arbitration

Arbitration Wars: The California Supreme Court Strikes Back In Sonic II

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On October 17, 2013, the California Supreme Court revisited the enforceability of arbitration agreements in California. The Court released its decision Sonic-Calabasas Inc. v. Moreno (Sonic II). In that 5 – 2 ruling, the California Supreme Court reversed its prior decision to strike down an arbitration agreement on the ground of FAA preemption, but remanded the case for analysis of the enforceability of the arbitration agreement under an unconscionability analysis.  READ MORE →

California Court of Appeal Denies Wage-and-Hour Class Claims and Enforces Arbitration Agreement under Concepcion

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Gavel and Hundred-Dollar Bill

Employers in California have been watching closely to see how courts will apply the United States Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), which held that the Federal Arbitration Act (FAA) preempted state law concerning the enforceability of class action waiver provisions, in which a party waives his or her right to arbitrate claims on a class basis. READ MORE →

Supreme Court Reaffirms Enforceability of Arbitration Agreement in Noncompetition Dispute

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In a succinct opinion issued on November 26, 2012, the Supreme Court delivered a stern warning to state courts that fail to enforce arbitration clauses accompanying noncompetition agreements. In Nitro-Lift Technologies, L.L.C. v. Howard, 568 U.S. ____ (2012), the employment contracts between two energy-sector employees and their employer contained a two-year noncompetition provision and a mandatory arbitration clause. After the employees joined a competitor, the employer commenced an arbitration proceeding, prompting the employees to bring suit in Oklahoma state court seeking an injunction preventing enforcement of the noncompetition agreements. Despite the mandatory arbitration clauses, Oklahoma’s highest court declared the noncompetition agreements unenforceable under a state law prohibiting restraints on an employee’s ability to work in the same industry. READ MORE →

California Court of Appeal: Employer Cannot Compel Arbitration Unless There Is A Signed Arbitration Agreement

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Chairs Around a Table

Since the United States Supreme Court’s decision in AT&T Mobility v. Concepcion, more and more employers have sought to get out of court and into arbitration when dealing with employee disputes. The California Courts of Appeal, however, are not making that easy when it comes to an employer’s burden to show the existence of a valid agreement to arbitrate. Several months ago, the Second Appellate District held in Sparks v. Vista Del Mar Child and Family Services that an arbitration policy in an employee handbook was not enough to force arbitration. Similar decisions have reached the same conclusion, e.g., Carey v. 24 Hour Fitness USA, Inc., (5th Cir. Jan. 25, 2012). READ MORE →

California Court Finds Arbitration Agreement In Employee Handbook Unenforceable

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People at a Table

In a July 30, 2012 decision the Second Appellate District of the Court of Appeal ruled that an employee was not bound by the arbitration clause in his employee handbook for a slew of reasons:

  • the clause itself was buried (or as the Court said “not specifically highlighted”) in a lengthy handbook and was not called to the employee’s attention;
  • the employee did not specifically acknowledge the clause or agree to arbitrate, but merely signed an acknowledgment of receipt of the handbook itself;
  • the handbook contained a (relatively) standard clause that it was not intended to create a contract but, the employer also “had it both ways” and retained the rights to unilaterally amend the handbook’s provisions;
  • the employer failed to provide the employee with the specific arbitration rules; and
  • the clause itself was found unconscionable:  procedurally, because the employer did not distribute the rules governing the arbitration to employees and because the issue of arbitration was not negotiable and, substantively, because it required the employee to relinquish administrative and judicial rights and made no express provision for discovery rights.

While this decision points out the pitfalls of this particular factual scenario, it also highlights some nuances.  As courts reinvigorate their scrutiny of arbitration clauses and agreements, due to what this Court called “the increasing phenomenon of depriving employees of the right to a judicial forum,” employers may want to revisit and revise their handbook language.

California Court of Appeal Enforces Arbitration

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A California Court of Appeal recently required a plaintiff to forego class and representative action claims in Nelsen v. Legacy Partners Residential, Inc., No. A132927 (Cal. App. July 18, 2012) finding that she failed to show the employer’s arbitration agreement was unconscionable or that compelling individual arbitration would violate state or federal law or public policy. Knocking down the attempt to keep class and representative claims alive in either a judicial or arbitration proceeding, the First Appellate District held that all of the plaintiff’s California Labor Code claims, as well her claim for injunctive relief, had to be arbitrated on an individual basis. READ MORE →

CA Court Holds Employment Arbitration Agreement Waiving Class and Representative Actions Enforceable

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Gavel and Hundred-Dollar Bill

In Iskanian v. CLS Transportation Los Angeles, LLC, (Cal. Ct. App. June 4, 2012), the California Court of Appeal for the Second Appellate District affirmed a decision to compel individual arbitration of wage-and-hour claims pursuant to an employment agreement that contained class and representative action waivers, holding that the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion was controlling. READ MORE →

New Decision Rejects D.R. Horton Reasoning

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A new ruling from the Northern District of California, Morvant v. P.F. Chang’s Bistro, Inc. (May 7, 2012), confirms the enforceability of class action waivers despite contrary California law and the National Labor Relations Board’s opinion in D.R. Horton. READ MORE →