Severability: General Swallow all-o feasting on a French Fricassee!! William Holland, publisher. May 1799. Library of Congress.
Success with Severability: Trabert v. Consumer Portfolio Services.
In Trabert v. Consumer Portfolio Services, Inc., Case No. D065556 (4/1 March 3, 2015) (Haller, Aaron, Irion) (published), the Court of Appeal ordered the trial court (1) to vacate its order denying a motion to compel arbitration, and (2) to enter a new order severing unconscionable finality-exceptions from an arbitration agreement and granting defendant Consumer Portfolio Services, Inc.’s motion to compel arbitration. Yes, there were unconscionable provisions concerning the finality of the arbitration award, but those provisions could be deleted “without affecting the core purpose and intent of the arbitration agreement.” Score one for severability.
Setback with Severability: Securitas Security Services USA, Inc.
In Securitas Security Services USA, Inc. v. Superior Court of San Diego County (Denise Edwards real party in interest), D066873 (4/1 Feb. 27, 2015) (O’Rourke, Nares, McIntyre) (published), the Court of Appeal issued a writ of mandate directing the superior court to vacate its order that the parties proceed to arbitrate Edward’s claims, including her class action and representative claims brought under PAGA, and that the trial court enter a new order denying Securitas’s amended motion to compel arbitration.
Here, the trial court correctly ruled that CLS Transportation Los Angeles v. Iskanian rendered a PAGA waiver within the dispute resolution agreement unenforceable. However, the trial court then erred by invalidating and severing an otherwise enforceable class action waiver provision, and sending the entire complaint, including class action and PAGA claims, to arbitration.
An express nonseverability clause torpedoed Securitas’ argument for severability. “Immediately after the class action waiver, this clause provides: ‘Notwithstanding any other clause contained in this Agreement, the preceding sentence [referring to the class action waiver] shall not be severable from this Agreement in any case in which the dispute to be arbitrated is brought as a class, collective or representative action.’” Thus, the entire dispute resolution agreement was unenforceable, because the PAGA waiver was unenforceable, and because the class action waiver could not be severed from the unenforceable PAGA waiver.
Securitas must have hoped that the nonseverability clause would allow it to snuff a class, collective, or representative claim in arbitration. Here, however, the nonseverability clause seems to have back-fired, because the PAGA waiver infected the arbitration provision, and the nonseverability clause tied the fate of the waiver of class, collective or representative claims to the unenforceable PAGA waiver.