I have received a few questions from employers about the recent California Supreme Court decision in McGill v. Citibank, N.A..  The McGill case isn’t an employment law case, but rather deals with a consumer class action.  In McGill, the California Supreme Court held that an arbitration provision that attempted to entirely waive an individual’s right to seek public injunctive relief (pursuant to the Consumers Legal Remedies Act (CLRA), unfair competition law (UCL), and false advertising law) is unenforceable. In so holding, the Court noted that CLRA expressly declares that the waiver of its provisions by any consumer “is contrary to public policy and shall be void and unenforceable”.  The Court also stated that the primary form of relief under UCL is an injunction, and that false advertising law authorizes injunctive relief by any person suffering an injury.  Accordingly, a primary purpose under CLRA, UCL, and false advertising law is to provide for injunctive relief to prohibit acts that threaten future injury to the general public, which purpose was barred by the arbitration provision in the consumer contract.

If you’re curious, the arbitration provision stated, in relevant part:

All Claims relating to your account or a prior related account, or our relationship are subject to arbitration, including Claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision. All Claims are subject to arbitration, no matter what legal theory they are based on or what remedy (damages, or injunctive or declaratory relief) they seek. This includes Claims based on contract, tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law;… any Claims made independently or with other claims… Claims and remedies sought as part of a class action, private attorney general or other representative action are subject to arbitration on an individual (non-class, non-representative) basis, and the arbitrator may award relief only on an individual (non-class, non-representative) basis… neither you, we nor any other person may pursue the Claim in arbitration as a class action, private attorney general action or other representative action, nor may such claim be pursued on your own or our behalf in any litigation or in any court.”

Although the McGill case deals with consumer class action issues, the case should serve as a reminder to employers that California courts are finding ways to subject arbitration agreements to an increasingly higher levels of scrutiny.  In this regard, pending a reversal of recent trends by the united States Supreme Court, arbitration agreements for employment disputes should not restrict or limit the remedies available in any manner.

The author would like to gratefully acknowledge the assistance of Harrison Finch.