Plaintiff, who was a trash truck driver for Athens Disposal Company, Inc., filed a class action against the company alleging violations of the Labor Code. Plaintiff asserted the following causes of action against Athens:
- Failing to pay overtime.
- Failing to provide meal periods and to pay an additional hour of compensation per workday to employees who missed a meal period.
- Failing to provide rest periods and to pay an additional hour of compensation per workday to employees who missed a rest period.
- Failing to provide necessary payroll information to employees and failing to maintain records on each employee showing all hours worked and all meal periods taken.
- Civil penalties authorized by the Private Attorneys General Act of 2004 (PAGA) for violating the Labor Code.
- Violation of the California Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.).
Immediately after the lawsuit was filed, Athens filed a petition to compel arbitration based on a written agreement with plaintiff. The arbitration agreement contained a provision waiving class arbitrations and also precluded an employee from acting in “a private attorney general capacity,” which would bar plaintiff’s enforcement of the Labor Code on behalf of other employees.
The court held that the entire arbitration agreement was not enforceable:
We conclude that the class arbitration waiver is unconscionable with respect to the alleged violations of the meal and rest period laws given “the modest size of the potential individual recovery, the potential for retaliation against members of the class, [and] the fact that absent members of the class may be ill informed about their rights.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 463 (Gentry).) In addition, because the arbitration agreement prevents plaintiff from acting as a private attorney general, it conflicts with the Labor Code Private Attorneys General Act of 2004 (PAGA) (§§ 2698–2699.5) — an act that furthers Gentry’s goal of comprehensively enforcing state labor laws through statutory sanctions (see Gentry, supra, 42 Cal.4th at pp. 462–463).
The court noted that the class action waiver in the arbitration agreement by itself was unenforceable, which may have been severed from the arbitration agreement. However, when coupled with the employee’s waiver of action as a private attorney general, the entire agreement was unenforceable.
The case, Franco v. Athens Disposal Company, Inc., can be downloaded for a short period of time from the court’s website in PDF or Word.