approach, as applied here. Although a high degree of substantive unconscionability might require only a small amount of procedural unconscionability, he says the scale shouldn’t slide the other way. And Justice Chin also doesn’t agree that the contract is quite so procedurally unconscionable as the majority does.
Showing posts with label concepcion. Show all posts
Showing posts with label concepcion. Show all posts
Saturday, November 2, 2019
Friday, February 23, 2018
Truckers II
Muro v. Cornerstone Staffing Solutions, Inc., No. D070206 (D4d1 Feb. 23, 2018)
Plaintiff is a trucker bringing a wage and hour class action against the Temp Service that employs him. His employment contract has an arb clause with a class action waiver. But as was addressed in the 2015 Garrido case, the FAA has a carve out for transportation worker contracts. So the clause is measured under California state arbitration law, which still applies a pre-AT&T v. Concepcion rule that usually invalidates class action waivers. Which happens here. So, like Mr. Garrido, Plaintiff here gets to keep his case in court as a class action.
Affirmed.
Plaintiff is a trucker bringing a wage and hour class action against the Temp Service that employs him. His employment contract has an arb clause with a class action waiver. But as was addressed in the 2015 Garrido case, the FAA has a carve out for transportation worker contracts. So the clause is measured under California state arbitration law, which still applies a pre-AT&T v. Concepcion rule that usually invalidates class action waivers. Which happens here. So, like Mr. Garrido, Plaintiff here gets to keep his case in court as a class action.
Affirmed.
Tuesday, May 30, 2017
Broughton-Cruz Lives to Fight Another Day
McGill v. Citibank, N.A., No. S224086 (Cal. Apr. 6, 2107)
The Supreme Court granted review of this case to address whether claims brought under statutes like the CLRA and UCL, which permit a private plaintiff to seek injunctive relief on behalf of the public, can be subjected to mandatory arbitration wherein that relief is completely waived. The Court of Appeal said yes. The Supreme Court says no.
The main issue in the case is whether a California rule that claims seeking public injunctive relief are not arbitrable is preempted under § 2 of the Federal Arbitration Act, which makes all contracts to arbitrate enforceable except to the extent that state law would generally invalidate the contract. The California Supreme Court had previously upheld such a rule (known as the “Broughton-Cruz” rule), but there’s a question as to whether it survives the U.S. Supreme Court’s ruling in AT&T v. Concepcion, which held that class-action waivers were enforceable and any rule otherwise was preempted by § 2. Plaintiff analogizes Broughton-Cruz to Iskanian v. Superior Court, in which the California Supreme Court held that Private Attorney General Act claims, in which private plaintiffs seek relief on behalf of the state, cannot be compelled to arbitration because the state is not a party to the arbitration agreement.
But the Court sidesteps the brewing Concepcion/Iskanian debate—which will sooner or later make it to the U.S. Supreme Court—to decide the case on narrower grounds. The agreement here effectively precluded plaintiff from seeking public injunctive relief in any forum, arbitral or otherwise. But unlike Concepcion—where the class action waiver was a procedure inconsistent with arbitration— the contract here waived a substantive remedy that is un-waivable as a matter of statute. Which means that the waiver is unenforceable, Concepcion notwithstanding.
Court of Appeal reversed.
The Supreme Court granted review of this case to address whether claims brought under statutes like the CLRA and UCL, which permit a private plaintiff to seek injunctive relief on behalf of the public, can be subjected to mandatory arbitration wherein that relief is completely waived. The Court of Appeal said yes. The Supreme Court says no.
The main issue in the case is whether a California rule that claims seeking public injunctive relief are not arbitrable is preempted under § 2 of the Federal Arbitration Act, which makes all contracts to arbitrate enforceable except to the extent that state law would generally invalidate the contract. The California Supreme Court had previously upheld such a rule (known as the “Broughton-Cruz” rule), but there’s a question as to whether it survives the U.S. Supreme Court’s ruling in AT&T v. Concepcion, which held that class-action waivers were enforceable and any rule otherwise was preempted by § 2. Plaintiff analogizes Broughton-Cruz to Iskanian v. Superior Court, in which the California Supreme Court held that Private Attorney General Act claims, in which private plaintiffs seek relief on behalf of the state, cannot be compelled to arbitration because the state is not a party to the arbitration agreement.
