190 Litigating CA Wage & Hour Class and PAGA Actions (24th Edition) Seyfarth Shaw LLP | www.seyfarth.com At the same time, however, Iskanian held that employees may pursue representative actions under the Private Attorneys General Act (“PAGA”), notwithstanding an arbitration agreement providing to the contrary.932 The California Supreme Court has also rejected employer efforts to mandate arbitration in the context of claims seeking statutory injunctive relief. McGill v. Citibank, a 2017 decision, ruled that a provision in an arbitration agreement waiving an individual’s right to seek statutory injunctive relief was contrary to public policy, and therefore, unenforceable.933 McGill did not decide whether there was an enforceable agreement to arbitrate, but rather decided that a contractual waiver of the right to seek a public injunction was unenforceable, regardless of whether that waiver appeared in an arbitration agreement or elsewhere.934 In May 2018, the U.S. Supreme Court held in Epic Systems Corp. v. Lewis, a 5-4 decision authored by Justice Neil Gorsuch, that requiring employees to enter into arbitration agreements with class waivers is consistent with the National Labor Relations Act and that such agreements are fully enforceable.935 B. The U.S. Supreme Court’s Epic Systems Decision In Epic Systems Corp. v. Lewis, the U.S. Supreme Court began its analysis by examining the Federal Arbitration Act. The FAA is unequivocal in its mandate that courts enforce arbitration agreements. The NLRA did not override this command by rendering a class waiver unlawful. The Supreme Court in Epic noted that Section 7 of the NLRA does not create a right to pursue a collective or class action. Rather, Section 7 focuses on the right to organize unions and bargain collectively and does not mention class or collective action procedures.936 Epic further supported its holding by observing that class and collective action procedures were “hardly known” in 1935 when the NLRA was passed; the NLRA contains no rules specifically concerning class or collective actions, in contrast to the extensive regulatory scheme it imposes surrounding other concerted activities; and the collective action procedures under the Fair Labor Standards Act (“FLSA”)—the statute under which the plaintiff-employees’ underlying causes of action arose—is just like the collective action procedures under the Age Discrimination in Employment Act, which the Supreme Court previously held does not prohibit mandatory individual arbitration.937 In short, Epic was unwilling to infer a Section 7 right to a class or collective action based on “vague terms or ancillary provisions” that would “dictate the particulars of dispute resolution procedures in Article III courts or arbitration proceedings—matters that are usually left to, e.g., the Federal Rules of Civil Procedure, the Arbitration Act, and the FLSA.”938 Epic’s reasoning was broader than some expected. Epic does not merely hold that between 932 Id. at 360; see also Provost v. YourMechanic, Inc., 55 Cal. App. 5th 982 (2020) (finding that the threshold question of whether the plaintiff was an “aggrieved employee” pursuant to PAGA could not be compelled to arbitration); Contreras v. Sup. Ct., 61 Cal. App. 5th 461 (2021) (same). 933 McGill v. Citibank, 2 Cal. 5th 945 (2017). 934 McGill did not invalidate agreements that would have the arbitrator decide whether to issue an injunction (as opposed to waiving the right entirely). Nor did McGill say that an arbitration agreement containing an invalid ban on public injunctive relief would necessarily be unenforceable; it is therefore possible that such an agreement could be enforced, with the exception of the improper clause waiving the right to seek statutory injunctive relief. 935 138 S. Ct. 1612 at 1632 (2018). 936 Id. 937 Id. at 1627-28. 938 Id.
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