Supreme Court of California Justia
Docket No. S141502

Gentry v. Super. Ct.

Filed 8/30/07



IN THE SUPREME COURT OF CALIFORNIA



ROBERT GENTRY,

Petitioner,

S141502

v.

Ct.App.

2/5

B169805

THE SUPERIOR COURT OF

LOS ANGELES COUNTY,

Los Angeles County

Respondent;

Super. Ct. No. BC280631

CIRCUIT CITY STORES, INC.,

Real Party in Interest.



In this case we consider whether class arbitration waivers in

employment arbitration agreements may be enforced to preclude class

arbitrations by employees whose statutory rights to overtime pay pursuant to

Labor Code sections 500 et seq. and 11941 allegedly have been violated. We

conclude that at least in some cases, 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.

Accordingly, such class arbitration waivers should not be enforced if a trial


1

All statutory references are to this code unless otherwise indicated.

1


court determines, based on the factors discussed below, that class arbitration

would be a significantly more effective way of vindicating the rights of

affected employees than individual arbitration. We therefore reverse the

judgment of the Court of Appeal upholding the class arbitration waiver and

remand for the above determination.

Another issue posed by this case is whether a provision in an arbitration

agreement that an employee can opt out of the agreement within 30 days

means that the agreement is not procedurally unconscionable, thereby

insulating it from employee claims that the arbitration agreement is

substantively unconscionable or unlawfully exculpatory. As explained below,

a finding of procedural unconscionability is not required to invalidate a class

arbitration waiver if that waiver implicates unwaivable statutory rights. But

such a finding is a prerequisite to determining that the arbitration agreement as

a whole is unconscionable. Plaintiff in this case argues that other terms of the

arbitration agreement were substantively unconscionable and that the entire

agreement should not be enforced. Contrary to the Court of Appeal, we

conclude the present agreement has an element of procedural unconscionability

notwithstanding the opt-out provision, and therefore remand for a

determination of whether provisions of the arbitration agreement were

substantively unconscionable.

I. STATEMENT OF FACTS

The facts are for the most part not in dispute. On August 29, 2002,

Robert Gentry filed a class action lawsuit in superior court against Circuit City

Stores, Inc. (Circuit City), seeking damages for violations of the Labor Code

and Business and Professions Code, as well as for conversion. Gentry filed

suit on behalf of salaried customer service managers such as himself whom

2

Circuit City had allegedly “illegally misclassified” as “exempt

managerial/executive employees” not entitled to overtime pay, when in fact,

they were “ ‘non-exempt’ non-managerial employees” entitled to be

compensated for hours worked in excess of eight hours per day and 40 hours

per week.

When he was hired by Circuit City in 1995, Gentry received a packet

that included an “Associate Issue Resolution Package” and a copy of Circuit

City’s “Dispute Resolution Rules and Procedures,” pursuant to which

employees are afforded various options, including arbitration, for resolving

employment-related disputes. By electing arbitration, the employee agrees to

“dismiss any civil action brought by him in contravention of the terms of the

parties’ agreement.” The agreement to arbitrate also contains a class

arbitration waiver, which provides: “The Arbitrator shall not consolidate

claims of different Associates into one proceeding, nor shall the Arbitrator

have the power to hear arbitration as a class action . . . .” As will be explained

at greater length below, the arbitration agreement also contained several

limitations on damages, recovery of attorney fees, and the statute of limitations

that were less favorable to employees than were provided in the applicable

statutes. The packet included a form that gave the employee 30 days to opt out

of the arbitration agreement. Gentry did not do so.

At that time, there was a split of authority in California on the

enforceability of class action waivers in consumer contracts. (See Szetela v.

Discover Bank (2002) 97 Cal.App.4th 1094 [waivers unconscionable];

Discover Bank v. Superior Court (2003) 105 Cal.App.4th 326 [waivers must be

upheld under the Federal Arbitration Act], overruled by Discover Bank v.

Superior Court (2005) 36 Cal.4th 148 (Discover Bank).) Circuit City moved to

3

compel arbitration. The court acknowledged that the governing case law was

“conflicting and in a state of flux,” and elected to follow the Court of Appeal

decision in Discover Bank v. Superior Court. The court did hold two

provisions of the agreement (cost splitting and limitation of remedies

provisions) substantively unconscionable based on federal case law. (Morrison

v. Circuit City Stores, Inc. (6th Cir. 2003) 317 F.3d 646.) The court severed

those provisions from the agreement, ordered Gentry to “arbitrate his claims on

an individual basis and submit to the class action waiver,” and stayed the

superior court action.

Gentry filed a mandate petition on September 9, 2003. The Court of

Appeal denied the petition, noting that the issue of the enforceability of the

class action waiver was before this court in Discover Bank. We granted

Gentry’s petition for review and deferred briefing pending our decision in

Discover Bank. On June 27, 2005, we issued our decision in Discover Bank,

supra, 36 Cal.4th 148. As discussed at greater length below, we held that “at

least under some circumstances, the law in California is that class action

waivers in consumer contracts of adhesion are unenforceable” as

unconscionable. (Discover Bank, supra, 36 Cal.4th at p. 153.) We remanded

this case for reconsideration in light of Discover Bank.

On remand, the Court of Appeal again denied Gentry’s petition for writ

of mandate. It distinguished the class arbitration waiver in this case from the

one found unconscionable in Discover Bank on two principal grounds. First,

the court held that the agreement was not unconscionable because of the 30-

day opt-out provision. Because of this provision, “the agreement at issue here

does not have that adhesive element and therefore is not procedurally

unconscionable.”

4

Second, for reasons elaborated on below, it found the class arbitration

waiver here was distinguishable from the one in Discover Bank and not

substantively unconscionable because the present case, unlike Discover Bank,

did not involve “predictably . . . small amounts of damages.” (Discover Bank,

supra, 36 Cal.4th at p. 162.)

We granted review to clarify our holding in Discover Bank.

II. DISCUSSION

A. Class Arbitration Waiver in Overtime Cases May Be Contrary

to Public Policy

In

Discover Bank, the plaintiff sought to prosecute a class action against

a credit card company that had allegedly defrauded a large number of

customers for small amounts of money, as low as $29 in the plaintiff’s case.

(Discover Bank, supra, 36 Cal.4th at p. 154.) The credit card company had

inserted into its agreement with its customers an amendment by sending a

notice to its customers and informing them that continued use of the account

would constitute acceptance of the terms of the amendment. The amendment

required arbitration of all disputes and prohibited classwide arbitration. (Id., at

pp. 153-154.) In finding such agreements generally unconscionable under

California law, we started out reviewing the policies in favor of class actions

and class arbitration2 in consumer actions, quoting Vasquez v. Superior Court

(1971) 4 Cal.3d 800, 808 (Vasquez): “ ‘Frequently numerous consumers are

exposed to the same dubious practice by the same seller so that proof of the

prevalence of the practice as to one consumer would provide proof for all.


2

For the sake of economy, this opinion will sometimes refer to class

action litigation and class arbitrations generically as “class actions.”

5

Individual actions by each of the defrauded consumers is often impracticable

because the amount of individual recovery would be insufficient to justify

bringing a separate action; thus an unscrupulous seller retains the benefits of its

wrongful conduct. A class action by consumers produces several salutary by-

products, including a therapeutic effect upon those sellers who indulge in

fraudulent practices, aid to legitimate business enterprises by curtailing

illegitimate competition, and avoidance to the judicial process of the burden of

multiple litigation involving identical claims. The benefit to the parties and the

courts would, in many circumstances, be substantial.’ ” (Discover Bank,

supra, 36 Cal.4th at p. 156.)

Because of the importance of class actions in consumer litigation, we

concluded that “at least some class action waivers in consumer contracts are

unconscionable under California law. First, when, a consumer is given an

amendment to its cardholder agreement in the form of a ‘bill stuffer’ that he

would be deemed to accept if he did not close his account, an element of

procedural unconscionability is present. [Citation.] Moreover, although

adhesive contracts are generally enforced [citation], class action waivers found

in such contracts may also be substantively unconscionable inasmuch as they

may operate effectively as exculpatory contract clauses that are contrary to

public policy. As stated in Civil Code section 1668: ‘All contracts which have

for their object, directly or indirectly, to exempt anyone from responsibility for

his own fraud, or willful injury to the person or property of another, or

violation of law, whether willful or negligent, are against the policy of the

law.’. . .

“Class action and arbitration waivers are not, in the abstract,

exculpatory clauses. But because, as discussed above, damages in consumer

6

cases are often small and because ‘ “[a] company which wrongfully exacts a

dollar from each of millions of customers will reap a handsome profit” ’

[citation], ‘ “the class action is often the only effective way to halt and redress

such exploitation.” ’ [Citation.] Moreover, such class action or arbitration

waivers are indisputably one-sided. ‘Although styled as a mutual prohibition

on representative or class actions, it is difficult to envision the circumstances

under which the provision might negatively impact Discover [Bank], because

credit card companies typically do not sue their customers in class action

lawsuits.’ [Citation.] Such one-sided, exculpatory contracts in a contract of

adhesion, at least to the extent they operate to insulate a party from liability

that otherwise would be imposed under California law, are generally

unconscionable.” (Discover Bank, supra, 36 Cal.4th at pp. 160-161, italics

omitted.)

We clarified that “[w]e do not hold that all class action waivers are

necessarily unconscionable. But when the waiver is found in a consumer

contract of adhesion in a setting in which disputes between the contracting

parties predictably involve small amounts of damages, and when it is alleged

that the party with the superior bargaining power has carried out a scheme to

deliberately cheat large numbers of consumers out of individually small sums

of money, then, at least to the extent the obligation at issue is governed by

California law, the waiver becomes in practice the exemption of the party

‘from responsibility for [its] own fraud, or willful injury to the person or

property of another.’ (Civ. Code, § 1668.) Under these circumstances, such

waivers are unconscionable under California law and should not be enforced.”

(Discover Bank, supra, 36 Cal.4th at pp. 162-163.)

7



We also concluded in Discover Bank that it was unnecessary to abandon

the arbitration forum in order to address the claims of a class of consumers.

Rather, class arbitration was a well-accepted alternative to class litigation on

the one hand and individual arbitration on the other. (Discover Bank, supra, 36

Cal.4th at pp. 157-158.) We noted that class arbitration has been in use for the

last 20 years and that rules concerning such arbitration have been incorporated

into various dispute resolution services. (Id., at p. 172.)

In

Discover Bank, before discussing the general principles of

unconscionability on which that decision was based, we noted that the Court of

Appeal in America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1

(AOL), had invalidated a Virginia choice-of-law provision in a consumer

contract with no arbitration agreement that effectively would have disallowed

the pursuit of a class action. The plaintiff sought class relief pursuant to

California’s Consumer Legal Remedies Act (CLRA) (Civ. Code, § 1750 et

seq.), which specifically authorizes such class actions (Civ. Code, § 1781), and

which further provides in Civil Code section 1751 that “ ‘[a]ny waiver by a

consumer of the provisions of this title is contrary to public policy and shall be

unenforceable and void.’ ” (Discover Bank, supra, 36 Cal.4th at p. 158.) We

noted that the plaintiff in Discover Bank did “not plead a CLRA cause of

action and so does not invoke its antiwaiver provision; nor does he seek

recovery under any other California statute as to which a class action remedy is

essential” (id., at p. 160, fn. omitted) apparently because the plaintiff sought to

pursue a national class action suit and had made a strategic decision not to rely

on a California statute. (Discover Bank, supra, 36 Cal.4th at p. 160, fn. 2.)

Accordingly, we had no occasion in Discover Bank to consider whether a class

8

action or class arbitration waiver would undermine the plaintiff’s statutory

rights.

In the present case, Gentry’s lawsuit is pursuant to statute. Section 510

provides that nonexempt employees will be paid one and one-half their wages

for hours worked in excess of eight per day and 40 per week and twice their

wages for work in excess of 12 hours a day or eight hours on the seventh day

of work. Section 1194 provides a private right of action to enforce violations

of minimum wage and overtime laws.3 That statute states: “Notwithstanding

any agreement to work for a lesser wage, any employee receiving less than the

legal minimum wage or the legal overtime compensation applicable to the

employee is entitled to recover in a civil action the unpaid balance of the full

amount of this minimum wage or overtime compensation, including interest

thereon, reasonable attorney’s fees, and costs of suit.” (§ 1194, subd. (a),

italics added.) By its terms, the rights to the legal minimum wage and legal

overtime compensation conferred by the statute are unwaivable. “Labor Code

section 1194 confirms ‘a clear public policy . . . that is specifically directed at

the enforcement of California’s minimum wage and overtime laws for the

benefit of workers.’ ” (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34

Cal.4th 319, 340 (Sav-On Drug Stores).) Although overtime and minimum

wage laws may at times be enforced by the Department of Labor Standards

Enforcement (DLSE), it is the clear intent of the Legislature in section 1194

3

Although Gentry pleads causes of action under Business and

Professions Code section 17200 et seq. as well as for common law conversion,
these actions are based on Circuit City’s alleged violation of the overtime laws,
which section 1194 is intended to enforce. We therefore focus on the ability of
employees to vindicate their rights pursuant to section 1194.

9

that minimum wage and overtime laws should be enforced in part by private

action brought by aggrieved employees. (See Bell v. Farmers Ins. Exchange

(2004) 115 Cal.App.4th 715, 746 (Bell) [noting declaration of former chief

counsel of DLSE indicating that without private enforcement through class

actions department’s resources to resolve claims would be overtaxed].)

