Paul W. Cane Jr.

The U.S. Supreme Court’s pro-arbitration, anti-class action decision in May in Epic Systems Corp. v. Lewis shook the employment law field and will have far-reaching effects in fields as diverse as independent contractor law and even the #MeToo movement, said Cane, co-chair of Paul Hastings’ appellate practice group.

“Much of our work involves pre-dispute arbitration, and that work looks to increase,” Cane said. “Epic will mean more arbitration agreements will be enforced, because the high court has removed a principal argument plaintiffs have made — that the National Labor Relations Act trumps the Federal Arbitration Act. The justices found no inconsistency.”

California courts were coming around to the same conclusion, Cane said, as in a recent case in which he represented E. & J. Gallo Winery in a potential wage and hour class action brought by Refugio Arreguin, hired by a labor contractor to work in a Gallo wine warehouse in Sonoma County. “The trial court refused to enforce the arbitration agreement Mr. Arreguin signed,” Cane said. “It didn’t care for aspects of the drafting.”

That didn’t matter to the court of appeal panel that reversed in favor of Cane’s client, despite the parties’ unequal bargaining power in the signing of the contract. “We agree that the arbitration agreement was procedurally unconscionable but find no substantive unconscionability, and so reverse the order denying appellants’ motions to compel arbitration,” the panel wrote in March. Arreguin v. E. & J. Gallo Winery, A145553 (Cal. App. 1st Dist. March 28, 2018).

“The court held that ambiguous positions in a contract are to be resolved in favor of the agreement,” Cane said. “The justices agreed with our position that arbitration agreements are to be construed in favor of enforceability.”

In April, the state Supreme Court issued its landmark Dynamex decision, restricting employers’ use of independent contractors by setting a standard presuming that all workers are employees.

“That was an earthquake,” Cane said. “Employers will be wise to use individual arbitration agreements to foreclose class actions by independent contractors.” Dynamex Operations West Inc. v. Superior Court of Los Angeles County, 230 Cal.App.4th 718 (Cal. 2018).

Cane foresees an upcoming clash as states, responding to the #MeToo movement against sexual harassment, pass laws that ban arbitration as a matter of public policy when such claims arise.

New York and Washington have done so; California may follow suit. “We’re gearing up to argue in favor of federal preemption of such laws,” Cane said. “Our position is that arbitration cannot be prohibited for certain categories of claims.”

Clients want to know where the law is going to go, so Cane is in the forecasting business. “Dynamex and #MeToo are instances in which arbitration will protect employer rights,” he said.

— John Roemer