190 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com limited success and multiple California Courts of Appeal have published decisions confirming that Epic Systems did not overrule Iskanian and PAGA claims still could not be compelled to arbitration.930 2. Federal District Courts in California Initially Declined to Follow Iskanian’s PAGA Exception, but the Ninth Circuit Ended That Debate Federal district courts in California initially declined to follow Iskanian’s PAGA exception and held that the FAA preempts the Iskanian rule that PAGA waivers are unenforceable.931 These district courts reasoned that while California courts control the interpretation of California statutes, such as PAGA, federal courts control the interpretation of federal statutes, such as the FAA.932 On these grounds, federal district courts concluded that they “need not defer to the California Supreme Court’s conclusion that the FAA does not preempt its rule that arbitration agreements are unconscionable if they waive an employee’s right to bring a representative PAGA claim.”933 The issue eventually went to the Ninth Circuit, in Sakkab v. Luxottica Retail North America, Inc., which held to the contrary: “the Iskanian rule does not stand as an obstacle to the accomplishment of the FAA’s objectives, and is not preempted.”934 The Ninth Circuit reasoned that “the Iskanian rule does not conflict with the FAA, because it leaves parties free to adopt the kinds of informal procedures normally available in arbitration. It only prohibits them from opting out of the central feature of PAGA’s private enforcement scheme—the right to act as a private attorney general to recover the full measure of penalties the state should recover.”935 Thus, it is now settled law in California that the right to bring representative claims under PAGA may not be waived by means of an arbitration agreement. F. The Return of the U.S. Supreme Court – The Viking River Decision The “Iskanian Rule” has allowed employees to pursue representative employment claims in PAGA-only actions for the better part of a decade, essentially circumventing arbitration agreements which aimed to preclude such representative actions. However, after denying multiple requests over the years, in December 2021, the U.S. Supreme Court granted certiorari in Viking River Cruises, Inc. v. Moriana936 to decide the issue of whether the 930 See e.g. Correia v. NB Baker Electric, Inc., 32 Cal.App.5th 602 (2019); Collie v. Icee Company, 52 Cal.App.5th 477 (2020); Winns v. Postmates Inc., 66 Cal. App.5th 803 (2021) (petition for cert. filed Mar. 15, 2022) 931 Lucero v. Sears Holdings Mgmt. Corp., 2014 WL 6984220, at *6 (S.D. Cal. Dec. 2, 2014) (“[T]he Court reaches the same conclusion as several other courts on this matter—the FAA preempts California’s rule against arbitration agreements that waive an employee’s right to bring representative PAGA claims.”); Langston v. 20/20 Cos., 2014 WL 5335734, at *8 (C.D. Cal. Oct. 17, 2014) (“This Court similarly concludes that the FAA preempts California’s rule against arbitration agreements that waive an employee’s right to bring representative PAGA claims.”); Ortiz v. Hobby Lobby Stores, Inc., 52 F. Supp. 3d 1070, 1087 (E.D. Cal. 2014) (“It is clear that the majority of federal district courts find that PAGA action waivers are enforceable because a rule stating otherwise is preempted by the FAA and Concepcion. As such, this Court holds that PAGA waivers are enforceable.”); Fardig v. Hobby Lobby Stores, Inc., 2014 WL 4782618, at *4 (C.D. Cal. Aug. 11, 2014 ) (“Even in light of Iskanian, the Court continues to hold that the rule making PAGA claim waivers unenforceable is preempted by the FAA.”). 932 Lucero, 2014 WL 6984220 at *4; Langston, 2014 WL 5335734 at *7. 933 Langston, 2014 WL 5335734, at *7; Fardig, 2014 WL 4782618, at *4. 934 Sakkab v. Luxottica Retail North America, Inc., 803 F.3d 425, 427 (9th Cir. 2015). 935 Id. at 439. 936 No. 20-1573 (Dec. 15, 2021).
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