In Phillips v. Sprint PCS, ___ Cal.App.4th ___ (Sept. 26, 2012), the Court of Appeal (First Appellate District, Division Three) affirmed an order compelling arbitration of a claim brought under the UCL's "fraudulent" prong.
If you have copies of additional documents that should be added to the list above (such as the defendant's filing(s)), please forward them.
Since my post on Monday, Kilgore has been added to the Ninth Circuit's pending en banc cases page. That page indicates that the case is "[t]o be calendared the week of December 10, 2012, in Pasadena, California."
Many thanks to the blog reader who wrote to advise that last Friday, the Ninth Circuit granted en banc rehearing in Kilgore v. KeyBank National Assn., No. 09-16703 (9th Cir.). A copy of the order is here.
In Kilgore, the three-judge panel held (among other things) that the FAA, as interpreted in Concepcion, preempts the California Supreme Court's Broughton and Cruz decisions, which held that CLRA and UCL claims seeking public injunctions are not arbitrable as a matter of public policy. Kilgore v. KeyBank Nat'l Assn., 673 F.3d 947 (2012).
It will be very interesting to see what the en banc panel does with this case. Notably, the California Supreme Court just denied review a week and a half ago in Hoover, in which the Court of Appeal had this to say about UCL public injunction claims:
Certainly, the injunctive relief claim under the Unfair Business
Practices Act (Bus. & Prof. Code, § 17200) is not arbitrable. (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316; Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th at pp. 500-501.)
And in April, the U.S. Supreme Court denied cert. in Brown, in which the Court of Appeal relied on Broughton and Cruz in concluding that PAGA claims were inarbitrable:
The purpose of the PAGA is not to recover damages or restitution, but to
create a means of "deputizing" citizens as private attorneys general to
enforce the Labor Code. (See Nicholson, Businesses Beware: Chapter 906 Deputizes 17 Million Private Attorneys General to Enforce the Labor Code
(2004) 35 McGeorge L.Rev. 581.) Here, the relief is in large part "for
the benefit of the general public rather than the party bringing the
action" (Broughton, supra, 21 Cal.4th at p. 1082), just as the claims for public injunctive relief in Broughton and Cruz, supra, 30 Cal.4th 303.
Meanwhile, the California Supreme Court has posted its statement of the issues on review in Iskanian (review granted last week):
(1) Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S.
Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court
(2007) 42 Cal.4th 443 with respect to contractual class action waivers
in the context of non-waivable labor law rights? (2) Does the high
court's decision permit arbitration agreements to override the statutory
right to bring representative claims under the Labor Code Private
Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.)? (3) Did
defendant waive its right to compel arbitration?
In Iskanian, the Court of Appeal affirmed an order compelling arbitration of wage and hour claims, in heavy reliance on Concepcion. Iskanian v. CLS Transp. Los Angeles, LLC, 206 Cal.App.4th 949 (2012). My original post on the Court of Appeal opinion is here. The statement of issues on review has not yet been posted.
Copies of documents from the case are available at these links:
In Goodridge v. KDF Automotive Group, Inc., ___ Cal.App.4th ___ (Aug. 24, 2012; pub. ord. Sept. 13, 2012), the Court of Appeal (Fourth Appellate District, Division One) affirmed an order declining to enforce an arbitration clause in a used car dealership's sales contract, agreeing with the trial court that the clause was unconscionable under Armendariz.
On September 5, the Supreme Court gave itself an extension of time to grant or deny review in Iskanian. With the extension, the petition for review must be acted on by October 12.
It is interesting that the Supreme Court took no similar action in Hoover. In July, the Supreme Court denied review in two other class arbitration cases, Kinecta and Samaniego. In all three cases, the lower courts declined to enforce the arbitration clauses.CORRECTION: The lower courts declined to enforce the arbitration clauses in Hoover and Samaniego. In Kinecta, the trial court granted the defendant's petition to compel arbitration
but declined to strike the class allegations from
the complaint, and the Court of
Appeal reversed the latter order.
On August 31, 2012, the Court of Appeal (Second Appellate District, Division One) handed down another post-Concepcion arbitration opinion in another wage and hour case, Reyes v. Liberman Broadcasting, Inc., ___ Cal.App.4th ___ (Aug. 31, 2012).
