On June 23, 2014, the California Supreme Court issued its
much-anticipated decision in Iskanian v. CLS Transportation Los
Angeles, LLC (Iskanian). In a far-reaching opinion,
the Court accepted the decision of the U.S. Supreme Court in
AT&T Mobility LLC v. Concepcion, 563 U.S. 321 (2011)
(Concepcion), holding class action waivers in arbitration
agreements are enforceable under the Federal Arbitration Act (FAA).
This part of the opinion was a victory for California employers in
that it overturned a prior California Supreme Court decision,
Gentry v. Superior Court, 42 Cal.4th 443 (2007), that had
invalidated class action waivers in employment contracts requiring
arbitration.
The California Supreme Court also rejected arguments made by the
plaintiff that class action waivers violate the National Labor
Relations Act and affirmed the appeals court's holding that
plaintiffs cannot rely on the decision of the National Labor
Relation Board (NLRB) in D.R. Horton, 357 NLRB No. 184
(2012) (D.R. Horton), to circumvent agreements requiring
individual arbitration. This holding was consistent with a prior
ruling of the Fifth Circuit Court of Appeals that refused to
enforce the NLRB's D.R. Horton decision. The NLRB,
however, continues to rely upon D.R. Horton pursuant to
its non-acquiescence doctrine.
In Iskanian, the plaintiff, Arshavir Iskanian, was hired
as a driver by CLS Transportation (CLS) – a limousine
company. Upon hire, plaintiff signed a mandatory arbitration
agreement that contained a class and representative action waiver.
After he left CLS, the plaintiff filed a class action alleging
various violations of the Labor Code as well as a representative
suit under PAGA. As a private litigant, the California Supreme
Court held that Iskanian is bound to that agreement by Concepcion.
However, the Iskanian decision allows his PAGA claim to
continue.
California employers are advised to review their arbitration
agreements in light of Iskanian and assess how best to
deal with the ramifications of its rulings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
