Authored by Gena Usenheimer

In a decision that is becoming more and more commonplace, last week the Central District of California enforced a class action waiver in an arbitration agreement, rejecting the panoply of arguments raised by the plaintiff in opposition.

In Appelbaum v. AutoNation, Inc., et al., the plaintiff sought to representative a putative class of service technicians and mechanics in a suit alleging the defendants failed to comply with California’s wage and hour and meal break laws.  In its April 8, 2014 decision, the Central District granted the defendants’ motion to compel arbitration on an individual basis.  Among other dubious arguments raised by the plaintiff, the Court rejected the contention that the Federal Arbitration Act did not govern the agreement as well as plaintiff’s argument that the arbitration agreement was so unconscionable as to be unenforceable under California law.  Dedicating much of its analysis to this unconscionability argument, the Court ultimately found that the substantive terms of this particular agreement were not so one-sided or unfair as to “shock the conscience” or to otherwise render the agreement unenforceable.   Notably, the Court found California PAGA claims are subject to arbitration on an individual basis and declined to follow D.R. Horton, expressly rejecting the argument that the National Labor Relations Act or Norris-LaGuardia Act preclude enforcement of class action waivers.

Thus, while employers utilizing class action waivers in arbitration agreements may still face scrutiny, particularly before the National Labor Relations Board, Appelbaum makes clear that the growing trend in the federal courts is to enforce them.

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