Urbino v. Orkin: Underscoring the Viability of Post-Concepcion Unconscionability Analysis

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A district court in the Central District of California has denied a motion to compel arbitration of a representative action brought pursuant to “PAGA,” the California Labor Code Private Attorneys General Act of 2004.  In Urbino v. Orkin Services of California, the Court deemed the parties’ arbitration agreement and representative action waiver unconscionable and unenforceable.  Urbino v. Orkin Services of California, Inc., No. 11-cv-6456, 2011 U.S. Dist. LEXIS 114746, *31-34 (C.D. Cal. Oct. 5, 2011) (available here).  In so ruling, the Court distinguished representative action waivers from the class action waivers enforced by the U.S. Supreme Court in Concepcion v. AT&T Mobility

The Urbino court refused to extend Concepcion to PAGA actions because of “the fundamental nature and purpose of a PAGA claim.”  Id. at *39.  PAGA cases are private actions that seek to enforce the Labor Code in the place of the California Labor and Workforce Development Agency.  Id. at *19.  Unlike the consumer claims at issue in Concepcion, which a plaintiff could pursue on an individual basis, PAGA actions must be brought as representative actions on behalf of the plaintiff and other aggrieved employees.  Id. at *41.  In other words, enforcement of a representative action waiver would leave the plaintiff with no viable PAGA claim whatsoever.  The Court’s decision to deny the motion to compel arbitration thus preserved the plaintiff’s right to pursue his PAGA action. 

In reaching this conclusion, the Court affirmed the continuing viability of a California case decided before Concepcion, Franco v. Athens Disposal Co., 171 Cal. App. 4th 1277 (2009).  In Franco, the court held that a PAGA representative action waiver was unconscionable, and thus unenforceable, because the waiver provision prevented aggrieved employees “‘from performing the core function of an attorney general.’”  Urbino, 2011 U.S. Dist. LEXIS 114746 at *35 (quoting Franco, 171 Cal. App. 4th at 1303). 

Urbino confirms the continuing viability of the unconscionability defense to representative action waivers in a post-Concepcion world.  Other California courts have also recently declined to enforce representative action waivers, despite Concepcion, perhaps signaling a positive trend in California towards permitting enforcement of employees’ rights pursuant to PAGA.  See Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489, 500 (2011) and Plows v. Rockwell Collin, Inc., No. SACV 10-01936, 2011 U.S. Dist. LEXIS 88781, *14-15 (C.D. Cal. Aug. 9, 2011).