PAGA stays on track after Bridgestonecert petition denied.
On June 1, 2015 the U.S. Supreme Court denied a petition for certiorari in Bridgestone Retail Operations, LLC v. Brown (“Bridgestone”), 2015 WL 86028, No. 14-790. The Bridgestone petition challenged the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles (“Iskanian”) (2014) 59 Cal.4th 348, holding that representative claims under the California Labor Code Private Attorneys General Act, Labor Code section 2698, et seq., are not preempted by the Federal Arbitration Act (FAA) and may not be compelled to individual arbitration since they, like qui tam claims, are brought on behalf of the state. Earlier this year, the U.S. Supreme Court declined to consider a petition for certiorari of the Iskanian decision itself. By declining to accept a second challenge to Iskanian, the High Court has given employee advocates a reason to feel renewed confidence that they may proceed in court with PAGA actions, whether or not their clients are otherwise subject to individual arbitration agreements.
PAGA permits an employee to recover civil penalties for wage violations on behalf of California’s Labor Workforce Development Agency, for redistribution to the State and all aggrieved employees. As Bryan Schwartz Law has discussed in previous blog posts, Iskanian holds that employees cannot waive the right to bring representative actions under PAGA in a court of law by signing mandatory arbitration agreements. AT&T Mobility v. Concepcion (2011) 131 S.Ct. 1740 and its progeny interpret the FAA as permitting employees to give up the right to bring class actions asserting other claims by signing agreements to individually arbitrate those claims. However, in Iskanian, the California Supreme Court reasoned that PAGA is an enforcement mechanism designed to carry out California’s interest in ensuring compliance with state wage laws, and not merely a private litigant’s claim. Therefore, while employers may argue under AT&T Mobility that employees have signed away their rights to bring ordinary class claims alleging wage violations, employees’ representative PAGA claims remain unaffected.
On June 3, 2015 the Ninth Circuit heard oral arguments in three cases presenting questions of whether the FAA requires enforcement of PAGA waivers. See Hopkins v. BCI Coca-Cola Bottling Company of Los Angeles, No. 13-56126; Sakkab v. Luxottica Retail North America, Inc., No. 13-55184; and Sierra v. Oakley Sales Corp., No. 13-55891. Like the U.S. Supreme Court when presented with Iskanian and Bridgestone – the Ninth Circuit should not interfere with California’s right to enforce its own wage laws. Stay tuned.