But the Court sidesteps the brewing Concepcion/Iskanian debate—which will sooner or later make it to the U.S. Supreme Court—to decide the case on narrower grounds. The agreement here effectively precluded plaintiff from seeking public injunctive relief in any forum, arbitral or otherwise. But unlike Concepcion—where the class action waiver was a procedure inconsistent with arbitration— the contract here waived a substantive remedy that is un-waivable as a matter of statute. Which means that the waiver is unenforceable, Concepcion notwithstanding.
Court of Appeal reversed.
Friday, September 2, 2016
Time to Fix that Arb Agreement . . .
Sandquist v. Lego Automotive, Inc., No. S220812 (Jul. 28, 2916)
Who decides if an arbitration can proceed on a class basis? It’s an unresolved question under both state and federal law. Because Court of Appeal decisions on the issue were somewhat inconsistent, the Supreme Court granted review on it. The answer, according to divided 4-3 court: It depends.
Who decides if an arbitration can proceed on a class basis? It’s an unresolved question under both state and federal law. Because Court of Appeal decisions on the issue were somewhat inconsistent, the Supreme Court granted review on it. The answer, according to divided 4-3 court: It depends.
Tuesday, November 17, 2015
Sometimes, It's Good to Be a Trucker . . .
Garrido v. Air Liquide Indus. U.S. LP, No. B254490 (D2d4 Oct. 26, 2015)
Before the U.S. Supreme Court stepped in with AT&T v. Concepcion, California state law more of less said that class action waivers in employment and consumer arbitration agreements are not enforceable. (Technically, there were multifactor tests, but most of the time they came out in favor of unenforceability.) Concepcion expressly reversed that rule for consumer contacts, abrogating a case called Discover Bank. And as the Cal. Supremes recognized more recently in the Iskanian case, the logic of Concepcion applies to employment cases too, thus abrogating their prior Gentry case.
But the whole reasoning of Concepcion depends on its reading of the Federal Arbitration Act’s preemption provision in 9 U.S.C. § 2. There are cases, however, to which the FAA, and thus its preemption rule, doesn’t apply. As the court recognizes here, in those cases, the logic of Concepcion shouldn’t control. Instead, in the absence of any indication that California state arbitration law has changed to reject the earlier Discover Bank and Gentry rationales on state law grounds, those cases are still good law when an agreement isn’t not governed by the FAA.
Notably, the FAA has an express carve out for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Courts have read the final "any other class of workers" catchall to mean only “transportation workers.” And since plaintiff here is a truck driver with an interstate route, the FAA does not apply to his contract. In the absence of that, the California Arbitration Act applies, and without the FAA to preempt state law, the old Gentry rule controls. Which means that the class waiver in plaintiff’s employment contract can’t be enforced.
Affirmed.
Before the U.S. Supreme Court stepped in with AT&T v. Concepcion, California state law more of less said that class action waivers in employment and consumer arbitration agreements are not enforceable. (Technically, there were multifactor tests, but most of the time they came out in favor of unenforceability.) Concepcion expressly reversed that rule for consumer contacts, abrogating a case called Discover Bank. And as the Cal. Supremes recognized more recently in the Iskanian case, the logic of Concepcion applies to employment cases too, thus abrogating their prior Gentry case.
But the whole reasoning of Concepcion depends on its reading of the Federal Arbitration Act’s preemption provision in 9 U.S.C. § 2. There are cases, however, to which the FAA, and thus its preemption rule, doesn’t apply. As the court recognizes here, in those cases, the logic of Concepcion shouldn’t control. Instead, in the absence of any indication that California state arbitration law has changed to reject the earlier Discover Bank and Gentry rationales on state law grounds, those cases are still good law when an agreement isn’t not governed by the FAA.
