California Employers Score Significant Victory in Favor of Class-Action Waivers

On June 4, 2012, a California appellate court ruled in Iskanian v. CLS Transport to uphold an employment contract containing a class-action waiver. Drawing on the recent US Supreme Court decision in Concepcion, the California Court of Appeals determined that Arshavir Iskanian must abide by the terms of the arbitration agreement he signed while working for CLS Transportation.

The decision is a big win for employers who ask employees to sign mandatory arbitration clauses. But Iskanian isn’t likely the final word on class-action waivers in California employment contracts: the ruling creates a split of authority with a related 2011 appeals court ruling, setting up a possible review by the California Supreme Court.

For your reference, here’s a roundup of commentary and analysis on the Iskanian decision:

Class-Action Waivers in Employment Agreements Deemed Valid by California Appeals Court (Ballard Spahr LLP)

“In Iskanian v. CLS Transport, the California Court of Appeals, 2nd District, applied the U.S. Supreme Court’s landmark decision in AT&T Mobility v. Concepcion, which held that state law rules disfavoring arbitration are displaced by the Federal Arbitration Act. The court found that Concepcion has overruled the California Supreme Court’s decision in Gentry v. Superior Court, which allowed state courts to invalidate class-action waivers where class arbitration would be a more effective way to vindicate the rights of aggrieved employees.” Read on>>

California Court Approves Class Action Waivers In Employment Arbitration Agreements (Proskauer)

“The plaintiff [Arshavir Iskanian] … brought a putative class action and a representative action under California’s Private Attorney General Act (PAGA) for various wage and hour violations. During his employment, Iskanian agreed that he would not assert class action or representative action claims against his employer and, instead, agreed to submit any legal claims he had to binding arbitration. The California Court of Appeal for the Second District held that the employee was bound by his agreement.” Read on>>

Everything an Employer Could Ask For in One Decision on Class Action Waivers (Sheppard Mullin Richter & Hampton LLP)

“This is a great decision for employers and would have been a far more momentous decision but for the awful Brown decision, which is now final and not subject to review. When two appellate courts disagree, trial courts are free to pick and choose which one to follow. Nonetheless, this decision provides a road map for the arguments employers can and should raise in defending their arbitration agreements from attack in the trial courts. That being said, the case has a likely shelf life of only about 120 days until the California Supreme Court grants review to resolve the split of appellate authority. When that happens, the case will be depublished.” Read on>>

California Court Enforces Waivers of Class and PAGA Representative Claims (Morgan Lewis)

“The Iskanian decision, however, creates a clear split in authority among California Courts of Appeal regarding the enforceability of PAGA representative action waivers. See, e.g., Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2d Dist. 2011) (holding that PAGA waivers were not enforceable); Reyes v. Macy’s, Inc., 202 Cal. App. 4th 1119 (1st Dist. 2011) (following Brown and refusing to compel individual arbitration of PAGA claims). This split may lead to California Supreme Court review, which means that the issue may not be resolved anytime soon.” Read on>>

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