Carmax Auto Superstores California, LLC, et al. v. Fowler

Case Updates

The petition for a writ of certiorari was granted. The judgment was vacated, and the case remanded to the California Court of Appeal, Second Appellate District for further consideration in light of American Express Co. v. Italian Colors Restaurant.

In its brief, the U.S. Chamber urged the U.S. Supreme Court to review this case, in which a California court refused to enforce an employment arbitration agreement because it contained a class-action waiver. The plaintiffs, employees of CarMax, signed an agreement providing that any employment disputes would be settled through binding arbitration and prohibiting class arbitrations. The California Court of Appeal refused to uphold the arbitration clause, holding that class waivers in employment agreements are invalid anytime the trial court finds that class arbitration is likely be a “more effective practical means” for the litigation. Such a ruling, the Chamber argued, conflicts directly with the Federal Arbitration Act (“FAA”) and Supreme Court precedent holding that arbitration agreements must be “rigorously enforce[d]” in accordance with their terms. The Chamber also noted that arbitration agreements are of critical importance to businesses nationwide and that this rule “undermines the practical benefits that inure to employers and employees alike by agreeing to arbitrate workplace disputes.”