Citing many of the recent cases, the panel reversed the trial court's order denying the defendant's petition to compel arbitration. If the Supreme Court decides to grant review in Iskanian, Hoover, and/or Nelsen, then Reyes is likely to become a "grant and hold."
In Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012), the Seventh Circuit affirmed
class certification of claims for unpaid overtime wages under FLSA and
Illinois state law. The opinion closely analyzes Dukes.
A copy of the cert. petition in Ross is available here. I have not yet seen any documents from AmEx. If you have copies of those, please forward.UPDATE: Many thanks to the blog reader who kindly forwarded a copy of the cert. petition in AmEx.
Several depublication requests have been filed in Hoover by defense-side interests. Both of the cases involve wage and hour claims brought by a putative class of workers.
Under Rule of Court 8.512(b)(1), the Supreme Court must grant or deny review within 60 days of the filing of a petition for review. (The Rule also allows the Court to grant itself an extension of time.) Accordingly, we may not see action in these cases for another month or so.
My original blog posts on Iskanian and Hoover are here and here.
In Truly Nolen of America v. Superior Court, ___ Cal.App.4th ___ (Aug. 9, 2012; pub. ord. Aug. 13, 2012), the trial court granted the defendant's petition to compel arbitration, but denied the defendant's request that the arbitration be limited to individual (as opposed to class) claims. The Court of Appeal (Fourth Appellate District, Division One) reversed the latter part of the order.
The opinion has an interesting discussion of whether Gentry survived Concepcion. While concluding that Gentry probably did not survive Concepcion, the Court of Appeal nevertheless considered itself bound by Gentry until a higher court (either the California Supreme Court or the U.S. Supreme Court) explicitly held otherwise. Slip op. at 21-24.
The opinion went on to hold that "[a]ssuming the Gentry standard survives the United States Supreme Court holdings, the factual analysis as to whether the Gentry factors apply in any particular case must be specific, individualized, and precise." Id. at 31. The declarations submitted by plaintiffs' counsel, the court determined, were too generalized to support the trial court's finding that the Gentry factors had been met. Id. at 24-31.
Next, the court held that an implied, rather than an express, agreement to class (as opposed to individual) arbitration may satisfy Stolt-Nielsen. Id. at 32-35. The court remanded for further findings on this point. See id.
Finally, the court declined to follow D.R. Horton. Slip op. at 35-36 (citing Nelsen v. Legacy Partners and Iskanian).
In Caron, the Court of Appeal (Fourth Appellate District, Division Three) held that the FAA preempts the CLRA's "no waiver" provision (Civ. Code section 1751). Scott's critique of the court's analysis is pretty spot-on. As he observes, the opinion creates a split in authority with Fisher v. DCH Temecula Imports LLC, 187 Cal. App. 4th 601 (2010) (discussed in this blog post), so this is another case to add to the Supreme Court watch list.
In Sparks v. Vista Del Mar Child and Family Services, ___ Cal.App.4th ___ (Jul. 30, 2012), the Court of Appeal (Second Appellate District, Division Five) affirmed an order denying arbitration of wrongful termination claims where the arbitration clause was buried in a lengthy employee handbook and was otherwise unconscionable.
While Sparks is not a class action, this excerpt is of interest:
The arbitration clause in question provides for the application of the Federal Arbitration Act. Although that Act preempts state-law rules that stand as an obstacle to the accomplishment of the Act’s objective, i.e. rules that require classwide arbitration, (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __, 131 S.Ct. 1740, 1748 (Concepcion)) the issue of whether the parties agreed to arbitration is ordinarily decided under state law. (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; see also Cheng-Canindin v. Renaissance Hotel Associates, supra, 50 Cal.App.4th at p. 683 [“The question of whether the parties agreed to arbitrate is answered by applying state contract law even when it is alleged that the agreement is covered by the FAA [Federal Arbitration Act, 9 U.S.C. § 1 et seq.]. [Citations.]”].) Moreover, the United States Supreme Court in Concepcion did not eliminate state law unconscionability as a defense to the enforcement of arbitration agreements subject to the Federal Arbitration Act. (Concepcion, supra, 563 U.S. __, 131 S.Ct. at p. 1746; Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1150; Kanbar v. O’Melveny & Myers (N.D. Cal. July 21, 2011, C-11-089211) __ F.Supp.2d__ [2011 WL 2940690 *6]; see also Rent-A-Center, West, Inc. v. Jackson (2010) __ U.S. __, 130 S.Ct. 2772, 2779 [arbitrator could decide unconscionability issue].)
