Friday, October 21, 2011
C.A. Rules Employment Claims Against Retailer Should Be Arbitrated
By a MetNews Staff Writer
The Court of Appeal for this district yesterday ruled that a putative class action on behalf of current and former California employees of the fast fashion chain Forever 21 for alleged Labor Code violations should be submitted to arbitration, pursuant to the terms of a written agreement between the retailer and its workers.
Div. Five, in an unpublished decision, directed Los Angeles Superior Court Judge John P. Shook to reverse his order denying Forever 21’s motion to compel arbitration after remittitur is issued.
The arbitration agreements at issue—which had been signed by former Forever 21 employees Robin Cunningham, Heather Florez and Eric Corona—provided that they agreed to have any dispute arising out of “claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination” submitted to arbitration.
It further provides that “the parties shall bear equally all fees and costs of arbitration, including the Arbitrator’s fee, except that Employee’s share of such fees and costs of arbitration shall not exceed the then-current total filing fee and costs in any court in which Employee could have filed suit.”
Cunningham, Florez and Corona sued Forever 21 last December for regular and minimum overtime wages owed; meal period and rest period wages; meal and split shift premiums; conversion of wages; unjust enrichment; unfair business practices; and failure to keep accurate records.
Forever 21 later filed a motion to compel arbitration, and Shook heard oral arguments in March.
At the conclusion of the hearing, Shook said he thought “this arbitration agreement is a bit one-sided,” and he noted that it “doesn’t provide for all of the types of relief that would otherwise be available in court, to wit, the statutory rights for attorney fees that are mandatory in these types of labor cases.”
Shook also said he did not “see any great prejudice to the Forever 21 Company being in court or going to arbitration,” and then denied the motion.
Writing yesterday for the appellate court, Presiding Justice Paul Turner noted initially that there was “no evidence that an unfair or oppressive process led to the execution of the agreements by plaintiffs,” and that Shook had found no procedural unconscionability factors barred enforcement of the arbitration agreements.
He reasoned that “[t]he sole ground for the denial of the petition to compel arbitration arises from what we, with respect, believe was a misconstruction by the trial court of the contractual language….”
Turner said Shook had “failed to use appropriate contract construction principles” in interpreting the arbitration agreement at issue. He noted that the agreement explicitly states that it not “be construed to waive any right, that either party is prohibited from waiving under applicable law.”
Using “ordinary state-law principles of contract construction,” which require all the provisions of an agreement be considered together so as to give effect to each provision, and that a contract be construed to give it a lawful intent, Turner said the agreement does not limit statutorily guaranteed remedies such as punitive damages or attorney fees.
The justice also concluded the agreement’s provision regarding provisional remedies “applies equally to both parties,” so it was not “one-sided,” and added that “[c]onsideration of whether the parties would be prejudiced by nonenforcement of an agreement to arbitrate is not a proper basis for refusing to enforce an arbitration clause.”
Turner was joined in his decision by Justice Sandy R. Kriegler and Los Angeles Superior Court Judge Sanjay Kumar, who was sitting on the appellate court by assignment.
Cunningham was represented by Daniel W. Dunbar of the Law Office of Daniel W. Dunbar and Evan D. Buxner of The Buxner Law Firm.
Nancy L. Abell, Deborah S. Weiser and Ji Hae Kim of Paul Hastings were counsel for Forever 21.
The case is Cunningham v. Forever 21, Inc., B232071
Copyright 2011, Metropolitan News Company