Labor Employment Law Blog

On April 1, 2008, in Metters v. Ralphs Grocery Co., the California Appellate Court provided guidance on what constitutes an enforceable arbitration agreement.  Samuel Metters was an employee alleging racial discrimination and harassment against his employer, Ralphs Grocery.  He claimed that a resolution dispute form with a binding arbitration clause was not an enforceable contract, despite his having signed it.  The Court agreed.

Every new hire faces a mountain of paperwork from Human Resources to sign on his/her first day of employment.  A frequent consequence of this "barrage of paperwork" is that one or two documents may be overlooked and not signed by the new hire.  If one of those documents happens to be an arbitration agreement, the California Court of Appeal ruled in Mitri et al. v. Arnel Management Co. et al. that the employer may not rely on handbook language that requires the employee to sign an arbitration agreement upon hire.

On January 19, 2006, the Second Appellate District of the California Court of Appeal decided the case of Gentry v. Superior Court (January 19, 2006). The issue before the Gentry Court was whether a class action waiver in a pre-employment arbitration agreement is enforceable under California law.

On August 4, 2005, in Grafton Partners, et al. v. Superior Court, the California Supreme Court refused to uphold a predispute jury trial waiver. In reaching this decision, the Court expressly overruled Trizec Properties, Inc. v. Superior Court, 229 Cal. App. 3d 1616 (1991) which previously held that predispute jury trial waivers were permissible even in the absence of statutory authorization.

Q. Are Mandatory Employment Arbitration Agreements A Good Idea?

A RECENT COURT OF APPEAL DECISION HIGHLIGHTS THE POTENTIAL BENEFITS OF ARBITRATION

It is no secret that litigation can be time-consuming and expensive. In an effort to contain potential litigation costs, many California employers have entered into arbitration agreements with their employees in which both sides agree that a private arbitrator, rather than a public court, will resolve employment related disputes. Compared to litigation, arbitration is often (but not always) quicker and less expensive. Thus, a well-drafted and legally enforceable arbitration agreement can be a useful, resource saving tool.

In recent years courts have debated the enforceability of class action waivers in arbitration agreements. A class action waiver is a provision in an arbitration agreement that expressly prohibits arbitration on a class-wide basis. Companies have tried to defeat class action lawsuits by compelling arbitration pursuant to arbitration agreements with class action waivers. The viability of this strategy has been tested in California with mixed results. For the last several years, California courts have found various class action waivers unenforceable. More recently, however, other California courts have upheld class action waivers, including a case decided just last month. The issue is now pending before the California Supreme Court.