The public importance of overtime legislation has been summarized as

follows: “An employee’s right to wages and overtime compensation clearly

have different sources. Straight-time wages (above the minimum wage) are a

matter of private contract between the employer and employee. Entitlement to

overtime compensation, on the other hand, is mandated by statute and is based

on an important public policy. . . . ‘The duty to pay overtime wages is a duty

imposed by the state; it is not a matter left to the private discretion of the

employer. [Citations.] California courts have long recognized [that] wage and

hours laws “concern not only the health and welfare of the workers themselves,

but also the public health and general welfare.” [Citation.] . . . [O]ne purpose

of requiring payment of overtime wages is “ ‘to spread employment throughout

the work force by putting financial pressure on the employer . . . .’ ”

[Citation.] Thus, overtime wages are another example of a public policy

fostering society’s interest in a stable job market. [Citation.] Furthermore . . .

the Legislature’s decision to criminalize certain employer conduct reflects a

determination [that] the conduct affects a broad public interest . . . . Under

Labor Code section 1199 it is a crime for an employer to fail to pay overtime

wages as fixed by the Industrial Welfare Commission.’ ” (Earley v. Superior

Court (2000) 79 Cal.App.4th 1420, 1430.)

Moreover, the overtime laws also serve the important public policy goal of

protecting employees in a relatively weak bargaining position against “ ‘the

10

evil of “overwork.” ’ ” (Barrentine v. Arkansas-Best Freight System (1981)
450 U.S. 728, 739 [commenting on overtime provision of the federal Fair

Labor Standards Act].)

In short, the statutory right to receive overtime pay embodied in section

1194 is unwaivable. In Armendariz v. Foundation Health Psychcare Services,

Inc. (2000) 24 Cal.4th 83 (Armendariz), we held that when an employee is

bound by a predispute arbitration agreement to adjudicate unwaivable statutory

employment rights (in that case, rights conferred by the Fair Employment and

Housing Act (FEHA)), the arbitration will be subject to certain minimal

requirements. As we summarized in a subsequent case: “(1) the arbitration

agreement may not limit the damages normally available under the statute

(Armendariz, supra, 24 Cal.4th at p. 103); (2) there must be discovery

‘sufficient to adequately arbitrate their statutory claim’ (id. at p. 106); (3) there

must be a written arbitration decision and judicial review ‘ “sufficient to ensure

the arbitrators comply with the requirements of the statute” ’ (ibid.); and (4) the

employer must ‘pay all types of costs that are unique to arbitration’ (id. at p.

113).” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076 (Little).) Our

imposition of these requirements was based on the recognition that while “a

party compelled to arbitrate such rights does not waive them, but merely ‘

“submits to their resolution in an arbitral, rather than a judicial, forum” ’

[citation], arbitration cannot be misused to accomplish a de facto waiver of

these rights.” (Little, supra, 29 Cal.4th at p. 1079.) “[T]he above requirements

[are] necessary to enable an employee to vindicate . . . unwaivable rights in an

arbitration forum.” (Id. at p. 1077.)

We have not yet considered whether a class arbitration waiver would

lead to a de facto waiver of statutory rights, or whether the ability to maintain a

11

class action or arbitration is “necessary to enable an employee to vindicate . . .

unwaivable rights in an arbitration forum.” (Little, supra, 29 Cal.4th at p.

1077.) We conclude that under some circumstances such a provision would

lead to a de facto waiver and would impermissibly interfere with employees’

ability to vindicate unwaivable rights and to enforce the overtime laws.

In arguing the contrary, Circuit City focuses on the language in

Discover Bank stating that we were not holding all class action waivers to be

necessarily unconscionable, but that waivers in consumer contracts of adhesion

involving “predictably . . . small amounts of damages,” that are part of a

“scheme to deliberately cheat large numbers of consumers out of individually

small sums of money,” will be held to be unconscionable and unenforceable.

(Discover Bank, supra, 36 Cal.4th at pp. 162-163.) Circuit City argues, as the

Court of Appeal concluded, that this is not such a case.

Yet the above quoted passage in Discover Bank was not intended to

suggest that consumer actions involving minuscule amounts of damages were

the only actions in which class action waivers would not be enforced. Rather,

Discover Bank was an application of a more general principle: that although

“[c]lass action and arbitration waivers are not, in the abstract, exculpatory

clauses” (Discover Bank, supra, 36 Cal.4th at p. 161), such a waiver can be

exculpatory in practical terms because it can make it very difficult for those

injured by unlawful conduct to pursue a legal remedy. Gentry argues

persuasively that class action waivers in wage and hour cases and overtime

cases would have, at least frequently if not invariably, a similar exculpatory

effect for several reasons, and would therefore undermine the enforcement of

the statutory right to overtime pay.

12



First, individual awards in wage and hour cases tend to be modest. In

addition to the fact that litigation over minimum wage by definition involves

the lowest-wage workers, overtime litigation also usually involves workers at

the lower end of the pay scale, since professional, executive, and

administrative employees are generally exempt from overtime statutes and

regulations. (See Cal. Code Regs., tit. 8, § 11070, subd. I(A); Ramirez v.

Yosemite Water Co. (1999) 20 Cal.4th 785, 798, fn. 4.) According to the

DLSE’s report in response to Gentry’s Public Records Act request, the average

award from its wage adjudication unit for 2000-2005 was $6,038. (See also

Asian Pacific American Legal Center et al., Reinforcing the Seams:

Guaranteeing the Promise of California’s Landmark Anti-Sweatshop Law, An

Evaluation of Assembly Bill 633 Six Years Later (Sept. 2005) p. 2 [average

claim for overtime and minimum wage violations submitted to DLSE ranged

from $5,000-$7,000, and settlement ranged from $400-$1,600].)

Indeed, the Court of Appeal in Bell, supra, 115 Cal.App.4th 715,

rejected the argument that even an award as large as $37,000 would be “ample

incentive” for an individual lawsuit for overtime pay, and would obviate the

need for a class action, pointing to the expense and practical difficulties of such

individual suits. “[T]he size of the average claim in part reflects the accrual of

unpaid overtime over the five-year duration of this lawsuit prior to trial. When

the complaint was first filed in October 1996, the average claim would have

been smaller and a large portion of the claims may not have been reasonably

adequate to fund the expense of individual litigation. The length of this

litigation in fact underscores the practical difficulties vindicating claims to

unpaid overtime. Employees will seldom have detailed personal records of

hours worked. Their case ordinarily rests on the credibility of vague

13

recollections and requires them to litigate complex overtime formulas and

exemption standards. For current employees, a lawsuit means challenging an

employer in a context that may be perceived as jeopardizing job security and

prospects for promotion. If the employee files after termination of

employment, the costs of litigation may still involve travel expenses and time

off from work to pursue the case, and the value of any ultimate recovery may

be reduced by legal expenses.” (Id. at p. 745.)4

It is true that section 1194 permits employees to recover reasonable

attorney fees if they prevail in an overtime litigation suit. (See Bell v. Farmers

Ins. Exchange (2001) 87 Cal.App.4th 805, 831.) Even assuming that such

attorney fees were equally available in arbitration, employees and their

attorneys must weigh the typically modest recovery, and the typically modest

means of the employees bringing overtime lawsuits, with the risk of not

prevailing and being saddled with the substantial costs of paying their own

attorneys. Moreover, the award of “reasonable” fees and costs are at the

discretion of the trial court. Assuming that the arbitrator had similar discretion,

there is still a risk that even a prevailing plaintiff/employee may be


4

How much is at issue in Gentry’s claim in the present case is unclear.

Circuit City contends that the claim must be for over $25,000 because the
“unlimited” jurisdiction box was checked on the civil case cover sheet
accompanying the complaint. Cases alleging less than $25,000 are considered
“limited civil cases.” (Code Civ. Proc., § 86, subd. (a)(1).) However, as
Gentry points out, cases will be classified as unlimited in jurisdiction if
injunctive relief is sought (Code Civ. Proc., § 580, subd. (b)(2)), as Gentry did
in the present case. Therefore, the designation of “unlimited jurisdiction” on
the cover sheet of the complaint does not inform us of the minimum amount of
damages being sought.

14

undercompensated for such expenses. Given these risks and economic

realities, class actions play an important function in enforcing overtime laws by

permitting employees who are subject to the same unlawful payment practices

a relatively inexpensive way to resolve their disputes. We have acknowledged

as much in a case involving overtime litigation similar to that at issue in the

present case. “ ‘ “By establishing a technique whereby the claims of many

individuals can be resolved at the same time, the class suit both eliminates the

possibility of repetitious litigation and provides small claimants with a method

of obtaining redress for claims which would otherwise be too small to warrant

individual litigation.” ’ ” (Sav-On Drug Stores, supra, 34 Cal.4th at p. 340.)

Although we agree at least in theory with Circuit City that arbitration can be a

relatively quick and inexpensive method of dispute resolution, the requirement

that numerous employees suffering from the same illegal practice each

separately prove the employer’s wrongdoing is an inefficiency that may

substantially drive up the costs of arbitration and diminish the prospect that the

overtime laws will be enforced.

The Court of Appeal in the present case, in upholding the class

arbitration waiver, pointed to our discussion in Discover Bank of the statement

in Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 32, that a

plaintiff’s Age Discrimination in Employment Act (ADEA) claim should be

arbitrated notwithstanding the lack of classwide relief. “At most, the Gilmer

court can be understood to mean that a party can still vindicate his or her rights

under the ADEA even if no class action remedy is available.” (Discover Bank,

supra, 36 Cal.4th at p. 168.) In so concluding, we cited an article reporting

that the median award for employee age discrimination suits was $269,000.

15

(Ibid.) Our discussion of Gilmer clearly does not apply to the much more

modest awards generally available in overtime compensation cases.

A second factor in favor of class actions for these cases, as noted in

Bell, is that a current employee who individually sues his or her employer is at

greater risk of retaliation. We have recognized that retaining one’s

employment while bringing formal legal action against one’s employer is not

“a viable option for many employees.” (Richards v. CH2M Hill, Inc. (2001)

26 Cal.4th 798, 821; see also Mullins v. Rockwell Internat. Corp. (1997) 15

Cal.4th 731, 741.) Richards and Mullins involved high-level managerial and

professional employees. The difficulty of suing a current employer is likely

greater for employees further down on the corporate hierarchy. As one court

observed: “ ‘Although there is only plaintiff’s suggestion of intimidation in

this instance, the nature of the economic dependency involved in the

employment relationship is inherently inhibiting.’ ” (O’Brien v. Encotech

Const. Services, Inc. (2001) 203 F.R.D. 346, 351.)

Indeed, federal courts have widely recognized that fear of retaliation for

individual suits against an employer is a justification for class certification in

the arena of employment litigation, even when it was otherwise questionable

that the numerosity requirements of rule 23 (Fed. Rules Civ. Proc., rule 23, 28

U.S.C.) were satisfied.5 (See, e.g., Mullen v. Treasure Chest Casino, LLC (5th

5

“Rule 23(a) states four threshold requirements applicable to all class

actions: (1) numerosity (a ‘class [so large] that joinder of all members is
impracticable’); (2) commonality (‘questions of law or fact common to the
class’); (3) typicality (named parties’ claims or defenses ‘are typical . . . of the
class’); and (4) adequacy of representation (representatives ‘will fairly and
adequately protect the interests of the class’).” (Amchem Products, Inc. v.
Windsor
(1997) 521 U.S. 591, 613.)

16

Cir. 1999) 186 F.3d 620, 625 [it is “reasonably presumed” that potential class

members still employed by employer “might be unwilling to sue individually

or join a suit for fear of retaliation at their jobs”]; see also Horn v. Associated

Wholesale Grocers, Inc. (10th Cir. 1977) 555 F.2d 270, 275; Arkansas

Education Ass’n v. Board of Education of Portland, Ark. (8th Cir. 1971) 446

F.2d 763, 765; Scott v. Aetna Servs., Inc. (D.Conn. 2002) 210 F.R.D. 261, 267;

Adames v. Mitsubishi Bank, Ltd. (E.D.N.Y. 1989) 133 F.R.D. 82, 89 [“[s]ince

here a number of putative members [of the class] are current employees, the

concern for possible employer reprisal action exists and renders the alternative

of individual joinder less than practicable”]; Simmons v. City of Kansas City

(D.Kan. 1989) 129 F.R.D. 178, 180; Slanina v. William Penn Parking Corp.

(W.D.Pa. 1985) 106 F.R.D. 419, 423-424 [indications that if individual joinder

were required, “most, if not all, of the current employees will be hesitant to

join’ ”].) “[I]t needs no argument to show that fear of economic retaliation

might often operate to induce aggrieved employees quietly to accept

substandard conditions.” (Mitchell v. Robert DeMario Jewelry, Inc. (1960)
361 U.S. 288, 292.)

Circuit City points out that retaliation by the employer against an

employee who files an overtime claim or other wage and hour claims is

unlawful under section 98.6.6 It further points to DLSE reports showing that


6

Section 98.6, subdivision (a) states in pertinent part: “No person shall

discharge an employee or in any manner discriminate against any employee or
applicant for employment because . . . the employee or applicant for
employment has filed a bona fide complaint or claim or instituted or caused to
be instituted any proceeding under or relating to his or her rights, which are
under the jurisdiction of the Labor Commissioner . . . .”

17

the number of complaints made pursuant to section 98.6 in the years 2000-

2004 ranged from 446 to 808 annually. (See DLSE, Annual Discrimination

Complaint Reports, <http://www.dir.ca.gov/dlse/DLSEreports.htm> [as of

Aug. 30, 2007].) It argues from these statistics that the enforcement

mechanism to sanction such retaliation is working. We agree with Gentry,

however, that these statistics are supportive of his position that retaliation

against employees for asserting statutory rights under the Labor Code is

widespread. Given that retaliation would cause immediate disruption of the

employee’s life and economic injury, and given that the outcome of the

complaint process is uncertain, we do not believe the existence of an

antiretaliation statute and an administrative complaint process undermines

Gentry’s point that fear of retaliation will often deter employees from

individually suing their employers.

Third, some individual employees may not sue because they are

unaware that their legal rights have been violated. The New Jersey Supreme

Court recently emphasized the notification function of class actions in striking

down a class arbitration waiver in a consumer contract: “[W]ithout the

availability of a class-action mechanism, many consumer-fraud victims may

never realize that they may have been wronged. As commentators have noted,

‘often consumers do not know that a potential defendant’s conduct is illegal.

