Arbitration Agreement Not Clear Enough For Arbitrator To Decide Scope, Validity

The mere incorporation of the procedural rules of the American Arbitration Association (AAA) in an arbitration agreement isn't explicit enough to have issues of the scope and validity of the arbitration agreement decided by the arbitrator, a California appellate court has ruled.

Carlos Villalobos was employed by Simplified Labor Staffing Solutions (Simplified), a temporary staffing services company. Simplified placed Villalobos with Maersk Warehouse and Distribution Services (Maersk), where he worked first as a materials handler and later as a forklift operator.

In June 2022, Villalobos filed a class action against Maersk alleging multiple wage-and-hour claims under the California Labor Code and an unfair competition claim. The suit was later consolidated with a second complaint filed by Villalobos for civil penalties against Maersk under the Private Attorneys General Act (PAGA).