A California appeals court has ruled that it’s up to the arbitrator handling a dispute to determine if the arbitration agreement allows class-action arbitration.
Recent case: When Tim was offered a job at a car dealership, he took the offer. He signed all the new-hire documents the dealership put in front of him without reading them. These included an arbitration agreement and an acknowledgment that he was an at-will employee.
Four years later, he filed a class-action lawsuit alleging that various forms of discrimination had forced him to quit.
The trial court dismissed the lawsuit, ordered arbitration and concluded that the arbitration would not include class-action claims.
Then Tim and his former co-workers appealed. The appeals court reversed, concluding that it was up to the arbitrator to determine whether Tim could represent the class of other similarly situated employees. (Sandquist v. Lebo Automotive, No. B244412, Court of Appeal of California, 2nd Appellate District, 2014)
Final note: Before you decide that you want to use arbitration as the way to lower litigation costs and reduce litigation hassles, be sure you do it right. Don’t rely on online examples. Instead, get expert legal guidance. Your lawyer can guide you in creating a binding agreement—one that, ideally, won’t have to be litigated first through the courts before going to arbitration. After all, the idea is to reduce cost and litigation risk, not to increase it.