Supreme Court reverses Court of Appeal opinion upholding "no class action" arbitration clause: Gentry v. Superior Court

The decision is up. The Supreme Court held 4-3 that the Court of Appeal erred by upholding the "no class action" arbitration clause, notwithstanding the fact that the clause appeared in an employment contract, rather than a consumer contract:

Yet the above quoted passage in Discover Bank was not intended to suggest that consumer actions involving minuscule amounts of damages were the only actions in which class action waivers would not be enforced. Rather, Discover Bank was an application of a more general principle: that although “[c]lass action and arbitration waivers are not, in the abstract, exculpatory clauses” (Discover Bank, supra, 36 Cal.4th at p. 161), such a waiver can be exculpatory in practical terms because it can make it very difficult for those injured by unlawful conduct to pursue a legal remedy. Gentry argues persuasively that class action waivers in wage and hour cases and overtime cases would have, at least frequently if not invariably, a similar exculpatory effect for several reasons, and would therefore undermine the enforcement of the statutory right to overtime pay.

Gentry v. Superior Court, ___ Cal.4th ___ (Aug. 30, 2007) (slip op. at 12.) The case has been remanded for the trial court to redetermine in the first instance whether the arbitration clause should be upheld. I will endeavor to post more on the decision later today and/or tomorrow.