In an earlier post from last year, I noted that an employer had filed a cert petition in October 2013 asking the U.S. Supreme Court to find that the Federal Arbitration Act preempts California’s Gentry rule. This case is called CarMax Auto Superstores California, LLC v. Fowler, No. 13-439.
In an employment case called Gentry v. Superior Court, 165 P.3d 556 (Cal. 2007), the California Supreme Court had previously held that class arbitration waivers were not enforceable if “class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration.”
In the CarMax case, a California appellate court held that this Gentry rule, which addressed class arbitration waivers in the employment context, survived the Supreme Court’s Concepcion decision, which involved the broad preemptive effect of the Federal Arbitration Act in the consumer context.
Earlier today, the Supreme Court issued an order “GVR’ing” the cert petition in CarMax – by granting cert, vacating the California appellate court opinion in CarMax, and immediately remanding the case to the California appellate court for further consideration in light of the Supreme Court’s American Express decision. The California appellate court had issued its CarMax decision in March 2013, a few months prior to the Supreme Court’s June 2013 American Express decision.
The Gentry rule is based in part on the effective vindication doctrine, which the Supreme Court eviscerated in its American Express decision. On remand, it will be difficult for the California appellate court to argue that Gentry still survives this American Express case, unless the California appellate court tries to distinguish and limit the American Express decision in much the same way as it tried to distinguish Concepcion, as not involving the special circumstances of an employment relationship. With my wishful thinking, I am also hoping that the appellate court would be willing to examine historical arguments that the FAA was originally intended for commercial arbitration, not employment arbitration, and that the FAA was originally intended for application solely in federal court, not state courts.