In less than one month, the United States Supreme Court issued two decisions in favor of employers that will likely have a significant effect on employment law in California by disfavoring class action lawsuits. Class action lawsuits have long posed a risk of significant exposure to larger California employers because plaintiffs with relatively small claims frequently join together to seek a large recovery and substantial attorney’s fees.
In AT&T Mobility LLC v. Concepcion, the Supreme Court held that a provision in a commercial arbitration agreement prohibiting classwide arbitration was enforceable. The Supreme Court effectively overruled the California Supreme Court’s decision in Discover Bank v. Superior Court, which held that class action waivers in consumer arbitration agreements are “unconscionable” because individual arbitration could not substitute for the deterrent effects of class actions because such individual claims involved small amounts of damages. The Supreme Court held that federal law favoring arbitration superceded state law and permitted such class-action waivers.
In Dukes v. Walmart, the Supreme Court held that a class action lawsuit involving 1.5 million women alleging discrimination could not proceed as a class action lawsuit. The court held that the case was not suitable as a class action because the plaintiffs had not shown that the alleged discrimination was part of a “corporate-wide” policy or practice that discriminated against women. Rather, each store where the plaintiffs worked had to be sued individually because the alleged discrimination occurred at the store level.
The Concepcion case could increase the likelihood that class-action waivers in arbitration provisions in employment agreements will be enforceable, though future legislative action and state court decisions could limit Concepcion’s effect on California employment law. The Dukes decision could reduce exposure of employers to class action lawsuits by requiring that discrimination lawsuits be brought on a store-by-store basis absent evidence of a discriminatory, company-wide policy or practice. Employment class action lawsuits and arbitrations are prevalent in California. These decisions could shift the employment litigation landscape by presenting plaintiff’s counsel with additional obstacles to proceeding with class action litigation.
– – – – – – – – – – – – – – – – – – – – – – – – – –
Back to Newsletter Menu