The United States Supreme Court has refused to consider a California case holding the Federal Arbitration Act (“FAA”) does not apply to a worker’s labor code enforcement claim that was brought under California’s Private Attorneys General Act (“PAGA”). In CLS Transportation Los Angeles, LLC v. Iskanian, No. 14-341, a worker sought to file a class action lawsuit against his employer over a number of wage and hour claims. Prior to beginning his employment, however, the employee signed an arbitral agreement waiving his right to class proceedings.
After eventually reaching the state high court, the Supreme Court of California ruled that the class arbitration waiver the employee signed was valid under the FAA. Despite this, the court held the worker’s PAGA action was not preempted by the federal law. A more detailed account of the California Supreme Court’s decision is available in a July 2014 Disputing blog post.
In its petition for a writ of certiorari, the man’s employer presented the court with following question:
Is an employee’s waiver in an arbitration agreement of a collective or “representative action” under the California Private Attorneys General Act, Cal. Labor Code § 2698 et seq., so distinguishable from a “class action” waiver that it is immune from the otherwise preemptive effect of the Federal Arbitration Act, 9 U.S. Code § 1, et seq., as held by this Court in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011)?
On January 20th, the U.S. Supreme Court denied the company’s petition. The holding in the California case is significant because it opens up a new argument for using public enforcement actions to avoid a class arbitration waiver.