When they are being charged an excessive interest rate or a penalty for check

bouncing, for example, few know or even sense that their rights are being

violated.’ ” (Muhammad v. County Bank of Rehoboth Beach, Delaware (N.J.

2006) 912 A.2d 88, 100.) Similarly, it may often be the case that the illegal

employer conduct escapes the attention of employees. Some workers,

particularly immigrants with limited English language skills, may be

18

unfamiliar with the overtime laws. (See Ha, An Analysis in Critique of KIWA’s

Reform Efforts in the Los Angeles Korean-American Restaurant Industry

(2001) 8 Asian L.J. 111, 122-123.) Even English-speaking or better educated

employees may not be aware of the nuances of overtime laws with their

sometimes complex classifications of exempt and nonexempt employees. (See

Ramirez v. Yosemite Water Co., supra, 20 Cal.4th at pp. 796-798.) The

likelihood of employee unawareness is even greater when, as alleged in the

present case, the employer does not simply fail to pay overtime but

affirmatively tells its employees that they are not eligible for overtime.

Moreover, some employees, due to the transient nature of their work, may not

be in a position to pursue individual litigation against a former employer.

(Ansoumana v. Gristede’s Operating Corp. (S.D.N.Y. 2001) 201 F.R.D. 81,

86-87.)

For these reasons, a federal district court recently concluded that an

arbitration agreement with a class arbitration waiver was inconsistent with the

minimum wage and overtime provisions of the federal Fair Labor Standards

Act (FLSA). “In this case, the imposition of a waiver of class actions may

effectively prevent . . . employees from seeking redress of FLSA violations.

The class action provision thereby circumscribes the legal options of these

employees, who may be unable to incur the expense of individually pursuing

their claims. In this respect, the class action waiver is not only unfair to . . .

employees, but also removes any incentive for [the employer] to avoid the type

of conduct that might lead to class action litigation in the first instance. The

class action clause is therefore substantively unconscionable.” (Skirchak v.

Dynamics Research Corp., Inc. (D.Mass. 2006) 432 F.Supp.2d 175, 181.)

Similarly, in another FLSA suit for minimum wage and overtime violations,

19

the trial court stated, interpreting the rule 23(a)(1) requirement that “the

proposed class be ‘so numerous that joinder of all members is impracticable’ ”:

“I also find it fair to consider that the members of this group would not be

likely to file individual suits. Their lack of adequate financial resources or

access to lawyers, their fear of reprisals (especially in relation to the immigrant

status of many), the transient nature of their work, and other similar factors

suggest that individual suits as an alternative to a class action are not practical.

[Citation.]” (Ansoumana v. Gristede’s Operating Corp., supra, 201 F.R.D. at

pp. 85-86.)

We also agree with the Bell court that “class actions may be needed to

assure the effective enforcement of statutory policies even though some claims

are large enough to provide an incentive for individual action. While

employees may succeed under favorable circumstances in recovering unpaid

overtime through a lawsuit or a wage claim filed with the Labor

Commissioner, a class action may still be justified if these alternatives offer no

more than the prospect of ‘random and fragmentary enforcement’ of the

employer’s legal obligation to pay overtime.” (Bell, supra, 115 Cal.App.4th at

p. 745, quoting Vasquez, supra, 4 Cal.3d at p. 807.) “By preventing ‘a failure

of justice in our judicial system’ (Linder v. Thrifty Oil Co. [(2000)] 23 Cal.4th

429, 434), the class action not only benefits the individual litigant but serves

the public interest in the enforcement of legal rights and statutory sanctions.”

(Bell, supra, at p. 741.) In other words, absent effective enforcement, the

employer’s cost of paying occasional judgments and fines may be significantly

outweighed by the cost savings of not paying overtime.

We cannot say categorically that all class arbitration waivers in

overtime cases are unenforceable. As Circuit City points out, some 40

20

published cases over the last 70 years in California have involved individual

employees prosecuting overtime violations without the assistance of class

litigation or arbitration. (See, e.g., Ramirez v. Yosemite Water Co., supra, 20

Cal.4th 785; Sequeira v. Rincon-Vitova Insectaries, Inc. (1995) 32 Cal.App.4th

632; Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16.)

Not all overtime cases will necessarily lend themselves to class actions, nor

will employees invariably request such class actions. Nor in every case will

class action or arbitration be demonstrably superior to individual actions.

Nonetheless, when it is alleged that an employer has systematically

denied proper overtime pay to a class of employees and a class action is

requested notwithstanding an arbitration agreement that contains a class

arbitration waiver, the trial court must consider the factors discussed above:

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

21

forum.” (Little, supra, 29 Cal.4th at p. 1077.)7 The kind of inquiry a trial

court must make is similar to the one it already makes to determine whether


7

The dissent claims our holding is inconsistent with Little’s predecessor,

Armendariz, because here “[n]o finding is made that a class remedy is
essential, as a practical matter, to vindication of the ‘unwaivable’ statutory
right” (Dis. opn., post, at p. 3.) Armendariz did not use the dissent’s italicized
word “essential” in its formulation, and it is unclear what that word means in
this context. Rather, in holding for example that employers must pay most of
the costs when they mandate arbitration of unwaivable rights for their
employees, we concluded that the imposition of such costs would burden
employees’ rights by “pos[ing] a significant risk that employees will have to
bear large costs to vindicate their statutory right against workplace
discrimination.” (Armendariz, supra, 24 Cal.4th at p. 110.) So, too, in the
present case, although it is still possible for employees to individually vindicate
their rights to overtime pay, the class arbitration waiver may, practically
speaking, significantly burden the ability of employees to do so. Armendariz
makes clear that for public policy reasons we will not enforce provisions
contained within arbitration agreements that pose significant obstacles to the
vindication of employees’ statutory rights. The Legislature has amended the
California Arbitration Act (CAA) several times since Armendariz (Stats. 2002,
ch. 176, § 1; Stats. 2002, ch. 1158, § 1; Stats. 2005, ch. 607, § 1; Stats. 2006,
ch. 357, § 1) but has not overturned or modified the holdings in that case.

Moreover, the dissent’s contention that Gentry as an individual has not

shown himself to be burdened by the class arbitration waiver is off the mark.
First, questions of the value of his claim and the appropriateness of a class
arbitration in this case will be determined on remand. More fundamentally, as
suggested above, one of the advantages of class action litigation or arbitration
is precisely the fact that the class representative spearheading the litigation is in
a more advantageous position — e.g., is better informed, is less likely to be
intimidated — than the class as a whole, and the class benefits from the
representative’s advantages. Given this reality, and given that our primary
concern is ensuring that the state’s overtime laws be effectively enforced and
that class arbitration waivers not thwart that enforcement, it makes little sense
to focus only on whether the class representative himself or herself would be
stymied in the pursuit of an individual arbitration remedy (see dis. opn., post,
at p. 8), rather than considering as well the difficulties for the class of
employees affected by Circuit City’s allegedly unlawful practices.

22

class actions are appropriate. “[T]rial courts are ideally situated to evaluate the

efficiencies and practicalities of permitting group action . . . .” (Linder v.

Thrifty Oil, Co., supra, 23 Cal.4th at p. 435.) Class arbitration must still also

meet the “community of interest” requirement for all class actions, consisting

of three factors: “(1) predominant common questions of law or fact; (2) class

representatives with claims or defenses typical of the class; and (3) class

representatives who can adequately represent the class.” (Sav-On Drug Stores,

supra, 34 Cal.4th at p. 326.)

Of course, in cases like the present, the trial court would be comparing

class arbitration with the individual arbitration methods the employer offers,

rather than comparing individual with classwide litigation. We do not

foreclose the possibility that there may be circumstances under which

individual arbitrations may satisfactorily address the overtime claims of a class

of similarly aggrieved employees, or that an employer may devise a system of

individual arbitration that does not disadvantage employees in vindicating their

rights under section 1194. But class arbitration waivers cannot, consistent with

the strong public policy behind section 1194, be used to weaken or undermine

the private enforcement of overtime pay legislation by placing formidable

practical obstacles in the way of employees’ prosecution of those claims.

Circuit City makes a number of arguments that we have already

concluded lack merit. As in Discover Bank, we again reject the “unsupported

assertions [of some courts] that, in the case of small individual recovery,

attorney fees are an adequate substitute for the class action or arbitration

mechanism. Nor do we agree . . . that small claims litigation, government

prosecution, or informal resolution are adequate substitutes.” (Discover Bank,

supra, 36 Cal.4th at p. 162.) In particular, we reject Circuit City’s argument

23

that the availability of enforcement by the Labor Commissioner is an adequate

substitute for classwide arbitration. It is true that an employee may seek

administrative relief from overtime violations with the Labor Commissioner

through a “Berman” hearing procedure pursuant to sections 98 to 98.8. (Added

by Stats. 1976, ch. 1190, §§ 4-11, pp. 5368-5371.) But a losing employer has a

right to a trial de novo in superior court, where the ruling of the Labor

Commissioner’s hearing officer is entitled to no deference. (§ 98.2, subds. (b),

(c); Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1116

(Murphy).) Thus, Berman hearings may result in no cost savings to the

employee. Moreover, in Bell, in rejecting the same argument, the court

considered a declaration by a former chief counsel of the DLSE, who stated

that “ ‘[r]equiring two thousand or so class members to go through individual

“Berman” hearings would obviously be extremely inefficient as compared to a

single class action. Also, a deluge of claims would simply outstrip the

resources of the DLSE . . . impacting not only these claimants but others

unrelated to this suit.’ ” (Bell, supra, 115 Cal.App.4th at p. 746.) In short,

Berman hearings are neither effective nor practical substitutes for class action

or arbitration.

Nor do we accept Circuit City’s argument that a rule invalidating class

arbitration waivers discriminates against arbitration clauses in violation of the

Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.). We considered at great

length and rejected a similar argument in Discover Bank. (Discover Bank,

supra, 36 Cal.4th at pp. 163-173.) 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

24

nonarbitration provisions alike. (See AOL, supra, 90 Cal.App.4th at pp. 17-18;

see also Armendariz, supra, 24 Cal.4th at pp. 99-102 [imposition of minimal

requirements on arbitration necessary to vindicate statutory rights not a

violation of the FAA].) “The Armendariz requirements are . . . applications of

general state law contract principles regarding the unwaivability of public

rights to the unique context of arbitration, and accordingly are not preempted

by the FAA.” (Little, supra, 29 Cal.4th at p. 1079.) We also continue to reject

Circuit City’s suggestion that class actions are incompatible with arbitration

and that compelling class arbitration in the appropriate case violates the FAA.

(Discover Bank, supra, 36 Cal.4th at pp. 171-172.)8

8

The dissent declares that we “may not elevate a mere judicial affinity

for class actions as a beneficial device for implementing the wage laws above
the policy expressed by both Congress and our own Legislature that voluntary
individual agreements to arbitrate . . . should be enforced according to their
terms.” (Dis. opn., post, at p. 6.) What is at issue in this case, however, is not
a “judicial affinity for class actions” but the enforcement of an unwaivable
statutory right to overtime pay. What happens when a class action waiver
significantly interferes with that right? Although the dissent claims that our
concerns about the effect of class arbitration waivers are exaggerated, based on
its own questionable assumptions about class arbitration and litigation, it also
appears to adopt the position that even if we are correct that such waivers will
substantially interfere with the ability of employees to enforce overtime laws in
some cases, the waiver should nonetheless be given effect. The dissent thus
articulates its preference that in this case the statutory policy in favor of
enforcing arbitration agreements as written overrides the statutory policy in
favor of vigorously enforcing overtime laws.

There is no indication, however, that the Legislature shared or shares the

dissent’s preference, or even that it has favored the arbitration of wage and overtime
claims at all. Indeed, the evidence is to the contrary. Section 1194 provides, as
discussed, that an employee is entitled to recover “in a civil action” overtime or
minimum wage compensation. It seems doubtful that the Legislature contemplated,
when that statute was originally enacted in 1937 (Stats. 1937, ch. 90, § 1194, p. 217),
that employer-mandated arbitration could serve as a substitute to “civil actions”


(footnote continued on next page)

25

Accordingly, we will remand this case to the Court of Appeal with

directions to remand to the trial court to determine in light of the above

discussion whether, in this particular case, class arbitration would be a

significantly more effective means than individual arbitration actions of

vindicating the right to overtime pay of the group of employees whose rights to



(footnote continued from previous page)

authorized by the statute. In fact, the forerunner of the CAA, Code of Civil Procedure
former section 1280, in operation at the time section 1194 was originally enacted,
specifically excluded “contracts pertaining to labor” from the scope of enforceable
arbitration agreements. (Stats. 1935, ch. 52, § 9, p. 388.) Moreover, at the time of the
CAA’s enactment in 1961 (Stats. 1961, ch. 461, § 2, p. 1540), the United States
Supreme Court’s construction of the FAA indicated that arbitration statutes would not
be used to enforce agreements to arbitrate unwaivable statutory rights. (See Wilko v.
Swan
(1953) 346 U.S. 427, 435-437, overruled by Rodriguez de Quijas v.
Shearson/Am. Exp.
(1989) 490 U.S. 477.) Outright legislative hostility to arbitrating
wage claims was further manifested in Labor Code section 229, passed two years
before the CAA went into effect. (Stats. 1959, ch. 1939, § 1, p. 4532.) That section,
which involves judicial actions to collect unpaid wages, provides that such actions
“may be maintained without regard to the existence of any private agreement to
arbitrate.” Thus, if we can discern any legislative policy toward employee wage
claims, it is that employees should have direct access to a judicial forum to enforce
their rights. Nor is there any sign that the Congress that enacted the FAA
contemplated that it be used to compel arbitration of statutory wage claims. (See
Leroy & Feuille, Judicial Enforcement of Predispute Arbitration Agreements: Back to
the Future (2003) 18 Ohio St. J. Disp. Resol. 249, 279 [legislative history indicates
“Congress’s main concern was with businesses who wanted to . . . resolve their
commercial disputes privately.”].) The United States Supreme Court has since held
that the FAA does not permit states to legislatively prohibit arbitration of wage
disputes. (Perry v. Thomas (1987) 482 U.S. 483.) But both the FAA and the CAA
permit arbitration-neutral rules that limit enforcement of specific provisions of
arbitration agreements on public policy grounds. (See Armendariz, supra, 24 Cal.4th
at p. 99; 9 U.S.C. § 2; Code Civ. Proc., § 1281.) It is perfectly consistent with the
evident intent of the Legislature to refuse to enforce, under some circumstances and
in an arbitration-neutral manner in accord with the FAA and the CAA, provisions of
arbitration agreements that significantly undermine the ability of employees to
vindicate their statutory right to overtime pay.

