18th Annual Workplace Class Action Report - 2022 Edition

214 Annual Workplace Class Action Litigation Report: 2022 Edition unconscionable under California law and therefore unenforceable. Id . at *12. First, the Court found that Plaintiff failed to dispute the existence of any essential element of a valid contract under California law, and Defendant had offered sufficient evidence and analysis in support of each element. The Court therefore held that the parties entered into a valid contract. Defendant also argued that the MAA clearly and unmistakably delegated arbitrability of "all" other arbitrability issues, including waiver, scope, and validity, and thus the Court should not reach the merits of Plaintiff’s other argument. The Court agreed. It explained that the determination of whether an arbitration clause is valid, applicable, and enforceable was reserved to the District Court unless "the parties clearly and unmistakably provided otherwise," such as by delegating the issue of arbitrability to arbitration. Id . at *23. The Court determined that where, as here, an arbitration provision explicitly referred arbitrability questions to an arbitrator, the parties clearly and unmistakably delegated the arbitrability question to the arbitrator. Id . at *25-26. For these reason, the Court granted the motion to compel arbitration of Plaintiff’s Labor Code claims. Finally, the Court noted that Plaintiff also asserted a single, representative claim under the Private Attorney General Act (“PAGA”). The parties agreed that the MAA’s representative action waiver was invalid to the extent it applied to Plaintiff’s PAGA claim. Id . at *28. The Court thus severed the PAGA claim, granted the motion to compel Plaintiff’s wage & hour claims to arbitration, and dismissed the action. Martinez-Gonzalez, et al. v. Elkhorn Packing Co ., 2021 U.S. App. LEXIS 32724 (9th Cir. Nov. 3, 2021). Plaintiff, a farm laborer, filed a class action alleging that Defendant failed to pay all wages due in violation of the California Labor Code. The District Court previously had denied Defendant’s motion to compel arbitration based on an agreement included in Plaintiff’s new hire employment paperwork. On appeal, the Ninth Circuit reversed and remanded the District Court’s order. The District Court had held that the arbitration agreements resulted from undue influence and economic duress, thereby making the agreements invalid and unenforceable. The Ninth Circuit explained that under California law, the doctrine of economic duress included “threatened use of civil process; threats which are a breach of the duty of good faith and fair dealing under a contract with the recipient; threats which would harm the recipient without significantly benefitting the party making the threat; or threats where what is threatened is otherwise a use of power for illegitimate ends." Id . at *11. Plaintiff contended that Defendant committed a wrongful act by asking him to sign the arbitration agreement after he made the journey from Mexico to California, where he was dependent on Defendant for housing and had already started harvesting lettuce. The Ninth Circuit held that economic duress did not render the arbitration agreements unenforceable because Defendant did not commit a wrongful act and reasonable alternatives were available. The Ninth Circuit reasoned that while the circumstances surrounding the signing of the agreements were not ideal, they did not constitute a "wrongful act" under California law. Id . The Ninth Circuit also opined that since there was no threat of termination or an express statement that the agreements were mandatory, it was clearly erroneous for the District Court to conclude that Plaintiff lacked a reasonable alternative. Id . at *12. In addition, the Ninth Circuit examined whether the doctrine of "undue influence" applied. The Ninth Circuit concluded that Plaintiff failed to establish undue influence because he was not subjected to oppressive conditions under California law where the timing and place of the orientation did not show that he lacked free will, Defendant did not deny Plaintiff time to consult with attorneys, and it did not demand Plaintiff to sign the document. Thus, the Ninth Circuit held that given the totality of the circumstances, the District Court clearly erred in finding undue influence. Id . at *4. For these reasons, the Ninth Circuit reversed and remanded the District Court’s ruling. Morgan, et al. v. Sundance, Inc., 992 F.3d 711 (8th Cir. 2021). Plaintiff filed a collective action alleging that Defendant failed to pay overtime compensation in violation of the FLSA. Defendant moved to dismiss the complaint, arguing that under the "first-to-file" rule, a similar lawsuit filed in Michigan barred the lawsuit. The District Court denied the motion to dismiss. Defendant thereafter filed an answer to the complaint and participated in a failed mediation in the Michigan case. Defendant thereafter filed a motion to compel arbitration after eight months, and the District Court denied the motion. It concluded that Defendant’s active participation in the litigation waived its right to arbitration. On appeal, the Eighth Circuit reversed and remanded the District Court’s ruling. The Eighth Circuit explained that a party is deemed to waive its right to arbitration if it: "(i) knew of an existing right to arbitration; (ii) acted inconsistently with that right; and (iii) prejudiced the other party by these inconsistent acts." Id . at 713-14. The Eighth Circuit reasoned that in applying the three factors to this case, Defendant did not waive its right to arbitration. The Eighth Circuit opined that Defendant did not dispute its knowledge of an existing right to arbitration, and thus met the first prong of the test. However, the Eighth Circuit rejected the District Court’s contentions that the eight month delay equated to Defendant acting inconsistently