NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

MANELLA, J.

Respondent Stephanie Rabb Mahmud brought suit against her former employer Ralphs Grocery Company (Ralphs) on behalf of herself and other persons similarly situated, alleging that Ralphs violated provisions of the state Labor Code requiring employers to provide employees meal breaks, to allow rest periods, to pay for unused accrued vacation time upon termination, and to pay all wages owed upon termination. The complaint also included an action for unfair competition. Ralphs petitioned to compel arbitration, presenting evidence of an arbitration agreement signed by Mahmud which contained a class action waiver. The trial court denied the petition, applying Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry), which permits invalidation of contractual class action waivers in certain circumstances. The trial court found the class action waiver unenforceable because there was no practical way to vindicate the potential claimants' statutory rights outside of class litigation due to the large number of claimants with relatively small claims. Ralphs appeals, contending that Gentry has been substantially undermined by the United States Supreme Court's decisions in Preston v. Ferrer (2007) 552 U.S. 346 and Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) ___ U.S. ___ [130 S.Ct. 1758] (Stolt-Nielsen). Ralphs further contends that substantial evidence did not support the trial court's order. We conclude otherwise and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In support of its petition to compel, Ralphs presented evidence that Mahmud became employed by Ralphs in December 2007. In February 2008, Mahmoud completed and signed an agreement entitled "Employment Application." The agreement contained a "Mandatory Final & Binding Arbitration" provision, which stated that Ralphs'"Dispute Resolution Program [and] Mediation and Binding Arbitration Policy" was incorporated and that the policy "applies to any employment-related disputes that exist or arise between Employees and [Ralphs] (as defined in the Policy) that would constitute cognizable claims or causes of action in a court or government agency under applicable law including individual statutory claims or disputes (`Covered Disputes')," and "requires that any Employee who wishes to initiate or participate in formal proceedings to resolve any Covered Disputes must submit the claims or disputes to final and binding arbitration in accordance with the Policy."1 Ralphs also submitted its multi-page "Mediation & Binding Arbitration Policy," which stated that "this Arbitration Policy is the exclusive mechanism for formal resolution of disputes and awards of relief that otherwise would be available to Employees or [Ralphs] in a court of law or equity or in an administrative agency." The arbitration policy further stated: "[T]here is no right or authority for any Covered Disputes to be heard or arbitrated on a class action basis, as a private attorney general, or on bases involving claims or disputes brought in a representative capacity on behalf of the general public, of other Ralphs employees (or any of them), or of other persons alleged to be similarly situated."

In opposition to the motion to compel, Mahmud submitted a declaration stating she had been employed by Ralphs as a security guard from December 2007 to March 2009, her hourly rate was $9.82 and her estimated damages for all the claims set forth in the complaint were $6,285. She further stated that in her experience, employees of Ralphs who complained about working conditions were either fired or "treated in such a way that forced them to quit." As a result, she "did not feel secure enough to complain about [her] wages or Ralphs' failure to provide meal or rest periods" and she believed "if [she] had complained about anything . . . [she] would have been disciplined or fired." Mahmud also stated that during her employment, she was unaware of all her rights under the Labor Code, including her right to additional pay if Ralphs did not provide her with a meal or a rest period. Mahmud's attorney submitted a declaration stating his firm could not represent individual class members in individual actions or arbitrations over meal breaks and rest periods because of the low amount of damages involved.

The trial court denied Ralphs' petition to compel. Focusing on the possibility that hundreds of people similarly situated could have claims in the same range as Mahmud's, the court found that the class action waiver was unenforceable under Gentry and its progeny because it prevented the employees from vindicating their rights. The court stated that class action litigation was the only practical way to proceed.2 Ralphs appealed.

DISCUSSION

A. Continued Validity of Gentry

In Gentry, supra, 42 Cal.4th 443, the California Supreme Court addressed whether a class waiver contained in an employment agreement which required arbitration of all employment-related disputes, including statutory claims, on an individual basis was enforceable. The plaintiff/employee alleged he had been improperly classified as an exempt managerial employee and that his statutory right to overtime pay had been violated. He contended that many others were similarly situated and sought to represent them in a class action. Pointing out that the "the statutory right to receive overtime pay embodied in section 1194 [of the Labor Code] is unwaivable," the Supreme Court found that a class action waiver can perform the same function as an illegal exculpatory clause, relieving an employer of culpability for violations of the Labor Code "in practical terms" because such a waiver "can make it very difficult for those injured by unlawful conduct to pursue a legal remedy." (Gentry, supra, 42 Cal.4th at pp. 456-457.) The court discussed several reasons this would be particularly true in wage and hour cases: (1) "individual awards in wage-and-hour cases tend to be modest" and involve "workers at the lower end of the pay scale"; (2) "a current employee who individually sues his or her employer is at greater risk of retaliation"; and (3) "individual employees may not sue because they are unaware that their legal rights have been violated." (Id. at pp. 457-458, 459, 461.) Accordingly, the court held that where "the prohibition of classwide relief would undermine the vindication of the employees' unwaivable statutory rights and would pose a serious obstacle to the enforcement of the state's overtime laws," and where the trial court determines that classwide adjudication "would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration," class waivers should not be enforced. (Id. at p. 450.)

