The Details Here Make The Difference . . .
Lacayo v. Catalina Restaurant Group Inc., et al., E069833 (4/2 8/1/19) (Miller, Fields, Menetrez) provides an in-depth discussion of the appealability of orders granting individual arbitration and delegating the issue of the availability of a class action suit to an arbitrator to decide. The plaintiff, an employee, brought seven causes of action raising violations of the Labor Code and an eighth cause raising an unfair competition law (UCL) claim based on the Labor Code violations. As is often the case, the employee/employer contract included a broad arbitration clause and a class action waiver.
The trial court granted the employer's motion to compel arbitration of the employee's individual claims, refused to dismiss the class claims, leaving it to the arbitrator to decide whether class claims were subject to arbitration, denied the motion to arbitrate as to the UCL claim, and stayed the matter till arbitration was completed. Predictably, the employer appealed, arguing that the refusal to grant the motion to dismiss the class claims was appealable, and the UCL claim should have been arbitrated. The Court of Appeal dismissed the appeal as to causes of action one through seven and affirmed the order on the eighth cause of action, the UCL claim.
Here's why. The order granting the motion to compel arbitration of causes one through seven but leaving the issue of classwide arbitration for the first seven causes to the arbitrator is non-appealable. An order granting a motion to compel arbitration does not decide the merits and is interlocutory (unlike a motion denying a motion to compel arbitration). As to the issue of classwide arbitration, the employer argued that an order compelling arbitration of a putative class action is a denial of a motion to compel arbitration and is appealable, citing Lamps Plus, Inc. v. Varela, -- U.S. __ (2019). But Lamps Plus is distinguishable from Lacayo, because in Lacayo, the arbitration clause specifically delegated to the arbitrator the decision as to whether a class action would be allowed, and in Lacayo, the trial court never ordered class arbitration of a putative class action. So the trial court ruled the arbitrator will get to decide that issue, which is quite different from an order compelling a class action. And presumably, if the arbitrator whiffed it, little could be done, since mistakes of law or fact by an arbitrator are generally not appealable.
The trial court's decision that the UCL claim was not arbitrable is explained by the fact that under the heading "Claims Not Covered by the Agreement," employer and employee excluded claims requiring "immediate injunctive relief and/or other equitable relief for unfair competition . . . "
COMMENT: Interestingly, the trial judge thought thought the class action waiver was clear and enforceable but the decision about its enforceability had been delegated to the arbitrator by the parties. Sending the matter to the arbitrator is consistent with existing law. Avoiding that result would required drafting an employment agreement that does not delegate issues of arbitrability to the arbitrator, leaving it to the court to decide arbitrability, thereby creating the possibility of further appeals, lack of finality, and uncertainty. And since generally it is the employer who will draft the employment agreement (except in the case of top executives with bargaining power), it is going to be the employer who decides what issues to delegate to the arbitrator.
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