26

such pay have been allegedly violated by Circuit City. If the trial court

invalidates the waiver on public policy grounds, then the parties may proceed

to class arbitration or, if the parties wish, have the matter brought in court (see

Discover Bank, supra, 36 Cal.4th at p. 173, fn. 8), unless the trial court

invalidates the arbitration agreement altogether for reasons discussed in the

next section of this opinion. Generally speaking, when an arbitration

agreement contains a single term in violation of public policy, that term will be

severed and the rest of the arbitration agreement enforced. (Little, supra, 29

Cal.4th at pp. 1074-1075.) We believe that severance is particularly

appropriate in the case of class arbitration waivers because, unlike limitations

on remedies or other limitations that are invalid on their face (see Armendariz,

supra, 24 Cal.4th at pp. 103-104), such waivers will only be invalidated after

the proper factual showing, as discussed above. The presence of a class

arbitration waiver in an employee arbitration agreement therefore does not by

itself “indicate a systematic effort to impose arbitration on an employee not

simply as an alternative to litigation, but as an inferior forum that works to the

employer’s advantage.” (Id. at p. 124.)

B. The Opt-out Provision and Procedural Unconscionability

The Court of Appeal concluded, and Circuit City argues, that the fact

that an employee had 30 days to opt out of the arbitration agreement means

that the terms of the agreement, including the class arbitration waiver, are not

procedurally unconscionable and are therefore enforceable. But the validity of

a class arbitration waiver was analyzed in the previous part of this opinion in

terms of unwaivable statutory rights rather than unconscionability. (See

Armendariz, supra, 24 Cal.4th at p. 113.) Because the statutory rights under

27

section 1194 at issue in this case are not waivable, the minimal requirements

imposed on arbitration agreements to ensure their vindication cannot be waived

by the employee in a prelitigation agreement. (Armendariz, supra, 24 Cal.4th

at p. 103, fn. 8.) As we clarified in Armendariz, such waiver could only occur

“in situations in which an employer and an employee knowingly and

voluntarily enter into an arbitration agreement after a dispute has arisen. In

those cases, employees are free to determine what trade-offs between arbitral

efficiency and formal procedural protections best safeguard their statutory

rights. Absent such freely negotiated agreements, it is for the courts to ensure

that the arbitration forum imposed on an employee is sufficient to vindicate his

or her rights . . . .” (Ibid., italics added.) There was no freely negotiated

postdispute agreement, nor for that matter a postdispute agreement of any kind,

in the present case. Therefore, if the trial court on remand finds the class

arbitration waiver invalid using the factors set forth in the previous part of this

opinion, that waiver will not be enforced.9

Gentry does challenge provisions of the arbitration agreement other than

the class arbitration waiver, however, and argues that the entire arbitration

agreement is unconscionable and unenforceable. Should the trial court on

remand find the class arbitration waiver in the present case to be void, it is

unclear whether the issue of the unconscionability of the arbitration agreement

as a whole will become moot, because it is unclear whether Gentry will


9

We note that if an employee believes individual arbitration to be as

advantageous as the dissent suggests, nothing in this opinion, nor in any
subsequent trial court ruling, precludes him or her from entering into an
individual postdispute arbitration agreement with Circuit City.

28

continue to resist arbitration or whether Circuit City will continue to seek it.

Nonetheless, because this issue may remain viable on remand, we will address

the Court of Appeal’s holding that the arbitration agreement was not

unconscionable because Gentry had a 30-day period to opt out of the

agreement. As noted above, the Court of Appeal stated that because of the opt-

out provision, “the agreement at issue here does not have [an] adhesive

element and therefore is not procedurally unconscionable.”

As a threshold matter, Gentry argues that the arbitration agreement was

ineffective because his failure to opt out of the agreement cannot constitute

assent to that agreement. Gentry bases his argument on the well-established

principle “that an offeror has no power to cause the silence of the offeree to

operate as an acceptance when the offeree does not intend it to do so.” (1

Corbin on Contracts (rev. ed. 1993) § 3.19, p. 407.) As one court cited in the

above treatise has stated: “ ‘[W]here the recipient of an offer is under no duty

to speak, silence, when not misleading, may not be translated into acceptance

merely because the offer purports to attach that effect to it. [Citations.]’ ”

(Albrecht Chemical Co. v. Anderson Trading Corp. (N.Y. 1949) 84 N.E.2d

625, 626; see also Leslie v. Brown Brothers Incorporation (1929) 208 Cal. 606,

621.) On the other hand, silence can constitute acceptance when “the conduct

of the party denying a contract has been such as to lead the other reasonably to

believe that silence, without communication, would be sufficient” to create a

contract. (1 Corbin on Contracts, supra, § 3.21, p. 414.)

In this case, Gentry signed an easily readable, one-page form that

accompanied receipt of the Associate Issue Resolution Package. The form

stated in part: “I understand that participation in the Issue Resolution Program

is voluntary. If I do not wish to participate in the arbitration component of the

29

Program, however, I must send the completed ‘Circuit City Arbitration Opt-

Out Form,’ which is included with this package. I must send the Opt-Out

Form via U.S. mail . . . to the above address within 30 calendar days of the

date on which I signed below. I understand that if I do not mail the Form

within 30 calendar days, I will be required to arbitrate all employment-related

legal disputes I may have with Circuit City.” (Original boldface.)

Although Gentry contends his signature was merely an

acknowledgement of receipt of the Associate Issue Resolution Package, it was

also an acknowledgment of his assent to the opt-out provision. The opt-out

provision of the acknowledgment agreement was neither inconspicuous or

difficult to understand. Thus, in signing the above form, Gentry manifested his

intent to use his silence, or failure to opt out, as a means of accepting the

arbitration agreement. Having thus indicated his intent, he may not now claim

that the failure to opt out did not constitute acceptance of the arbitration

agreement. (1 Corbin on Contracts, supra, § 3.21, p. 414.) The question is not

whether the acknowledgement form itself is a valid contract — it is not — but

rather whether Gentry’s signature on that form reasonably led Circuit City to

believe that his failure to opt out constituted acceptance of the arbitration

agreement. We conclude under the circumstances of this case that it did.

The question whether an arbitration agreement has been validly formed

is of course different from whether that agreement was unconscionable. In

order to evaluate the Court of Appeal’s conclusion that the 30-day opt-out

provision meant that Circuit City’s arbitration agreement was not procedurally

unconscionable, we first review some general principles. “ ‘To briefly

recapitulate the principles of unconscionability, the doctrine has “ ‘both a

“procedural” and a “substantive” element,’ the former focusing on

30

‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on

‘ “overly harsh” ’ or ‘ “one-sided” ’ results.” [Citation.] The procedural

element of an unconscionable contract generally takes the form of a contract of

adhesion, “ ‘which, imposed and drafted by the party of superior bargaining

strength, relegates to the subscribing party only the opportunity to adhere to the

contract or reject it.’ ” . . . [¶] Substantively unconscionable terms may take

various forms, but may generally be described as unfairly one-sided.’ ”

(Discover Bank, supra, 36 Cal.4th at p. 160.)

As we have further explained: “ ‘The prevailing view is that

[procedural and substantive unconscionability] must both be present in order

for a court to exercise its discretion to refuse to enforce a contract or clause

under the doctrine of unconscionability.’ [Citation.] But they need not be

present in the same degree. ‘Essentially a sliding scale is invoked which

disregards the regularity of the procedural process of the contract formation,

that creates the terms, in proportion to the greater harshness or

unreasonableness of the substantive terms themselves.’ [Citations.] In other

words, the more substantively oppressive the contract term, the less evidence

of procedural unconscionability is required to come to the conclusion that the

term is unenforceable, and vice versa.” (Armendariz, supra, 24 Cal.4th at p.

114, italics omitted.)

As the above suggests, a finding of procedural unconscionability does

not mean that a contract will not be enforced, but rather that courts will

scrutinize the substantive terms of the contract to ensure they are not

manifestly unfair or one-sided. (See, e.g., Little, supra, 29 Cal.4th at p. 1071.)

As also suggested above, there are degrees of procedural unconscionability. At

one end of the spectrum are contracts that have been freely negotiated by

31

roughly equal parties, in which there is no procedural unconscionability.

Although certain terms in these contracts may be construed strictly, courts will

not find these contracts substantively unconscionable, no matter how one-sided

the terms appear to be. (See, e.g., Nunes Turfgrass, Inc. v. Vaughan-Jacklin

Seed Co. (1988) 200 Cal.App.3d 1518, 1538-1539 [liability limitation

negotiated by two commercial entities upheld].) Contracts of adhesion that

involve surprise or other sharp practices lie on the other end of the spectrum.

(See, e.g., Ellis v. McKinnon Broadcasting Co. (1993) 18 Cal.App.4th 1796,

1804 [party told that signing contract was “mere formality” to conceal

oppressive forfeiture provision].) Ordinary contracts of adhesion, although

they are indispensable facts of modern life that are generally enforced (see

Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817-818), contain a degree

of procedural unconscionability even without any notable surprises, and “bear

within them the clear danger of oppression and overreaching.” (Id., at p. 818.)

Thus, a conclusion that a contract contains no element of procedural

unconscionability is tantamount to saying that, no matter how one-sided the

contract terms, a court will not disturb the contract because of its confidence

that the contract was negotiated or chosen freely, that the party subject to a

seemingly one-sided term is presumed to have obtained some advantage from

conceding the term or that, if one party negotiated poorly, it is not the court’s

place to rectify these kinds of errors or asymmetries. Accordingly, if we take

the Court of Appeal in this case at its word that there was no element of

procedural unconscionability in the arbitration agreement because of the 30-

day opt-out provision, then the logical conclusion is that a court would have no

basis under common law unconscionability analysis to scrutinize or overturn

even the most unfair or exculpatory of contractual terms.

32

We conclude that the Court of Appeal erred in finding the present

agreement free of procedural unconscionability. It is true that freedom to

choose whether or not to enter a contract of adhesion is a factor weighing

against a finding of procedural unconscionability. (See, e.g., Dean Witter

Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758, 769-771

[agreement between brokerage house and sophisticated consumer of financial

services that included a $50 termination fee on an IRA account was not

unconscionable where competing IRA’s without the challenged fee were freely

available].) But there are several indications that Gentry’s failure to opt out of

the arbitration agreement did not represent an authentic informed choice.

First and foremost, the explanation of the benefits of arbitration in the

Associate Issue Resolution Handbook was markedly one-sided. The Court of

Appeal thought otherwise, stating: “The ‘Associate Issue Resolution

Handbook,’ written in straightforward language, does point out the advantages

of electing arbitration (notably, that the procedure is cost effective and the

employee’s claim is resolved ‘in a matter of weeks or a few months rather than

years’). However, it also notes the disadvantages (for example, the lack of a

right to a jury trial and limited discovery). The employee is then free to decide

whether or not the advantages of arbitration outweigh the disadvantages.”

But what the Court of Appeal’s discussion entirely neglected is that

although the handbook alluded to some of the shortcomings of arbitration in

the general sense, it did not mention any of the additional significant

disadvantages that this particular arbitration agreement had compared to

litigation. These included the following: First, the agreement provided for a

one-year statute of limitations as opposed to the three-year statute for

recovering overtime wages provided under Code of Civil Procedure section

33

338 (see Murphy, supra, 40 Cal.4th at p. 1099) and a four-year statute of

limitations for the unfair competition claim under Business and Professions

Code section 17208. Second, the agreement provided a limitation of remedies

to backpay “only up to one year from the point at which the [employee] knew

or should have known of the events giving rise to the alleged violation of the

law,” whereas an employee filing suit could potentially recover backpay for a

three-year period from the date the cause of action actually accrued. Third, the

agreement imposed a maximum of $5,000 in punitive damages. Although

exemplary damages are not available in overtime suits (see § 1194.2

[“liquidated damages” equal to the amount of wages recovered available in

minimum wage litigation but not overtime litigation]), Circuit City’s

agreement applied to “any and all employment-related legal disputes,”

including violation of the FEHA and discharges in violation of public policy,

for which punitive damages without any such limitation would be available.

(See Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211,

220-221.) Fourth, the agreement contained a provision that parties will

“generally” be liable for their own attorney fees, with the arbitrator having the

“discretion” to award the employee attorney fees, as opposed to section 1194’s

provision that a prevailing employee “is entitled to” reasonable attorney fees

and costs. (§ 1194, subd. (a).)

The fact that Circuit City’s explanation of the arbitration agreement

emphasized that the arbitration is “much less expensive” and that “the

arbitrator can award monetary damages to compensate you for the harm you

may have suffered,” without mentioning the many disadvantages to the

employee that Circuit City had inserted into the agreement, meant that the

employee would receive a highly distorted picture of the arbitration Circuit

34

City was offering. Although an employee who read Circuit City’s nine-page

single-spaced document entitled Circuit City’s “Dispute Resolution Rules and

Procedures” would have encountered the above provisions, only a legally

sophisticated party would have understood that these rules and procedures are

considerably less favorable to an employee than those operating in a judicial

forum. As has been observed, even “ ‘experienced but legally unsophisticated

businessmen may be unfairly surprised by unconscionable contract terms.’ ”

(Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1535 [finding

unconscionability in a corporate manager’s arbitration agreement with his

employer].) The same would be even more true for the nonexecutive

employees who would be the likely plaintiffs in suits about overtime pay. And

notwithstanding the statement in the documents provided Gentry that

employees “may consult with an attorney” about their legal rights, and contrary

to the dissenting opinion’s contention otherwise, it is unrealistic to expect

anyone other than higher echelon employees to hire an attorney to review what

appears to be a routine personnel document.

