Kinecta Alternative Financial Solutions, Inc. v. Superior Court
205 Cal. App. 4th 506
| Cal. Ct. App. | 2012Background
- Malone signed an arbitration agreement limiting disputes to bilateral arbitration between Malone and Kinecta; the agreement did not reference class arbitration.
- Malone filed a class action alleging wage-and-hour violations, rest/meal breaks, and wage statements against Kinecta and Navicert.
- Kinecta moved to compel arbitration for Malone’s individual claims and to dismiss the class claims; the trial court ordered arbitration but kept class claims.
- The court’s order effectively compelled class arbitration despite the provision’s silence on class actions and its bilateral focus.
- The central dispute is whether the FAA requires or allows class arbitration where the arbitration clause is silent on that issue, and whether Discover Bank/Gentry analysis applies post-Concepcion.
- This California Supreme Court proceeding reviews whether to reverse the trial court’s denial of Kinecta’s motion to dismiss class claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FAA preempt state-law limitations on class arbitration? | Malone relies on Discover Bank and Gentry. | Kinecta argues FAA preempts Discover Bank rulings. | FAA governs; Concepcion preempts Discover Bank rule. |
| Did the arbitration agreement authorize class arbitration? | Malone contends class arbitration is necessary to vindicate rights. | Arbitration limited to Malone and Kinecta; no class arbitration. | Arbitration provision did not authorize class arbitration. |
| Should class claims have been dismissed under Stolt-Nielsen/Concepcion? | Malone claims class arbitration could be required. | No contractual basis for class arbitration. | No, not authorized; reversal of order to dismiss class claims. |
| What standard governs review of an order to compel arbitration in this context? | N/A | N/A | De novo review of arbitration clause enforceability. |
| Does incorporating CCP §382 or pleading rules authorize class actions in arbitration? | Arbitration clause incorporates pleading rules. | Incorporation does not authorize class actions. | No, CCP §382 not incorporated; no class arbitration. |
Key Cases Cited
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (unconscionable class waivers in consumer contracts under Discover Bank rule)
- Gentry v. Superior Court, 42 Cal.4th 443 (Cal. 2007) (four-factor test for class arbitration under wage/overtime rights)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Sup. Ct. 2011) (FAA preempts Discover Bank rule; class arbitration is not required by FAA)
- Stolt-Nielsen v. AnimalFeeds Intl. Corp., 559 U.S. 662 (Sup. Ct. 2010) (cannot compel class arbitration absent explicit agreement; silent clauses not presumed to authorize)
- Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (Cal. Ct. App. 2011) (Gentry factors survive Discover Bank changes; remains guiding authority in CA)