Ninth Circuit Affirms California Restriction on Arbitration Agreements

On September 28, 2015, a divided Ninth Circuit Court of Appeal upheld California’s ban on PAGA waivers in arbitration agreements. Sakkab v. Luxottica Retail N. Am., Inc., No. 13-55184, 2015 WL 5667912 (9th Cir. Sept. 28, 2015). The 2 to 1 decision held that the ruling of the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) prohibiting employee waivers of representative Private Attorney General Act of 2004 (“PAGA”) claims in workplace arbitration agreements, did not violate the Federal Arbitration Act (“FAA”) which requires that arbitration agreements be enforced according to their terms.

ninth-circuit-220xThe decision resolved a conflict between some federal District Courts which found the Iskanian rule was preempted by the FAA. It is unclear whether the defendant will file a petition for writ of certiorari before the U. S. Supreme Court. Unless the Supreme Court decides to weigh in on the issue, California employers will be forced to defend PAGA claims in court even when the underlying wage claims are sent to arbitration. A copy of the decision may be found at http://cdn.ca9.uscourts.gov/datastore/opinions/2015/09/28/13-55184.pdf

Posted in Arbitration and ADR, General.