Below is the first part of an article by by Matthew C. Kane, Michael D. Mandel, Sabrina A. Blender, Regina A. Musolino, Bethany A. Pelliconi and John A. Van Hook from lexology.com. It reads…
In Iskanianv. CLS Transportation Los Angeles, a driver for CLS Transportation Los Angeles, LLC (CLS), brought a class action complaint alleging various violations of the California Labor Code. In addition, he asserted a “representative action” claim under California’s unique Labor Code Private Attorneys General Act of 2004, Lab. Code § 2698 et seq. (PAGA), which permits “aggrieved” employees to stand in the shoes of the state to pursue civil penalties against employers. As part of Iskanian’s employment with CLS, he signed an arbitration agreement in which he waived the right to pursue class action and representative action claims against CLS and instead agreed to submit his individual claims to arbitration.
CLS moved to compel arbitration, asserting that Iskanian’s claims were subject to binding individual arbitration and that he could not pursue any class or representative claims. The trial court granted CLS’s motion and Iskanian appealed. While that appeal was pending, the California Supreme Court decided Gentry v. Superior Court, 42 Cal.4th 443 (2007), holding that class action waivers in employment arbitration agreements are invalid under certain circumstances. In light of Gentry, the California Court of Appeal in Iskanian sent that case back to the trial court to reconsider its decision granting the motion to compel. CLS subsequently withdrew its motion to compel and the parties proceeded to litigate the case in court.
During the course of litigation, the United States Supreme Court decided AT&T Mobility LLC v. Concepcion,131 S.Ct. 1740 (2011), in which it held that the Federal Arbitration Act (FAA) preempts state law rules that invalidate class action waivers. In light of Concepcion, CLS renewed its motion to compel arbitration and argued that Concepcion invalidated Gentry. Iskanian argued, among other things, that Gentrywas still good law and that class action waivers were unlawful, that employers cannot require the arbitration of representative PAGA claims, that the arbitration agreement violated the National Labor Relations Act (NLRA), and that CLS had waived its right to arbitration by proceeding in court. Both the trial court and California Court of Appeal ruled in favor of CLS, and Iskanian appealed to the California Supreme Court.