Adr Update: Who Decides if There Will Be a Class? Universal Protection Service v. Superior Court
| Citation | Vol. 29 No. 4 |
| Publication year | 2015 |
| Author | By Joel M. Grossman |
By Joel M. Grossman
Joel M. Grossman is a mediator and arbitrator with JAMS in Los Angeles. He has been selected four times as one of the Top Neutrals in California by the Daily Journal. For more information please contact www.grossmanmediation.com.
California employment lawyers are very familiar with the scenario of an employee filing a lawsuit in court, the employer filing a petition to compel arbitration, and the employee vigorously opposing the petition. In an interesting twist, the employee in Universal Protection Service, L.P. v. Superior Court of San Diego County1 filed a class action claim in arbitration and the employer attempted to move the case to court, in order to obtain a ruling that the arbitration would be limited to the employee alone. The case raises the important question of who should decide—the arbitrator or the court—whether, under the terms of the arbitration agreement (assuming silence on the issue), the arbitration can proceed as a class action or whether it must be limited to the individual employee who filed the claim.
The case began when the employee filed for arbitration pursuant to the arbitration clause, which provided that "any and all disputes or claims" the parties may have against each other, with certain exceptions not relevant here, must be arbitrated. The employee's arbitration demand included eleven causes of action for violations of wage and hour laws, such as unpaid overtime and missed meal and rest breaks. The employee's arbitration demand expressly stated that she was bringing the claim on behalf of herself and others similarly situated (i.e., a class action), and that in addition to other remedies, she was seeking penalties under the Private Attorneys General Act of 2004 (PAGA).
The employer responded by filing a declaratory relief action in superior court, seeking an order that the arbitration agreement allowed only an individual claim, not a class claim, and a further ruling that the court—not an arbitrator—must determine whether or not the arbitration agreement would permit a class action. The employer further argued that under Iskanian v. CLS Transportation Los Angeles, LLC,2 the PAGA claim could only be submitted to a court.
The employee then filed a petition to compel arbitration, arguing that the parties delegated arbitrability issues to the arbitrator by incorporating the American Arbitration Association (AAA) employment rules in their arbitration agreement. The trial court granted the employee's petition to compel arbitration, and the employer filed a petition for a writ of mandate or prohibition, seeking an order from the court of appeal that the trial court vacate its order granting the motion to compel arbitration. As discussed below, the court denied the writ and held that the petition to compel arbitration was properly granted.
As discussed in an earlier article for the Law Review,3 the general rule is that "gateway issues" concerning arbitration are to be decided by the court, not the arbitrator, unless the parties' arbitration agreement shows "clear and unmistakable evidence" that the parties intended to delegate the issue to the arbitrator.4 On the question of whether an employee may bring a class action in arbitration, assuming no class action waiver and that the arbitration agreement is silent on the issue, the United States Supreme Court ruled in Stolt-Nielsen S.A. v. AnimalFeeds International Corp.5 that there could be no class action absent an indication in the agreement that the parties intended to include class actions...
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