In Nelsen v. Legacy Partners Residential, Inc., ___ Cal.App.4th ___ (Jul. 18, 2012), the Court of Appeal (First Appellate District, Division One) denied a writ petition challenging an order compelling arbitration of various wage and hour claims.
The opinion discusses the U.S. Supreme Court's Concepcion and Stolt-Nielsen opinions, as well as the California opinions Gentry, Kinecta, and Iskanian, the NLRB's D.R. Horton decision, and the Ninth Circuit's Kilgore and Coneff.
Last week, I reported that on July 11, 2012, the Supreme Court had denied review in Samaniego v. Empire Today, no. S202510. In Samaniego, the Court of Appeal affirmed an order denying a petition to compel arbitration.
In this case, the Court of Appeal (First Appellate District, Division Three) refused to enforce an arbitration clause, finding it unconscionable under Armendariz and rejecting the defendant's argument that Concepcion precluded that result. Samaniego v. Empire Today LLC, 205 Cal.App.4th 1138 (2012).
Here is my original post on the unpublished opinion handed down on April 5, 2012. The opinion was ordered published on May 7, 2012.
In Hoover v. American Income Life Ins. Co., ___ Cal.App.4th ___ (May 16, 2012; pub. ord. June 13, 2012), the Court of Appeal (Fourth Appellate District, Division Two), in refusing to enforce an arbitration clause in a collective bargaining agreement, said this:
Certainly, the injunctive relief claim under the Unfair Business Practices Act (Bus. & Prof. Code, § 17200) is not arbitrable. (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316; Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th at pp. 500-501.)
Slip op. at 19.
The citations of Cruz and Brown are significant. The California and U.S. Supreme Courts both declinedto reviewBrown. The opinion’s reasoning may well be followed by other California state courts analyzing whether Cruz survived Concepcion -- notwithstanding the Ninth Circuit's opinion in Kilgore.
On an unrelated subject, Matt Cain's perfect game was beyond amazing. Go Giants.
In Ortega v. Topa Ins. Co., ___ Cal.App.4th ___ (May 25, 2012), the Court of Appeal (Second Appellate District, Division Three) affirmed an order striking class allegations from the complaint.
Among other things, the Court affirmed the applicability of the "death knell" doctrine to such rulings:
While generally an order granting a motion to strike is not an appealable order, in this case, the trial court’s order is effectively a final judgment. The order at issue in this case struck all class allegations from the complaint. Such an order is appealable, even if made at the pleading stage. “Whatever its form, an order that has the effect of denying certification as a class action disposes of that action and is an appealable final judgment.” (Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, 1322, fn. 2.)
Slip op. at 9.
On a related note, a recent unpublished opinion from the Fifth Appellate District, Barnes v. Bakersfield Dodge, Inc., No. F063370 (Cal. App. May 22, 2012), held that the "death knell" doctrine applies to an order granting a motion to compel arbitration in a putative class case if the arbitration clause bans class proceedings. At least one publication request has been filed there. The appellate court reversed the order, holding that the defendant had waived its right to seek to compel arbitration.
UPDATE: The publication requests in Barnes were denied.
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 Gentrytest. .... 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).
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."
On Tuesday, May 29, 2012, the Second Circuit denied en banc rehearing in In re American Express Merchants' Litigation, No. 06-1871 (2d Cir. May 29, 2012).
That is the case in which the three-judge panel declined, post-Concepcion, to enforce an arbitration clause with a class-action ban because doing so would preclude effective vindication of statutory rights. In re American Express Merchants’ Litig., 667 F.3d 204 (2nd Cir. 2012) ("Amex III").
The order denying en banc rehearing is accompanied by a concurring opinion and three dissenting opinions, all of which are of interest. The dissenting opinion of Judge Cabranes reads, in full:
I concur fully in the thorough opinion of Chief Judge Jacobs dissenting from the denial of in banc review. I write separately simply to underscore that the issue at hand is indisputably important, creates a circuit split, and surely deserves further appellate review. This is one of those unusual cases where one can infer that the denial of in banc review can only be explained as a signal that the matter can and should be resolved by the Supreme Court.