Moreover, it is not clear that someone in Gentry’s position would have

felt free to opt out. The materials provided to Gentry made unmistakably clear

that Circuit City preferred that the employee participate in the arbitration

program. The “Associate Issue Resolution Handbook” distributed with the

opt-out form touted the virtues of arbitration, including use of the all-caps

subheading — WHY ARBITRATION IS RIGHT FOR YOU AND CIRCUIT

CITY — that left no doubt about Circuit City’s preference. The fact that the

arbitration agreement was structured so that arbitration was the default dispute

resolution procedure from which the employee had to opt out underscored

Circuit City’s pro-arbitration stance. Given the inequality between employer

35

and employee and the economic power that the former wields over the latter

(see Armendariz, supra, 24 Cal.4th at p. 115), it is likely that Circuit City

employees felt at least some pressure not to opt out of the arbitration

agreement. The lack of material information about the disadvantageous terms

of the arbitration agreement, combined with the likelihood that employees felt

at least some pressure not to opt out of the arbitration agreement, leads to the

conclusion that the present agreement was, at the very least, not entirely free

from procedural unconscionability.10

To reiterate, the fact that some degree of procedural unconscionability is

present does not mean necessarily that the arbitration agreement is

unenforceable. But it does mean that the agreement is not immune from

judicial scrutiny to determine whether or not its terms are so one-sided or

oppressive as to be substantively unconscionable.

As noted, Gentry argues that several provisions of the arbitration

agreement other than the class arbitration waiver are substantively

unconscionable, an argument that Circuit City disputes. The Court of Appeal

did not address these arguments, believing the agreement not to be

procedurally unconscionable and upholding the class arbitration waiver. As


10

We note that two Ninth Circuit cases came to the contrary conclusion.

(Circuit City Stores, Inc. v. Ahmed (9th Cir. 2002) 283 F.3d 1198; Circuit City
Stores, Inc. v. Najd
(9th Cir. 2002) 294 F.3d 1104.) The Ahmed court in its
brief discussion of the unconscionability issue did not consider the
concealment of disadvantageous terms nor the reality that Circuit City clearly
favored arbitration and was in a position to pressure employees to choose its
favored option. (Ahmed, supra, 283 F.3d at pp. 1199-1200.) Najd viewed
Ahmed as binding. (Najd, supra, 294 F.3d at p. 1108.) We find neither case
persuasive.

36

stated in the previous part of this opinion, we remand the matter to the Court of

Appeal with directions to remand to the trial court to determine whether the

class arbitration waiver is void. Unless the issue is mooted, the trial court must

also determine on remand whether the original 1995 arbitration agreement or

an amended agreement controls the present case and whether the controlling

agreement has substantively unconscionable terms.11 If so, the court must

determine whether these terms should be severed, or whether instead the

arbitration agreement as a whole should be invalidated. (See Little, supra, 29

Cal.4th at pp. 1074-1076.)


11

Circuit City points to a 1998 modification of the arbitration agreement

that required that the arbitration be conducted according to the procedural rules
in effect when the arbitration request was filed. Circuit City further points to
the arbitration agreement amendments of 2001 and 2005, which it claims do
not contain the above terms, and contends that these amended agreements
would govern the conduct of Gentry’s arbitration and are not substantively
unconscionable. Gentry on the other hand argues that the 1995 rules apply and
that for various reasons the 1998 amendment is not effective. The Court of
Appeal did not address this issue, nor was it one of the issues presented in the
petition for review. Assuming the issue is not moot, it must be determined on
remand which agreement controls and whether there is substantive
unconscionability under that agreement. But for present purposes, our only
inquiry is whether the 1995 arbitration agreement, notwithstanding its opt-out
provision, contained an element of procedural unconscionability. The fact that
the 1995 agreement had substantively unconscionable terms that were not fully
disclosed to Gentry is directly pertinent to that determination.

37



III. DISPOSITION

The judgment of the Court of Appeal is reversed and the cause is

remanded for proceedings consistent with this opinion.

MORENO, J.

WE CONCUR: GEORGE, C. J.
KENNARD,

J.

WERDEGAR,

J.






38












DISSENTING OPINION BY BAXTER, J.




I respectfully dissent. I cannot join the majority’s continuing effort to limit

and restrict the terms of private arbitration agreements, which enjoy special

protection under both state and federal law.

Both the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) and the

California Arbitration Act (CAA; Code Civ. Proc., § 1281 et seq.) provide that an

agreement to resolve disputes by arbitration, rather than by court litigation, must

be enforced except upon grounds applicable to contracts generally. These statutes

are intended to override courts’ historical suspicion of arbitration as an inferior

forum for the vindication of claims, and to endorse contracts—including

employment contracts—in which parties agree to resolve their disputes by this

relatively cheap, simple, and expeditious means. (See, e.g., Circuit City Stores,

Inc. v. Adams (2001) 532 U.S. 105, 111-124; Gilmer v. Interstate/Johnson Lane

Corp. (1991) 500 U.S. 20, 30 (Gilmer); Moses H. Cone Hospital v. Mercury

Constr. Corp. (1983) 460 U.S. 1, 24 (Moses H. Cone Hospital); St. Agnes Medical

Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1204; Mercury Ins.

Group v. Superior Court (1998) 19 Cal.4th 332, 342; Moncharsh v. Heily & Blase

(1992) 3 Cal.4th 1, 9.)1


1

Section 2 of the FAA (9 U.S.C. § 2) creates “a liberal federal policy

favoring arbitration agreements, notwithstanding any state substantive or


(footnote continued on next page)

1



In all but the most exceptional cases, these laws thus demand deference to

the “fundamentally contractual nature [of private arbitration], and to the attendant

requirement that [contractual] arbitration shall proceed as the parties themselves

have agreed. [Citation.]” (Vandenberg v. Superior Court (1999) 20 Cal.4th 815,

831, first italics added; see, e.g., Volt Info. Sciences v. Leland Stanford Jr. U.

(1989) 489 U.S. 468, 478 [FAA “requires courts to enforce privately negotiated

agreements to arbitrate, like other contracts, in accordance with their terms”].) Of

course, “by agreeing to arbitrate, a party ‘trades the procedures and opportunity for

review in the courtroom for the simplicity, informality, and expedition of

arbitration.’ [Citation.]” (Gilmer, supra, 500 U.S. 20, 31.)

Because of the statutory preference that arbitration agreements be fully

implemented, past decisions have recognized but limited circumstances in which

general contract principles may render terms of such an agreement unenforceable.

The majority holds that such circumstances may be present here. In my view, the

majority thereby errs.

Real party in interest Circuit City Stores, Inc. (Circuit City) offered its

employees, including plaintiff Gentry, a voluntary program to resolve disputes by

arbitration. Consistent with the primary advantage of arbitration as a quicker,

simpler, and cheaper alternative to court litigation, the program provided, among

other things, that claims would proceed on an individual basis, and that

consolidation of the separate claims of multiple plaintiffs in a single proceeding

would not be permitted.



(footnote continued from previous page)

procedural policies to the contrary.” (Moses H. Cone Hospital, supra, 460 U.S. 1,
24.)

2



The program’s terms, including the individual arbitration provision, were

set forth in a package of written materials, which plaintiff Gentry received, and

were further explained in a video presentation, which he attended. He signed a

receipt for the written materials. The receipt advised that he should review the

materials and contact Circuit City with any questions. It even suggested that he

could consult with an attorney about his legal rights. Finally, it clearly provided

that, having done so, he could “opt out” of the arbitration program, without

penalty, by mailing the appropriate form to Circuit City within 30 days.

Gentry did not exercise his option. The majority concedes that a contract

under the program’s terms was thus validly formed.

Later, contrary to those provisions, Gentry filed a class action against

Circuit City, seeking overtime wages allegedly due both to himself and to other

employees. The superior court enforced the arbitration agreement according to its

terms, and ordered individual arbitration of Gentry’s claim. The Court of Appeal

summarily denied mandate. We directed that court to reconsider under the

intervening decision in Discover Bank v. Superior Court (2005) 36 Cal.4th 148

(Discover Bank). After doing so, the Court of Appeal again denied Gentry relief.

Now the majority reverses, finding that the individual-arbitration term in

Circuit City’s agreement with Gentry may be invalid. The majority does not reach

this result—because it cannot—by any analysis to be found in the prior case law.

No finding is made that a class remedy is essential, as a practical matter, to

vindication of the “unwaivable” statutory right (Armendariz v. Foundation Health

Psychcare Services, Inc. (2000) 24 Cal.4th 83, 100-113 (Armendariz); see Green

Tree Financial Corp.-Ala. v. Randolph (2000) 531 U.S. 79, 90-91) to overtime

wages. Nor does the majority rely, for this holding, on the public policy against

contract terms that are both procedurally and substantively oppressive, and thus

3



“unconscionable.” (See Gilmer, supra, 500 U.S. 20, 33; Armendariz, supra, at

pp. 113-121; but cf. discussion, post.)

Finally, there is no suggestion that the individual-arbitration clause in the

voluntary agreement between Gentry and Circuit City meets the test of invalid

“exculpatory” agreements (see Civ. Code, § 1668) set forth in Discover Bank,

supra, 36 Cal.4th 148. There we confronted an agreement, unilaterally imposed

by means of a “bill stuffer,” that required customers of a credit card company to

either accept nonclass arbitration of claims against the company or cease using

their accounts. The Discover Bank majority held that a waiver of class rights,

contained in such a mandatory contract, may be deemed exculpatory, and thus

unenforceable, in a setting where “disputes between the contracting parties [will]

predictably involve small amounts of damages, and . . . it is alleged that the party

with the superior bargaining power has carried out a scheme to deliberately cheat

large numbers of [persons] out of individually small sums of money.” (Id., at

pp. 162-163.) Under such circumstances, the majority reasoned, the waiver of

class treatment “becomes in practice the exemption of the party [with superior

bargaining power] ‘from responsibility for [its] own fraud, or willful injury to the

person or property of another.’ [Citation.]” (Id., at p. 163.)

Whatever the merits of Discover Bank—a decision from which I largely

dissented—we face no similar situation here. As the instant majority admits,

claims for overtime wages, unlike the minor credit card fees and charges at issue

in Discover Bank, are not necessarily and predictably “miniscule” (maj. opn., ante,

p. 11), such that the incentive to prosecute individual actions, and thus to hold the

wrongdoer to account, will rarely, if ever, be present. Obviously, an individual

claim for accumulated unpaid wages can be substantial. And there is no indication

in the record that Gentry himself—the person whose contract for individual

4



arbitration is actually before us—cannot, as a practical matter, vindicate his

statutory overtime rights except through class proceedings.

Moreover, as the instant majority acknowledges, Circuit City did not

abruptly impose on Gentry a mandatory requirement of individual arbitration.

Unlike the credit card customers in Discover Bank, Gentry was given the

opportunity to consider the terms of Circuit City’s arbitration proposal, and, after

doing so, to opt out of the arbitration program without suffering any penalty or

sanction.

Nonetheless, breaking new ground, the majority opines that, for several

reasons, an agreement to arbitrate disputes on an individual basis might make it

“very difficult” (maj. opn., ante, at p. 12) for some Circuit City employees to

pursue their unwaivable rights to unpaid overtime wages. To that extent, the

majority reasons, such a provision—even, apparently, if neither oppressive nor

mandatory—must thus be considered exculpatory and invalid. Accordingly, the

majority rules that if, on remand, the trial court decides a representative action is a

significantly better means of enforcing the statutory rights of all affected Circuit

City employees to unpaid overtime wages, the court may, at Gentry’s behest,

ignore and dishonor his agreement to arbitrate on an individual basis.

In effect, the majority holds that, despite such an agreement, the trial court

may certify a class, in an overtime-wage case, in any circumstance where it could

otherwise do so. For all practical purposes, the majority thus decrees, such

agreements are forbidden, and meaningless, in this context.2


2

The majority denies that class action waivers in arbitration agreements are

necessarily invalid in suits to vindicate overtime-wage rights, but that is the
practical effect of the majority’s holding. Even where no class action waiver is at
issue, “[a] line of California cases follows the principle of rule 23(b)(3) of the
Federal Rules of Civil Procedure (28 U.S.C.), which ‘provides that, for a class


(footnote continued on next page)

5



The majority cites no currently valid statutory provision that requires or

supports such a determination.3 On the other hand, two statutes—the FAA and the



(footnote continued from previous page)

action to be maintained, it must be “superior to other available methods for the fair
and efficient adjudication of the controversy.” This “superiority” criterion has
been held to be “manifest” in the . . . requirement that the class mechanism confer
“substantial benefits.” ’ [Citations.]” (Bell v. Farmers Ins. Exchange (2004)
115 Cal.App.4th 715, 741 (Bell); see also, e.g., Linder v. Thrifty Oil Co. (2000) 23
Cal.4th 429, 435 (Linder); Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d
318, 385.) Thus, the majority holds in effect that whenever, in an overtime-wage
case, the court could otherwise find a class proceeding appropriate, it may do so
notwithstanding a free and fair agreement for individual arbitration. Nor is there
any realistic limitation in the majority’s suggestion that its rule applies to cases
where “systematic[ ]” denial of overtime pay to a “class of employees” is alleged.
(Maj. opn., ante, at p. 20.) Such assertions would appear, by necessity, in any
complaint seeking to litigate overtime-pay claims in a class proceeding.

