Konig v. U-Haul Co. of California

• Decision Date: 19 December 2006
• Docket Number: No. B190547.,B190547.
• Citation: 145 Cal.App.4th 1243,52 Cal.Rptr.3d 244
• Parties: Ron KONIG, Plaintiff and Appellant, v. U-HAUL COMPANY OF CALIFORNIA, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

52 Cal.Rptr.3d 244

145 Cal.App.4th 1243

Ron KONIG, Plaintiff and Appellant, v. U-HAUL COMPANY OF CALIFORNIA, Defendant and Respondent.

No. B190547.

Court of Appeal, Second District, Division 5.

December 19, 2006.

Law Office of Joseph Antonelli, Joseph Antonelli and Janelle Carney, West Covina, for Plaintiff and Appellant.

Fulbright & Jaworski, James R. Evans, Jr., and Joseph H. Park, Los Angeles; and Mariscal, Weeks, McIntyre & Friedlander, and Gary L. Birnbaum for Defendant and Respondent.

TURNER, P.J.

I. INTRODUCTION

This appeal raises the issue of whether a class action waiver contained in a employment agreement between plaintiff, Ron Konig, and his former employer defendant, U-Haul Company of California, is enforceable under standards set forth in Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 156-174, 30 Cal.Rptr.3d 76, 113 P.3d 1100. Plaintiff has failed to prove this action involves "predictably ... small amount of damages" per class member as is his burden under Discover Bank. We affirm the order granting defendant's motion to compel arbitration and dismissing plaintiffs class action claims.

II. BACKGROUND

On June 15, 2005, plaintiff filed a proposed class action for unpaid wages and unfair business practices against his former employer. The complaint, which contained five causes of action, alleged various violations of the Labor Code and the Business and Professions Code. The complaint alleged, among other things, defendant failed to pay its employees overtime and accrued vacation. With respect to the overtime pay, paragraph 23 of the complaint alleged: "[Defendant had a] uniform corporate policy and practice of allocating and authorizing servicing of clientele and improperly classifying that service as sales by defendant U-Haul. This corporate policy and pattern of conduct was/is accomplished with the advance knowledge and designed intent to place all service oriented duties and tasks and classify those duties as sales so as to call these members of the class, outside sales persons and classify them as exempt employees. Each and every one of the members of the class named herein who were customarily and regularly required to discharge their duties in the course and in excess of, forty hours in a week and/or eight hours in a day without the appropriate compensation." Defendant is further alleged to have falsely disseminated information among its employees that the employees were not entitled to overtime compensation under California law and defendant's policies. The complaint further alleged that the defendant did not allow its employees to take meal and rest breaks. Plaintiff sought damages on behalf of himself and defendant's similarly situated current and former employees. Plaintiff explicitly alleged his claims were typical of all other class members. At oral argument, plaintiff conceded his causes of action would be cognizable as general jurisdiction claims. That is, his own personal damage claim exceeds $25,000. (Code Civ. Proc. § 86, subd. (a)(1).)

On November 7, 2005, defendant moved to compel arbitration, to stay the action, and for dismissal of the class action claims. Defendant argued that the claims raised in the lawsuit are exclusively subject to final and binding arbitration by defendant's arbitration policy, which was acknowledged and signed by plaintiff. The arbitration policy is as follows: "The [U-Haul Arbitration Policy] applies to all ... employees, regardless of length of service or status, and covers all disputes relating to or arising out of an employee's employment with [defendant] or the termination of that employment. Examples of the types of disputes or claims covered by the [U-Haul Arbitration Policy] include, but are not limited to, claims for wrongful termination of employment, breach of contract, fraud, employment discrimination, harassment or retaliation under the Americans With Disabilities Act, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964 and its amendments, the California Fair Employment and Housing Act or any other state or local anti-discrimination laws, tort claims, wage or overtime claims or other claims under the Labor Code, or any other legal or equitable claims and causes of action recognized by local, state or federal law or regulations.... [¶] Your decision to accept employment or continue employment with [defendant] constitutes your agreement to be bound by the [U-Haul Arbitration Policy]. Likewise, [defendant] agrees to be bound by the [U-Haul Arbitration Policy]. This mutual obligation to arbitrate means that both you and [defendant] are bound to use the [U-Haul Arbitration Policy] as the only means of resolving any employment related disputes. This mutual obligation to arbitrate claims also means that both you and [defendant] forego any right either may have to a jury trial on claims relating in any way to your employment, and both you and [defendant] forego and waive any right to join or consolidate claims in arbitration with others or to make claims in arbitration as a representative or as a member of a class or in a private attorney general capacity, unless such procedures are agreed to by both you and [defendant]. No remedies that otherwise would be available to you individually or to [defendant] in a court of law, however, will be forfeited by virtue of this agreement to use and be bound by the [U-Haul Arbitration Policy]. The [U-Haul Arbitration Policy] changes the forum and process for resolving disputes, but does not change the potential legal remedies you have. [¶] The [U-Haul Arbitration Policy] shall be governed by the Federal Arbitration Act (`FAA'), 9 U.S.C. § 1 et seq. If for any reason, the FAA is deemed inapplicable, only then will the [U-Haul Arbitration Policy] be governed by the applicable state arbitration statutes. The National Rules for the Resolution of Employment Disputes of the American Arbitration Association (`AAA') in place at the time of the dispute will govern the procedures to be used in arbitration, unless you and [defendant] agree otherwise in writing."

