Employment Client Alert: 9th Circuit Upholds Arbitration Provision Despite Delay

In Richards v. Ernst & Young, LLP, No. 11-17530, published December 9, 2013 (Richards), the Ninth Circuit Court of Appeals held the district court erroneously denied Ernst & Young, LLP’s (Ernst & Young) motion to compel arbitration. Ernst & Young filed a motion to compel plaintiff Michelle Richards to arbitration following the U.S. Supreme Court decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) (Concepcion), which upheld the enforceability of class arbitration waivers in California.

The trial court concluded Ernst & Young waived its right to arbitration by failing to assert that right as a defense with regard to two other employees whose claims were consolidated with Richards’ claim. On appeal, plaintiff argued that the trial court properly denied the motion compelling arbitration because it had ruled on the merits of certain claims prior to the filing of Ernst & Young’s motion to compel arbitration. The trial court previously dismissed plaintiff’s claim for failure to provide meal periods and rest breaks without prejudice and disallowed her claim for injunctive relief for lack of standing. Nevertheless, the Ninth Circuit rejected plaintiff’s argument, concluding that the disposition of these claims did not equate to analysis of the merits of the case.

The court also rejected plaintiff’s argument that her costs incurred during discovery constituted prejudice. Finally, while the Court refused to consider plaintiff’s argument on appeal that a National Labor Relations Board case, D.R. Horton, 357 N.L.R.B. No. 184, 2012 WL 36274 (Jan. 3, 2012), supported the district judge’s ruling, the court noted the overwhelming majority of district courts had declined to follow this decision.

Richards upholds the binding nature of arbitration agreements and reinforces the rationale of Concepcion. Namely, courts will enforce arbitration provisions like other contract provisions.

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December 17, 2013