"Federal Judge Blasts Belated Motion to Compel Arbitration"

Los Angeles Daily Journal, May 4, 2015

Following wage and hour claims, cosmetology school litigated for 17 months before seeking arbitration

By America Hernandez

In a proposed wage and hour class action involving hairdressing students providing services without pay as part of their training, a federal judge decried the defense's attempt to hit the reset button mid-discovery by moving to binding arbitration after 17 months in court.

"We are not convinced that [Defendant], having learned that the district court was not receptive to its arguments, should be allowed a second bite at the apple through arbitration," wrote U.S. District Judge Philip S. Gutierrez in a harshly worded order denying a motion to dismiss without hearing oral argument. Ford, et al. v. Yasuda, et al., CV13-1961 (C.D. Cal., filed Oct. 28, 2013).

The dispute began in October 2013 when Maria Ford and several other students at the Milan Institute of Cosmetology's Bakersfield campus sued the program director, claiming violation of the Fair Labor Standards Act and California's Unfair Competition Law.

The Milan Institute is part hairdressing and cosmetology school, part beauty salon, where paying clients are attended to by students completing the practicum component of their degree.

Plaintiffs contended that upon transitioning to work in the school's salon, they became employees entitled to minimum wage and other benefits.

The school filed a motion to dismiss on grounds that the students were not employees, but did not raise the arbitration agreement all students signed upon enrollment as an affirmative defense.

Nearly a year later, when students filed an amended complaint with additional wage claims, the school invoked the arbitration agreements, which call for individual rather than collective arbitration, for the first time.

The plaintiffs protested, saying Milan had waived its right to invoke them by proceeding in federal court.

"You can't shop around and see if you're going to get a good order from the judge, then decide you don't like it and say, 'Let's go try arbitration,'" said plaintiffs' attorney Bryan Schwartz in Oakland. "This is a setback for employers who do whatever they can to strip away any class claims and prevent people from coming together to vindicate their rights."

But lead defense counsel Ronald L. Holt of Dunn & Davison LLP said the judge mischaracterized the history of case.

"First off, we're only employers insofar as it's been alleged by the students," he said, adding that while the case has been on file for 17 months, nothing happened for the first seven or eight months. After defendants hired new counsel, said Holt, the parties eventually entered a joint stipulation in May 2014.

"The plaintiffs began to conduct discovery, and it was at that point that we determined we were going to invoke our right [to arbitrate]."

Holt said the defendants plan to file an interlocutory appeal with the 9th U.S. Circuit Court of Appeals.