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DIRECTV, Inc. v. Imburgia Provides One More Reason Employees Should Speak to an Employment Law Attorney

A recent Supreme Court decision, DIRECTV, Inc. v. Imburgia, provides one more reason employees should consult with an employment law attorney. Imburgia concerned whether the employee and employer had agreed to arbitrate disputes. At issue was whether the Federal Arbitration Act preempted California law.

This should have been an easy case. The agreement at issue contained a clause that provided the arbitration agreement was unenforceable, if the “law of your state” made arbitration agreements containing class-action waivers unenforceable. The law of California at the time the agreement was entered into made arbitration agreements containing class-action waivers unenforceable. Therefore, argued the employee, the arbitration agreement was unenforceable.

The employee’s argument is valid, the premises sound. But the Supreme Court rejected the employee’s argument. The majority reasoned that, although at the time the agreement was made California law said that arbitration agreements containing class action waivers were unenforceable, nonetheless, after the Imburgia plaintiffs began this lawsuit, and before the Imburgia decision, came Concepcion. Concepcion held that federal law pre-empted state law, which in turn meant California law governing class-action waivers was pre-empted. In other words, the arbitration agreement was unenforceable at formation, but became enforceable four years later on account of the decision in Concepcion, a decision neither party could have predicted at the time of entering into the agreement.

For employees, this case means arbitration agreements create moving targets because, as here, the law could change during the course of your employment. The Supreme Court has therefore made one more reason for employees to consult an attorney because your legal rights can change as the laws related to your workplace develop.

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