Last June, the California Supreme Court in Iskanian v. CLS Transportation, 59 Cal. 4th 348, decided that the waiver of class action participation in an arbitration agreement was enforceable, but the waiver of a representative action under the Private Attorneys General Act (“PAGA”) was not. This later carve-out for PAGA, based on what the Court deemed “public policy,” was very troubling to employers who fear, with good reason, that PAGA will now become the plaintiffs’ lawyers’ preferred vehicle for wage and hour cases, despite a clear waiver of representative actions in an arbitration agreement.
CLS Transportation, the employer in the case, has filed a Petition for a Writ of Certiorari with the United States Supreme Court seeking review of that portion of the California decision dealing with PAGA. (Fox Rothschild LLP represents CLS Transportation).
The Petition argues that the California high court was simply wrong when it found that PAGA was somehow special, and thus exempt from the preemptive effect of the Federal Arbitration Act (“FAA”), which the U.S. Supreme Court has said, in several prior decisions, requires that an arbitration agreement be enforced “according to its terms”, and that state “public policy,” however noble, is irrelevant.
CLS Transportation is supported by friend-of-the-court briefs filed by the California Chamber of Commerce, the Civil Justice Association of California, the Employers Group, the Pacific Legal Foundation, the National Federation of Independent Businesses, and the California Employment Law Council. Briefing is now complete, and we understand the case will be “distributed” to the Supreme Court Justices in early January. Your California Employment Law blog will be the first to know whether the U.S. Supreme Court will agree to hear the appeal.