3

California statutes generally permit class actions (Code Civ. Proc., § 382)

and give workers the right to engage in concerted activities with respect to
workplace issues, free of employer interference or coercion (see Lab. Code,
§ 923), but nothing suggests these laws preclude noncoercive agreements between
employer and employee to arbitrate disputes on an individual basis.

As evidence of the Legislature’s hostility to the use of contractual

arbitration to vindicate wage claims, the majority points to several California
statutes that purported to render arbitration agreements unenforceable in this
context. (Maj. opn., ante, at pp. 25-26, fn. 8.) Of course, as the majority
implicitly concedes, all such laws have been superseded or invalidated by the
prevailing public policy that favors enforcement of arbitration agreements
according to their terms, as set forth in the CAA and the FAA. (See Perry v.
Thomas
(1987) 482 U.S. 483 [FAA preempted California statute (Lab. Code,
§ 229) that allowed maintenance of action for unpaid wages “without regard to the
existence of any private agreement to arbitrate”].)

On the other hand, as the majority is well aware, the Legislature knows

how to provide for a right to class action relief that cannot be waived. It has made
such provision, for example, in the Consumers Legal Remedies Act. (Civ. Code,
§§ 1751, 1752, 1781; see Discover Bank, supra, 36 Cal.4th 148, 158-159; maj.
opn., ante, at p. 8.) No similar provisions appear in the wage laws at issue here.

6



CAA—strongly undermine it. I conclude that the majority may not elevate a mere

judicial affinity for class actions as a beneficial device for implementing the wage

laws above the policy expressed by both Congress and our own Legislature that

voluntary individual agreements to arbitrate—by which parties give up certain

litigation rights and procedures in return for the relative speed, informality, and

cost efficiency of arbitration—should be enforced according to their terms.

Hence, I cannot accept the majority’s reasoning, or its result.

In the majority’s view, several factors suggest that the absence of a class

remedy might “under some circumstances” unduly interfere with employees’

ability to vindicate their statutory rights to overtime pay. (Maj. opn., ante, at

p. 11.) Because claims for unpaid overtime wages tend to be “modest,” the

majority asserts, the fees and costs of proceeding individually might discourage

many such actions, resulting in mere “ ‘ “random and fragmentary

enforcement” ’ ” of the wage laws. (Id., at p. 19.) The majority cites the prospect

of employer retaliation—admittedly illegal—against a worker who asserts an

individual claim without the protective coloration of collective action. An

additional issue, the majority suggests, is that many employees, especially those

low-wage workers most vulnerable to violations, may not know their rights.

Finally, the majority concludes, administrative proceedings—so-called Berman

hearings (Lab. Code, §§ 98-98.8; see Murphy v. Kenneth Cole Productions, Inc.

(2007) 40 Cal.4th 1094, 1114-1116)—are an inadequate alternative means of

vindicating smaller claims for overtime wages.

In many respects, the majority’s concerns are exaggerated. Though a credit

card customer might not sue individually to recover a minor fee or charge he

believes improper, one would expect an employee vigorously to pursue any

significant amount due as compensation for his labor. The case law supports that

hypothesis. As the majority acknowledges, “some 40 published cases over the last

7



70 years in California have involved individual employees prosecuting overtime

violations without the assistance of class litigation or arbitration. [Citations.]”

(Maj. opn., ante, at p. 20.)4

And though the majority stresses the drawbacks of individual litigation to

resolve small or modest claims (see generally, e.g., Linder supra, 23 Cal.4th 429,

435; Bell, supra, 115 Cal.App.4th 715, 741), it fails to consider that because

arbitration is relatively quick, simple, informal, and inexpensive, it may allow the

individual pursuit of claims that would be less practical if litigated individually in

court. These qualities of informality, simplicity, and expedition—advantages

largely negated by the complexities of a class proceeding—are presumably what

Gentry and Circuit City sought when they agreed to individual arbitration.

Moreover, while collective action has its place, the parties here may also

have contemplated that resolution of a dispute by the relatively simple, informal

process of individual arbitration would reduce the workplace tensions that might

otherwise arise as the result of a class battle in court. Indeed, though the majority

suggests that class proceedings may lessen the chances of retaliation against an

individual employee, I find it hard to imagine that a worker who organizes fellow

employees to mount a class assault against the employer will thereby achieve

improved standing in the employer’s eyes.


4

In the modern era, these cases include Ramirez v. Yosemite Water Co.

(1999) 20 Cal.4th 785; Rawson v. Tosco Refining Co. (1997) 57 Cal.App.4th
1520; Sequiera v. Rincon-Vitova Insectaries, Inc. (1995) 32 Cal.App.4th 632;
Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16; Baker v.
Aubry
(1989) 216 Cal.App.3d 1259; Hernandez v. Mendoza (1988)
199 Cal.App.3d 721; Swepston v. State Personnel Bd. (1987) 195 Cal.App.3d 92;
and Markman v. County of Los Angeles (1973) 35 Cal.App.3d 132.

8



But even if class relief were a “significantly more effective” way for Circuit

City employees, as a group, to establish their overtime-wage claims (maj. opn.,

ante, at pp. 2, 20, 23), this does not justify invalidating Gentry’s voluntary

agreement to resolve his claims by individual arbitration. Unless Gentry’s

contract to arbitrate individually constitutes a de facto waiver of his own statutory

rights, he should not be allowed to act, contrary to his agreement, as a

representative plaintiff.5 Otherwise, the strong public policy that arbitration

agreements are to be enforced according to their terms should prevail.

Here, as in Discover Bank, the majority insists its analysis does not

discriminate against the arbitral forum—an approach forbidden by both the FAA

and the CAA—but simply indicates the procedures necessary in any forum to

prevent the de facto waiver of statutory rights. However, there is more than one

way courts can show hostility to arbitration as a simpler, cheaper, and less formal

alternative to litigation. They can simply refuse to enforce the parties’ agreement

to arbitrate. Or, more subtly, they can alter the arbitral terms to which the parties

agreed, and defeat the essential purposes and advantages of arbitration, by

transforming that process, against the parties’ expressed will at the time they

entered the agreement, into something more and more like the court litigation

arbitration is intended to avoid.


5

As I have indicated in the text, such a finding cannot be made on this record

under the standards suggested by the majority. There is no indication that
Gentry’s own claim is too small to warrant individual legal action. He need not
fear retaliation as a Circuit City employee, because his employment ended in
March 2001, before he filed this lawsuit in August 2002. Moreover, the very fact
that he sued indicates he was, and is, aware of his legal rights.

9



Given the strong policy that arbitration agreements are to be enforced as

written, any such alteration should be employed only on a showing of the starkest

necessity. The majority has not adhered to that limitation here.

Two years ago, I noted that “the [strong prevailing weight] of decisions,

applying federal law or the law of other states, . . . hold[s] that arbitration clauses

are not invalid either because they specifically exclude class treatment or because

they preclude such treatment by failing expressly to provide for it. [Citations.]”

(Discover Bank, supra, 36 Cal.4th 148, 176, fn. 1 (conc. & dis. opn. of

Baxter, J.).) The majority does not suggest, and I have no reason to believe, that

this situation has changed.6 The majority thus moves California further along the

path away from the mainstream on the issue. Persuasive reasoning supports the

contrary, prevailing view. I must therefore disassociate myself from the

majority’s holding.

In a separate ruling, the majority concludes that the arbitration agreement

between Gentry and Circuit City is procedurally unconscionable, thus exposing

numerous other provisions of the agreement to possible invalidation on grounds

that they are substantively oppressive or unfair. (See, e.g, Armendariz, supra,

24 Cal.3d 83, 114.) Again, I cannot agree.


6

Skirchak v. Dynamic Research Corp., Inc. (D.Mass. 2006) 432 F.Supp.2d

175, the only overtime case cited by the majority in which a class waiver in an
arbitration provision was invalidated, involved a mandatory agreement unilaterally
imposed by the employer. In Skirchak, employees were advised by e-mail that
they would be required to submit to the company’s dispute resolution program.
Acceptance was a condition of continued employment. Applying principles of
procedural unconscionability under Massachusetts law, the court deemed essential
to its holding that the employees had no meaningful choice whether to accept the
provision. (Id. at pp. 179-180.)

10



As noted above, this was not a case in which one party has simply imposed

mandatory contract terms on another. Gentry was not required blindly to accept

the arbitration program and its terms as a condition of his employment. (Cf.

Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071; Armendariz, supra,

24 Cal.4th 83, 91-92, 114-115; see also Discover Bank, supra, 36 Cal.4th 148, 154

[customers of credit card company could reject arbitration term of cardholder

agreement only by ceasing to use their accounts].) On the contrary, Circuit City

provided Gentry, and other employees, with an extensive orientation about the

program, then allowed them a reasonable time to “opt out,” without penalty,

simply by mailing back a form.

The instant Court of Appeal determined on this basis that no procedural

unconscionability was present. Two Ninth Circuit decisions, applying California

law, had previously reached the same conclusion. (Circuit City Stores, Inc. v.

Najd (9th Cir. 2002) 294 F.3d 1104, 1108; Circuit City Stores, Inc. v. Ahmed

(9th Cir. 2002) 283 F.3d 1198, 1199-1200.)

The majority concedes that Gentry’s freedom to choose against the

arbitration program “weigh[s] against a finding of procedural unconscionability.

[Citation.]” (Maj. opn., ante, at p. 29.) Nonetheless, the majority discerns an

“element” of procedural oppression—thus allowing scrutiny of the agreement’s

substantive terms—by finding that Circuit City’s explanatory materials were “one-

sided.” (Ibid.) In particular, the majority asserts, the explanatory materials failed

to disclose that certain terms of the arbitration program might work to an

employee’s disadvantage in specific situations. Whatever the merits of that

premise,7 the receipt Gentry signed prominently advised that he could consult his


7

As the majority makes clear, the informational packet Gentry received

included not only the “Associate Issue Resolution Handbook,” which sought to


(footnote continued on next page)

11



own attorney about the legal “pros and cons” of the program, and he was given

ample opportunity to do so. Under these circumstances, there is no basis for a

conclusion that the process by which Circuit City sought to secure its employees’

agreement to the program was misleading.

The majority also points out that Circuit City made clear its preference for

arbitration. But even if Circuit City encouraged employees to accept the

arbitration agreement, the record is devoid of any evidence that it implied,

threatened, or imposed any sanction for an employee’s decision to opt out of the

program. I see in this situation no grounds for a finding that Circuit City unfairly

coerced or induced its employees’ agreement.

Accordingly, I would affirm the judgment of the Court of Appeal.















BAXTER, J.

WE CONCUR:


CHIN, J.
CORRIGAN, J.




(footnote continued from previous page)

explain the program, but also the “Circuit City Dispute Resolution Rules and
Procedures,” which set forth the program’s terms in full.

12



See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Gentry v. Superior Court
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted
XXX 135 Cal.App.4th 944
Rehearing Granted

__________________________________________________________________________________

Opinion No.
S141502
Date Filed: August 30, 2007
__________________________________________________________________________________

Court:
Superior
County: Los Angeles
Judge: Thomas L. Willhite, Jr.

__________________________________________________________________________________

Attorneys for Appellant:

Riordan & Horgan, Dennis P. Riordan; Righetti & Wynne, Righetti Law Firm, Matthew Righetti, John
Glugoski; Law Offices of Ellen Lake and Ellen Lake for Petitioner.

Altshuler, Berzon, Nussbaum, Rubin & Demain, Michael Rubin, Dorthea Langsam; McGuinn, Hillsman &
Palefsky and Cliff Palefsky for International Brotherhood of Teamsters, Laborers International Union of
North America, Service Employees International Union, Unite-Here and California Employment Lawyers
Association as Amici Curiae on behalf of Petitioner.

Goldstein, Demchak, Baller, Borgen & Dardarian, Laura L. Ho and Jospeh E. Jaramillo for Trial Lawyers
for Public Justice, Asian Law Caucus, Asian Pacific American Legal Center, California Rural Legal
Assistance Foundation, Hastings Civil Justice Clinic, Impact Fund, The Katherine and George Alexander
Community Law Center, La Raza Centro Legal, Inc., Lawyers’ Committee for Civil Rights of the San
Francisco Bay Area, The Legal Aid Society of San Francisco-Employment Law Center and Mexican
American Legal Defense and Educational Fund as Amici Curiae on behalf of Petitioner.

Law Office of Michael H. Crosby and Michael H. Crosby as Amici Curiae on behalf of Petitioner.

Edmund G. Brown, Jr., Attorney General, Tom Greene, Chief Assistant Attorney General, Albert Norman
Shelden, Assistant Attorney General, Ronald A. Reiter and Michele R. Van Gelderen, Deputy Attorneys
General, as Amici Curiae on behalf of Petitioner.
__________________________________________________________________________________

Attorneys for Respondent:

No appearance for Respondent.

Attorneys for Real Party in Interest:

Berry & Block, Rex Darrell Berry, Scott M. Plamondon; Jones Day and Steven B. Katz for Real Party in
Interest.







Page 2 – S141502 – counsel continued

Attorneys for Real Party in Interest:

Littler Mendelson, Henry D. Lederman, Lisa C. Chagala and Harry M. Decourcy for Ralphs Grocery
Company as Amicus Curiae on behalf of Real Party in Interest.

Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Kelly L. Hensley and Melissa K. Lee for
National Retail Federation and California Retailers Association as Amici Curiae on behalf of Real Party in
Interest.

Deborah J. La Fetra and Timothy Sandefur for Pacific Legal Foundation as Amicus Curiae on behalf of
Real Party in Interest.

National Chamber Litigation Center, Robin S. Conrad; Constantine Cannon, W. Stephen Cannon,
Raymond C. Fay; Mayer, Brown, Rowe & Maw and Donald M. Falk for Chamber of Commerce of the
United States of America and Retail Industry Leaders Association as Amici Curiae on behalf of Real Party
in Interest.

