California Appellate Court Affirms Order Denying Motion to Compel Arbitration
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In Pinela v. Neiman Marcus Group, Inc. (6/29/15) — Cal.App.4th —, the plaintiffs brought a class and PAGA representative action alleging a number of wage and hour violations. The trial court granted the defendant’s motion to compel arbitration, except as to the PAGA claims. The trial court later reconsidered and denied the motion, holding that the arbitration agreement was illusory, The Court of Appeal affirmed, holding as follows:
Under Code of Civil Procedure section 1008, a trial court may exercise its inherent discretion to reconsider any issue at any time, and the trial court maintained jurisdiction to reconsider the arbitration order, even after entering that order compelling arbitration.
Although the arbitration agreement delegated questions of its enforceability to the arbitrator, this clause did not satisfy the conditions required for a valid delegation clause. First, Peleg v. Neiman Marcus Group,Inc. (2012) 204 Cal.App.4th 1425, (discussed here) found that the same delegation clause did not “clearly and unmistakably delegate enforceability questions to the arbitrator,” as required, because a second clause regarding severability provided that the court may decide the same issue. Second, the delegation clause was not irrevocable, as required, because “both the delegation provision and the Agreement as a whole are unconscionable” and therefore revocable.
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