Franco v. Athens Disposal: Court Rules on Class Arbitration Waivers

On March 10, the Second District Court of Appeal issued an interesting decision on a number of issues, including class arbitration waivers. The Court held:

1. An arbitration agreement between an employer and employee that purported to waive class arbitrations and preclude employee from acting in "a private attorney general capacity" was unconscionable and unenforceable.

2. Where the trial court erroneously found that the class arbitration waiver was enforceable, any subsequent motion for reconsideration or renewal in the trial court had no effect on the plaintiff's right to appeal that first order.

3. The trial court erred in considering the merits of plaintiff’s overtime claims in determining the enforceability of the class arbitration waiver.

4. Employees cannot waive -- and cannot be forced to waive -- the protections of California's meal and rest period laws.

5. The record did not support the trial court’s determination that the employees’ claims would be so individualized as to render class arbitration treatment significantly less effective than individual arbitrations where employer used a computer and an electronic timecard system to keep track of employees’ work hours, allegedly engaged in a systematic course of illegal practices and policies, and allegedly subjected all employees to the same unlawful conduct.

6. The arbitration agreement provision purporting to prevent the plaintiff from acting as a private attorney general impermissibly sought to nullify the Labor Code Private Attorneys General Act ("PAGA") and was unconscionable.