Claims — continued from Page 12
statutory rights, and that Plaintiff ’s rights under the CLRA (Consumer Legal Remedies Act, Cal. Civil Code § 1750) and UCL (Unfair Competition Law, Cal. Bus. & Prof. Code section 17200, et seq ) – the basis for his argument that he is entitled to broad injunctive relief – are state rights.” The distinction was based upon yet another AT&T case, Kaltwasser v. AT&T Mobility LLC, No. 07-411, 2011 U.S. Dist. LEXIS 106783, 2011 WL 4381748, at *5 (N.D. Cal. Sept. 20, 2011), in which the court observed that “it is not clear that Green Tree’s solicitude for the vindication of rights applies to rights arising under state law.” Nevertheless, the Court quoted
Kaltwasser at some length in narrowing the scope of Green Tree after Concepcion in holding that “‘If the Concepcion majority had intended to allow for the plaintiffs to avoid class-action waivers by offering evi- dence about particular costs of proof they would face – essentially applying the underlying rationale of Discover Bank without relying on Discover Bank as a rule – one would expect it to have drawn attention to such a significant point in response to the dissent.’ Of course, it did not do so.” It based the decision, in part, upon the practical determination that “it is simply unworkable for ‘every court evaluating a motion to compel arbitra- tion’ to ‘have to make a fact-specific com- parison of the potential value of a plain- tiff ’s award with the potential cost of proving the plaintiff[’]s case.’ District courts should not be faced with disputes over experts’ qualifications, methodology, and rates at the motion to compel stage of litigation.” (Citing and quoting Kaltwasser, and citing Moses H. Cone Mem’l Hosp., 460 U.S. at 22 (discussing “Congress’s clear intent, in the Arbitration Act, to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possi- ble”). The Court then approvingly observed that “These considerations led Judge Fogel [in Kaltwasser] to conclude: ‘If Green Tree has any continuing applica- bility [post-Concepcion] it must be con- fined to circumstances in which a plain- tiff argues that costs specific to the
14 — The Advocate Magazine JANUARY 2012
arbitration process, such as filing fees and arbitrator’s fees, prevent her from vindicating her claims . . . Concepcion forecloses plaintiffs from objecting to class-action waivers in arbitration agree- ments on the basis that the potential cost of proving a claim exceed potential individual damages.’” • Employment agreements after Concepcion While much of the recent FAA law is
being crafted on the back of cases against AT&T Mobility, the principles of Concepcion have been applied outside the context of cellular phone service con- tracts. In the employment contract con- text, Concepcion has been likewise held to mean what it says. For example, in Lewis v. UBS
Financial Services Inc., No. 10-04867 SBA, 2011 U.S. Dist. LEXIS 116433 (N.D. Cal. Sept. 30, 2011), plaintiff argued that “notwithstanding Concepcion, arbitration cannot be compelled based on the California Supreme Court’s decision in Gentry.” In Gentry, the California Supreme Court extended the Discover Bank rule to the employment context and held that class-action waivers in employ- ee arbitration agreements may be unen- forceable in certain circumstances. (Id. at 463.) Gentry counsels that in assessing the enforceability of a class action waiver, the court should consider: (1) the size of plaintiff ’s potential recovery; (2) the potential for retaliation against members of a class; (3) whether there is a signifi- cant risk that class members are ill- informed about their rights; and (4) whether other real world obstacles would prevent the vindication of class members’ rights through individual arbitration. (Ibid.)
Plaintiff acknowledged Concepcion
but urged that it applied only to con- sumer contracts, not employment con- tracts. The court disagreed, holding that “the Supreme Court made it clear that ‘[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The con- flicting rule is displaced by the FAA.’ (Concepcion, 131 S.Ct. at 1747.) Like Discover Bank, Gentry advances a rule of
enforceability that applies specifically to arbitration provisions, as opposed to a general rule of contract interpretation. As such, Concepcion effectively overrules Gentry.” On this point, Lewis collects a series of other Northern District opin- ions, and one Central District opinion arising out of a consumer contract for the provision of DIRECTV service, Murphy v. DIRECTV, No. 07-6465, 2011 U.S. Dist. LEXIS 87625, 2011 WL 3319574, at *4 (C.D. Cal. Aug. 2, 2011). • Public injunctive relief and Private Attorney General Act (PAGA) claims after Concepcion Plaintiffs have also sought to avoid
arbitration after Concepcion based upon the Broughton/Cruz line of cases which hold that claims seeking public injunctive relief cannot be arbitrated in the context of the CLRA and UCL. (Broughton v. Cigna Healthplans of Calif. (1999) 21 Cal.4th 1066, 1079-80 CLRA); Cruz v. PacifiCare Health Sys., Inc. (2003) 30 Cal.4th 303 (UCL).) Illustrative of the likely result in future cases – even if only because it does not involve cellular phone contracts or AT&T – is the Hendricks decision discussed above. And as with other challenges after Concepcion, the Broughton/Cruz principles have like- wise been held to have been overruled by Concepcion. For its analysis, Hendricks relies on the analysis in a case against T- Mobile (i.e. not AT&T) – Arellano v. T- Mobile USA, Inc., No. C 10-5663 WHA, 2011 U.S. Dist. LEXIS 52142, 2011 WL 1842712 (N.D. Cal. May 16, 2011). While Arellano also finds that
Concepcion forecloses the argument that an arbitration agreement is void because small claims might be prohibitively expensive to pursue on an individual basis, Hendricks relies upon Arellano for the conclusion that the prohibition on injunctive relief in arbitration for CLRA and UCL claims is unenforceable “at least for actions in federal court.” Hendricks then concludes that, like the conclusion in Arellano, after Concepcion injunctive relief cannot be preserved from arbitration because “[s]tates cannot require a procedure that is inconsistent
See Claims, Page 16
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