Garrido v. Air Liquide: FAA Does Not Apply in Action by Interstate Transportation Worker; Gentry Factors Apply, and Trial Court Properly Denied Motion to Compel Individual Arbitration

In Garrido v. Air Liquide Industrial U.S. LP (10/26/15) --- Cal.App.4th ---, the plaintiff worked as a truck driver for the defendant, delivering industrial gases in California and neighboring states. He filed a putative class action alleging wage and hour violations against the defendant. The defendant moved to compel individual arbitration pursuant to arbitration agreement, which stated that it was governed by the Federal Arbitration Act (FAA).

The trial court denied the motion to compel arbitration. Analyzing the case under Gentry v. Superior Court (2007) 42 Cal.4th 443, the court held that the defendant could not enforce the agreement because doing so would prevent the plaintiff from bringing a class claim and would stand as an obstacle to his right to vindicate statutory labor rights. The defendant appealed, and the Court of Appeal affirmed, holding as follows:

Although the agreement stated that it would be governed by the FAA, the FAA did not apply here. The FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," which includes "transportation workers." As a truck driver transporting goods across state lines, the plaintiff was a "transportation worker," and the FAA did not apply.

Without the FAA, the California Arbitration Act (CAA) applied.

Although the California Supreme Court held in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, that Gentry’s rule against employment class waivers was preempted by the FAA, Gentry still controls cases where the FAA does not apply. "While Iskanian made clear that the Gentry rule is preempted by the FAA, it did not go beyond that finding. Therefore, the Gentry rule remains valid under the CAA."

Substantial evidence supported the trial court's finding that the four Gentry factors were met: the potential recovery for any individual was modest; there existed a potential for retaliation against the employees; the plaintiff testified that he did not know of his rights during his employment, and the court could infer that the same was true of the other employees; and requiring each employee to bring a separate action would create "real world obstacles to the vindication of class members’ rights..."

"In light of these determinations, the trial court correctly found that a class proceeding here would be a significantly more effective way of allowing employees to vindicate their statutory rights," and the defendant could not enforce the arbitration agreement.

The opinion is available here.