Jul. 19 2012

Another California Court Rejects D.R. Horton

Topics: Arbitration Agreements, Class Actions, Court Decisions

Yesterday, in Nelsen v. Legacy Partners, another California court followed the lead of the recent decision in Iskanian v. CLS, enforcing an employment arbitration agreement notwithstanding that it precluded class wide relief for alleged wage and hour violations.  Interestingly, the agreement at issue in Nelsen was silent on whether class claims could be pursued in arbitration.  However, following Supreme Court precedent (Stolt-Nielsen), the Nelsen court held that because arbitration is a matter of contract, a party cannot be required to arbitrate claims it has not expressly agreed to arbitrate.  Silence on the issue of class claims could not be interpreted as the employer's express agreement to arbitrate class claims.  As a result, the court held that Nelsen had to pursue her claims individually in arbitration. 

The court also rejected the employee's argument that the implicit class waiver was unconscionable under California law (Gentry).  The court refused to decide whether Gentry is preempted by Concepcion, instead finding that even if Gentry is still good law, the employee made no factual showing as to why the class waiver would be found unconscionable under the factors set forth by the California Supreme Court in Gentry.  The court also rejected the employee's argument that the implicit class waiver was unenforceable under the NLRB's decision in D.R. Horton.  The court essentially rejected the NLRB's analysis and further found that the NLRA did not even apply to Nelsen because she was a supervisor. 

Finally, the court rejected Nelsen's argument that her claim for injunctive relief under Business and Professions Code section 17200 was exempt from arbitration.  The court held that Concepcion makes clear that the FAA preempts laws that exempt certain claims from arbitration.  The Nelsen v. Legacy Partners decision is available here.

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About the Editor

Robin Largent represents employers, including major food and retail companies, in all types of employment litigation: wrongful termination, retaliation, breach of contract, wage and hour (California Labor Code) and unfair competition. She also regularly counsels and advises California employers on issues of compliance with California and federal employment laws.
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