Waiving Class Arbitration for Wage and Hour Class Actions

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Waiving Class Arbitration for Wage and Hour Class Actions

On August 13, 2012 in Truly Nolen of America v. Superior Court (Miranda) (California Courts of Appeal– 4th District, No. D060519), the court held that there were not enough facts to rule regarding the plaintiffs' unwaivable rights.

In Truly, two ex-employees filed a class action lawsuit against Truly Nolen of America ("Truly"), a pest control company, alleging California wage and hour law violations. Truly then filed a motion to compel arbitration of the claims pursuant to arbitration agreements. In addition, Truly asked the trial court to order the plaintiffs to arbitration on an individual basis rather than a class basis. The court granted the motion but did not order the arbitration to be based on an individual basis because it deemed that the class basis for arbitration was appropriate according to the California Supreme Court's decision in Gentry v. Superior Court. In response to this, Truly filed a writ of mandate petition, arguing that the trial court should not have relied on Gentry in determining that the class basis was appropriate because Gentry had been overruled by the U.S. Supreme Court's decision in AT&T Mobility LLC v. Concepcion. Truly added that furthermore, the Gentry factors were not applicable to this case.

On appeal, Truly's petition was granted. The ruled laid out in Gentry was when a group of employees files a class action even though there is a class arbitration waiver, and that group alleges that an employer has improperly denied overtime, the waiver will be invalid if class action arbitration would be more effective in asserting the employees' rights. Gentry then laid out a four factor test to be used in determining such cases. Concepcion then held that arbitration agreements were required to be enforced according to their terms even if a state has contrary policy reasons to not enforce it according to such terms. However, Concepcion did not explicitly rule on the class arbitration issue regarding unwaivable statutory rights. As such, the California Courts of Appeal held that Gentry was still applicable in this case, but Truly's petition was granted because the trial court's application of the Gentry factors was unsupported by the factual record.

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