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U.S. Supreme Court Declines Review of California’s Iskanian Decision – California State and Federal Courts Remain Divided on PAGA Waivers

January 22 2015

By Labor & Employment

The U.S. Supreme Court has declined to review California high court’s landmark decision in Iskanian v. CLS Transportation Los Angeles, which held that arbitration agreements with mandatory class waivers are generally enforceable, but carved out an exception for the state’s Private Attorney General Act (“PAGA”) claims.

As discussed in our prior blog post, The New PAGA-Waiver Trap Door, while the California Supreme Court in Iskanian held that an employee cannot waive their right to a PAGA lawsuit, not all California federal courts agree. A number of federal trial judges in California have disagreed and ruled that PAGA waivers are enforceable in their courts. (See, e.g., Lucero v. Sears Holding Mgmt. Corp., 2014 U.S. Dist. LEXIS 168782 (S.D. Cal. Dec. 2, 2014); Mill v. Kmart Corp., 2014 U.S. Dist. LEXIS 165666 (N.D. Cal. Nov. 26, 2014); Ortiz v. Hobby Lobby Stores, Inc., 2014 U.S. Dist. LEXIS 140552 (E.D. Cal. Oct. 1, 2014); Chico v. Hilton Worldwide, Inc., 2014 U.S. Dist. LEXIS 147752 (C.D. Cal. Oct. 7, 2014); and Langston v. 20/20,Companies, Inc., 2014 WL 5335734 (C.D. Cal. Oct. 17, 2014).

CLS and other California employers were hoping the U.S. Supreme Court would resolve this growing conflict. Unfortunately, for now, the U.S. Supreme Court has decided they will not resolve this divide. Accordingly, a PAGA waiver in an arbitration agreement may or may not be enforceable, depending on whether the action is in state or federal court. Employers who wish to have arbitration agreements with PAGA waivers should consult legal counsel to determine if doing so is advisable.