At Issue for Employers and Employees:  Classwide Arbitration or Individual Arbitration?

     In an April 25, 2012 post, we said the rule in Gentry v. Superior Court, 42 Cal.4th 443 (2007), allowing for invalidation of a class arbitration waiver where nonwaivable statutory rights are at issue, manages to maintain a “toehold”.  We suggested Gentry, like Wile E. Coyote, was still “up in the air.”   Our next case, Truly Nolen of America v. Superior Court of San Diego County (Alvaro Miranada et al., real parties in interest), Case No. D060519 (Haller, J., author) (for publication) suggests that Gentry is gathering rapid downward momentum.

     Truly Nolen is a wage and hour case, brought by employees who filed a class again against Truly Nolen, a nationwide pest-control company. 

Pest control.  1870-90.  Library of Congress.

Truly Nolen moved to compel arbitration under signed arbitration agreements.  The arbitration agreements were silent about the availability of classwide arbitration.  The trial court granted the motion to compel arbitration. but rejected the employer’s request for individual arbitration, believing Gentry was binding precedent requiring arbitration.  The employer filed a writ of mandate petition challenging the court refusal to order individual arbitration.

     The Court of Appeal left no doubt as to the direction in which it thought the law is evolving:  “we agree with Truly Nolen that Concepcion [v. AT&T, __ U.S. __ [131 S.Ct. 1740] (2011)] implicitly disapproved the reasoning of the Gentry court . . . “  While questioning the viability of Gentry – a California Supreme Court case – the Court of Appeal recognized that the case is stare decisis because it arguably rests on a public policy argument about unwaivable statutory rights that the California Supreme Court has not revisited.

     Gentry may be on life-support, but the 4th District Division 1 hasn’t yet pulled the plug.

      However, the Court of Appeal also concluded the trial court’s application of the Gentry elements requiring arbitration of a class action was unsupported on the factual record.  Therefore, the Court of Appeal vacated the portion of the order denying Truly Nolen’s motion to order individual arbitration.  The Court also remanded to allow the parties to present additional evidence as to whether the parties had “impliedly agreed” to permit class arbitration. 

     Comment:  Under Stolt-Nielsen v. AnimalFeeds Internat. Corp., __U.S. __ ,130 S.Ct. 1758 (2010), not expressly addressing class action arbitrability leads to the same outcome as a waiver of class action arbitrability.  However, under contract law principles, there is still room for parties to “impliedly agree” to class action arbitrability without expressly agreeing to arbitrate class actions.

      Truly Nolen contains an excellent summary of the key federal and California cases in this “rapidly evolving” area of law concerning “the right to classwide arbitration in wage and hour litigation under the FAA and under California law.”