PAGA: Fifth District Affirms Denial Of Motion To Compel Arbitration Because Blanket Waiver Of PAGA Claims Is Unenforceable
Agreement Was Not Ambiguous.
The court explained in Duran v. Employbridge Holding Company, F084167 (5th Dist. filed 4/27/23 pub. 5/30/23) (Franson, Hill, Smith) that the provision "claims under PAGA . . . are not arbitrable under this Agreement" is not ambiguous. "It is not objectively reasonable to interpret the phrase 'claims under PAGA' to include some PAGA claims while excluding others. Thus, the carve-out provision excludes all the PAGA claims from the agreement to arbitrate."
While the law in this area remains somewhat in flux, it appears that the rule is that an individual plaintiff's claim may be arbitrated, and under California law, as interpreted by California's courts, the PAGA plaintiff still has standing to pursue representative claims affecting other individuals in court. The standing issue is before the California Supreme Court.
Public Injunctive Relief: First District Div. 1 Holds McGill Rule Remains The Law In California
McGill v. CitiBank Held An Arbitration Agreement Is Invalid And Unenforceable If It Waives A Party's Statutory Right To Seek Public Injunctive Relief.
Ring sells home security and smart home devices. Brandon Jack and others sued Ring, requesting injunctive relief to require Ring to prominently disclose certain things to consumers. Ring moved to compel arbitration, lost its motion, and appealed. Affirmed. Jack v. Ring LLC, A165103, A165386 (1/2 5/25/23) (Miller, Richman, Markman). McGill v. CitiBank, 2 Cal. 5th 945 (2017), is still good California law.
COMMENT: See our sidebar category Arbitration: Public Injunctive Relief, for other posts on the case.
Nonsignatories, Agents: Absence Of Ostensible Or Actual Authority Means Arbitration Agreement Is Unenforceabler
Keep In Mind That Authority Must Be Created By The Principal, Not The Agent.
Kinder v. Capistrano Beach Care Center, LLC, B316937 (2/7 5/18/13) (Escalante, Perluss, Feuer) is a lawsuit brought by a resident of a residential skilled nursing facility who broke her hip in a fall and sued. The nursing facility tried, unsuccessfully, to enforce an arbitration agreement, and was no more successful in the Court of Appeal.
The problem is that Nancy Kinder, who broke her hip, did not sign the arbitration agreement. Her children did, but there was a lack of proof that they had actual or ostensible authority to sign.
COMMENT: There are many lawsuits brought by aged residents of nursing homes in which the defendant seeks to enforce the arbitration agreement. Sometimes, as here, the injured person is a nonsignatory to the agreement. When that is the case, it may not be possible to enforce the agreement. The arbitration agreement might have been enforceable if the resident had signed and had capacity, if there had been an effective power of attorney, or if the signatory had acted under a conservatorship. Perhaps the difficulty of obtaining a power of attorney or a conservatorship is the simple explanation for why this is not done. And if the resident lacks capacity at the time the power of attorney is entered into, that's yet another problem.
Employment: Employee’s Release Of Claim After It Accrued Is Not Illegal Or A Violation Of Public Policy
Employee Entered Into Release Of Claims In Her Separation Agreement.
Elizabeth Castelo entered into a release of claims in her separation agreement from her employer Xceed Financial Credit Union. In arbitration, the employee argued that she had entered into a pre-dispute arbitration agreement that was invalid. The arbitrator ruled in favor of the employer, the court confirmed the award, and the employee appealed. Castelo v. Xceed Financial Credit Union, B311573 (2/7 5/18/23) (Escalante, Perluss, Segal).
Some pre-dispute releases can be found invalid under some circumstances. Civil Code section 1668 provides: "All contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law."
Here, however, the Court of Appeal agreed that Castelo knew about her claims before she entered into the release of claims. There was no violation of public policy.
Construction Of Agreement And Unconscionability: Confidentiality Agreement And Arbitration Clause Were Construed Together
File This Under "More Ways Than One To Skin A Cat."
Woman wearing a blue robe with Buzzer the cat. Photographer: Arnold Genthe. Library of Congress.
Alberto v. Cambrian Homecare, B14192 (2/4 filed 4/19/23, cert for pub. 5/10/23) (Daum, Collins, Currey), affirms the trial court's order finding an arbitration clause unconscionable.
Here's the wrinkle. Ordinarily, a contract and an arbitration provision are separately construed, and the court must decide whether the arbitration provision is unconscionable. Here, there was a confidentiality agreement, and a separate agreement to arbitrate. Or were they separate? Neither agreement incorporated by reference the other agreement.
But as we said above, there's more than one way to skin a cat. Here, the court construed the two agreements together, applying Civil Code §1642. That section provides: "Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together."
The confidentiality agreement allowed the employer to obtain immediate injunctive relief for a breach of confidentiality and apparently was not symmetrical. The discussion of wages among employees was prohibited. In contravention of PAGA, the arbitration agreement created a blanket prohibition of representative actions, absent mutual consent. The agreements, construed together, infected one another.
Happy July 4th To All My Readers !
On The Occasion Of Our 247th Fourth Of July . . .
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