Wednesday, October 28, 2015
C.A. Rejects Class-Action Waiver in Arbitration Agreement
State Law, Not Federal, Governs in Suit by “Transportation Worker,’ Panel Says
By KENNETH OFGANG, Staff Writer
A class action waiver in an employment arbitration agreement signed by a truck driver is unenforceable because California, not federal, law applies to claims by transportation workers, the Court of Appeal for this district has ruled.
Div. Two held late Monday, on rehearing, that Los Angeles Superior Court Judge Amy Hogue was correct in denying Air Liquide Industrial U.S. LP’s motion to compel arbitration of Mario Garrido’s claims for various violations of the Labor Code.
The court’s original ruling, in an unpublished opinion, was that Garrido had forfeited his argument that Gentry v. Superior Court (2007) 42 Cal.4th 443, barring enforcement of class waivers, controlled. But the court Monday found good cause to reconsider that ruling because the issue had been thoroughly briefed in connection with the plaintiff’s request for rehearing.
Garrido was fired in January 2011. In June of the following year, he sued for denial of statutorily mandated meal periods, accurate wage statements, prompt payment of wages due upon termination of employment, and unfair business practices, and asked for class certification.
The company moved to compel arbitration, and argued that the agreement’s class action waiver was enforceable. Hogue, however, said that even under the Federal Arbitration Act, Gentry is controlling.
Presiding Justice Roger Boren, writing for the Court of Appeal, said Gentry indeed controls in Garrido’s case because §1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from coverage under the act.
The term “workers engaged in foreign or interstate commerce,” the jurist added, has been held to mean transportation workers.
Garrido, he concluded, was a “transportation worker” because his primary duties involved the delivery of gas across state lines.
“Air Liquide cites to no authority holding that a truck driver whose responsibility is to move products across state lines does not fall under section 1 of the FAA,” he wrote.
He added that “[t]he fact that Garrido transported Air Liquide’s own products (rather than those of an Air Liquide client) is of little consequence,” agreeing with the holding in International Brotherhood of Teamsters Local Union No. 50 v. Kienstra Precast, LLC (7th Cir. 2012) 702 F.3d 954 that “a trucker is a transportation worker regardless of whether he transports his employer’s goods or the goods of a third party; if he crosses state lines he is ‘actually engaged in the movement of goods in interstate commerce.’”
The agreement is, Boren went on to say, subject to the California Arbitration Act, as the defendant argued. But that act does not preclude application of Gentry, he said.
While the case was on appeal, he explained, the Supreme Court decided AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740, holding that the FAA preempted state law barring enforcement of waivers of classwide arbitration. Although Gentry was not addressed in the opinion, subsequent cases have treated Concepcion as abrogating Gentry, which had held that such waivers violated California public policy.
That policy, the presiding justice explained, can still be applied, however, when the state’s arbitration law, rather than the FAA, governs.
He also concluded that the trial judge was correct in denying arbitration entirely, rather than enforcing the arbitration clause without the waiver.
“Air Liquide moved exclusively for individual, not class arbitration, and neither party has indicated an intent or willingness to engage in class arbitration,” he noted.
Littler Mendelson’s Nancy E. Pritikin, Dominic J. Messiha, and Jennifer Tsao represented the defendant, while Robert L. Esensten and Jordan Esensten of Esensten Law represented Garrido.
The case is Garrido v. Air Liquide Industrial U.S. LP, 15 S.O.S. 5123.
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