According to Chief Judge Jacobs' dissenting opinion, the split is with the Ninth Circuit's opinion in Coneff v. AT&T Corp., 673 F.3d 14 1155, (9th Cir. 2012). The concurring opinion by Judge Pooler, however, explains that there is in fact no split between Amex III and Coneff.
Certainly we can expect a cert. petition to be filed in this case. Whether it will be granted is another question.
Last Saturday the New York Times had this article on the impact of Concepcion. An excerpt:
A year later, we’re starting to see how much the game has changed. On April 25, the consumer advocacy group Public Citizen released a report titled “Justice Denied” that said that since Concepcion, judges had cited the decision at least 76 times as a reason to prevent potential class-action lawsuits from moving ahead. In some of those cases, the judges made clear that they were ruling against the plaintiffs through gritted teeth, explaining that Concepcion basically made it impossible to come to any other decision.
Kinecta is an employment case. The employment agreement contained an arbitration clause with a class-action ban. The trial court granted the defendant's petition to compel arbitration but denied the defendant's motion to strike the class allegations from the complaint. The defendant filed a writ petition, which the Court of Appeal granted, reversing the latter order. Slip op. at 2-4.
The Court then addressed whether Concepcion also overruled Gentry v. Superior Court (Circuit City Stores, Inc.), 42 Cal.4th 443 (2007), which addressed unconscionability in the employment class action context. While "[a] question exists about whether Gentry survived the overruling of Discover Bank in Concepcion," the decision "has not been expressly abrogated or overruled," and therefore "appears to remain the binding law in California." Slip op. at 10 (citing Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489, 498, 505 (2011)).
The Court rejected the plaintiff's argument that the class-action ban was unconscionable under Gentry, not because Gentry has been overruled, but because the plaintiff "provided no evidence as to any of the four Gentry factors required to support a trial court’s determination that the arbitration should proceed as a class action arbitration." Slip op. at 11.
Next, the Court held that, under Stolt-Nielsen, the defendant could not be compelled to participate in a class arbitration because it had not consented to do so:
By denying Kinecta’s motion to dismiss class allegations from Malone’s complaint, the order compelling arbitration imposed class arbitration even though the arbitration provision was limited to the arbitration of disputes between Malone and Kinecta. .... We conclude that the parties did not agree to authorize class arbitration in their arbitration agreement. (Stolt-Nielsen, supra, 130 S.Ct. at p. 1776.) Therefore the order denying Kinecta’s motion to dismiss class claims without prejudice must be reversed.
Slip op. at 13.
What is strange about Kinecta is that it wholly failed to consider In re D. R. Horton, Inc., 357 NLRB No. 184, 2012 WL 36274 (N.L.R.B. Jan. 3, 2012), which held that agreements precluding collective action by employees, such as arbitration clauses with class action bans, are unenforceable as a matter of federal labor law, notwithstanding the FAA and Concepcion. My assumption would have to be that the parties did not bring this case to the court's attention.
If you have not read the D.R. Horton decision, I highly recommend it, even if you don't handle employment cases. Anyone litigating the Concepcion question will find it very interesting.
UPDATE: As a clarification, the federal labor laws construed in D.R. Horton apply to many, but not all, employers. It is possible that the case was not addressed in Kinecta because the employer's operations were not covered by the National Labor Relations Act. NELA has a helpful D.R. Horton fact sheet addressing that and other questions.
Before getting back to Brinker, here is some news on the arbitration front.
As I reported last week, the U.S. Supreme Court was scheduled to consider Brown v. Ralphs Grocery Co. during its conference last Friday. Ralphs Grocery Co. v. Brown, no. 11-800.
Yesterday, the Supreme Court denied the cert. petition. Here is a link to the order list.
No further appellate review is possible. In Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011), the Court of Appeal (Second Appellate District, Division Five) held that representative PAGA claims are not subject to arbitration, even after Concepcion.
We may know as early as Monday, April 16, 2012 whether the U.S. Supreme Court will review the Court of Appeal's decision in Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011). The Court in Brown refused to compel arbitration of plaintiff's PAGA claim, notwithstanding Concepcion.
