Hoover v. American Income Life Insurance Company
Talk about burying the lede. In Hoover v. American Income Life Insurance Company, the California Court of Appeal for the Fourth District discussed at length how employers that aggressively litigate cases in court cannot later compel the cases to arbitrate pursuant to arbitration contracts. The employer in Hoover litigated its case in court for 15 months, filing several motions, taking extensive discovery and even engaging in two separate mediations. After all that it tried to enforce a pre-employment arbitration contract, but the court refused on grounds that the employer had waived its contractual right to arbitrate by litigating the case in court for so long (and to the detriment of the employee). Almost as an afterthought, the court then said that arbitration agreements generally cannot encompass overtime and other state law-based wage-and-hour claims unless the contracts are governed by the Federal Arbitration Act (“FAA”). The FAA only applies to transactions that have a substantial impact on interstate commerce. So according to Hoover, many employees might still be able to sue for wage-and-hour violations, both for themselves and on a class-wide basis, notwithstanding if they have arbitration agreements.