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The enforcement of arbitration agreements in the employment context has been maddeningly inconsistent, with different jurisdictions creating their own requirements and rules that might render such an agreement unenforceable. Predictably, California courts were in the vanguard of invalidating employment arbitration agreements. California courts created their own rules that, among other things, largely required class action procedures to be available if a claim was to be arbitrated. Six months ago, the Supreme Court held that the Federal Arbitration Act ("FAA"), 9 U.S.C. section 2, preempts state laws that would condition arbitration agreements on the availability of class action arbitration procedures. <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2011/10/ATT-Mobility-v.-Concepcion.pdf">AT&amp;T Mobility v. Concepcion</a>.pdf, 563 U.S. ____ (April 27, 2011). This holding overturned prior holdings from California as well as other jurisdictions, and made arbitration agreements a much more attractive prospect for employers. Indeed, in the wake of Concepcion, many employers revised their arbitration agreements to contain express class action waivers. One concern arising from the Concepcion decision was how closely courts would follow it and, equally importantly, whether courts hostile to arbitration would find new means to avoid enforcing otherwise valid arbitration agreements. So far, we have seen cautious acceptance by a number of courts. Commentary on several of these decisions can be accessed under the "topics" heading to this blog. A recent case, however, represents the clearest sign that the Concepcion decision will not only result in more cases being referred to arbitration, but that they will be arbitrated on an individual basis if that is what the contract provides. In <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2011/10/Dauod-v.-Ameriprise-Financial-Services-Inc.pdf">Dauod v. Ameriprise Financial Services, Inc.pdf</a>, Inc., Case No. 8:10-cv-00302-CJC(MANx) (C.D. Cal. Oct. 12, 2011), the plaintiffs were financial advisors whose employment agreements required arbitration of disputes before the Financial Industry Regulatory Authority ("FINRA"). FINRA is the successor to the National Association of Securities Dealers, better know by the acronym "NASD." The arbitration agreement also prohibited the employee from pursuing claims on a representative basis on behalf of other employees. The Dauod case had an interesting procedural posture. One of the plaintiffs received a large loan from the employer at the outset of her employment, with a related agreement that provided for bonuses over the course of five years that could be used to retire the debt. When her employment ended less than a year later, however, the employer commenced FINRA arbitral proceedings to recover the loan amount outstanding. While that arbitration was pending, the plaintiffs filed a putative class action in court asserting violations of California's wage and hour laws. They also successfully moved to stay the FINRA proceedings, and the district court's 2010 ruling granting the stay was most likely correct under the pre-Concepcion California law. Thus, prior to Concepcion, the plaintiffs appeared to have won a procedural victory, with the arbitration stayed and the putative class action proceeding in federal court in southern California. In the wake of Concepcion, however, the defendant moved to lift the stay and for summary judgment on the class allegations. The court found that Concepcion dictated enforcement of the arbitration provisions. Rejecting the argument that Concepcion should be limited to consumer cases, the court had no difficulty in disposing of the argument that a class action waiver rendered the agreement unconscionable. It also rejected arguments relating to the California Private Attorney General Act ("PAGA") as the plaintiffs did not assert any PAGA claims. Thus, the court vacated the stay, directed arbitration on an individual (not class basis) and dismissed the case. Almost overnight, what had been a procedural victory for the plaintiffs only a year ago had become a complete victory for the employer, with arbitration compelled on an individual basis. The Bottom Line: The Concepcion decision can be used to compel arbitration of employment class action claims on an individual basis even in jurisdictions traditionally hostile to arbitration. &nbsp;

California Court Compels Arbitration of Employment Class Action on an Individual Basis