A cert. petition was filed in January 2012, after the California Supreme Court denied review. Now, the case has been distributed for conference on Friday, April 13, 2012. Ralphs Grocery Co. v. Brown, no. 11-800. The conference results are normally announced the following Monday, although it's always possible a case will be relisted.
I have reviewed the opposition to the cert. petition (pulled from Lexis) and it is very well done.
Two more cert. petitions of interest now pending in the U.S. Supreme Court:
Ticketmaster et al. v. Stearns, no. 11-983. The cert. petition was filed in February, and the case has been distributed for confernce on April 20, 2012. The defendant is attempting to obtain review of Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011), in which the Ninth Circuit reversed an order denying class certification of a UCL "fraudulent" prong claim. The cert. petition claims a split in authority between Stearns and Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023 (8th Cir. 2010) on the issue of whether Article III standing must be established for all unnamed class members in federal-court actions. (Frankly, I don't see it. If you read Stearns carefully it says that such a requirement, if there is one, was satisfied.)
Comcast Corp. v. Behrend, no. 11-864. The cert. petition was filed in January 2012 and plaintiffs elected not to file a reponse. After the case was distributed for conference, the Court ordered a response filed by April 9. The defendant is attempting to obtain review of Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011), in which the Third Circuit affirmed class certification in an antitrust case, holding: "The factual and legal underpinnings of Wal-Mart—which involved a massive discrimination class action and different sections of Rule 23—are clearly distinct from those of this case. Wal-Mart therefore neither guides nor governs the dispute before us."
In Samaniego v. Empire Today LLC, 2012 WL 1141054 (nonpub. Apr. 5, 2012), the Court of Appeal (First Appellate District, Division Three) refused to enforce an arbitration clause, finding it unconscionable under Armendariz, and flatly rejected the defendant's argument that Concepcion precluded that result:
Concepcion addresses whether the FAA preempts the Discover Bank rule. (131 S.Ct. at p. 1746.) The United States Supreme Court held that it does, because “[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” (Id. at p. 1748.) But at the same time as the Court repudiated the categorical rule in Discover Bank, it explicitly reaffirmed that the FAA “permits agreements to arbitrate to be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ [although] not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” (Id. at p. 1746; 9 U.S.C. § 2; see Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1158, fn. 4.) In short, arbitration agreements remain subject, post-Concepcion, to the unconscionability analysis employed by the trial court in this case.
Slip op. at 11-12.
The case was a putative class action (for Labor Code violations), but the arbitration clause did not appear to contain a class-action ban.
UPDATE: The unpublished opinion was ordered published on May 7, 2012. Thereafter, the California Supreme court denied review. See this update.
This is the case in which the Court of Appeal declined to enforce a no-class-action arbitration clause notwithstanding Concepcion. Sanchez v. Valencia Holding Co., LLC, 201 Cal.App.4th 74 (2011). The Court of Appeal reasoned that ordinary state-law unconscionability principles were preserved by Concepcion.
The docket in Sanchez has not yet been updated to indicate the issues on review.
UPDATE: This is the issue on review, as stated on the docket:
Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?
Thanks to the blog reader who pointed out that on Friday, the Ninth Circuit handed down another opnion interpreting Concepcion.
In Coneff v. AT&T Corp., ___ F.3d ___ (9th Cir. Mar. 16, 2012), the Ninth Circuit held that Concepcion preempted Scott v. Cingular Wireless, 161 P.3d 1000 (Wash. 2007), which is the Washington Supreme Court's equivalent to Discover Bank. Slip op. at 3145-51. (My blog post on Scott is here.)
The opinion went on to hold that Concepcion recognized the "continued vitality" of the doctrine of procedural unconscionability, and remanded for the district court to reevaluate the enforceability of the arbitration clause under this doctrine (after deciding which state's laws should apply). Slip op. at 3151-53.
Two of the opinions hail from Missouri. In Robinson v. Title Lenders, Inc., ___ S.W.3d ___ (Mo. Mar. 6, 2012), the Missouri Supreme Court held that the FAA, as interpreted in Concepcion, did not preempt general state-law unconscionability principles. The Court reversed the trial court's order compelling arbitration and remanded for further proceedings. In Brewer v. Missouri Title Loans, ___ S.W.3d ___ (Mo. Mar. 6, 2012), the Court reiterated its unconscionability holding and affirmed the lower court's order striking down the arbitration clause (which happened to include a class action ban) as unconscionable under Missouri law.
