A recent federal court decision illustrates how defendants may be able to defeat PAGA claims in California. Brown v. American Airlines, Inc., No. CV 10-8431-AG (PJWx), 2015 WL 6735217 (C.D. Cal. Oct. 5, 2015) is the latest case to dismiss PAGA claims based on the presence of numerous individualized issues that render the case unmanageable. This decision provides hope for employers in the face of rulings by the California Supreme Court and certain federal district courts that PAGA actions need not meet class certification requirements.
On September 28, 2015, the Ninth Circuit held in Shukri Sakkab v. Luxottica Retail North America, Inc. that the FAA does not preempt the rule that the California Supreme Court enunciated in Iskanian v. CLS Transportation that California law bars the waiver of Private Attorneys General Act (“PAGA”) claims. As a result, California employers will likely see an increase in the filing of PAGA cases as employees use them as a vehicle for representative actions outside of arbitration.
The California Supreme Court is poised to clarify what limits may apply to burdensome discovery demands in litigation under California’s Labor Code Private Attorneys General Act of 2004 (“PAGA”), which allows employees to bring non-class representative actions against employers on behalf of themselves and other “aggrieved employees” for alleged violations of the Labor Code.
The Ninth Circuit recently delivered a setback to defendants seeking to remove cases to federal court under the Class Action Fairness Act (“CAFA”) when it interpreted the statute narrowly to exclude consideration of non-class claims in determining the jurisdictional amount in controversy in Yocupicio v. PAE Grp., LLC, No. 15-55878, 2015 WL 4568722 (9th Cir. 2015).
On January 20, the United States Supreme Court denied certiorari in CLS Transportation Los Angeles LLC v. Iskanian, leaving intact a decision by the California Supreme Court holding that representative Private Attorney General Act (PAGA) claims cannot be waived in arbitration agreements. Enacted in 2004, PAGA deputizes private citizens to seek penalties on behalf of the state by bringing representative suits for workplace violations.
After the California Supreme Court’s recent decision in Iskanian v. CLS Transportation, which held that PAGA representative action waivers are unenforceable under California law, employers have struggled with whether to retain such waivers in their arbitration agreements. The answer to whether such waivers should be retained is not as straightforward as one might expect.
Ever since the U.S. Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, California employers hoped this day would come. In a predictable result, the California Supreme Court today acknowledged that class action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (FAA). In so doing, the Court overruled its 2007 decision in Gentry v. Superior Court which effectively had barred class action waivers for wage and hour cases. But the Court’s 6-1 plurality decision also bolstered an alternate method for bringing Labor Code claims in court by declaring that actions brought under the Private Attorneys General Act (Labor Code § 2968 et seq.) are not waivable by private agreement and thus not subject to compelled arbitration. READ MORE
Joining the ever growing list of opinions on the arbitrability of class claims, an NLRB Administrative Law Judge recently ruled that an arbitration agreement that did not expressly bar workers from bringing class or collective actions still violated federal labor law because the employer’s steps taken to enforce the agreement in court had the practical effect of doing so. READ MORE
A California Court of Appeal recently required a plaintiff to forego class and representative action claims in Nelsen v. Legacy Partners Residential, Inc., No. A132927 (Cal. App. July 18, 2012) finding that she failed to show the employer’s arbitration agreement was unconscionable or that compelling individual arbitration would violate state or federal law or public policy. Knocking down the attempt to keep class and representative claims alive in either a judicial or arbitration proceeding, the First Appellate District held that all of the plaintiff’s California Labor Code claims, as well her claim for injunctive relief, had to be arbitrated on an individual basis. READ MORE
On July 10, 2012, a California court of appeal held that an employer’s practice and policy of charging back advanced sales commissions following a canceled service agreement does not violate California law. The Court held that these advanced commissions are not wages; thus they do not come within the ambit of California Code of Civil Procedure section 223 which prohibits the secret payment of lower wages and exposes the employer to PAGA penalties. READ MORE