The employee arbitration agreement was to be executed and acknowledged by each employee. The employee arbitration agreement provided in part: "I understand that final and binding arbitration will be the sole and exclusive remedy for any such claim or dispute against [defendant] ... and that, by agreeing to use arbitration to resolve my dispute, both [defendant] and I agree to forego any right we each may have had to a jury trial on issues covered by the [U-Haul Arbitration Policy], and forego any right to bring claims on a representative, class member basis, or as a private attorney general."

In support of the motion to compel, defendant argued that the arbitration agreement was enforceable under the United States Arbitration Act (9 U.S.C. § 1 et seq.) or alternatively under the California Arbitration Act. (Code Civ. Proc., § 1280 et seq.) In support of the arbitration motion, defendant presented evidence that plaintiff was hired as a general manager in April 1986 and was subsequently promoted to the position of Area Field Manager. Defendant asserted that plaintiff had "accepted the written terms" [of the U-Haul Arbitration Policy] as a "condition of his employment" in July 2003. Defendant terminated plaintiff in July 2004. Plaintiff then filed a complaint with the Department of Fair Employment and Housing in which he alleged that he was terminated for complaining about harassment and unprofessional behavior in violation of the California Fair Employment and Housing Act.

Plaintiff opposed the motion to compel arbitration on the grounds: he never executed the arbitration agreement; his alleged signature on the July 2003 document was a forgery; the standard arbitration agreement drafted by defendant is procedurally unconscionable; and the arbitration agreement is substantively unconscionable in that it prohibits class actions, lacks mutuality, and requires employees to pay fees. Plaintiff also argued that the case was controlled by Discover Bank v. Superior Court, supra, 36 Cal.4th at pages 156-174, 30 Cal.Eptr.3d 76, 113 P.3d 1100, which concluded the United States Arbitration Act did not preempt a finding that the arbitration provision is unconscionable.

In reply, defendant argued plaintiffs claims regarding his signature lacked merit. Defendant contended that, even if plaintiff did not sign the arbitration agreement, he consented to its terms by electing to accept the benefits of employment, with knowledge that it was a condition of his continued employment. Defendant further argued: California law does not favor class actions; Discover Bank did not resolve issues related to employment agreements; the arbitration agreement is not substantively unconscionable because it satisfies the requirements of Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, 103-113, 99 Cal.Rptr.2d 745, 6 P.3d 669; the arbitration agreement is mutual; and arbitration agreements are favored in California.

At the initial hearing, the trial court requested supplemental briefing on class action waivers in the employment context. In the interim, on January 19, 2006, we decided Gentry v. Superior Court (2006) 135 Cal.App.4th 944, 37 Cal.Rptr.3d 790, review granted April 26, 2006, S141502. As noted, the Supreme Court granted review of Gentry on April 26, 2006. Earlier though, on March 24, 2006, the trial court ruled that the arbitration agreement was enforceable under federal law. Citing Gentry, the trial court ruled that a class action waiver in and of itself did not render the arbitration agreement or unconscionable. The trial court found that plaintiff had failed to establish the infirmities that led to Discover Bank's conclusion that the consumer contract waiver was substantively unconscionable. Specifically, the trial court ruled plaintiff did not prove that there were predictably amounts of damages plus a...