California Court Criticizes Prior Case Law Invalidating Class Action Waivers, Then Punts To State Supreme Court

Truly Nolen of America v. Superior Court, 2012 WL 3222211 (Aug. 13, 2012) (pdf)

California law involving classwide wage-and-hour arbitration continues to evolve in the aftermath of the United States Supreme Court's landmark decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), which generally prohibits states from requiring additional due process guarantees (not required under the Federal Arbitration Act) for enforcing arbitration agreements. (See our prior blog post here.) Since Concepcion, lawyers and jurists have called into question the continuing viability of Gentry v. Superior Court – in which the California Supreme Court delineated a four-factor test for invalidating class arbitration waivers – as well as other cases subjecting employment arbitration agreements to special (employee-friendly) rules. Some courts have continued to apply Gentry while others have declared it dead, holding that "[a] rule like the one in Gentry – requiring courts to determine whether to impose class arbitration on parties who contractually rejected it – cannot be considered consistent with [Concepcion's] objective of enforcing arbitration agreements according to their terms." See, e.g., Iskanian v. CLS Transp. Los Angeles, LLC, 206 Cal. App. 4th 949 (2012).

In its recent decision in Truly Nolen of America v. Superior Court, the California Court of Appeal gave a nod to Iskanianand other cases invalidating Gentry, but ultimately held that in the absence of an express or implied agreement among the parties regarding class arbitration, ordering the arbitration of non-waivable employment claims on a classwide basis was "questionable" though not erroneous, since this is a narrow issue on which the California Supreme Court has not yet opined. The plaintiffs, who worked as pest control technicians for Truly Nolen of America ("Truly Nolen"),alleged on behalf of themselves and other current and former employees that they had been misclassified as exempt from California's stringent overtime pay requirements. Truly Nolen moved to compel arbitration of the plaintiffs' claims based on an arbitration agreement between the parties which was silent on the issue of whether class claims would be arbitrated on an individual or classwide basis. The trial court, relying on Gentry, ordered classwide arbitration, over Truly Nolen's objections.

On appeal, the...