Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (24th Edition) 191 conflicting rights and interests of the FAA and NLRA, the FAA wins. Rather, Epic suggests that there may not be any Section 7 right to pursue a collective or class action in the first place.939 There are a few instances, however, where class action waivers still would not apply. For instance, the FAA by its terms does not apply to certain employees, most notably transportation workers.940 Furthermore, agency-initiated actions by their nature are beyond the FAA’s scope. Thus, the Department of Labor and the Equal Employment Opportunity Commission are free to pursue relief under the statutes they enforce on behalf of groups of employees, regardless of whether those employees have entered into arbitration agreements containing class waivers. Additionally, the California Supreme Court’s ruling in Iskanian v. CLS Transportation Los Angeles, LLC941 that the right to pursue representative actions under the Private Attorneys General Act (“PAGA”) cannot be waived still remains good law.942 C. The Supreme Court Holds That Class Arbitration Must Be Expressly Agreed Upon In Lamps Plus, Inc. v. Varela, the U.S. Supreme Court ruled that arbitration proceedings may be conducted on a class basis only where there is an express agreement between the parties that authorizes class proceedings.943 Relying on its past decisions in Stolt-Nielsen, Concepcion, and Epic Systems, the Court made clear that class arbitration “fundamentally changes” the nature of “traditional individualized arbitration” envisioned by the Federal Arbitration Act in several ways, including making the process slower, more costly, and “more likely to generate procedural morass than final judgment.”944 In so ruling, the Court rejected the basis of the Ninth Circuit’s contrary ruling, which had found the arbitration agreement at issue to be ambiguous and, applying California state contract law that contractual ambiguities should be construed against the drafter, held that the agreement allowed for class arbitration. Relying on its prior 939 Id. at 1624-32. 940 In recent years, courts have significantly expanded the transportation worker exemption to deny motions to compel arbitration. In 2022, the U.S. Supreme Court determined that an individual does not need to work in the transportation industry nor cross state lines while working to be exempt from coverage under the FAA. Southwest Airlines Co. v. Saxon, 596 U.S. 450, 455 (2022). In Saxon, the Supreme Court held that workers who load cargo onto airplanes engaged in interstate travel are “transportation workers” exempt from the FAA. Then, in 2024, the Ninth Circuit held that warehouse workers who handled goods that were part of the flow of interstate commerce fell within this exemption, even though the work was performed locally. Ortiz v. Randstad Inhouse Servs., LLC, 95 F.4th 1152 (9th Cir. 2024). The Court emphasized that the workers' tasks were “actively engaged” and "intimately involved with" the movement of goods in interstate commerce. Id. at 1162; see also Miller v. Amazon.com, Inc., 2023 WL 5665771 (9th Cir. Sept. 1, 2023) (affirming the denial of a motion to compel arbitration on grounds that Amazon Flex delivery drivers who complete “last-mile” and tipproducing deliveries are exempt from the FAA as transportation workers because they deliver goods moving in interstate commerce to their final destination, even if the drivers do not physically cross state lines); Rittman v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020) (Amazon delivery drivers held exempt from FAA pursuant to transportation worker exemption). 941 59 Cal. 4th 348 (2014). 942 See, e.g., Olson v. Lyft, 56 Cal. App. 5th 862 (2020) (holding that Epic Systems did not overrule Iskanian’s determination that PAGA claims cannot be compelled to arbitration). However, after denying multiple requests over the years, in December 2021 the U.S. Supreme Court granted certiorari in Viking River Cruises, Inc. v. Moriana, No. 20-1573 (Dec. 15, 2021) to decide whether the FAA requires enforcement of an arbitration agreement which provides that an employee cannot raise representative claims, including under PAGA. 943 139 S. Ct. 1407 (2019). 944 Id. at 1412.
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