Kittrell v. USA Debusk LLC

Background

Gary Alan Kittrell alleged that USA Debusk LLC employed him as a truck driver and violated California wage-and-hour laws. His seven causes of action concerned minimum wages, overtime pay, meal periods, rest periods, sick pay, and accurate wage statements. He sought relief for himself and for a proposed class of USA Debusk’s non-exempt employees.

USA Debusk presented an arbitration agreement bearing Kittrell’s signature and argued that his individual claims had to be arbitrated and that the proposed class claims could not proceed. Kittrell said he did not remember signing an arbitration agreement and disputed its enforceability.

Federal Arbitration Act

The court found that the arbitration agreement existed and covered Kittrell’s employment-related claims. However, the Federal Arbitration Act (FAA) excludes contracts involving certain transportation workers from its coverage. Applying the definition of transportation workers, the court considered Kittrell’s description of his work as a Pneumatic Vacuum Truck Operator. He loaded and unloaded catalyst and other materials, transported catalyst from outside California to California oil refineries, and transported spent catalyst to destinations outside California.

The court concluded that Kittrell had sufficiently shown that he was part of a class of transportation workers engaged in interstate or foreign commerce. It therefore found that he was exempt from arbitration under the FAA.

California Arbitration Act

The court then considered whether arbitration could be compelled under the California Arbitration Act (CAA), which does not contain the FAA’s transportation-worker exemption. The court found that the agreement covered Kittrell’s claims and rejected his arguments that it was unenforceable under California law.

The court held that California Labor Code section 432.6, which restricts an employer from requiring certain waivers as a condition of employment, does not itself make an executed arbitration agreement unenforceable. The court also held that Labor Code section 229 did not prevent arbitration because Kittrell’s meal-period, rest-period, and wage-statement claims were not claims for the collection of due and unpaid wages covered by that statute.

Unconscionability

The court assumed, for purposes of deciding the motion, that the arbitration agreement was required as a condition of employment. On that assumption, it found procedural unconscionability, meaning the agreement was presented without a meaningful opportunity to negotiate. But the court found that the agreement was not substantively unconscionable, meaning it did not otherwise impose sufficiently unfair or one-sided terms, after addressing Kittrell’s challenges to six provisions.

The court rejected challenges based on the agreement’s duration, its treatment of claims against non-employers, its use of the American Arbitration Association’s rules in effect when arbitration begins, and its attorney-fee provision. The court also held that Kittrell could not rely on the rule concerning public injunctions because the injunction he sought concerned alleged wage-and-hour violations affecting employees, rather than the public at large.

The court did find substantively unconscionable the provision barring claims brought in a representative capacity on behalf of other employees, including potential claims under California’s Private Attorneys General Act. Kittrell had not asserted such a claim, but the court nevertheless addressed the provision. It severed, or removed, that provision from the agreement and held that the remaining agreement was enforceable.

Class-Action Waiver

The arbitration agreement required arbitration to proceed only on an individual basis. Kittrell argued that the class-action waiver should be invalidated under California law. The court considered four factors: the potential size of an individual recovery, possible retaliation, whether absent class members understood their rights, and other practical obstacles to pursuing individual arbitration.

The court found that the estimated value of Kittrell’s individual claims—approximately $15,522—supported invalidation. But it found that the other factors did not support invalidation, or supported it only slightly. Kittrell offered no sufficient basis for his fear of retaliation, and the court found no adequate evidence that proposed class members lacked information about their rights. The court also noted evidence that many USA Debusk employees had declined to sign arbitration agreements and could therefore bring employment claims in court if they chose.

The court concluded that Kittrell had not shown that the class-action waiver should be invalidated.

Disposition

Judge Maxine M. Chesney granted USA Debusk LLC’s motion to compel arbitration. The court ordered that Kittrell’s individual arbitration claims proceed and stayed the action pending resolution of those claims. The opinion does not state that the action was dismissed.