Gentry v. Superior Court: It's Alive, It's Alive!
Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry) held that class action waiver provisions in a contract are unenforceable, and a motion to compel arbitration may be denied, where the so-called "Gentry factors" are satisfied, and it is determined that a class action is a more effective practical means of vindicating rights of affected employees than individual litigation or arbitration. In AT&T Mobility v. Concepcion, 563 U.S. 333 (2011), SCOTUS effectively invalidated Gentry in circumstances where the Federal Arbitration Act preempts state law -- typically, circumstances where interstate commerce is involved.
In Muro v. Cornerstone Staffing Solution, Inc., D070206 (4/1 2/23/18) (Dato, Benke, Aaron) (published), interstate commerce was clearly involved. The plaintiff, a trucker, sued his employer Cornerstone, a "full service employee staffing firm providing assistance to a variety of employers" in California and other states, for employment-related violations. Furthermore, the plaintiff had routes in California and across state lines. The trial court, however, determined that the FAA did not apply, that Gentry did apply, and that the class action waiver was unenforceable.
Why? Section 1 of the FAA expressly exempts from its coverage all "'contracts of employment . . . of workers engaged in foreign or interstate commerce.'" Rejecting the employer's argument that the employers' business must be devoted to the transportation industry, the Court of Appeal held that the plaintiff was a worker was engaged in interstate commerce. Because the FAA did not apply, the Court applied state law, i.e., Gentry, to affirm the trial court's order denying a motion to compel arbitration.
COMMENT: Regarding the application of the Gentry factors, an abuse of discretion standard of review applies. As a refresher, the four Gentry factors are: (1) the modest size of potential individual recovery; (2) potential for retaliation against members of the class; (3) the fact absent members of the class may be ill informed of their rights; and (4) other real world obstacles to the vindication of class members' rights through individual arbitration.
While the result in this particular case may seem dramatic, the circumstances are a bit unusual, because it will not be the usual case that, when interstate commerce is involved, the FAA does not apply.
Comments