Cases & Deals

Applied Medical Resources' arbitration agreement enforceability affirmed on appeal

Clients Applied Medical Resources Corporation

Jones Day obtained a significant victory for client Applied Medical Resources Corporation ("AMRC") in a putative wage and hour class arbitration alleging claims for violation of California's Labor Code, obtaining a published opinion confirming the enforceability of an arbitration agreement between Applied Medical and the plaintiff, an AMRC employee.

Plaintiff sought to allege a panoply of statutory claims for violation of California's Labor Code, UCL, and the Private Attorney General Act ("PAGA") on an individual, class, and representative basis on behalf of thousands of current and former employees of AMRC. In response to the class action complaint, AMRC brought a motion to compel individual arbitration based on an arbitration clause contained in the plaintiff's employment application, requested that class claims be dismissed under the U.S. Supreme Court's decision in Stolt-Nielsen and California cases that have since followed Stolt-Nielsen, and a stay of the representative PAGA claim pending resolution of the arbitration. Superior Court Civil Complex division Judge Robert J. Moss, granted AMRC's motion to compel individual arbitration in its entirety, dismissed the class claims, and stayed the PAGA claim.

Plaintiff appealed the enforceability of the arbitration agreement and, in particular, the conscionability of its provisions. On appeal, the California Court of Appeal, Fourth District, Division Three, rejected plaintiff's arguments that the arbitration agreement in which he entered was unconscionable, affirming the Superior Court's ruling. Although the appellate court acknowledged the agreement had a low degree of procedural unconscionability, the court was not persuaded that the agreement was substantively unconscionable and, therefore, unenforceable. Accordingly, the appellate court affirmed the enforceability of the parties' arbitration agreement. The court also remanded the question of who decides whether the arbitration may proceed on a class or individual basis for a decision from the arbitrator based on the recent California Supreme Court decision in Sandquist v. Lebo Automotive, Inc., which opinion had been issued while the instant case had been pending appeal.

Nguyen v. Applied Medical Resources Corp., Case No. 30-2014-00748050 (Super. Ct. Orange Cty.); Case No. G052207 (Cal. App.); Case No. 73 460 00056 14 (AAA)

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