Supreme Court of United States of America decided in a landmark judgment in 2010 where class action was invalidated for the purposes of arbitration. This is the landmark case of AT&T MOBILITY LLC v. Concepcion (accessible at: http://scholar.google.com/scholar_case?case=17088816341526709934) which decided on April 27th, 2011, with a few dissenting opinions.

This case holds great importance as the same issue of class action has cropped up again and again since then. In a recent case decided on August 13, 2012 Truly Nolen of America v. Superior Court (accessible at: http://www.courts.ca.gov/opinions/documents/D060519.PDF), a California Court managed to deviate from the Supreme Court ruling of AT&T. the issue at hand was whether the Federal Arbitration Act prohibits state from requiring addition due process guarantees for enforcing certain provisions of arbitration agreement? Justice Scalia, who wrote the opinion on behalf of the majority, wrote "Requiring the availability of class-wide arbitration interferes with fundamental attributes of arbitration."

In the instant case of Truly Nolen, the plaintiffs, Alvaro Miranda and Danny Luna, filed a class action suit. They worked as pest control technicians for Truly Nolen of America and it was claimed that they (the plaintiffs and other employees) had been wrongly classified as exempt from California’s overtime pay requirements. Hence, this case has also become famous as wage-and-hour arbitration case. Truly Nolen has simply tried to harvest upon the issue of whether the claims of the employees could be arbitrated as class action or individually. The courts relied on Gentry v. Superior Court as a precedent. The trial court ordered class-wide arbitration.

The case went to appeal. Even though the court agreed that under Concepcion, class action waivers contained in arbitration agreements should be enforced, but at the same time the court declined “to disregard the California Supreme Court's decision” in Gentry “without specific guidance from our high court.”

The court said that “Under California law, when a party seeks to establish an implied agreement, a trial court or arbitrator applying California law must evaluate the entire contract in light of the contract language and the parties' reasonable expectations and, if appropriate, make factual findings on disputed extrinsic evidence.” So, both parties will be given an opportunity to prove their points in the arbitration agreements.

For now the case has been remanded so that the proceedings may be carried out as per the guidelines in the concluding sections of this ruling. The four-factor test as set out in Gentry may be satisfied (requiring a small disputed monetary amount; a potential for retaliation; lack of knowledge by absent class members of their rights; and other policy reasons which prevent complete vindication of the employees’ statutory rights).