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Wednesday, October 3, 2012

Reyes v. Liberman Broadcasting: Court of Appeal Reverses Order Denying Motion to Compel Arbitration

In Reyes v. Liberman Broadcasting Inc. (8/31/12) --- Cal.App.4th ---, the plaintiff worked as a security officer for the defendant, LBI. After his employment ended, he filed a putative class action and PAGA representative action alleging wage and hour violations. The trial court denied LBI's petition to compel arbitration on grounds that LBI failed to timely raise the issue. The Court of Appeal reversed.

The Court held that LBI had not waived its right to compel arbitration. Slip op. at 3-23. LBI's failure to invoke the arbitration clause sooner was not inconsistent with asserting the right to arbitrate for a number of reasons:
  1. The arbitration agreement did not authorize class arbitration. Slip op. at 4-6, citing Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. ___, (discussed here); Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506, 510 (discussed here).   
  2. Prior to AT&T Mobility LLC v. Concepcion (2011) __ U.S. __, (discussed here), California law arguably barred enforcement of the arbitration agreement because it did not authorize class arbitration.  Slip op. at 6-8. 
  3. There is a difference of opinion whether Concepcion implicitly overruled Gentry v. Superior Court (2007) 42 Cal.4th 443.  Slip op. at 8-12, citing Iskanian v. CLS Transportation Los Angeles, LLC (2012)  206 Cal.App.4th 949, review granted 9/19/12 (discussed here); but cf. Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 497 (discussed here).  
  4. Given the possibility that California law barred enforcement of the arbitration agreement, LBI did not waive its right to arbitration by not making its motion prior to Concepcion. Slip op. at 12-17; citing Quevedo v. Macy’s, Inc. (C.D.Cal. 2011) 798 F.Supp.2d 1122; In re Cal. Title Ins. Antitrust Litig. (N.D.Cal. June 27, 2011, No. 08-01341); but cf. Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832 (discussed here).  
Further, LBI had not "substantially invoked the litigation machinery," LBI moved to compel arbitration just one month after Concpecion, LBI did not file a counterclaim, and the plaintiff showed no prejudice as a result of the delay.  Slip op. at 17-23.  

Finally, the Court held that the National Labor Relations Act did not apply, finding no "congressional command in the NLRA prohibiting the enforcement of the arbitration agreement according to its terms." Slip op. at 23-25, citing Iskanian, supra.  

Given the grant of review in Iskanian, it will be very interesting to see whether the Supreme Court allows Reyes to stand, or issues a grant-and-hold order.  

The opinion is available here.  

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