But Trial Court Was Correct That Class Arbitration Cannot Be “Inferred” From Silence On The Issue
The trial court judge denied Tenet Health Care Corporation’s motion to compel arbitration of a wage-and-hour lawsuit brought by a hospital nurse. Tenet appealed and obtained a reversal. McElroy v. Tenet Health Care Corporation, G047300 (4th Dist. Div. 3 Aug. 21, 2013) (Bedsworth, J. author 3:0) (unpublished).
The trial court identified three reasons for finding the agreement to arbitrate non-existent, each of which the Court of Appeal shot down. First, the AAA’s procedural rules were not shown to have been provided – but they were sufficiently incorporated by reference. Second, despite the employer’s right to make changes in the contract, it was not truly illusory. The covenant of good faith and fair dealing limits the unbridled exercise of power. Besides, the contract provided that the agreement could not be changed except by agreement. Third, the Court of Appeal interpreted language that the Employee Handbook is not a contract of employment as simply a disclaimer that the employee was something other than an at-will employee.
The Court of Appeal held that the claim of unconscionability simply wasn’t supported by the record. Thus, the arbitration provision was in bold type and not buried (for better or worse, the employee handbooks was not in the record.) Nor was a fee-sharing provision unduly onerous. The employee’s maximum out-of-pocket expenses for the arbitrator and administrative cost would be equal to one day’s pay for exempt employees, or eight times hourly rate for non-exempt employees.
The Court of Appeal, however, did credit the trial judge for concluding that consent to arbitrating class claims cannot be inferred from an agreement that is silent on the subject – “[t]his ruling comports with both federal and state law.” Stolt-Nielsen S.A. v. Animalfeeds International Corp., 559 U.S. 662 (2010).
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