Morris v. Ernst & Young, LLP update

For those of you who recognized that the Ninth Circuit got it 100% right when it found in Morris v. Ernst & Young, LLP (9th Cir. Aug. 22, 2016) that an arbitration agreement that precludes collective actions violates rights protected by the NLRA, you may wish to know where things stand with that case on further appeal.  Right now, Morris is before the U.S. Supreme Court on a Petition for Writ of Certiorari.  Here is the Docket report:

  • Sep 8 2016:  Petition for a writ of certiorari filed. (Response due October 11, 2016)
  • Sep 21 2016:  Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for petitioners.
  • Sep 29 2016:  Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for respondents
  • Oct 3 2016: Brief amici curiae of National Association of Manufacturers, et al. filed. VIDED.
  • Oct 3 2016: Brief amicus curiae of Chamber of Commerce of the United States filed.
  • Oct 6 2016: Order extending time to file response to petition to and including November 14, 2016.
  • Oct 7 2016: Brief amicus curiae of International Association of Defense Counsel filed.
  • Oct 10 2016: Brief amicus curiae of Atlantic Legal Foundation filed.
  • Oct 11 2016: Brief amicus curiae of The Employers Group filed.
  • Oct 11 2016: Brief amicus curiae of The Retail Litigation Center, Inc. filed.
  • Oct 11 2016: Brief amicus curiae of The Business Roundtable filed.
  • Oct 11 2016: Brief amicus curiae of New England Legal Foundation filed.
  • Nov 15 2016: Order further extending time to file response to petition to and including November 21, 2016.
  • Nov 21 2016: Brief of respondents Stephen Morris, et al. in opposition filed.

Just look at those busy amicus filers.  I bet all those employers are telling the Supreme Court that the world would end in fire and death if they couldn't block class actions for wage and hour violations with arbitration agreements that employees have to sign to work.

Second Appellate District concludes that Gentry remains good law, despite Concepcion

While it may not last much longer than it takes the ink to dry on the opinion, the Court of Appeal (Second Appellate District, Division One), in Franco v. Arakenian Enterprises, Inc. (November 26, 2012) considered a significant question: "The question on appeal is whether Gentry was overruled by Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. ___ [130 S.Ct. 1758] (Stolt-Nielsen) and AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___ [131 S.Ct. 1740] (Concepcion)."  Slip op., at 3.  Summarizing a 65-page opinion, the Court said:

We conclude that Gentry remains good law because, as required by Concepcion, it does not establish a categorical rule against class action waivers but, instead, sets forth several factors to be applied on a case-by-case basis to determine whether a class action waiver precludes employees from vindicating their statutory rights. And, as required by Stolt-Nielsen, when a class action waiver is unenforceable under Gentry, the plaintiff's claims must be adjudicated in court, where the plaintiff may file a putative class action. Accordingly, we affirm.

Slip op., at 3.

The decision follows an earlier opinion in the matter, Franco v. Athens Disposal Co., Inc., 171 Cal. App. 4th 1277 (2009) (Franco I).  That procedural and factual history is extensive, and I won't summarize it.  The opinion also contains a footnote indicating that it invited comment on D.R. Horton, but because Franco did not respond to the request, the Court declined to address the impact of that matter.

 The decision also has an exhaustive review of arbitration decisions in the context of statutory claims.  After that history, the Court examined the reach of the Concepcion.  An extended portion of the Court's analysis cited approvingly to a law review analysis: Gilles & Friedman, After Class: Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion (2012) 79 U.Chi. L.Rev. 623.

Ultimately, after looking at the Question Presented in Concepcion, the Court concluded that, in this case, Franco lacked the means, not the incentive, to pursue his claims.  That distinction, the Court held, justified the trial court's decision to deny the petition to compel arbitration.