Notably, the FAA has an express carve out for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Courts have read the final "any other class of workers" catchall to mean only “transportation workers.” And since plaintiff here is a truck driver with an interstate route, the FAA does not apply to his contract. In the absence of that, the California Arbitration Act applies, and without the FAA to preempt state law, the old Gentry rule controls. Which means that the class waiver in plaintiff’s employment contract can’t be enforced.
Affirmed.
Wednesday, March 18, 2015
This Fight Doesn't Seem Over
Franco v. Arakellian Enters., No. B232583 (D2d1, as modified Mar. 11, 2015)
This is an employee class action where the plaintiff asserts claims under both the Labor Code Private Attorney General Act as well as other statutes. This is the Second District’s third shot in this case, which has been ping-ponging through the courts as the law regarding the arbitrability of certain claims kept changing. This time, the court gets the case on transfer from the California Supreme Court to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), which held that PAGA claims are not arbitrable under arbitration clauses in an employment agreement because the claims actually belong to the state government, even if they are prosecuted by an employee on a quasi-qui tam basis.
Given cumulative effects of the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740 (2011) and the state supreme court’s Iskanian ruling, the results are pretty clear: Plaintiff’s non-PAGA claims are arbitrable and subject to a class valid action waiver. Plaintiff’s PAGA claims are not arbitrable and the waiver of his right to bring representative PAGA actions is unenforceable, but severable from the otherwise valid arbitration provision. On remand, the trial court should stay the PAGA claims under Code of Civil Procedure 1281.4, pending resolution of the non-PAGA claims by arbitration.
Remanded with orders.
This is an employee class action where the plaintiff asserts claims under both the Labor Code Private Attorney General Act as well as other statutes. This is the Second District’s third shot in this case, which has been ping-ponging through the courts as the law regarding the arbitrability of certain claims kept changing. This time, the court gets the case on transfer from the California Supreme Court to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), which held that PAGA claims are not arbitrable under arbitration clauses in an employment agreement because the claims actually belong to the state government, even if they are prosecuted by an employee on a quasi-qui tam basis.
Given cumulative effects of the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740 (2011) and the state supreme court’s Iskanian ruling, the results are pretty clear: Plaintiff’s non-PAGA claims are arbitrable and subject to a class valid action waiver. Plaintiff’s PAGA claims are not arbitrable and the waiver of his right to bring representative PAGA actions is unenforceable, but severable from the otherwise valid arbitration provision. On remand, the trial court should stay the PAGA claims under Code of Civil Procedure 1281.4, pending resolution of the non-PAGA claims by arbitration.
Remanded with orders.
Thursday, January 8, 2015
This Ain't No PAGA
McGill v. Citibank, N.A., No. G047838 (Dec. 18, 2014)
The trial court in this case partially granted a petition to to compel arbitration, but denied it with respect to the plaintiff’s Unfair Competition Law, Consumer Legal Remedies Act and False Advertising Law claims seeking injunctive relief. The denial was based on a line of old California cases holding that those claims aren’t arbitrable because they benefit the public. But those cases are preempted by AT&T Mobility v. Concepcion, which says states can’t make rules that discriminate against arbitration. In Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), the California Supreme Court recently distinguished Concepcion with respect to claims brought under the Labor Code’s Private Attorney General Act. According to the Court, PAGA claims belong to the state government, even if they are prosecuted by an individual on the state’s behalf. Because the state didn’t agree to arbitrate the claims, a defendant can’t compel arbitration of PAGA claims. But that logic does not apply to UCL, CLRA, or FAL claims, which—while sometimes touching on the public interest—are nonetheless claims belonging to individuals, not the state’s claims that are pursued by an individual on its behalf.
Reversed.
Classic Minutemen, should you care.
Update: Review granted, April 2, 2015.
