The panel noted that the agreement barred private attorney general actions, which the panel construe

Appellate Panel Tries to Draft a Roadmap for the California Supreme Court to Save California's Prohibition of Class Action Waivers from U.S. Supreme Court Precedent | Sheppard Mullin Richter & Hampton LLP - JDSupra
The battle for how the landmark arbitration decision Concepcion v. AT T Mobility ( Concepcion ) should be construed in California continues with Monday s issuance of Franco v. Arekelian Enterprises, Inc. ( Franco II ). Division One of the Second District Court of Appeal (in Los Angeles) has developed a troubling reputation among the class action defense bar because it has issued a series of decisions that stake out pro-plaintiff positions in Labor Code class action cases, including such decisions as Jaimez v. Daiohs USA, Inc. , 181 Cal. App. 4th 1286 (2010) (reversing denial of class certification in a wage hour case) and the two depublished Harris v. Superior Court decisions (attempting to establish an exceedingly narrow administrative exemption in California).
The Franco II panel labors mightily to construe Concepcion narrowly and to work around flamingo hotel and casino numerous precedents to establish a rule that will allow trial courts to strike down employment arbitration agreements with class action waivers in the great majority of class action cases. The opinion holds that the California Supreme Court s anti-waiver decision in Gentry v. Superior Court ( Gentry ) remains good law despite Concepcion. Franco II is at sharp odds with Iskanian v. CLS Transporation Los Angeles, LLC ( Iskanian ), an appellate decision currently on review in the California Supreme Court that held that Gentry flamingo hotel and casino was implicitly overruled by Concepcion . Division One appeared aware that their decision will meet the same fate, and crafted a roadmap for the California Supreme Court to follow flamingo hotel and casino to reaffirm flamingo hotel and casino Gentry .
As explained below, although Franco II is more than sixty pages long and purports to undertake an overview of the entire flamingo hotel and casino history of arbitration law, it appears disingenuous in its treatment of relevant precedent, especially Concepcion , and it ignores key cases that contradict the conclusions the panel wants to reach. Whether or not this case is persuasive to a majority of California Supreme Court justices (which it might be), there is a good chance that the United States Supreme Court as currently composed would grant review and reject the arguments set forth in Franco II .
This action addresses whether a class/collective action waiver flamingo hotel and casino within an arbitration agreement between Mr. Franco and his employer is enforceable. The agreement at issue in Franco II required the employer and employee to arbitrate any and all claims and disputes that are related flamingo hotel and casino in any way to [the employee s] employment or the termination of [that] employment flamingo hotel and casino but further required both sides to forego any right . . . to bring claims on a representative or class basis. The agreement went on to state that the employee waived any right to join or consolidate claims in arbitration with others or to make claims in arbitration flamingo hotel and casino as a representative or as a member of a class or in a private attorney general capacity . (emphasis added). The agreement clarified that no remedies that otherwise would be available to [the employee] individually or to the Company in a court of law, however, will be forfeited by virtue of this agreement. The apparent intent of these provisions was to ensure the employee s right to sue individually but to preclude employees from asserting class actions, collective flamingo hotel and casino actions, or representative actions under the Labor Code, Unfair Competition Law ( UCL ) or California Labor Code Private Attorney General flamingo hotel and casino Act ( PAGA ). The Court of Appeal was tasked with determining whether this agreement was enforceable and, more specifically, whether the California Supreme Court s Gentry decision remained good law that would render the class action waiver unenforceable even in light of more recent U.S. Supreme Court precedent.
Unlike the 2011 decision, Brown v. Superior Court , where the appellate court simply held that it had no power to refuse to follow Gentry because Gentry is an opinion flamingo hotel and casino of a higher state court, the Franco II panel took on the issue of deciding whether Gentry , in fact, survived Concepcion. flamingo hotel and casino In doing so, the panel attempted to justify the continued vitality of Gentry and to harmonize Gentry, Discover Bank (upon which Gentry relied), and the more recent U.S. Supreme Court precedents with an apparent intent to severely limit the enforceability of class action waivers in California. The panel s overview of the history of arbitration law is excessively long and addresses a lot of irrelevant case law before getting to the heart of the opinion. The core of the Franco II panel s reasoning was as follows:
First, the panel recognized that the 2010 U.S. Supreme Court Stolt-Nielsen decision precluded class arbitration where the employer never agreed to class arbitration. Accordingly, flamingo hotel and casino where a class action flamingo hotel and casino waiver is deemed unenforceable, the remedy is simply to order the action to proceed as a class action in court, not to order the case to class arbitration.