Then, tucked right into the end of the opinion, the Court offered a monumental observation that would have had great significance if the Court had considered D.R. Horton:

Which brings us to the subject of Concepcion's effect, if any, on PAGA claims. We have already concluded that Athens Services's arbitration agreement — the MAP — contains two unenforceable clauses: the class action waiver and the prohibition on acting as an attorney general. (See Franco I, supra, 171 Cal.App.4th at pp. 1297–1300, 1303; fn. 2, ante.) Those clauses operate independently of each other: One restricts Franco‘s pursuit of his rest and meal period claims while the other prohibits his recovery under the PAGA. Together, they render the MAP tainted with illegality, making it unenforceable and permitting Franco to adjudicate his claims in a judicial forum. (See Franco I, at p. 1303; fn. 2, ante.) Concepcion does not preclude a court from declaring an arbitration agreement unenforceable if the agreement is permeated by an unlawful purpose.

Slip op., at 64.  See that?!  Right there?!  This Court gets it!  If you impose a contract that violates the law (e.g., the NLRA), then the contract is unenforcable in Court on the general ground of illegality.  Any contract that violates the NLRA, not just arbitration agreements, is void and unenforceable.  How hard is this, really?  And here we finally see a Court clearly articulate the illegality defense analysis, but the Court declined to address the NLRA argument because one of the parties was too busy to answer.  Wonderful.

Of course, this case may vanish for years when it gets sucked up into the California Supreme Court's Gentry re-examination.

California Supreme Court grants review in Iskanian v. CLS Transportation of Los Angeles

Hot off the presses, or, more correctly, hot off the e-mail case activity notifcation system, the California Supreme Court has granted the Petition for Review in Iskanian v. CLS Transportation of Los Angeles, Supreme Court Case No. S204032.  Letters in support of a Petition aren't listed on the docket, but I sent in a letter in support of review, focused on the proliferation of poor analysis related to the NLRB's D.R. Horton decision.

NLRB issues decision in D.R. Horton protecting employees from arbitration agreements barring class actions

Fairly hot off the presses, we have the National Labor Relations Board's decision in D.R. Horton, Inc.  The decision addresses, among other things, whether a mandatory arbitration agreement that bars class or collective actions violates certain employee rights under the National Labor Relations Act.  Hint: it does.  Very important for certain wage & hour cases.

Full disclosure: I contributed an amicus brief in response to the NLRB's invitation for such briefs, as noted in footnote 1.

Brown v. Ralphs Grocery Company decided, but dodges the Gentry-Concepcion issue and the NLRA prohibition on concerted activity bans

The Court of Appeal (Second Appellate District, Division Five) issued its opinion today in Brown v. Ralphs Grocery Company (July 12, 2011).  The opinion is notable for what it doesn't address.  As mentioned previously here, the Court had requested supplemental briefing on the issue of whether Concepcion dished out the Discover Bank treatment to Gentry v. Superior Court (2007) 42 Cal.4th 443.  After a few feverish days of writing an amicus brief (for CAOC) focused primarily on the fact that the National Labor Relations Act prohibits enforcement of any contract that would impede concerted activity by employees (including class actions to improve wages and working conditions), I was disappointed to see that the Court dodged the entire question, deciding the matter on the ground that a factual showing had not been made in the trial court to support the Gentry factors.  There is also a split decision discussion of how PAGA claims interact with motions to compel arbitration.

On balance, this non-opinion doesn't do much to answer the question of how Concepcion interacts with wage & hour class actions and the Gentry decision.  It will take another appellate vehicle to properly present those questions for review.

Concepcion has no application in many employment cases

About a week ago, on behalf of Consumer Attorneys of California ("CAOC"), I filed an amicus curiae brief in support of the plaintiff in Brown v. Ralphs Grocery Company.  In Brown, after oral argument, the Court of Appeal requested supplemental briefs on the question of whether AT&T Mobility LLC v. Concepcion (April 27, 2011) precludes the Gentry v. Superior Court (2007) 42 Cal.4th 443 defense to certain arbitration agreements.  After determining that the parties had not already addressed the issues, CAOC presented several bases for rejecting the contention that Concepcion overruled Gentry, including the fact that a bar on class actions violates the National Labor Relations Act's protection of concerted action by employees to improve their wages and working conditions.  You can view the brief viat the Spiro Moss website here.

Other attorneys at Spiro Moss contributed to the brief, including Dennis F. Moss (who conceived of the argument involving the NLRA), Gregory N. Karasik, and J. Mark Moore.  David M. Arbogast of Arbogast & Berns LLP also contributed to CAOC's brief.