The trial court in this case partially granted a petition to to compel arbitration, but denied it with respect to the plaintiff’s Unfair Competition Law, Consumer Legal Remedies Act and False Advertising Law claims seeking injunctive relief. The denial was based on a line of old California cases holding that those claims aren’t arbitrable because they benefit the public. But those cases are preempted by AT&T Mobility v. Concepcion, which says states can’t make rules that discriminate against arbitration. In Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), the California Supreme Court recently distinguished Concepcion with respect to claims brought under the Labor Code’s Private Attorney General Act. According to the Court, PAGA claims belong to the state government, even if they are prosecuted by an individual on the state’s behalf. Because the state didn’t agree to arbitrate the claims, a defendant can’t compel arbitration of PAGA claims. But that logic does not apply to UCL, CLRA, or FAL claims, which—while sometimes touching on the public interest—are nonetheless claims belonging to individuals, not the state’s claims that are pursued by an individual on its behalf.
Reversed.
Classic Minutemen, should you care.
Update: Review granted, April 2, 2015.
Wednesday, July 2, 2014
Gentry Falls, But PAGA Waivers Are Still Void
Iskanian v. CLS Transp., No. S204032 (Cal., as modified, June 26, 2014)
This is yet another arbitration preemption decision in the wake of AT&T v. Concepcion, 563 U.S. 321 (2011). The California Supreme Court holds that its prior opinion in Gentry v. Superior Court, 42 Cal. 4th 443 (2007)—which says class action waivers in employment agreements are generally unenforceable—is preempted under the FAA. But the court goes on to decide that the FAA does not preempt state law that prohibits waiver of representative actions under the Labor Code Private Attorney General Act.
This is yet another arbitration preemption decision in the wake of AT&T v. Concepcion, 563 U.S. 321 (2011). The California Supreme Court holds that its prior opinion in Gentry v. Superior Court, 42 Cal. 4th 443 (2007)—which says class action waivers in employment agreements are generally unenforceable—is preempted under the FAA. But the court goes on to decide that the FAA does not preempt state law that prohibits waiver of representative actions under the Labor Code Private Attorney General Act.
Monday, June 23, 2014
Armendariz Survives Concepcion
Sabia v. Orange Cnty. Metro Realty, Inc., No. B243141 (D2d8 May 18, 2014)
In this putative class action, the trial court granted an order compelling arbitration on an individual basis because the arbitration agreement contained a class action waiver. The court here reverses. It first finds that, although orders granting motions to compel arbitration are generally not appealable, under the “death knell” doctrine, it could hear the appeal in this case. The nature of plaintiffs’ claims were such that there was no way they could practically be arbitrated on an individual basis. So the order compelling arbitration was, for all practical purposes, a dismissal of the case.
The court proceeds to reverse because the arbitration clause at issue applied only to claims brought by plaintiffs. It did not require arbitration of defendants’ claims. That made it unconscionable under Armendariz v. Foundation Health Psychcare Services, 24 Cal. 4th 83 (2000), which generally prohibits non-bilateral arbitration agreements. The court goes on to explain that the Armendariz rule survives AT&T v. Concepcion’s ruling that California’s judicially made rule deeming class action waivers unconscionable was preempted by the FAA because it discriminated against arbitration. According to the court, the Armendariz rule does not discriminate against arbitration. Indeed, it just prevents a more powerful party from cynically foisting arbitration on the weaker party, while reserving a judicial forum for itself. One-sided arbitration clauses—particularly when contained in contracts of adhesion—reflect the very mistrust of arbitration that the U.S. Supremes have repeatedly repudiated.
Reversed.
**Note: Review granted September 21, 2014.
In this putative class action, the trial court granted an order compelling arbitration on an individual basis because the arbitration agreement contained a class action waiver. The court here reverses. It first finds that, although orders granting motions to compel arbitration are generally not appealable, under the “death knell” doctrine, it could hear the appeal in this case. The nature of plaintiffs’ claims were such that there was no way they could practically be arbitrated on an individual basis. So the order compelling arbitration was, for all practical purposes, a dismissal of the case.
