Arbitration agreements in the employment arena suffer another blow in Sanchez v. Western Pizza.

Western Pizza Enterprises, Inc. (Western Pizza), appealed the denial of its motion to compel arbitration of a complaint filed by Octavio Sanchez.  The trial court determined that a provision in the arbitration agreement prohibiting class arbitration was unenforceable, that other terms of the agreement were unconscionable, and that the agreement could not be enforced.

On appeal, Western Pizza contended that the enforceability of the arbitration agreement is a question for the arbitrator to decide and that the Federal Arbitration Act (FAA) preempts California law to the extent that California law would prevent the enforcement of the agreement.  Western Pizza also argued that the class arbitration waiver did not impermissibly interfere with the employees’ ability to vindicate their statutory rights, and therefore is enforceable.  Finally, the employer argued that the terms of the arbitration agreement were neither procedurally nor substantively unconscionable.

The court of appeals rejected Western Pizza's contentions and found the denial of the motion to compel arbitration was proper.