Plows v. Rockwell Collins: Defendant Waived Arbitration by Litigating, Concepcion Inapplicable to PAGA, and Gentry Still Good Law

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With the issuance of its opinion in Plows v. Rockwell Collins, the Central District has added to the list of cases circumscribing the application of the U.S. Supreme Court’s Concepcion v. AT&T, articulating a doctrine of waiver that is likely applicable to many defendants that have suddenly moved for arbitration following the April 27, 2011 issuance of Concepcion; underscoring the California Court of Appeal’s holding in Brown v. Ralphs Grocery Co. that Concepcion is inapplicable to representative actions brought pursuant to PAGA (the Labor Code Private Attorney General Act of 2004); and holding that Gentry v. Superior Court remains good law.  See Plows v. Rockwell Collins, Inc., No. SACV-10-1936 DOC, 2011 U.S. Dist. LEXIS 88781 (C.D. Cal. Aug. 9, 2011) (available here).

In finding that Rockwell Collins had waived any entitlement to arbitration, Central District Judge David O. Carter found that the defendant had behaved in a manner “inconsistent with a demand for arbitration” by availing itself of the court system with venue transfer and removal motions, propounding discovery, participating in meeting and scheduling conferences, and waiting to move to compel arbitration until nearly 13 months after the case was filed, just a matter of days after Concepcion was issued.  Plows at *6.

Additionally, Judge Carter denied the defendant’s motion to compel arbitration as to PAGA claims, citing to the Court of Appeal’s Brown v. Ralphs decision concerning precisely the same issue:

The California Court of Appeals, in Brown, comprehensively and persuasively discussed the reasons why class action waivers contained in arbitration agreements may not be used to divest plaintiffs of their right to bring representative actions under PAGA.  Specifically, the Court of Appeals emphasized that “the purpose of the PAGA is not to recover damages or restitution, but to create a means of ‘deputizing’ citizens as private attorneys general to enforce the labor code.”

Plows at * 14-15, quoting Brown v. Ralphs, 197 Cal. App. 4th at 501.

Finally, Plows distinguished Gentry v. Superior Court (which establishes a four-factor test for determining whether mandatory arbitration provisions are unenforceable in employment contracts) from Discover Bank v. Superior Court (which governed arbitration clauses in consumer contracts and was expressly overruled by Concepcion).  Plows, relying on Brown v. Ralphs, notes that, in contrast to Discover Bank, Gentry’s focus is on unwaivable rights, and that the Supreme Court expressly limited itself to overruling Discover Bank.  Again lauding Brown v. Ralphs as being “persuasive” (Plows at *13), Judge Carter ruled that the plaintiff would be permitted to conduct discovery precisely directed at establishing whether the at-issue employment agreement and arbitration clause are enforceable under Gentry.