California Courts of Appeal
California courts continue to uphold trial courts who deny petitions to compel arbitration, confirming their role in maintaining access to the courts for workers. Courts are even more hostile to class action waivers, which cause employees to give up substantial rights for no benefit at all. In this case, the court found that an arbitration and class action waiver provision were both exempt from the Federal Arbitration Act, and were therefore subject to California law. Applying our Supreme Court’s precedent, the arbitration was properly denied and the class action waiver was properly deemed unenforceable.MURO v. CORNERSTONE STAFFING SOLUTIONS, INC.
MURO DROVE TRUCKS THROUGHOUT THE WESTERN STATES
Plaintiff Muro was a truck driver for Defendant/Appellant Cornerstone Staffing Solutions. Cornerstone provided employees for its employer-clients, specializing in transportation and logistics.
MURO SIGNED AN ARBITRATION AGREEMENT AND CLASS ACTION WAIVER, BUT BROUGHT HIS CLAIMS IN SUPERIOR COURT ANYWAY
As a condition of his employment, Muro signed an arbitration agreement. That agreement stated that it was governed “solely by the Federal Arbitration Act,” and that it would proceed under the rules of the American Arbitration Association. The agreement also provided for a waiver of the right to proceed with or participate in a class action.
Nonetheless, Muro filed a putative wage and hour class action with the Superior Court. Cornerstone petitioned to compel arbitration.
THE FAA DID NOT APPLY
The Court of Appeals upheld the trial court’s denial of the petition. Even though the agreement specifically referenced the Federal Arbitration Act, and even though Muro was engaged in interstate commerce – which the FAA specifically holds is within its purview – the court found that “transportation workers” fell within a specific FAA exemption.
Section 1 of the FAA specifically exempts from its coverage all “contracts of employment of seamen, railroad employees,” and, as pertinent here, “any other class of workers engaged in foreign or interstate commerce,” which the United States Supreme Court has interpreted to mean “transportation workers.” This has consistently been held to include truck drivers who cross state lines. This was sufficient to find that the FAA did not apply, and the court then analyzed the contract under California law.
THE CLASS ACTION WAIVER AND THE ARBITRATION AGREEMENT WERE UNENFORCEABLE
California applies a four part test to determine if a class action waiver is enforceable. The party opposing the clause must show (1) the modest size of the potential recover for the individual, (2) potential for retaliation against members of the class, (3) absent
CONCLUSION: Trial courts that deny petitions to arbitrate and class action waivers will be upheld by the appellate courts. The four factor test shown above indicates that the class action mechanism is preferable for promoting the rights of California workers.
CELA INVOLVEMENT: CELA member Jamie Serb helped litigate this matter, along with the Turley & Mara Law Firm
Ca. Ct. App., Fourth District, Division 1. Filed 2/23/18. Opinion by Judge Dato. 20 Cal.App.5th 784
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