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LEWIS v. 24 HOUR FITNESS USA, INC., B227869. (2011)

Court: Court of Appeals of California Number: incaco20111103053 Visitors: 2
Filed: Nov. 03, 2011
Latest Update: Nov. 03, 2011
Summary: NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS TURNER, P. J. Defendant, 24 Hour Fitness USA, Inc., appeals from a September 20, 2010 order denying its motion to compel arbitration. Defendant sought to compel arbitration after plaintiffs and the proposed class representatives, Kevin Lewis, Amanda Nguyen, Shane Nicol and Fareh Zoberi, brought a class action seeking recovery of unpaid overtime compensation. Defendant's motion to compel arbitration was denied after the trial court found that the clas
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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

TURNER, P. J.

Defendant, 24 Hour Fitness USA, Inc., appeals from a September 20, 2010 order denying its motion to compel arbitration. Defendant sought to compel arbitration after plaintiffs and the proposed class representatives, Kevin Lewis, Amanda Nguyen, Shane Nicol and Fareh Zoberi, brought a class action seeking recovery of unpaid overtime compensation. Defendant's motion to compel arbitration was denied after the trial court found that the class action waiver in the arbitration agreements was unenforceable as against public policy under Gentry v. Superior Court (2007) 42 Cal.4th 443, 453-473 and Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 158-174, overruled on other grounds in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___, ___-___ [131 S.Ct. 1740, 1746-1753]. Defense counsel agreed that if the class action waiver was found unconscionable, defendant would prefer that plaintiffs' claims be litigated in court. We reverse the order refusing to enforce the class action waiver provision in the arbitration agreements.

The sole evidence presented by the proposed class representatives, plaintiffs, were virtually identical declarations which state: they were provided with the employee handbook, which contains the arbitration provisions, without comment or an opportunity to negotiate; they were not advised they could consult with an attorney; they had no legal training; and they earn modest incomes. On appeal, defendant argues that plaintiff presented no evidence of substantive unconscionability such as to permit the class action waiver to be set aside under Gentry and Discover Bank. Other then vague factually unsupported allusions concerning plaintiffs' potential financial recoveries, we agree that they have failed to present any evidence that class action waiver provision is substantively unconscionable.

Plaintiffs had the burden of proof on the unconscionability issue. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972; Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1156.) We review the record for substantial evidence of substantive unconscionability. (Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 820-821; Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App.4th 494, 502.) In Gentry, our Supreme Court identified substantive unconscionability principles that must be litigated in the trial court: "[T]he trial court must consider . . .: the modest size of the potential individual recovery, the potential for retaliation against members of the class, the fact that absent members of the class may be ill informed about their rights, and other real world obstacles to the vindication of class members' right to overtime pay through individual arbitration. If it concludes, based on these factors, that a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws for the employees alleged to be affected by the employer's violations, it must invalidate the class arbitration waiver to ensure that these employees can `vindicate [their] unwaivable rights in an arbitration forum."' (Gentry v. Superior Court, supra, 42 Cal.4th at p. 463; see Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1077.)

As noted, plaintiffs' declarations only briefly address some of the circumstances of the execution of their employment agreements. No declaration discusses the substantive unconscionability factors identified by our Supreme Court in Gentry. No declaration demonstrated any potential individual recovery was modest to the degree that pursuit of a personal claim would interfere with any of plaintiffs' statutory rights. Thus, in the presence of this complete failure of proof, there is no substantial evidence the class action waiver language was substantively unconscionable.

There is no merit to plaintiffs' forfeiture analysis. Plaintiffs assert that defendant has forfeited its right to challenge the class action waiver ruling. Defense counsel stated that if the trial court invalidated the class action waiver, defendant would prefer to have the matter litigated in the court. Plaintiffs reason that defendant therefore agreed to the denial of its motion to compel arbitration. We disagree. The validity of defendant's class action waiver language was expressly litigated. There is nothing unfair about permitting defendant to assert its right to individual arbitration of plaintiffs' claims. (JRS Products, Inc. v. Matsushita Electric Corp. of America (2004) 115 Cal.App.4th 168, 178; Woodward Park Homeowners Assn., Inc. v. City of Fresno (2007) 150 Cal.App.4th 683, 712.) Agreements of this sort, where the trial court is not misled, do not bar a party from litigating an issue on appeal. (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 212-213; Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403.) No forfeiture occurred. We need not address: the parties' preemption contentions; the arguments as to the trial court's stated reasons for refusing to enforce the arbitration agreements; and the arbitrability of any individual cause of action as plaintiffs never raised this precise issue here or in the trial court. (Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 681; Tutti Mangia Italian Grill, Inc. v. American Textile Maintenance Co. (2011) 197 Cal.App.4th 733, 740.)

The order under review is reversed. Defendant, 24 Hour Fitness USA, Inc., shall recover its costs on appeal from plaintiffs, Kevin Lewis, Amanda Nguyen, Shane Nicol and Fareh Zoberi.

KRIEGLER, J. and KUMAR, J.*, concurs.

FootNotes


* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Source:  Leagle

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