Brown v. Ralphs Grocery Co.
197 Cal. App. 4th 489
Cal. Ct. App.2011Background
- Brown; plaintiff, Terri Brown, asserts Labor Code violations and PAGA penalties against Ralphs Grocery Co. and The Kroger Co.;
- Defendants petition to compel arbitration based on an arbitration agreement in Brown’s employment application/policy;
- Arbitration policy prohibits class actions and representative actions on behalf of others;
- Trial court found procedural unconscionability and substantive unconscionability due to class action and PAGA waivers;
- AT&T Mobility LLC v. Concepcion prompted post-decision briefing on FAA preemption and PAGA implications;
- Court remands to determine severability or enforceability of the arbitration agreement as a whole
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gentry requires a factual showing to invalidate a class action waiver | Brown argues four-factor Gentry analysis supports invalidity | Ralphs/Kroger contends Brown failed to provide substantial evidence | No substantial evidence; class action waiver not invalidated on these facts |
| Whether AT&T preemption applies to the PAGA representative action waiver | Brown urges AT&T preempts California rule, invalidating PAGA waiver | Ralphs/Kroger argue AT&T does not apply to PAGA; waiver remains | AT&T preemption does not apply to PAGA; PAGA waiver not unenforceable on this basis |
| Whether the PAGA waiver should be severed from the arbitration agreement | Sever the PAGA waiver and enforce arbitration; or void entire agreement | Severance or enforceability should be determined by trial court | Remanded to determine severability and enforceability of rest of the agreement |
Key Cases Cited
- Gentry v. Superior Court, 42 Cal.4th 443 (Cal. 2007) (four-factor test to invalidate class action waivers; substantial evidence required)
- Franco v. Athens Disposal Co., Inc., 171 Cal.App.4th 1277 (Cal. Ct. App. 2009) (PAGA and class action waivers; enforceability under state law vs. FAA considerations)
- AT&T Mobility LLC v. Concepcion, 563 U.S._131 S.Ct. 1740 (U.S. 2011) (FAA preempts Discover Bank rule on consumer class action waivers; implications for PAGA)
- Arias v. Superior Court, 46 Cal.4th 969 (Cal. 2009) (PAGA enforcement as public law enforcement; distinct from private class action)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (arb. agreement severability; unconscionability considerations)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (California rule on class-action waivers in consumer contracts; later preempted by FAA in AT&T)