(Reuters) – A trio of cases before the California Supreme Court will clarify how it will apply a recent U.S. Supreme Court decision limiting class action arbitration to employment contracts.
The three cases ask the state’s high court to interpret the U.S. Supreme Court’s 2011 ruling in AT&T Mobility v. Concepcion, which found that the Federal Arbitration Act pre-empted a California state law prohibiting “unconscionable” contracts. The ruling has been used by companies to enforce their arbitration clauses with consumers and, to a lesser extent, with employees.
In Sonic-Calabasas A Inc v. Frank Moreno, Wisdom v. AccentCare Inc and Iskanian v. CLS Transportation, California’s Supreme Court is tackling how the ruling affects arbitration agreements used by the state’s employers, including those that prevent employees from bringing class actions.
The first case, Sonic-Calabasas, was argued in early April. The court will address whether mandatory arbitration agreements can preclude employees from taking wage disputes to a state labor commissioner. A ruling could come at any time.
If the court rules narrowly in Sonic-Calabasas, it could use Wisdom – a case brought by a group of on-call staffing coordinators for the home healthcare company AccentCare – as a vehicle to decide whether Concepcion supplants previous state court rulings on whether a contract is so unconscionable that it can be voided. In Wisdom, the court will decide whether a clause that job applicants initialed agreeing to the binding arbitration of all disputes was unenforceable because the process was not mutual.
In Iskanian, the third case, a collective wage-and-hour claim brought by Arshavir Iskanian against a transportation and limousine service, the court will decide if California courts can deem employment agreements requiring arbitration to be unenforceable under the state’s Private Attorney General Act and federal labor laws that protect concerted action.
By Amanda Becker