Jones Day, Elwood Lui and Harry I. Johnson III for Federated Department Stores, Inc., as Amicus Curiae
on behalf of Real Party in Interest.

Fulbright & Jaworski and James R. Evans for U-Haul Co. of California as Amicus Curiae on behalf of Real
Party in Interest.

Morgan, Lewis & Bockius, Rebecca D. Eisen, Brett M. Schuman and John D. Battenfeld for Employers
Group as Amicus Curiae on behalf of Real Party in Interest.

Stroock & Stroock & Lavan, Julia B. Strickland, James W. Denison and Andrew W. Moritz for California
Bankers Association, American Bankers Association, Consumer Bankers Association and American
Financial Services Association as Amici Curiae on behalf of Real Party in Interest.








Counsel who argued in Supreme Court (not intended for publication with opinion):

Michael Rubin
Altshuler, Berzon, Nussbaum, Rubin & Demain
177 Post Street, Suite 300
San Francisco, CA 94108
(415) 421-7151

Cliff Palefsky
McGuinn, Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA 94133
(415) 421-9292

Rex Darrell Berry
Berry & Block
2150 River Plaza Drive, Suite 415
Sacramento, CA 95833
(916) 564-2000


Opinion Information
Date:Docket Number:
Thu, 08/30/2007S141502

Parties
1Gentry, Robert (Petitioner)
Represented by Dennis P. Riordan
Riordan & Horgan
523 Octavia Street
San Francisco, CA

2Gentry, Robert (Petitioner)
Represented by Ellen Lake
Attorney at Law
4230 Lakeshore Avenue
Oakland, CA

3Gentry, Robert (Petitioner)
Represented by Matthew Righetti
Righetti & Wynne
466 Montgomery Street, Suite 1400
San Francisco, CA

4Gentry, Robert (Petitioner)
Represented by Michael Rubin
Altshuler Berzon Nussbaum
177 Post Street, Suite 300
San Francisco, CA

5Superior Court Of Los Angeles County (Respondent)
6Circuit City Stores, Inc. (Real Party in Interest)
Represented by Rex D. Berry
Berry & Block, LLP
2150 River Plaza Drive, Suite 415
Sacramento, CA

7Circuit City Stores, Inc. (Real Party in Interest)
Represented by Steven B. Katz
Thelen Reid Brown Raysman & Steiner
333 S. Hope St., Ste. 2900
Los Angeles, CA

8Circuit City Stores, Inc. (Real Party in Interest)
Represented by Scott Michael Plamondon
Berry & Block, LLP
2150 River Plaza Drive, Suite 415
Sacramento, CA

9Strange & Carpenter (Pub/Depublication Requestor)
Represented by Gretchen Arlene Carpenter
Strange & Carpenter
12100 Wilshire Boulevard, Suite 1900
Los Angeles, CA

10Brown, Edmund G. (Amicus curiae)
Represented by Michele Robin Vangelderen
Office of the Attorney General
300 S. Spring Street, Suite 500
Los Angeles, CA

11Ralphs Grocery Company (Amicus curiae)
Represented by Henry D. Lederman
Littler Mendelson
2175 N. California Boulevard, Suite 835
Walnut Creek, CA

12Pacific Legal Foundation (Amicus curiae)
Represented by Deborah Joyce Lafetra
Pacific Legal Foundation
3900 Lennane Drive, Suite 200
Sacramento, CA

13Pacific Legal Foundation (Amicus curiae)
Represented by Timothy Mason Sandefur
Pacific Legal Foundation
3900 Lennane Drive, Suite 200
Sacramento, CA

14National Retail Federation (Amicus curiae)
Represented by Melissa Kathryn Lee
Sheppard Mullin Richter & Hampton, LLP
333 S. Hope Street, 48th Floor
Los Angeles, CA

15National Retail Federation (Amicus curiae)
Represented by Richard J. Simmons
Sheppard Mullin Richter & Hampton, LLP
333 S. Hope Street, 48th Floor
Los Angeles, CA

16Trial Lawyers For Public Justice (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

17Trial Lawyers For Public Justice (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

18Employers Group (Amicus curiae)
Represented by Brett Michael Schuman
Morgan Lewis & Bockius LLP
1 Market Street, Spear Street Tower
San Francisco, CA

19International Brotherhood Of Teamsters (Amicus curiae)
Represented by Michael Rubin
Altshuler Berzon Nussbaum
177 Post Street, Suite 300
San Francisco, CA

20International Brotherhood Of Teamsters (Amicus curiae)
Represented by Cliff Palefsky
McGuinn Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA

21Federated Department Stores, Inc. (Amicus curiae)
Represented by Elwood Lui
Jones Day Reavis & Pogue
555 S. Flower Street, 50th Floor
Los Angeles, CA

22U-Haul Company Of California (Amicus curiae)
Represented by James R. Evans
Fulbright & Jaworski, LLP
555 S. Flower Street, 41st Floor
Los Angeles, CA

23Law Office Of Michael H. Crosby (Amicus curiae)
Represented by Michael H. Crosby
D. F. Garrettson House
2366 Front Street
San Diego, CA

24Chamber Of Commerce Of The United States Of America (Amicus curiae)
Represented by Robin S. Conrad
National Chamber Litigation Center, Inc.
1615 "H" Street, N.W.
Washington, DC

25Chamber Of Commerce Of The United States Of America (Amicus curiae)
Represented by Donald M. Falk
Mayer Brown Rowe & Maw, LLP
Two Palo Alto Square, Suite 300
3000 El Camino Real
Palo Alto, CA

26California Retailers Association (Amicus curiae)
Represented by Melissa Kathryn Lee
Sheppard Mullin Richter & Hampton, LLP
333 S. Hope Street, 48th Floor
Los Angeles, CA

27California Retailers Association (Amicus curiae)
Represented by Richard J. Simmons
Sheppard Mullin Richter & Hampton, LLP
333 S. Hope Street, 48th Floor
Los Angeles, CA

28Laborers International Union Of North America (Amicus curiae)
Represented by Michael Rubin
Altshuler Berzon Nussbaum
177 Post Street, Suite 300
San Francisco, CA

29Laborers International Union Of North America (Amicus curiae)
Represented by Cliff Palefsky
McGuinn Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA

30Service Employees International Union (Amicus curiae)
Represented by Michael Rubin
Altshuler Berzon Nussbaum
177 Post Street, Suite 300
San Francisco, CA

31Service Employees International Union (Amicus curiae)
Represented by Cliff Palefsky
McGuinn Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA

32Unite-Here (Amicus curiae)
Represented by Michael Rubin
Altshuler Berzon Nussbaum
177 Post Street, Suite 300
San Francisco, CA

33Unite-Here (Amicus curiae)
Represented by Cliff Palefsky
McGuinn Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA

34California Employment Lawyers Association (Amicus curiae)
Represented by Michael Rubin
Altshuler Berzon Nussbaum
177 Post Street, Suite 300
San Francisco, CA

35California Employment Lawyers Association (Amicus curiae)
Represented by Cliff Palefsky
McGuinn Hillsman & Palefsky
535 Pacific Avenue
San Francisco, CA

36California Bankers Association (Amicus curiae)
Represented by Julia B. Strickland
Stroock & Stroock & Lavan
2029 Century Pk East, #1800
Los Angeles, CA

37American Bankers Association (Amicus curiae)
Represented by Julia B. Strickland
Stroock & Stroock & Lavan
2029 Century Pk East, #1800
Los Angeles, CA

38American Financial Services Association (Amicus curiae)
Represented by Julia B. Strickland
Stroock & Stroock & Lavan
2029 Century Pk East, #1800
Los Angeles, CA

39Retail Industry Leaders Association (Amicus curiae)
Represented by Robin S. Conrad
National Chamber Litigation Center, Inc.
1615 "H" Street, N.W.
Washington, DC

40Retail Industry Leaders Association (Amicus curiae)
Represented by Donald M. Falk
Mayer Brown LLP
2 Palo Alto Sq #300, 3000 El Camino Real
3000 El Camino Real
Palo Alto, CA

41Asian Law Caucus (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

42Asian Law Caucus (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

43Asian Pacific American Legal Center (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

44Asian Pacific American Legal Center (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

45California Rural Legal Assistance Foundation (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

46California Rural Legal Assistance Foundation (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

47Hastings Civil Justice Clinic (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

48Hastings Civil Justice Clinic (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

49Impact Fund (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

50Impact Fund (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

51Katherine & George Alexander Community Law Center (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

52Katherine & George Alexander Community Law Center (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

53La Raza Centro Legal, Inc. (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

54La Raza Centro Legal, Inc. (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

55Lawers Committee For Civil Rights Of San Francisco Bay Area (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

56Lawers Committee For Civil Rights Of San Francisco Bay Area (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

57Legal Aid Society Of San Francisco (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

58Legal Aid Society Of San Francisco (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

59Mexican American Legal Defense & Educational Fund (Amicus curiae)
Represented by Laura Luo-Yao Ho
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA

60Mexican American Legal Defense & Educational Fund (Amicus curiae)
Represented by Joseph E. Jaramillo
Goldstein, Demchak, Baller et al.
300 Lakeside Drive, Suite 1000
Oakland, CA


Disposition
Aug 30 2007Opinion: Reversed

Dockets
Feb 28 2006Petition for review filed
  Robert Gentry, petitioner Dennis Riordan, Matthew Righetti, Ellen Lake, counsel c/a rec req
Mar 3 2006Received Court of Appeal record
 
