By Ordering Dispute Resolved Through Arbitration, Federal Judge Says PetSmart Can Use Coercive Fine Print to Avoid Accountability for TRAP
June 14, 2023 | Denver, Colorado — Today, BreAnn Scally, a former PetSmart groomer who brought a high-profile class action lawsuit against the giant pet retailer for using illegal training repayment agreement provisions (TRAPs), filed for leave to appeal a decision by a federal district court forcing her to resolve her dispute through individual arbitration, effectively ending the case on behalf of groomers across California lawsuit.
A copy of the motion can be found here.
In July 2021, Ms. Scally filed this case to challenge PetSmart’s use of TRAPs in California. The groundbreaking complaint alleges that Ms. Scally took a job at PetSmart because she believed PetSmart when it said it offered its employees “free paid training” to help them learn how to groom. Instead, PetSmart forced her and other workers into a TRAP that required them to repay the company $5,000 for on-the-job education and training if they quit, were fired, or were laid off within two years of beginning to work as a groomer.
Ms. Scally’s case, Scally v. PetSmart, was brought by Towards Justice and Jubilee Legal, with support from the Student Borrower Protection Center.
“I signed up to be a groomer at PetSmart because I needed a job and because I love animals. I didn’t have any choice but to sign their contract. But that contract has been a nightmare for me—it kept me trapped in a horrible job where I couldn’t make ends meet, and now even after I’ve tried to go to court to fight back, they’re saying another contract prevents me from doing that too. I’m going to keep fighting for PetSmart workers, and they should keep fighting too,” said Plaintiff BreAnn Scally.
Alongside Scally’s TRAP, PetSmart required Scally and all other employees to sign “forced arbitration” agreements—fine print waiving workers’ access to justice and waiving their rights to pursue legal recourse on behalf of a class.
“This is the weaponization of ‘fine print,” said Towards Justice attorney Rachel Dempsey. “These are coercive contracts that are specifically designed to insulate companies like PetSmart and its illegal practices.”
Forced arbitration is a little-known but ruthless contract term that bars most workers in the country from going to court, instead requiring them to submit to secretive private dispute resolution proceedings before an arbitration provider picked by their employer. It is often presented to workers as a condition of employment, and workers rarely even know that they’re subject to arbitration until they try to enforce their rights in court. Arbitration contracts frequently require workers to give up the right to proceed collectively against their employer, making it hard or impossible to sue to get companies to change policies even if they affect the whole workplace in the same way.
The arbitration agreement that PetSmart is trying to enforce against BreAnn also requires that low-wage workers like her have to split the cost of arbitration, which can cost over a thousand dollars per hour. These terms are designed to scare workers from suing over predatory practices, like indenturing workers to pay back thousands of dollars for “free” training.
Background
Even as Scally’s case proceeds, her story has already changed the narrative around TRAPs and employer-driven debt that keeps workers indentured. After she filed her case:
- The Federal Trade Commission (FTC) proposed prohibiting many kinds of TRAPs in its non-compete rule.
- The Consumer Financial Protection Bureau (CFPB) is taking the issue on in its inquiry into employer-driven debt.
- The U.S. Department of Labor has brought enforcement actions involving employer-driven debt and the weaponization of arbitration on behalf of Towards Justice clients.
- States around the country have introduced laws prohibiting TRAPs.
A copy of the complaint in Scally v. PetSmart, filed in the Superior Court of the state of California, is available here.
A copy of a sample PetSmart TRAP is available here.
A report by the Student Borrower Protection Center on TRAPs, Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility, is available here.
###
About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.
About Towards Justice
Towards Justice is a nonprofit legal organization that uses impact litigation, policy advocacy, and collaboration with workers and worker organizations to build worker power and advance economic justice.
Learn more at towardsjustice.org or follow Towards Justice on Twitter @TowardsJustice.
About Jubilee Legal
Jubilee Legal is a debtor and consumer rights law practice based in Oxnard, California, and focused on helping people understand their rights, overcome the stigma of debt, and exercise collective power in the financial system.
Learn more at jubilee.legal or follow Jubilee Legal on Twitter @JubileeLegal.