A California appellate court recently held in Garrido v. Air Liquide Industrial U.S. L.P that the rule set forth in Gentry v. Superior Court, 42 Cal.4th 443 (2007) remains valid so long as the Federal Arbitration Act (“FAA”) does not govern the dispute at issue. Gentry addresses class waivers contained within arbitration agreements that would “interfere with employees’ ability to vindicate unwaivable rights” and sets forth four factors a court should consider when deciding whether to uphold a class waiver.
In Garrido, a former employee filed a class action complaint against Air Liquide, alleging various Labor Code violations and unfair business practices. The trial court denied a motion to compel arbitration brought by Air Liquide, finding that the agreement’s class waiver provision was improper under Gentry’s four factors. Following the trial court’s ruling, the California Supreme Court held in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348, 364 (2014) that Gentry’s rule against employment class waivers was preempted by the FAA.
The Garrido appellate court found that the dispute was not subject to the FAA because Section 1 of the FAA exempts from coverage transportation workers. Further, it found that Gentry’s holding has not been overturned under California law in situations where the FAA does not apply. Accordingly, the appellate court affirmed the trial court, finding that the agreement’s class waiver provision was unenforceable.
Garrido v. Air Liquide Industrial U.S. LP, 246 Cal.App.4th 833 (2015).