In reaching its conclusion, the court addressed preemption under the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.). Section 2 of the FAA provides that an agreement to submit to arbitration a controversy arising out of the parties' contract "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2.) It represents "`a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary'" (Perry v. Thomas (1987) 482 U.S. 483, 489) and forbids states from promulgating laws which would "undercut the enforceability of arbitration agreements" (Southland Corp. et al. v. Keating et al. (1983) 465 U.S. 1, 16). In Perry, the United States Supreme Court held that the FAA preempted a California statute which permitted state court actions for collection of wages to be maintained "`without regard to the existence of any private agreement to arbitrate.'" (Perry v. Thomas, supra, at p. 484.) The court explained that "[a] state-law principle that takes its meaning precisely from the fact that a contract to arbitrate is at issue does not comport with [section 2]." (Id. at p. 492.) The court made clear, however, that "state law, whether of legislative or judicial origin," can properly be applied to arbitration agreements "if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally." (Ibid.) Based on that principle, the California Supreme Court held in Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover Bank), that the FAA would not preempt its ruling that "class action waivers are, under certain circumstances, unconscionable as unlawfully exculpatory" because its ruling represented "a principle of California law that does not specifically apply to arbitration agreements, but to contracts generally."3 (Id. at p. 165.) In Gentry, the court cited Discover Bank and reiterated: "The principle that in the case of certain unwaivable statutory rights, class action waivers are forbidden when class actions would be the most effective practical means of vindicating those rights is an arbitration-neutral rule: it applies to class waivers in arbitration and nonarbitration provisions alike." (Gentry, supra, 42 Cal.4th at p. 465.)

Claiming to have discerned a rule of FAA preemption unaddressed by our Supreme Court, Ralphs contends that laws which "neither impair nor seek to regulate arbitration agreements as such, but seek to impose rules on contracts of a particular subject (for example, labor contracts, consumer contracts, franchise agreements, etc.) rather than on contracts generally" are preempted. Ralphs contends that the Gentry criteria "are based on the policies inherent in state labor laws but do not apply to other types of contracts" and thus, the rule announced in Gentry "falls within . . . FAA preemption." Ralphs confuses the general principle — that class action waivers are unenforceable if they significantly impair the plaintiff's ability to seek redress for the defendant's illegal conduct — with the specific factors used to determine whether the plaintiff has available a practical remedy. The general principle applies to all contracts; the specific factors may vary depending on the type of contract before the court. In Gentry, the Supreme Court outlined the determinative facts which must exist to invalidate a class action waiver where the plaintiff is an employee pursuing a statutory claim against his or her employer. It did not announce a separate rule for employment contracts or arbitration provisions. In any event, our Supreme Court addressed the issue of preemption in Gentry, and determined that the legal rule announced therein was not preempted by the FAA or any federal court interpretation of it. We are bound by this holding. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.)

Ralphs contends that more recent United States Supreme Court decisions — Preston v. Ferrer, supra, 552 U.S. 346 and Stolt-Nielsen, supra, [130 S.Ct. 1758] — demonstrate that Gentry wrongly decided the issue of FAA preemption. (See People v. Superior Court (Williams) (1992) 8 Cal.App.4th 688, 702 [California appellate courts are bound by decisions of the California Supreme Court on questions of federal law "`unless the United States Supreme Court has decided the question differently.'"].) Although the holding in Stolt-Nielsen casts doubt on the view long held by California courts, as well as courts in other jurisdictions, that where the arbitration agreement is silent on the subject of class actions, the court may instruct the parties to arbitrate on a classwide basis (see Keating v. Superior Court (1982) 31 Cal.3d 584, 611-613, overruled on other grounds in Southland Corp. et al. v. Keating et al., supra, 465 U.S. 1, and cases cited therein), neither decision undermines the holding in Gentry as applied by the trial court here.4

