Paul W. Cane Jr.

Cane is the only defense lawyer who is both a fellow of the College of Labor and Employment Lawyers and a member of the California Academy of Appellate Lawyers. He is known for helping establish significant precedents that affect much of state employment law.

A key case last year went to the state’s highest court. It involved a mandatory arbitration agreement of a former Forever 21 Inc. worker who accused the clothing retailer of race and sex harassment. The worker’s suit turned on the enforceability of a pre-dispute agreement. Baltazar v. Forever 21 Inc., 62 Cal. 4th 1237 (Cal. Sup. Ct. March 28, 2016).

“The state Supreme Court overruled prior unfavorable cases that had been cited against our clients for years,” Cane said. It put to rest several arguments that litigants had advanced to avoid arbitration agreements. First, the justices rejected the contention that an agreement has to attach a set of rules, like those of JAMS or the American Arbitration Association. Several prior court of appeal cases became obsolete, or are at least limited to those with unusual facts, Cane said.

Second, the high court overruled Trivedi v. Curexo, which had held that there is something improper about providing in an arbitration agreement the right to seek temporary injunctive relief from a court before the arbitration takes place. Third, the justices took a more nuanced approach to the question of procedural unconscionability than had been the outcome of previous cases. The court focused on whether there was deception, surprise or unfair practices, not merely whether a pre-dispute arbitration agreement was or was not negotiable. “‘I don’t have a choice’ is not enough to avoid an arbitration agreement,” Cane said.

Looking beyond Baltazar, Cane said that with contract formation issues largely resolved, “The battleground now moves to certain categories of statutory claims, especially Private Attorney General Act or PAGA claims and unfair competition law claims and claims alleging class actions. In class actions — what if you have an arbitration agreement that doesn’t mention class actions? Is it a question for a court or for an arbitrator?”

The answer is in dispute. “The state Supreme Court in Sandquist [v. Lebo Automotive Inc., 1 Cal.5th 233 (2016)] said it’s a question for an arbitrator. But federal courts of appeal have ruled differently, though the 9th Circuit has yet to weigh in. That issue will go to the U.S. Supreme Court,” Cane said. “We have several other cases on the ‘who decides’ issue. My fearless prediction is that the U.S. Supreme Court will reverse Sandquist and leave the gateway to arbitrability to the courts.”

— John Roemer