A California appeals court has ruled that if an arbitration agreement doesn’t say whether class-action arbitration is allowed, then it isn’t.
Recent case: When Kim went to work for a California credit union, she signed a document acknowledging that she was an at-will employee and agreeing to arbitrate any employment disputes instead of taking them to court.
Then Kim filed a class-action lawsuit, alleging that the credit union violated California wage-and-hour laws by failing to pay overtime and by not allowing required breaks and rest periods. She sued on behalf of all similarly situated employees.
The credit union asked the court to send her case to arbitration, as she had agreed, and to dismiss the class-action claims. A lower court sent the case to arbitration as a class action.
The credit union appealed, pointing out that nothing in the arbitration agreement mentioned class actions. The agreement specified that it applied only to Kim’s claims.
The appeals court agreed that the case should be in arbitration, but said it should not be a class action. (Kinecta Alternative Financial Solutions, v. Superior Court, et al., No. B235491, Court of Appeal of California, 2nd Appellate District, 2012)
Final note: If you use arbitration agreements, ask your attorney to review them in light of this case. Remember, arbitration agreements are contracts. That means they should be written by legal experts who have the latest knowledge about what is allowed and what is not.