Labor & Employment Law

Gentry at the US Supreme Court

Circuit City Stores has filed a petition for a writ of certiorari in Circuit City Stores, Inc. v. Gentry, known previously as Gentry v. Superior Court (California Supreme Court 08/30/2007) (4-3 vote)

Briefs filed at the US Supreme Court are available at LawMemo and at SCOTUSblog.

The Court will consider the petition at its March 28 private conference, and should announce its decision (to grant or deny the petition) March 31. If the petition is granted, oral arguments will be scheduled for the fall. If denied, then the California judgment will remain undisturbed.

Facts:

Robert Gentry brought a class action suit claiming that the employer had misclassified salaried customer service managers as exempt from the overtime provisions of the California Labor Code. Because Gentry had signed an agreement to arbitrate, and the agreement contained a class action waiver, the trial court ordered arbitration on an individual basis. The California Court of Appeal affirmed; the California Supreme Court (4-3) reversed.

California Supreme Court's decision:

The California Supreme Court held that in some cases a class arbitration action waiver may be contrary to public policy.

Rather than relying on the unconscionability doctrine, the California court focused on the fact that Gentry's claim dealt with the "unwaivable" statutory right to receive overtime pay.

Circuit City Stores' petition states two "Questions Presented"

1. Whether the Federal Arbitration Act permits a court to refuse to enforce an agreement calling for individual arbitration based on state labor law policies that do not apply generally to "any contract." 9 U.S.C. § 2.
2. Whether the Federal Arbitration Act permits a state court to refuse to enforce an agreement to arbitrate based upon an unconscionability analysis "that takes its meaning precisely from the fact that a contract to arbitrate is at issue." Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987).

Gentry's reply brief argues:

1. The Supreme Court lacks jurisdiction because there is no final judgment.
2. The questions presented were not raised in the lower courts.
3. There are no conflicting decisions on the first question presented.
4. The second question is based on a mischaracterization of the California decision.

My view:

The Court should deny the petition for certiorari. Tom Goldstein at SCOTUSblog has it on his list of probable grants, but I think the Court will pass on this one.

Even if the SCt has jurisdiction, it's smarter for them to let the case go back and percolate some more. If the ultimate decision is that the class action waiver gets thrown out, then the Court can take another look at it. But that's quite a ways in the future.

Also, I don't think the California court was "picking on" arbitration. Their theory applies equally to litigation; so it's hard to see an important federal question here.

This California case has sparked a great deal of interest, mainly because the California Court split 4 to 3 on a controversial theory of state law. But the US Supreme Court is not in the business of correcting state law. The federal law question being raised is not of great significance, and the attempt to get to the US Supreme Court is really premature.

Full post as published by Arbitration Blog on March 15, 2008 (boomark / email).