Employment Litigation · Primary-source case analysis

Merchant of Tennis: Curative Notice Had to Reflect California Rescission Law

By Aneeta Mishra and Timothy Chan

Published April 19, 2026 · Updated October 18, 2026

Decision: Merchant of Tennis, Inc. v. Superior Court, No. E085766 (Cal. Ct. App. Apr. 2, 2026).

Merchant of Tennis examines what workers must be told when a class-action court permits them to rescind individual settlement agreements allegedly obtained through fraud or duress.

Hundreds of individual settlements

During a pending wage-and-hour class action, the employer paid more than $875,000 under approximately 954 individual settlement agreements. The trial court found the releases voidable and proposed a curative notice allowing signers to revoke and join the class.

The repayment consequence was disputed

The notice promised workers they would not have to return the payment, while allowing an offset against a later recovery. Those are not equivalent protections: If workers recover nothing, there is nothing to offset. The employer sought disclosure of that unsuccessful-litigation repayment risk. The workers argued immediate repayment would deter participation and that any amount could be handled as a later offset.

Statutory restoration and prejudice both mattered

The majority held the curative process had to be reconsidered under California rescission law. Section 1693 protects against denial of rescission for delayed restoration unless that delay substantially prejudices the other party. The prejudice inquiry concerns the party awaiting repayment, not simply hardship to the worker. Here, Merchant sought notice of possible repayment at the end of litigation and offered no evidence of substantial prejudice from waiting. The majority treated delay until judgment as appropriate, but required the notice to explain that repayment might still be required if Merchant prevailed. Merchant of Tennis, opinion pages 10–12.

Disposition and disagreement

The court issued a writ directing the trial court to vacate its notice ruling and reconsider it consistently with the opinion; each side bore its costs. A dissent would have upheld broader equitable discretion, underscoring that the decision did not finally adjudicate every signer’s restitution obligation.

Key takeaways

• Individual wage settlements can affect class membership and released claims.
• A rescission notice should accurately explain restoration consequences.
• Section 1693 may permit timing relief upon a supported prejudice finding.
• Do not treat a curative notice as the final adjudication of individualized defenses.

Discussed in: Merchant of Tennis: Rescinding California Employee Settlement Releases.