Preston v. Ferrer addressed the validity of a provision of the Talent Agencies Act (TAA) (Labor Code, § 1700 et seq.), which granted the Labor Commissioner exclusive original jurisdiction to determine the validity of an agreement between an entertainer and an unlicensed individual or entity purporting to act as a talent agent, without regard to the existence of an arbitration provision in the parties' agreement. The Supreme Court had previously decided in Southland Corp. et al. v. Keating et al., supra, 465 U.S. 1, that a California statute requiring disputes between franchisors and franchisees to be judicially determined despite an arbitration provision in the parties' agreement was preempted. The sole issue addressed in Preston v. Ferrer was whether "the FAA override[s] not only state statutes that refer certain state-law controversies initially to a judicial forum, but also state statutes that refer certain disputes initially to an administrative agency." (Preston v. Ferrer, supra, 552 U.S. at p. 349.) The court held that "when parties agree to arbitrate all questions arising under a contract, the FAA supersedes state laws lodging primary jurisdiction in another forum, whether judicial or administrative" (id. at p. 359), explaining that the TAA conflicted with the FAA in two respects: "First, the TAA . . . grants the Labor Commissioner exclusive jurisdiction to decide an issue that the parties agreed to arbitrate, [citation]; second, the TAA . . . imposes prerequisites to enforcement of an arbitration agreement that are not applicable to contracts generally, [citation]." (Id. at p. 356.) The decision does not conflict with Gentry. To the contrary, in Gentry, the California Supreme Court acknowledged this rule, but concluded that there was no discrimination against arbitration provisions in its holding and thus no preemption problem. (Gentry, supra, 42 Cal.4th at p. 465.) As Mahmud notes, Preston did not involve class action waivers or the invalidation of such waivers as unconscionable or violative of statutorily guaranteed rights. Accordingly, federal courts construing California law since Preston have continued to find class action waivers in arbitration agreements unenforceable and unconscionable. (See, e.g., McArdle v. AT&T Mobility LLC (N.D. Cal. 2009) 657 F.Supp.2d 1140, 1147; Stiener v. Apple Computer, Inc. (N.D. Cal. 2008) 556 F.Supp.2d 1016, 1022, fn. 7.)

Nor does the recent holding in Stolt-Nielsen undermine Gentry's conclusion that the California legal principle which permits courts to find class action waivers unenforceable in certain circumstances is not preempted. The plaintiff in Stolt-Nielsen, an entity that regularly transported goods via shipping containers, brought a class action antitrust suit against a group of shipping companies, alleging price fixing. The maritime contract at issue contained an arbitration clause which said nothing about class actions, and the arbitration panel concluded that regardless of the intent of the parties, the arbitration provisions should be construed to permit class arbitration as a matter of "public policy." (Stolt-Nielsen, supra, [130 S.Ct. at pp. 1768-1770].) Concluding that the intent of the parties ("sophisticated business entities"), rather than public policy, must be the determinative factor for purposes of construing the breadth of an arbitration agreement, the Supreme Court held that "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." (Id. at p. 1775.) "An implicit agreement to authorize class-action arbitration . . . is not a term that the arbitrator may infer solely from the fact of the parties' agreement to arbitrate" because "class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to an arbitrator." (Ibid.)

The issue addressed in Stolt-Nielsen — whether parties to an arbitration agreement may be compelled to arbitrate a dispute on a classwide basis when the agreement is silent — is not at issue here. The trial court did not order the parties to arbitrate on a classwide basis. Instead, the court found the arbitration agreement's class action waiver unenforceable, denied Ralphs' petition to compel without prejudice, and permitted the action to proceed, at least until the class issue is resolved. The trial court's actions were appropriate under Gentry, and were not inconsistent with Stolt-Nielsen.5

Our conclusion is supported by the Second Circuit's recent decision in Fensterstock v. Education Finance Partners (2d Cir. 2010) 611 F.3d 124. There, a borrower claimed that the lender had misapplied some of the borrower's monthly payments, resulting in an overcharge for interest. Applying California law, the district court found that a promissory note provision providing for arbitration of disputes over the loan on an individual basis only was unconscionable under Discover Bank, supra, 36 Cal.4th 148. The circuit court affirmed the unconscionability finding, specifically stating that California law as construed by the Supreme Court in Discover Bank was not preempted because it "`place[s] arbitration agreements with class action waivers on the exact same footing as contracts that bar class action litigation outside the context of arbitration.'" (Fensterstock v. Education Finance Partners, supra, 611 F.3d at p. 134.) Accordingly, the circuit court upheld the district court order declining to stay the action and compel arbitration.6

B. Evidentiary Support for Gentry Factors

The Supreme Court stated in Gentry that in determining whether to enforce a contractual class action waiver, the 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' rights to overtime pay through individual arbitration." (Gentry, supra, 42 Cal.4th at p. 463.) "If [the court] 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 . . . ." (Ibid.)

