California Supreme Court Opinion Seeks To Promote Accessible And Affordable Procedures To Resolve Wage Disputes.
I'm trying to catch up with some published opinions I failed to post on earlier this year. The most important, if only because it is a California Supreme Court opinion, is OTO, L.L.C. v. Kho, and the only benefit to my delay is that I can now provide an official reporter case citation: 8 Cal.5th 111 (2019). The majority opinion, authored by Justice Corrigan, appeared August 29, 2019. This is another case in which the court must "consider the enforceability of an agreement requiring arbitration of wage disputes."
The court granted review "to decide whether an arbitral scheme resembling civil litigation can constitute a sufficiently accessible and affordable process." But the opinion decided something less expansive, because it concluded that on the facts of this case, there was "an unusually high degree of procedural unconscionability," making it unnecessary to definitively resolve the issue for which review had been granted. Rather, here, the court concluded that the circumstances were oppressive, and the agreement to arbitrate was unconscionable.
The twist here is that the employer sought to bypass a Berman hearing by providing an arbitration procedure that included many of the aspects of a civil litigation. Whereas sometimes an arbitration procedure is viewed as unfair because it does not provide the procedural safeguards of civil litigation, here the unfairness hinged on the fact that the arbitration procedure did not provide the speed, accessibility, and affordability of a Berman proceeding, which is an administrative proceeding that is intended to provide an employee with an economic and efficient means of resolving a wage dispute.
In a lengthy and vigorous dissent, Justice Chin writes, "The majority violates these federal and state law principles by invalidating the arbitration rules to which the parties in this case agreed — even though those rules have been “carefully crafted to ensure fairness to both sides” (maj. opn., ante, 251 Cal.Rptr.3d at p. 732, 447 P.3d at p. 695) and do not make arbitration “per se unfair,” unaffordable, or inaccessible (ibid.) — because they are not, in the majority’s view, as advantageous for Kho as the Berman procedure. This conclusion is both inconsistent with California law and preempted by the FAA."
Comment: If Justice Chin's lengthy dissent demonstrates one thing, it is that California's many published opinions about mandatory pre-dispute employer/employee arbitration can make for confusing reading. I'm not going to provide a drafting solution, but only suggest that arbitration procedures that are accessible and affordable for employees, and not one-sided, should survive this decision.
Comments