In Lane v. Francis Capital Management, ___ Cal.App.4th ___ (March 11, 2014), the California Court of Appeal (Second Appellate District, Division Four) reversed the order of the Los Angeles County Superior Court (Judge Kahn) denying defendant’s motion to compel arbitration.
Plaintiff filed an action against defendant employer in state court alleging wrongful termination and numerous wage and hour violations. Defendant moved to compel arbitration pursuant to Code of Civil Procedure sections 1281.1 et seq., arguing that the parties had entered into a binding agreement to arbitrate all employment-related disputes. The court denied the motion, finding that Labor Code Section 229 – which precludes enforcement of arbitration agreements concerning claims for unpaid wages – barred enforcement of the agreement (as least as it pertained to plaintiff’s wage and hour claims) and was not preempted by the Federal Arbitration Act (“FAA”). In addition, the court agreed with plaintiff that the arbitration agreement was both procedurally and substantively unconscionable because plaintiff was not provided a copy of the arbitration rules and the agreement contained no express right to discovery.
The appellate court disagreed, finding that Labor Code Section 229 applied to only one of plaintiff’s claims. The court determined that Section 229 applies only when a plaintiff is seeking unpaid wages under Labor Code Sections 200 through 244, and plaintiff asserted only one claim for unpaid wages within those sections. The court further determined that the arbitration agreement was not unconscionable, either procedurally or substantively. Although plaintiff was not provided with a copy of the arbitration rules, they were incorporated by reference and were available on the Internet, and plaintiff did not claim that he was unable to obtain a copy of them. Additionally, because the incorporated rules gave the arbitrator the authority to order full discovery, the court disagreed that plaintiff was not afforded an express right to discovery.