Happy Friday. Today is the one year anniversary of AT&T Mobility LLC v. Concepcion, 563 U.S.___ (2011), in which SCOTUS overruled the Cal Supremes' decision in Discover Bank v. Superior Court (2005) 36 Cal. 4th 148. SCOTUS held that Discover Bank, which provided a roadmap for avoiding contractual arbitration, was preempted by the Federal Arbitration Act, 9 U. S. C. §1, et seq.
The name of this blog is not “CalArbNews.com.” But it sure seems that way sometimes. Because for the past year, many trial courts and Courts of Appeal have sought to answer this question: "Supremacy Clause? What Supremacy Clause? Do we really have to do what that darned SCOTUS says? Can't we come up with new ways to avoid arbitration? " And CBL has posted on the ongoing struggle here, here, here and here, among other places.
In honor of the one-year birthday of Concepcion, here are some of the most recent developments:
Thomas v. Westlake (March 23, 2012) ___ Cal.App.4th___(4th Dist. No. D058531): Plaintiff brought churning claims against four financial advisors and two insurance companies, who sought binding arbitration under agreement only the advisors had signed. The trial court denied a motion to compel arbitration under Code of Civil Procedure §1281.2, subd. (c), which provides that a court can deny a petition for arbitration when there is a risk of conflicting rulings as to parties and non-parties to the arbitration agreement. But the Court of Appeal reversed on the ground that everybody was a party to the arbitration contract, even the two who hadn't signed. Why? Because the plaintiff had alleged – as every plaintiff does in every case in California – that all of the defendants were agents of all the other defendants. As agents of signatories to the arbitration agreement, they were bound. And having alleged the agency in his complaint, the plaintiff was estopped to deny it.
Peleg v. Neiman Marcus Group, Inc. (April 12, 2012) ___ Cal.App.4th ___ (2nd Dist. No. B231634): In this employment case, there was a binding arbitration agreement that the employer could amend, modify, or revoke on thirty days notice. The Court of Appeal held that this meant that the agreement was illusory, and therefore unenforceable, since
. . . the employer could amend the contract in anticipation of a specific claim, altering the arbitration process to the employee's detriment and making it more likely the employer would prevail. The employer could also terminate the arbitration contract altogether, opting for a judicial forum if that seemed beneficial to the company.
Kinecta Alternative Financial Aolutions, Inc.v. Superior Court, County of Los Angeles (April 25, 2012) ___Cal.App.4th___ (2nd Dist. Nos. B235491 and B236084): Also an employment case. The Court of Appeal upheld an arbitration agreement. However, since the agreement was silent on the subject of class actions, the trial court should have dismissed the class action allegations without prejudice when it compelled arbitration. The practical effect, of course, is to eliminate class actions for those bound by this agreement, since the employee who arbitrates his or her claim to judgment will no longer qualify as a class representative.
But here's the most intriguing one: Last year, CBL reported on Sanchez v. Valencia Holding Company, LLC (2011) ___Cal.App.4th___ (2nd Dist., B228027), in which the Court of Appeal threw out the arbtration contract used by every new car automobile dealer in the State of California. The Cal Supremes have now granted a hearing. We'll be monitoring this one carefully, and will keep you posted.