The court proceeds to reverse because the arbitration clause at issue applied only to claims brought by plaintiffs. It did not require arbitration of defendants’ claims. That made it unconscionable under Armendariz v. Foundation Health Psychcare Services, 24 Cal. 4th 83 (2000), which generally prohibits non-bilateral arbitration agreements. The court goes on to explain that the Armendariz rule survives AT&T v. Concepcion’s ruling that California’s judicially made rule deeming class action waivers unconscionable was preempted by the FAA because it discriminated against arbitration. According to the court, the Armendariz rule does not discriminate against arbitration. Indeed, it just prevents a more powerful party from cynically foisting arbitration on the weaker party, while reserving a judicial forum for itself. One-sided arbitration clauses—particularly when contained in contracts of adhesion—reflect the very mistrust of arbitration that the U.S. Supremes have repeatedly repudiated.
Reversed.
**Note: Review granted September 21, 2014.
An Open Question No Longer
Malone v. Superior Court, No. B253891 (D2d3 June 17, 2014)
The court declines to issue a writ ordering the trial court to vacate an order compelling arbitration where the arbitration clause delegates questions as to the enforceability of the arbitration clause to the arbitrator. Although it isn’t cited, the opinion is more or less a retread of last month’s Tiri v. Lucky Chances decision out of the first district.
The court declines to issue a writ ordering the trial court to vacate an order compelling arbitration where the arbitration clause delegates questions as to the enforceability of the arbitration clause to the arbitrator. Although it isn’t cited, the opinion is more or less a retread of last month’s Tiri v. Lucky Chances decision out of the first district.
Wednesday, May 28, 2014
When the Refs Pick the Refs....
Tiri v. Lucky Chances, Inc., No. A136675 (D1d4 May 15, 2014)
The court of appeal holds that an arbitration agreement effectively delegated the issue of arbitrability to the arbitrator and that because the plaintiff could not establish that the delegation itself was unconscionable, the delegation should be enforced.
The court of appeal holds that an arbitration agreement effectively delegated the issue of arbitrability to the arbitrator and that because the plaintiff could not establish that the delegation itself was unconscionable, the delegation should be enforced.
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.
Thursday, February 20, 2014
A Double Secret Fee Application
Concepcion v. Amscan Holdings, No. B247832 (D2d7 Feb. 18, 2014)
This is an appeal of an attorneys fee award arising out of a settlement of five different class actions against the Party City stores for collecting zip code information. The parties agreed the class would get $300,000 in certificates for merchandise but did not agree to a fee award. Plaintiffs sought $350,000, which Party City opposed on the grounds that much of the work between the various plaintiff lawyers appeared duplicative. The trial court was initially inclined to agree with Party City, but invited the plaintiffs to submit supplemental information in camera. Plaintiffs took the invitation, after which the trial court approved the full award. Party City appealed. The court of appeal first holds, following the recent Ruiz decision, that Party City did not waive any right to appeal because the settlement agreement lacked clear waiver language. Furthermore, by relying on information filed in camera in approving the award, the trial court violated Party City’s right to due process. Although plaintiffs could have permissibly redacted their bills of privileged matters, the trial court was not free to base an attorneys fee award on information that Party City could not see, and thus could not contest.
Reversed and remanded.
This is an appeal of an attorneys fee award arising out of a settlement of five different class actions against the Party City stores for collecting zip code information. The parties agreed the class would get $300,000 in certificates for merchandise but did not agree to a fee award. Plaintiffs sought $350,000, which Party City opposed on the grounds that much of the work between the various plaintiff lawyers appeared duplicative. The trial court was initially inclined to agree with Party City, but invited the plaintiffs to submit supplemental information in camera. Plaintiffs took the invitation, after which the trial court approved the full award. Party City appealed. The court of appeal first holds, following the recent Ruiz decision, that Party City did not waive any right to appeal because the settlement agreement lacked clear waiver language. Furthermore, by relying on information filed in camera in approving the award, the trial court violated Party City’s right to due process. Although plaintiffs could have permissibly redacted their bills of privileged matters, the trial court was not free to base an attorneys fee award on information that Party City could not see, and thus could not contest.
Reversed and remanded.
Subscribe to:
Posts (Atom)