With increasing frequency, California courts (especially federal district courts) are enforcing binding arbitration agreements between employers and employees. In Richards v. Ernst & Young, No. 11-17530 (9th Cir. Aug. 21, 2013), the Ninth Circuit recently reversed a denial of the employer’s motion to compel arbitration of the employee's wage and hour claims. In so doing, the Court: (1) found the employee was not prejudiced by a significant delay by the employer in moving to compel arbitration; and (2) rejected the employee's argument that the Court should refuse arbitration based on the NLRB’s decision in D.R. Horton, 357 N.L.R.B. No. 184 (Jan. 3, 2012). The Court observed: “the only court of appeals, and the overwhelming majority of the district courts, to have considered the issue have determined that they should not defer to the NLRB’s decision in D.R. Horton because it conflicts with the explicit pronouncements of the Supreme Court concerning the policies undergirding the Federal Arbitration Act.” Click here for more information.
In another pro-arbitration decision, Vasquez v. Sears Roebuck & Co., Case No. 13cv680-WQH (S.D. Cal. 2013), the Southern District of California recently enforced an arbitration agreement, and made at least three significant holdings in doing so. First, the court severed unconscionable substantive provisions on the award of attorneys’ fees and confidentiality rather than invalidate the entire agreement. Second, the court found that the California Supreme Court’s decision in Gentry v. Superior Court, 42 Cal. 4th 443, 463 (2007), which had held class action waivers in employment arbitration agreements could not be enforced if a class action provided a significantly more effective tool for vindicating the plaintiffs’ rights, was no longer good law in California given the U.S. Supreme Court’s decision in Concepcion v. AT&T Mobility LLC, 131 S. Ct. 1740, 1745 (2011). Lastly, the Court enforced the plaintiff’s waiver of class action and Private Attorney General’s Act (“PAGA”) claims. The Court again cited the U.S. Supreme Court in Concepcion: “[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.” Concepcion, 131 S. Ct. at 1747…. “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.” Id. at 1753; cf. Am. Exp. Co. v. Italian Colors Rest.,133 S. Ct. 2304, 2308 (2013) (holding that the FAA prohibits courts “to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim”). In ruling that the Federal Arbitration Act required enforcement of the plaintiff’s PAGA and class action waivers, the Court directly refuted a contrary state court decision in Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2011).