100 | 2026 Cal-Peculiarities ©2026 Seyfarth Shaw LLP www.seyfarth.com The California Supreme Court deviated from the federal norm in Sandquist v. Lebo Automotive, a 2016 decision considering an arbitration agreement that did not expressly address whether class arbitration was authorized.110 The agreement simply stated that it covered any “claim, dispute, or controversy.”111 The Supreme Court held that the question of “who decides” whether class arbitration is available—the court or the arbitrator—should be answered by interpreting the agreement under state contract law,112 and that where the agreement does not expressly permit or prohibit class arbitration and states the arbitrator will resolve “all disputes,” then the question of class arbitrability is for the arbitrator.113 California’s invalidation of representative PAGA waivers in arbitration agreements. While California has yielded to federal authority with respect to enforcing class waivers in arbitration, the same has not been true as to waivers of the right to bring PAGA representative actions. For some time, California appellate courts disagreed whether to enforce arbitration agreements by which the parties waive the right to participate in representative actions, such as PAGA actions.114 The California Supreme Court finally addressed that issue in 2014, in Iskanian v. CLS Transportation Los Angeles, LLC. Iskanian acknowledged that the FAA preempts California’s policy against class action waivers in arbitration agreements,115 but also held, against the weight of federal authority, that representative actions are not subject to mandatory arbitration.116 The Court of Appeal then expanded on Iskanian to conclude that predispute waivers of the judicial forum in a PAGA claim are unenforceable, and that the predispute/postdispute boundary is not crossed until the pertinent employee is authorized to commence a PAGA action as an agent of the state: “Only after employees have satisfied the statutory requirements for commencing a PAGA action are they in a position ‘to determine what trade-offs between arbitral efficiency and formal procedural protections best safeguard their statutory rights.’”117 Employers sought to revisit PAGA’s immunity from arbitration agreements after a 2018 U.S. Supreme Court ruling that arbitration agreements requiring individual arbitration are enforceable under the FAA, regardless of employee rights to concerted activity under the NLRA.118 But in 2019 the Court of Appeal reaffirmed that PAGA representative action waivers remain unenforceable under California law and that PAGA representative actions may not be compelled to arbitration without the state’s consent.119 A 2020 case upheld an employee’s right to seek injunctive relief against arbitration of a PAGA claim. The employee had brought a PAGA suit for violation of wage and hour laws. When the employer moved to stay proceedings pending arbitration under the parties’ employment contract, the employee sought a preliminary injunction against the arbitration. The trial court issued the injunction and denied the employer’s stay request. The Court of Appeal affirmed, holding that the trial court properly considered (1) the party’s likelihood of prevailing on the merits and (2) the relative interim harm the parties would suffer from the issuance or nonissuance of an injunction. Both factors seemed to favor the injunction: because the PAGA claim was representative, not individual, the plaintiff could not be compelled to submit any portion of it to arbitration, including whether he was an “aggrieved employee,” and so arbitration of a nonarbitrable claim would be futile. And the employee’s harm from suffering arbitration would outweigh the employer’s harm from an injunction against arbitration.120 Another 2020 case similarly held that predispute waivers of PAGA claims are unenforceable. The Court of Appeal held that the plaintiffs’ arbitration agreements were unenforceable as to their PAGA claims, which they brought on behalf of the LWDA—the real party in interest despite it not being named as such. Here, although the plaintiffs were acting as agents of the LWDA when they sued, they were not acting as LWDA agents when they signed their arbitration agreements. Consequently, the agreements were not entered into on behalf of the LWDA and thus could not be enforced against the LWDA. Because there was no arbitration agreement between the employer and the LWDA, the trial court properly denied the employer’s motion to compel arbitration.121
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