In proceedings before the trial court, Mahmud, as the party opposing arbitration, had the burden of establishing that the arbitration provision was invalid. (Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277, 1287.) "`[T]o the extent the trial court's determination that the arbitration agreement was [valid or invalid] turned on the resolution of conflicts in the evidence or on factual inferences to be drawn from the evidence, we consider the evidence in the light most favorable to the trial court's ruling and review the trial court's factual determinations under the substantial evidence standard.'" (Ibid., quoting Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 892.)7 "When the trial court makes no express findings, we will infer that the trial court made every implied finding necessary to support the order . . ., and review those implied findings for substantial evidence." (Arguelles-Romero v. Superior Court, supra, 184 Cal.App.4th at p. 836.)

Ralphs contends the record contains no evidence concerning Gentry factors (2), (3) or (4). That is incorrect. Mahmud presented evidence that she was an hourly employee of Ralphs for several years, that Ralphs failed to provide meal breaks or rest periods throughout her employment, that she was not aware of her rights under the Labor Code with respect to meal breaks and rest periods, that employees who complained about working conditions were fired or treated badly, and that her total damages were approximately $6,000. This evidence supported, either directly or through reasonable inference, the first three factors — the modest size of potential recovery, the potential for retaliation, and the lack of information about rights among class members. Mahmud's attorney stated in his declaration that his firm could not represent individual claimants in individual actions or arbitrations over meal and rest periods because of the low level of damages involved. This supported the fourth factor — real world obstacles to the vindication of employees' rights.

Comparing the magnitude and specificity of the evidence presented by Mahmud with that of plaintiffs in comparable situations, similar evidence has been found sufficient to support invalidation of class action waivers. (See Murphy v. Check `N Go of California, Inc. (2007) 156 Cal.App.4th 138, 142-143 [plaintiff/employee alleged she was misclassified as an exempt employee and deprived of overtime compensation, accurate itemized wage statements, adequate meal and rest periods or wages upon termination; plaintiff presented declarations from her counsel and other attorneys experienced in wage and hour cases attesting to the difficulty of prosecuting such cases individually]; Sanchez v. Western Pizza Enterprises, Inc., supra, 172 Cal.App.4th at pp. 170-171 [plaintiff, pizza deliveryman, alleged that employer failed to reimburse him and others similarly situated for actual cost of mileage driven; evidence established modest difference between amounts paid for reimbursement and amounts incurred and low-wage status of delivery drivers and indicated that most drivers were immigrants with limited English language skills unlikely to be aware of their rights].) The evidence presented by Mahmud was substantially equivalent to that in Franco v. Athens Disposal Co., Inc., supra, 171 Cal.App.4th 1277, where the trial court's grant of the employer's petition to compel arbitration of the employee's claim for failure to provide meal breaks, rest periods and overtime pay was reversed on appeal. The appellate court found the Gentry factors amply supported where the employee/plaintiff (1) submitted evidence showing his estimated damages, (2) filed declarations attesting that his attorneys could not economically represent individual class members in individual arbitrations, and (3) filed a separate declaration stating that during his employment with defendant, (a) "he did not know he was entitled to an hour's pay if [defendant] did not give him a meal or rest period"; (b) "he was not aware of all of his rights under the Labor Code or other labor law"; (c) "in his experience, employees who complained about working conditions were `looked down on' by management and `often los[t] their jobs or [were] treated in ways that force[d] them to quit'"; and (d) "he `did not feel secure enough to complain about anything [he] may have felt was wrong . . . [and] felt that if [he] complained about anything [he] would be fired.'" (171 Cal.App.4th at p. 1285.)

As in Gentry and Franco, some evidence supported the conclusion that the size of the potential individual recovery was too modest to be litigated on an individual basis, that there was a possibility of retaliation against employees who attempted to file individual suits or claims, and that potential class members might be ill informed of their rights. We conclude the trial court's order was supported by substantial evidence.

DISPOSITION

The order denying the petition to compel arbitration is affirmed. Respondent is awarded her costs.

We concur.

EPSTEIN, P. J.

WILLHITE, J.