Our own Court of Appeal reached a similar conclusion several months ago in Sanchez v. Valencia Holding Co., LLC, 201 Cal.App.4th 74 (2011). (A petition for review was filed in January and remains pending in Sanchez. Here is a link to the docket. On February 23, 2012, the Supreme Court gave itself an extension of time, through April 3, to grant or deny the petition.)
In Kilgore v. KeyBank, N.A., ___ F.3d ___ (9th Cir. Mar. 7, 2012), the Ninth Circuit likewise assessed the enforceability of an arbitration clause in light of ordinary rules of unconscionability (namely, those of California as set forth in Armendariz). Slip op. at 2654-56. With great conciseness (at least when compared to the Robinson and Brewer opinions), the Ninth Circuit in Kilgore held that such rules are not preempted:
Concepcion did not overthrow the common law contract defense of unconscionability whenever an arbitration clause is involved. Rather, the Court reaffirmed that the savings clause preserves generally applicable contract defenses such as unconscionability, so long as those doctrines are not “applied in a fashion that disfavors arbitration.” Concepcion, 131 S. Ct. at 1747.
Slip op. at 2654. The court went on to hold that the particular abitration clause before it was not unconscionable. Id. at 2654-56.
The opinion's other major holding is even more noteworthy. The Ninth Circuit held that the FAA, as interpreted in Concepcion, preempts the California Supreme Court's Broughton and Cruz decisions, which held that CLRA and UCL claims seeking public injunctions are not arbitrable as a matter of public policy. Kilgore, slip op. at 2646-54.
In some respects, the issue resembles one addressed by the Court of Appeal in Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011). Brown held that a representative action brought under the Labor Code Private Attorneys General Act ("PAGA") was inarbitrable, Concepcion notwithstanding. The California Supreme Court denied review in October. A cert. petition is now pending in the U.S. Supreme Court (no. 11-880). The response to the petition is due to be filed today.
In other arbitration-related news, simultaneous supplemental briefs were filed two days ago, on March 13, 2012, in Sonic-Calabasas A, Inc. v. Moreno, S174475. That case involves an employment contract in which arbitration was substituted for a Berman hearing. The U.S. Supreme Court vacated the California Supreme Court's February 2011 opinion and ordered the matter reconsidered in light of Concepcion. See this blog post for more.
And on February 15, 2012, the Kentucky Supreme Court heard oral argument on the post-Concepcion petition for rehearing in Schnuerle v. Insight Communications Co., no. 2008-SC-000789 (to pull up the case, visit the docket search page, click on "case number," then insert year 2008 and case no. 789). In its original opinion, handed down in December 2010, the Kentucky Supreme Court struck down as unconscionable a no-class-action arbitration clause. Schnuerle v. Insight Communications Co., ___ S.W.3d ___, 2010 WL 5129850 (Ky. Dec. 16, 2010). See this blog post for more on Schnuerle.
In Ross v. RBS Citizens, N.A., ___ F.3d ___ (7th Cir. Jan. 27, 2012), the Seventh Circuit affirmed class certification of claims for unpaid overtime wages under FLSA and Illinois state law. The opinion closely analyzes Dukes.
Many thanks to the blog readers who brought these decisions to my attention.
In other arbitration-related developments, on October 31, 2011, the U.S. Supreme Court granted cert. in Sonic-Calabasas A, Inc. v. Moreno, no. 10-1450, and issued this order:
The petition for a writ of certiorari is granted. The judgment is vacated, and the case is remanded to the Supreme Court of California for further consideration in light of AT&T Mobility LLC v. Concepcion, 563 U.S. ___ (2011).
In Sonic, the California Supreme Court held (in February, pre-Concepcion) that a provision in an employment contract waiving the right to a Berman hearing in favor of arbitration was unconscionable. Sonic-Calabasas A, Inc. v. Moreno, 51 Cal.4th 659 (2011). Justice Moreno's majority opinion was joined in by Chief Justice George, Justice Kennard, and Justice Werdegar; Justices Chin, Baxter and Corrigan dissented.
With two new members on the Court, it's hard to say where this will head. The case is not a class action. Here is a link to the docket: Sonic-Calabasas A, Inc. v. Moreno, S174475.