Yesterday, the Court of Appeal (Second Appellate District, Division Two) affirmed a post-Concepcion order compelling arbitration and dismissing the (previously-certified) class claims. Iskanian v. CLS Transportation Los Angeles, LLC, ___ Cal.App.4th ___ (Jun. 4, 2012). In so doing, the Court addressed a number of very interesting issues that are currently the subject of active litigation in the lower courts, state and federal.
Among other things, the opinion holds that "the Concepcion decision conclusively invalidates the Gentry test. .... 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 the objective of enforcing arbitration agreements according to their terms." Slip op. at 8-9 (hyperlink added).
This conflicts with the statement a few weeks ago in Kinecta Alternative Financial Solutions, Inc. v. Superior Court (Malone), ___ Cal.App.4th ___ (Apr. 25, 2012; modified May 1, 2012), that Gentry "appears to remain the binding law in California." Kinecta, slip op. at 10. (Kinecta is discussed in more detail in this blog post.)
The opinion also creates a split in authority on whether representative PAGA actions remain inarbitrable post-Concepcion, as held in Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011):
Respectfully, we disagree with the majority’s holding in Brown. We recognize that the PAGA serves to benefit the public and that private attorney general laws may be severely undercut by application of the FAA. But we believe that United States Supreme Court has spoken on the issue, and we are required to follow its binding authority.
Finally, the Court declined to follow D.R. Horton. Slip op. at 11-13 (discussing In re D. R. Horton, Inc., 357 NLRB No. 184, 2012 WL 36274 (N.L.R.B. Jan. 3, 2012)).
We should all watch this case to see if the California Supreme Court takes it up.
UPDATE: The blog California Mediation and Arbitration also has a post on Iskanian. As that post observes, "Kinecta, Brown, and Iskanian create a sharp split in authority" in this "active area of the law."