Mar 17 2006Answer to petition for review filed
  Circuit City Stores, Inc., real party in interest. by Rex Darrell Berry, retained counsel
Mar 20 2006Request for depublication (petition for review pending)
  Altshuler Berzon et al. on behalf of the Service Employees International Union, the International Brotherhood of teamsters, UNITE HERE, and their combined 875,000 California members. (non-parties)
Mar 20 2006Request for depublication filed (another request pending)
  Strange & Carpenter, Attorneys at Law non-party Gretchen Carpenter, retained.
Apr 26 2006Petition for review granted (civil case)
  Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno, and Corrigan, JJ.
Apr 26 2006Letter sent to:
  All counsel enclosing grant order and the form for certification of interested persons and entities.
May 1 2006Certification of interested entities or persons filed
  by Matthew Righetti, Righetti Law Firm, counsel for petitioner (Gentry)
May 4 2006Certification of interested entities or persons filed
  by Rex D. Berry of Berry & Block for RPI Circuit City Stores, Inc.
May 19 2006Request for extension of time filed
  petitioner requesting a 30-day extension to and including June 26, 2006 to file petitioner's opening brief on the merits. Robert Gentry, petitioner by Dennis P. Riordan, counsel
May 23 2006Received:
  Amended proof of service to petitioner's (Gentry) motion for extension of time
May 23 2006Extension of time granted
  To June 26, 2006 to file petitioner's opening brief on the merits.
Jun 21 2006Request for extension of time filed
  to July 10, 2006 to file Petitioner's (Gentry) Opening Brief on the Merits
Jun 23 2006Extension of time granted
  On application of petitioner and good cause appeairng, it is ordered that the time to serve and file Petitioner Gentry's Opening Brief on the Merits is extended to and including July 10, 2006.
Jul 10 2006Opening brief on the merits filed
  Robert Gentry, petitioner by Ellen Lake, retained counsel and Dennis P. Riordan of Riordan & Horgan, and Matthew Righetti and John Glugoski of Righeti Law Firm, retained.
Jul 17 2006Request for judicial notice filed (granted case)
  Robert Gentry, petitioner, by Ellen Lake, retained counsel.
Jul 28 2006Request for extension of time filed
  to and including September 8, 2006, to file the RPI's Answer Brief on the Merits
Aug 2 2006Extension of time granted
  On application of real party in interest and good cause appeairng, it is ordered that the time to serve and file the answer brief on the merits is extended to an d including September 8, 2006.
Sep 5 2006Request for extension of time filed
  to September 18, 2006 to file the anwer brief on the merits.
Sep 6 2006Extension of time granted
  On application of real party in interest and good cause appeairng, it is ordered that the time to serve and file the answer brief on the merits is extended to and including September 18, 2006.
Sep 18 2006Answer brief on the merits filed
  Real Party in Interest; Circuit City Stores, Inc.
Sep 18 2006Request for judicial notice filed (granted case)
  Real Party in Interest; Circuit City Stores, Inc. [submitted concurrent with Answer Brief/Merits.]
Sep 29 2006Request for extension of time filed
  to Nov. 13, 2006 to file Petitioner's reply brief on the merits and Petitioner's opposition to request for judicial notice.
Oct 10 2006Extension of time granted
  On application of petitioner and good cause appearing, it is ordered that the time to serve and file the reply brief on the merits is extended to and including November 13, 2006.
Oct 18 2006Order filed
  The order filed October 10, 2006 is hereby amended to read as follows: On application of petitioner and good cause appearing, it is ordered that the time to serve and file petitioner's reply brief on the merits and petitioner's opposition to the request for judicial notice is extended to and including November 13, 2006.
Nov 13 2006Application to file over-length brief filed
  counsel for petitioner (Robert Gentry) *** Reply Brief***
Nov 13 2006Received:
  from counsel for petnr. Reply Brief on the Merits
Nov 13 2006Opposition filed
  by counsel for petitioner to Request for Judicial Notice.
Nov 13 2006Received:
  from counsel for petnr. Supplemental Proof of Service
Nov 14 2006Reply brief filed (case fully briefed)
  counsel for petitioner Robert Gentry *** with permission ***
Dec 6 2006Request for extension of time filed
  to file brief as amicus curiae in support of petitioner (Gentry) Deputy Attorney General Michele R. Van Gelderen
Dec 6 2006Received:
  Faxed copy of the AG's request for an e.o.t. to January 15, 2007, to file the amicus curiae brief.
Dec 8 2006Received application to file Amicus Curiae Brief
  and brief of Ralphs Grocery Company in support of real party in interest, Circuit City Stores, Inc.
Dec 8 2006Extension of time granted
  On application of the Attorney General and good cause appearing, it is ordered that the time to serve and file the Attorney General's amicus curiae brief in support of petitioner (Gentry) is extended to and inculding January 15, 2007.
Dec 12 2006Received application to file Amicus Curiae Brief
  Pacific Legal Foundation, in support of respondent (?) by Deborah J. La Fetra and Timothy Sandefur
Dec 12 2006Received application to file Amicus Curiae Brief
  National Retail Federation and California Retailers Association in support of RPI. Richard J. Simmons of Sheppard Mullin et al., retained. Request for Judicial Notice received with appendix (1 vol)
Dec 14 2006Received application to file Amicus Curiae Brief
  Employers Group in support of real party in interest (Circuit City Stores, Inc.)
Dec 14 2006Received application to file Amicus Curiae Brief
  International Brotherhood of Teamsters, Laborers International Union of North America, Service Employees International Union, Unite-Here, and California Employment Lawyers Association in support of petitioner (Gentry)
Dec 14 2006Received application to file Amicus Curiae Brief
  & Brief of Federated Department Stores, Inc., under separate covers supports Circuit City Stores, Inc.
Dec 14 2006Received:
  concurrent with a.c. app/brief of Federated Dept. Stores, Inc. request for judicial notice.
Dec 14 2006Permission to file amicus curiae brief granted
  The application of Ralphs Grocery Company for permission to file an amicus curiae brief in support of real party in interest (Circuit City Stores, Inc.) is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 14 2006Amicus curiae brief filed
  Ralphs Grocery Company in Support of Real Party in Interest (Circuit City Stores, Inc.)
Dec 14 2006Permission to file amicus curiae brief granted
  The application of Pacific Legal Foundation for permission to file an amicus curiae brief in support of real party in interest (Circuit City Stores, Inc.) is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 14 2006Amicus curiae brief filed
  Pacific Legal Foundation in Support of Real Party in Interest Circuit City Stores, Inc.
Dec 14 2006Permission to file amicus curiae brief granted
  The application of National Retail Federation and California Retailers Association for permission to file an amicus curiae brief in support of real party in interest (Circuit City Stores, Inc.) is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 14 2006Amicus curiae brief filed
  National Retail Federation and California Retailers Association In Support of Real Party in Interest Circuit City Stores, Inc.
Dec 14 2006Request for judicial notice filed (granted case)
  National Retail Federation and California Retailers Association. (1 vol.) Appendix of Federal Authorities (1 vol.)
Dec 14 2006Received application to file Amicus Curiae Brief
  California Bankers Association, American Bankers Association, Consumer Bankers Association and American Financial Services Association in support of Real Party in Interest Circuit City Stores, Inc.
Dec 14 2006Received application to file Amicus Curiae Brief
  Trial Lawyers for Public Justice, Asian Law Caucus, Asian Pacific American Legal Center et al. in support of petitioner (Gentry)
Dec 14 2006Received application to file Amicus Curiae Brief
  Chamber of Commerce of the United States of America and the Retail Industry Leaders Association.
Dec 14 2006Received application to file Amicus Curiae Brief
  U-Haul Co. of California [app & brief submitted under same cover] in support of Real Party in Interset Circuit City Stores, Inc.,
Dec 15 2006Application to appear as counsel pro hac vice filed
  Robin S. Conrad of the National Chamber Litigation Center, Inc., Washington, D.C. for Amicus Curiae Chamber of Commerce of the United States of America
Dec 15 2006Application to appear as counsel pro hac vice filed
  W. Stephen Cannon and Raymond C. Fay of Constantine Cannon, P.C., Washington, D.C. for Amici Curiae Retail Industry Leaders Association.
Dec 15 2006Application to appear as counsel pro hac vice filed
  Raymond C. Fay of Constantine Cannon, P.C., Washington, D.C. for Amici Curiae The Retail Industry Leaders Association.
Dec 18 2006Received application to file Amicus Curiae Brief
  Law Office of Michael H. Crosby in support of petitioner by Michael H. Crosby
Dec 19 2006Request for extension of time filed
  Joint application of petitioners and real party in interest to February 15, 2007 within which to file each party's answer to all amicus curiae briefs filed.
Dec 27 2006Permission to file amicus curiae brief granted
  The application of International Brotherhood of Teamsters, Laborers International Union of North America, Service Employees International Union, Unite-Here, and California Employment Lawyers Association for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  International Brotherhood of Teamsters, Laborers International Union of North America, Service Employees International Union, Unite-Here, and California Employment Lawyers Association in support of petitioner.
Dec 27 2006Permission to file amicus curiae brief granted
  The application of California Bankers Association, American Bankers Association and American Financial Services Association for permission to file an amicus curiae brief in support of Real Party in Interest Circuit City Stores, Inc. is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  California Bankers Association, American Bankers Association and American Financial Services Association in support of RPI Circuit City Stores, Inc. is hereby granted. by James W. Denison of Stroock & Stroock & Lavan LLP, retained.
Dec 27 2006Permission to file amicus curiae brief granted
  The application of Chamber of Commerce of the United States of America and the Retail Industry Leaders Association for permission to file an amicus curiae brief in support of real party in interest is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  Chamber of Commerce of the United States of America and the Retail Industry Leaders Association in support of real party in interest by Donald M. Falk of Mayer, Brown Rowe & Maw LLP, retained.
Dec 27 2006Permission to file amicus curiae brief granted
  The appilcation of Law Office of Michael H. Crosby for permission to file an amicus curiae brief in support of petitioner is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  Law Office of Michael H. Crosby in support of petitioner. by Michael H. Crosby.
Dec 27 2006Request for judicial notice filed (granted case)
  by Amicue Curiae Law Office of Michael H. Crosby
Dec 27 2006Permission to file amicus curiae brief granted
  The application of Employers Group for permission to file an amicus curiae brief in support of real party in interest (Circuit City Stores, Inc.) is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  Employers Group in support of real party in interest. by Rebecca D. Eisen, Brett M. Schuman and John D. Battenfeld of Morgan, Lewis & Bockius LLP and
Dec 27 2006Permission to file amicus curiae brief granted
  The application of Federated Department Stores, Inc. for permission to file an amicus curiae brief in support of real party in interest is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  Federated Department Stores, Inc. in support of real party in interest. by Elwood Lui and Harry I. Johnson, III of Jones Day, retained.
Dec 27 2006Request for judicial notice filed (granted case)
  Amicus Curiae Federated Department Stores, Inc. by Elwood Lui of Jones Day, retained.
Dec 27 2006Permission to file amicus curiae brief granted
  The application of Trial Lawyers for Public Justice, Asian Law Caucus, Asian Pacific American Legal Center, California Rural Legal Assistance Foundation, Hastings Civil Justice Clinic, Impact Fund, The Katherine and George Alexander Community Law Center, La Raza Centro Legal, Inc., Lawyers' Committee for Civil Rights of the San Francisco Bay Area, The Legal Aid Society of San Francisco - Employment Law Center, and Mexican American Legal Defense and Educational Fund for permission to file an amicus curiae brief in support of Petitioner Robert Gentry is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  Trial Lawyers for Public Justice, Asian Law Caucus, Asian Pacific American Legal Center, et al., in support of Petitioner Robert Gentry. by Laura L. Ho and Joseph E. Jaramillo of Goldstein, Demchak et al.
Dec 27 2006Permission to file amicus curiae brief granted
  The application of U-Haul Co. of California for permission to file an amicus curiae brief in support of real party in interest is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 27 2006Amicus curiae brief filed
  U-Haul Co. of California ion support of real party in interest. by James R. Evans, Jr. of Fulbright & Jaworski, LLP.
Dec 28 2006Extension of time granted
  On joint application of Petitioner Robert Gentry and Real Party in Interest Circuit City Stores, Inc., and good cause appearing, it is ordered that the time to serve and file each party's response to all amicus curiae briefs is extended to and including February 15, 2007.
Jan 16 2007Amicus curiae brief filed
  Attorney General in support of petitioner (Gentry) by Michele R. Van Gelderen, Deputy Attorney General - Los Angeles (Received at the Los Angeles Office)
Feb 7 2007Application to appear as counsel pro hac vice granted
  Robin S. Conrad's application to appear as counsel pro hac vice on behalf of amicus curiae Chamber of Commerce of the United States of America is granted.
Feb 15 2007Response to amicus curiae brief filed
  Real party Circuit City Stores, Inc. consolidated Reply to Amici Curiae
Feb 15 2007Motion filed (non-AA)
  to file Consolidated Answer to Briefs of Amici Curiae Pacific Legal Foundation, National Retail Federation, et al., Employers Group, Federated Department Stores, Inc., Ralphs Grocery Company, California Bankers Association, et al., Chamber of Commerce of the United States of America, et al., and U-Haul Company of California
Feb 16 2007Order filed
  Petitioner's Motion to File Consolidated Answer to Briefs of Amici Curiae Pacific Legal Foundation, National Retail Federation, et al., Employers Group, Federated Department Stores, Inc. Ralphs Grocery Company, California Bankers Association, et al., Chamber of Commerce of the United States of America, et al., and U-Haul Company of California is hereby GRANTED.
Feb 16 2007Response to amicus curiae brief filed
  Petitioner Gentry's Consolidated Answer to Briefs of Amici Curiae by Ellen Lake, Dennis P. Riordan of Riordan & Horgan, and Matthew Righetti John Glugoski of Righetti Law Firm, P.C.
Feb 16 2007Received:
  Petitioner's Opposition to Request for Judicial Notice by Federated Department Stores, Inc.
Feb 16 2007Received:
  Petitioner's Opposition to Request for Judicial Notice by National Retail Federation, et al.
Apr 26 2007Change of contact information filed for:
  Steven Bernard Katz is now with Thelen Reid Brown Raysman & Steiner LLP, counsel for Real Party in Interest Circuit City Stores, Inc." [Mr. Katz was formerly with Jones Day.]
May 2 2007Case ordered on calendar
  to be argued on Tuesday, June 5, at 2:00 p.m., in Los Angeles
May 9 2007Application filed to:
  reschedule oral argument filed by Ellen Lake, counsel for petitioner Gentry
May 15 2007Note:
  Application to reschedule oral argument withdrawn.
May 15 2007Filed letter from:
  Ellen Lake, counsel for petitioner Gentry requesting to share 10 minutes of oral argument time with counsel for amici curiae International Brotherhood of Teamsters et al.
May 17 2007Order filed
  The request of counsel for petitioner in the above-referenced cause to allow two counsel to argue on behalf of petitioner at oral argument is hereby granted. The request of petitioner to allocate to amici curiae International Brotherhood of Teamsters, et al. 10 minutes of petitioner's 30-minute allotted time for oral argument is granted.
May 25 2007Received:
  Letter dated 5-25-2007 from Ellen Lake, counsel for petitioner, re additional authority.
May 25 2007Received:
  Letter dated 5-24-2007 from Ellen Lake, counsel for petitioner (Gentry), re additional aurhority.
May 31 2007Request for judicial notice granted
  Petitioner Robert Gentry's Motion for Judicial Notice of July 17, 2006 is granted. Real party Circuit City's Request for Judicial Notice of September 18, 2006 is granted. Amici curiae National Retail Federation et al.'s Request for Judicial Notice of December 14, 2006 is granted as to exhibits A, C, F, G, and M, and is denied as to all other exhibits. Amicus curiae Federated Department Stores, Inc.'s Motion for Judicial Notice of December 14, 2006 is denied. Amicus curiae Michael H. Crosby's request for judicial notice of December 14, 2006 is denied.
Jun 5 2007Cause argued and submitted
 
Jul 11 2007Received:
  Letter dated July 10, 2007, from Rex Darrell Berry, counsel for RPI Circuit City Stores, Inc.
Aug 20 2007Received:
  Letter dated 8-17-2007 from Ellen Lake, counsel for petitioner, re copies of a new decision by the U. S. Court of Appeals for the Ninth Circuit.
Aug 22 2007Received:
  Letter dated 8-21-2007 from Berry & block LLP, counsel for real party in interest in response to 8-17-2007 letter from counsel for petitioner
Aug 28 2007Received:
  Notice of Name Change effective 8-31-2007 for Mayer Brown et al will be Mayer Brown LLP, the office address remains the same. E-mail address will change to mayerbrown.com
Aug 29 2007Notice of forthcoming opinion posted
 
Aug 30 2007Opinion filed: Judgment reversed
  Court of Appeal judgment is reversed and remanded. Opinion by Moreno, J. -- joined by George, C.J., Kennard, Werdegar, JJ. Dissenting opinion by Baxter, J. -- joined by Chin, Corrigan, JJ.
Sep 17 2007Rehearing petition filed
  Circuit City Stores, Inc., real party in interest by Steven B. Katz, Thelen Reid Brown Raysman & Steiner, LLP CRC 8.25(b)
Sep 19 2007Time extended to consider modification or rehearing
  to and including November 28, 2007
Sep 26 2007Answer to rehearing petition filed
  Petitioner Robert Gentry et al. by Ellen Lake, Esq.
Oct 31 2007Rehearing denied
  Baxter, Chin and Corrigan, JJ., are of the opinion the petition should be granted.
Oct 31 2007Remittitur issued (civil case)
 
Nov 5 2007Received:
  Acknowledgment of receipt for remittitur
Nov 8 2007Returned record
  to Second Appellate District
Apr 14 2008Received:
  Letter dated March 31, 2008 from the Supreme Court of the United States, Petition for writ of certiorari denied.

Briefs
Jul 10 2006Opening brief on the merits filed
 
Sep 18 2006Answer brief on the merits filed
 
Nov 14 2006Reply brief filed (case fully briefed)
 
Dec 14 2006Amicus curiae brief filed
 
Dec 14 2006Amicus curiae brief filed
 
Dec 14 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Dec 27 2006Amicus curiae brief filed
 
Jan 16 2007Amicus curiae brief filed
 
Feb 15 2007Response to amicus curiae brief filed
 
Feb 16 2007Response to amicus curiae brief filed
 
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