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

by Orrick - Global Employment Law Group
Contact

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.

A California Court of Appeal recently held that under Concepcion, a trial court’s dismissal of class claims and an order compelling arbitration in a putative wage-and-hour class action were proper. The Court of Appeal, First District, in Outland v. Macy’s, Inc. (Cal. Ct. App. Jan. 16, 2012), refused to revive the class claims brought by a former employee of Macy’s, Inc. Plaintiff Jennifer Outland, a former group sales manager, filed suit in 2009, claiming that Macy’s improperly classified her and other group sales managers in California as exempt. Macy’s filed a motion to compel arbitration based on its employee dispute resolution program which contained a class action waiver provision.

The court rejected Outland’s argument that Gentry v. Superior Court, 165 P.3d 556 (Cal. 2007), in which the California Supreme Court articulated a four-factor test for invalidating class arbitration waivers in employment contracts, remains good law. The court also rejected Outland’s argument that her class claims were protected by the 2012 D.R. Horton, Inc. ruling (357 NLRB No. 184), in which the National Labor Relations Board held that requiring individual arbitrations of employment-related claims violated employees’ statutory right to collective actions.

With respect to Gentry’s survival post-Concepcion, the court noted that although Concepcion did not mention this case specifically, the reasoning of Concepcion applies as equally to Gentry as it does to Discover Bank, 36 Cal.4th 148 (2005), the California Supreme Court decision that Concepcion effectively overruled. Therefore, the court found that Concepcion “directly and conclusively undercuts Gentry’s rationale.”

The Outland court acknowledged that its holding regarding Gentry is contrary to that of an earlier appellate court opinion, Franco v. Arakelian Enterprises, Inc., (2012) 211 Cal.App.4th 314. In Franco, the appellate court concluded that Concepcion did not overrule Gentry; therefore, in order to prove that a class action waiver is unconscionable under Franco, a plaintiff must provide evidence of the “Gentry factors.” These factors include: (1) “the modest size of the potential individual recovery”; (2) “the potential for retaliation” against class members; (3) a lack of information among absent class members concerning their rights; (4) the fact that a class action “may be needed to assure the effective enforcement of statutory policies”; and (5) “other real world obstacles to the vindication of class members’ rights…”.

The court noted that Outland did not submit evidence concerning the Gentry factors, so even if it accepted Franco’s rationale, it had no record on which to find Macy’s class action waiver unconscionable.

The court also declined to follow the NLRB’s ruling in D.R. Horton, following a line of federal district court cases holding that under the FAA, a federal statute will not override an arbitration agreement unless there is clear evidence of such intent in the language of the statute or the legislative history. And with respect to the NLRA, no such intent can be shown in the statute’s language or legislative history.

Although Outland provides some further understanding of how the California courts are applying Concepcion in the wage-and-hour class action context, this is far from the last word on these questions. The legal issues raised in this case, and the larger question of whether Concepcion overruled Gentry, are currently before the California Supreme Court, as it reviews Iskanian v. CLS Transportation Los Angeles, LLC (2012) 206 Cal.App.4th 949, (where the Court of Appeal, Second District held that Concepcion invalidated Gentry) review granted September 6, 2012, S204032.

The case is Jennifer Outland et al. v. Macy’s Inc., case number A133589 in the California Court of Appeal for the First Appellate District.

 

Written by:

Orrick - Global Employment Law Group
Contact
more
less

Orrick - Global Employment Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.