Continuing to push back against the federal policy in favor of arbitration contained in the Federal Arbitration Act, the California Supreme Court has handed down its long-awaited decision in Sonic-Calabasas, Inc. v. Moreno. A copy of the decision can be accessed here.
The California Supreme Court had earlier ruled that an employer cannot require employees to arbitrate disputes while waiving their right to a “Berman hearing” (an administrative proceeding to settle wage disputes). In today’s decision, responding to instructions from the U.S. Supreme Court, the California Court acknowledges that the FAA preempts its earlier ruling. But now a majority of the Court holds that state courts can continue to invalidate arbitration agreements under unconscionability rules that do not interfere with “fundamental attributes of arbitration.” The Court has thus remanded the case to the trial court to determine whether the arbitration agreement in this case was otherwise so unconscionable as to be unenforceable. Justice Chin, joined by Justice Baxter, has written a strong dissent that effectively invites the U.S. Supreme Court to revisit the work of the California Supreme Court.
A Seyfarth One Minute Memo analyzing the 104-page decision will be distributed and posted on this blog shortly.