Rules governing the formation of class actions in both California and nationwide involve an early decision concerning whether a class can be certified. When it comes to determining class arbitration, a judge generally makes that decision unless the parties have agreed to have the arbitrator decide. In cases when an arbitration agreement is silent on class, California courts have split on if a judge or an arbitrator should decide class arbitration status.
Sandquist v. Lebo Automotive involves plaintiff Timothy Sandquist, who was allegedly forced to quit his job at a car dealership. He filed a class action against the dealership, asserting both individual and class claims of discrimination and a hostile work environment. Sandquist sought damages, injunctive relief and declaratory relief.
Sandquist had worked for Lebo Automotive for almost 10 years, and had signed an employment agreement with a provision that any “claim, dispute or controversy” would be handled “exclusively by binding arbitration.” The agreement was silent on class arbitration.
The defendants filed a motion to compel individual arbitration per the employee agreement, and the trial court granted that motion. The trial court dismissed the class claims with prejudice after the plaintiff failed to identify any dealership employee who had not signed the employment agreement.
On appeal, the Second Appellate District reversed the trial court’s decision, finding, “The question whether the parties agreed to class arbitration was for the arbitrator rather than the court to decide, and … the trial court erred by deciding that issue in this case.”
The appellate court also noted, “…the United States Supreme Court explained that, although the court has long recognized and enforced a `liberal federal policy favoring arbitration agreements’…it has made clear that there is an exception to this policy: The question whether the parties have submitted a particular dispute to arbitration, i.e., the ‘question of arbitrability,’ is `an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.’”
The California Supreme Court will now decide whether a judge or an arbitrator should decide if employees who agree to arbitrate as individuals waive their rights to class claims.
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