An employer’s motion to dismiss a former employee’s claim for late payment penalties under Cal. Lab. Code § 201.3(b)(1) was denied where the employer’s arguments that there were potentially valid reasons why the employee or other putative class members may have received late payments merely supported the employer’s affirmative defenses. However, the employee failed to sufficiently allege willfulness where the employer’s statement that it lacked control over the prompt delivery of paychecks outside a direct deposit program did not show an intent to pay wages late.

Outcome

Litigation attorney Motion to dismiss and/or strike granted in part and denied in part.

Procedural Posture

Plaintiff customer filed a putative class action against defendant mobile telephone company after the company unilaterally changed its policy from allowing free mobile-to-mobile minutes and began charging for them. The company filed motions: (1) to compel arbitration and to stay litigation pursuant to the Federal Arbitration Act (FAA), 9 U.S.C.S. § 1 et seq.; and (2) to stay its obligation to answer or otherwise respond to an amended complaint.

Overview

A customer alleged that the company had promised him that all calls made from his mobile phone to his own mobile number, primarily for purposes of checking voice mail, were considered mobile-to-mobile calls, and were free of charge. Initially, he was not charged for them, but later was. He asserted the following causes of action: (1) violation of the Federal Communications Act, 47 U.S.C.S. § 201; (2) breach of contract; (3) unjust enrichment; (4) breach of the covenant of good faith and fair dealing; (5) unfair competition in violation of Cal. Bus. & Prof. Code § 17200; (6) violation of the Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq.; and (7) declaratory relief. The court found that the arbitration clause was unquestionably included in a contract of adhesion because there was no opportunity for customers to negotiate its terms; accordingly the arbitration clause was procedurally unconscionable. The court also found the arbitration clause to be substantively unconscionable. The court found the FAA did not preempt the California rule of unconscionability as applied to class action/class arbitration waivers.

Outcome

The company’s motion to compel arbitration was denied. The company’s motion to stay its obligation to answer or otherwise respond to the complaint pending the court’s ruling on the motion to compel arbitration was granted and the company was ordered to file a response to the amended complaint within 30 days.