Second, the panel recognized that Concepcion had expressly overruled Discover Bank on the ground that Discover Bank had rendered class action waivers in consumer arbitration agreements categorically unenforceable. The panel noted, however, that AT T s arbitration agreement in Concepcion had pro-consumer features that gave the consumer meaningful remedies for the small dollar claims that were likely to arise, even if the consumer would often choose not to go through the effort to recover them even in meritorious cases. The panel thus interpreted Concepcion as invalidating flamingo hotel and casino state laws and rules that create a categorical bar to class action waivers in arbitration agreements, even when the agreement allows the plaintiff meaningfully to vindicate his or her individual rights in arbitration. The panel attempted to bolster this interpretation by noting that, after Concepcion , the U.S. Supreme Court reversed a West Virginia Supreme Court decision that purported to enforce a state-law categorical bar on certain types of elder abuse actions from being sent to arbitration.
Third, the panel distinguished Gentry from the expressly rejected Discover Bank case on the ground that, while the Discover Bank decision had created a categorical bar on class action waivers, Gentry purported to bar class action waivers only in a limited universe of situations that required individual findings by a court to establish. The panel described the required court finding to invalidate a class action waiver as follows:
[that] a class . . . is likely flamingo hotel and casino to be a significantly more effective practical means of vindicating the rights of the affected employees flamingo hotel and casino than individual litigation or arbitration, and . . . the disallowance of the class action will likely lead to a less comprehensive enforcement of [wage and hour] laws for the employees alleged to be affected by the employer s violations .
Plaintiff submitted a declaration attesting that he was unaware of his rights, he believed other employees who ever complained were looked flamingo hotel and casino down upon and harassed into quitting, and he felt insecure that if he complained he would be fired. All of this dissuaded him from bringing an individual wage/hour claim.
Plaintiff s lawyers submitted declarations stating that they wouldn t find it lucrative enough for them to take individual wage cases to arbitration with stakes flamingo hotel and casino like Plaintiff s (which they estimated at just over $10,000) and that in their experience the class action device is necessary to get employers to follow wage and hour laws.
The panel noted that the agreement barred private attorney general flamingo hotel and casino actions, which the panel construed as barring even an individual PAGA claim, thus effectively precluding Franco and his co-workers from suing under PAGA.
The panel noted that the amount in dispute in Plaintiff s individual case of $10,250 was too small to entice his lawyers to take the case to arbitration, particularly given that his central claims for meal and rest period flamingo hotel and casino did not provide for the recovery of attorney s fees. The court concluded that the Plaintiff could not enforce his rights given the costs involved flamingo hotel and casino in doing so and the unavailability of competent counsel to take the case.
Franco II s least persuasive premise is that there is anything more categorical about the bar to consumer class action waivers in Discover Bank than the bar to employment class action waivers in Gentry . While the two cases used slightly different reasoning flamingo hotel and casino to invalidate their respective class action waivers, both cases purported to craft exceptions to their announced anti-waiver rule that could exist depending on the facts of the underlying case. Indeed, the Franco flamingo hotel and casino II panel appears to misapprehend what categorical means where, in describing Discover Bank as a categorical rule, it explains that Discover Bank would invalidate most of those waivers. Something that happens often, but not always, is not categorical.
If categorical simply means that most often the waivers will not be enforceable, the Gentry test is categorical indeed, especially flamingo hotel and casino given the low evidentiary bar the court sets to challenging a waiver. Franco s showing was that (1) he claimed ignorance of the wage/hour laws and stated he worried he might be retaliated against based on vague allegations that he believed his employer had retaliated against unspecified others; flamingo hotel and casino (2) his lawyers attested that they would not bother taking the case, but not that no lawyer would take Franco s individual case; and (3) the meal and rest period claims did not carry a right to attorney s fees. A similar showing could be made in most wage and hour class actions and probably in every meal and rest period class action, creating a bar to mandatory individual arbitration of those actions that is just as categorical as the rejected Discover Bank rule. Furthermore, if the employee were allowed to bring an overlapping individual PAGA claim with