18th Annual Workplace Class Action Report - 2022 Edition

374 Annual Workplace Class Action Litigation Report: 2022 Edition McGuire, et al. v. 99 Cents Only Stores LLC, 2021 Cal. App. Unpub. LEXIS 1356 (Cal. App. 2d Dist. March 2, 2021). Plaintiff, a retail store worker, brought a putative class action alleging violations of the California Labor Code (“CLC”) as well as a PAGA claim. Defendant moved to compel arbitration and the trial court denied the motion to compel on the basis that Defendant had waived its right to enforce the arbitration agreement by litigating the case for a 14-month period before moving to compel. Defendant’s motion to compel individual arbitration followed closely on the heels of the U.S. Supreme Court decision in Lamps Plus, Inc. v. Varela , 139 S. Ct. 1407, 2019 (“ Lamps Plus ”), which eliminated all risk that an arbitration agreement could be interpreted as a basis for class-wide arbitration under the Federal Arbitration Act (“FAA” ), an outcome Defendant had openly sought to avoid. On appeal, Defendant challenged the trial court’s determination that it had waived its right to enforce an arbitration agreement. The California Court of Appeal agreed with Defendant’s position and reversed the trial court’s order denying the motion to compel. The Court of Appeal held that the trial court erred in concluding that, by litigating the matter during the 14-month period before the Lamps Plus ruling, Defendant had waived its right to seek individual arbitration where neither the trial court’s factual findings nor the record supported the prejudice required to establish such waiver. First, the Court of Appeal determined that the record did not support a finding that Defendant’s delay was unreasonable and thus prejudicial. Further the Court of Appeal concluded that the considerable risk of class arbitration prior to Lamps Plus provided a reasonable explanation for the timing of the company’s motion, whether or not that risk rose to the level of making such a motion futile. Moreover, the trial court did not find, and nothing in the record suggested, that Defendant sought or gained any improper tactical advantage by waiting to enforce the arbitration agreement. The Court of Appeal disagreed with Plaintiff that Defendant’s desire to avoid class arbitration under an agreement the company viewed as authorizing only individual arbitration constituted an effort to gain an improper tactical advantage. It reasoned that nothing prohibits arbitration agreements covering only individual claims, and Defendant was entitled to pursue an outcome consistent with the company’s interpretation of its arbitration agreement. The Court of Appeal further concluded that the exchange of class-wide discovery and Plaintiff’s work analyzing class claims did not support a finding of prejudice. Plaintiff bore a heavy burden of proving that these efforts would not have occurred had the company moved earlier to compel arbitration. Further, Plaintiff failed to provide a record from which the trial court could have reasonably inferred how much of these efforts, if any, exceeded what Plaintiff would have done to pursue his PAGA claim – a non-arbitrable representative cause of action based on the exact same alleged conduct and CLC violations as Plaintiff’s class claims. Thus, the Court of Appeal ruled that Plaintiff’s showing below was insufficient as a matter of law to meet his burden of establishing prejudice by Defendant’s delay in pursuing individual arbitration. For these reasons, the Court of Appeal reversed the trial court’s order denying Defendant’s motion to compel arbitration. McLane, et al. v. Goplus Corp., 2021 Cal. App. Unpub. LEXIS 156 (Cal. App. 4th Dist. Jan. 12, 2021). Plaintiff, a former employee, filed a class action alleging various violations of the California Labor Law. Defendant filed a motion to compel arbitration of Plaintiff’s claims pursuant to an agreement contained in her new hire paperwork that she signed at the commencement of her employment. The trial court denied the motion. On appeal, the California Court of Appeal reversed and remanded the trial court’s ruling. The trial court had found that the parties did not form a contract because the acknowledgment was not structured like an contract and therefore Plaintiff did not agree to its terms. The trial court also ruled that, even if the parties had agreed to the terms of the acknowledgement, the agreement was unconscionable and thus unenforceable. The trial court further determined that the agreement lacked mutuality. The Court of Appeal explained that the acknowledge document was a contract between the parties because it made clear that the employee “was agreeing to the arbitration agreement by signing the acknowledgment in simple terms in a three-paragraph-long document with unambiguous contractual terms." Id . at *8. The Court of Appeal further held that the form was not "convoluted" and had "clear, conspicuous language” that Plaintiff was agreeing to the arbitration agreement and terms and conditions indicating that it was "a binding legal contract … with unmistakable contractual language." Id . The Court of Appeal opined that there was no California case law authority that supported Plaintiff’s position that an arbitration agreement was so vague as to be unenforceable. Id . at *9. For these reasons, the Court of Appeal reversed and remanded the trial court’s ruling denying Defendant’s motion to compel arbitration. Medina, et al. v. Equilon Enterprises , 2021 Cal. App. LEXIS 749 (Cal. App. 4th Dist. Sept. 10, 2021). Plaintiff filed a class action alleging violations of the California Labor Code. Defendant Shell owned gas stations and operated them through contracts with separate companies called MSO operators, one of which employed