California Labor and Employment Defense Blog

First California Court Pushes Back Against AT&T Mobility v. Concepcion -- Brown v. Ralphs Grocery Company

The U.S. Supreme Court decision in AT&T Mobility v. Concepcion held that the Federal Arbitration Act preempts California's rule against waiving class action rights in consumer arbitration contracts.  As we previously posted, if the reasoning of Concepcion were extended to the arbitration of employment claims it would overrule a vast body of well settled California law.   

It was thus inevitable that California state courts would begin pushing back on this federal takeover of state contract and arbitration law.  And Brown v. Ralphs Grocery Company may be the first shot in that campaign.  

Brown ducks the big issue of whether Concepcion effective overruled the California Supreme Court's decision in Gentry v. Superior Court, which generally prohibits class action waivers in employment arbitrations.  But Brown nevertheless creates a firebreak against the spread of the Concepcion rule to the employment context.  It did this by holding that Concepcion does not allow the enforcement of an arbitration provision that waives the right of an employee to pursue a representative action on behalf of similarly situated employees under the Labor Code Private Attorney General Act, or "PAGA."  

What is significant about the Brown Court's analysis, however, is that it utterly ignores the policy concerns stated in Concepcion regarding the need to enforce arbitration agreements exactly as written.  Instead, it bases its conclusion on the public policies favoring the enforcement of PAGA on a representative basis.  As the Court explained:

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. Here, the relief is in large part for the benefit of the general public rather than the party bringing the action.  And, a representative action has significant institutional advantages over a single claimant arbitration. The representative action is a means for public enforcement of the labor laws. Thus, assuming it is authorized, a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.  That plaintiff and other employees might be able to bring individual claims for Labor Code violations in separate arbitrations does not serve the purpose of the PAGA, even if an individual claim has collateral estoppel effects.  Other employees would still have to assert their claims in individual proceedings. In short, representative actions under the PAGA do not conflict with the purposes of the FAA. If the FAA preempted state law as to the unenforceability of the PAGA rep-resentative action waivers, the benefits of private attorney general actions to enforce state labor laws would, in large part, be nullified.

All of this policy analysis is equally applicable to non-PAGA class actions.  Indeed, this is almost the identical reasoning employed by the California Supreme Court in Gentry.   Thus, notwithstanding its stated reservation of the issue, Brown has to be read as a strongly suggesting that Gentry is still good law in California and that Concepcion should be limited as closely as possible to its facts -- i.e., as applying only in the consumer context.

Trackbacks (0) Links to blogs that reference this article Trackback URL
Comments (0) Read through and enter the discussion with the form at the end
Van Vleck Turner & Zaller LLP, 6310 South San Vicente, Ste. 430, Los Angeles, California 90048

Phone: 323.592.3505 | Fax: 323.592.3506