ALF Urges Supreme Court To Enforce Individualized Arbitration Of California Employment Disputes

The Supreme Court repeatedly has held that the Federal Arbitration Act (FAA) requires arbitration agreements to be enforced according to their terms. This includes employment agreement provisions that compel individualized arbitration of employee disputes by waiving the right to file class or representative claims, as well as individualized claims, in court. But in Iskanian v. CLS Transportation Los Angeles, LLC, 327 P.3d 129 (Cal. 2014), the California Supreme Court held that as a matter of California public policy, the FAA does not apply to arbitration agreements that waive representative actions arising under the California Private Attorneys General Act (PAGA). PAGA authorizes an employee to bring a civil penalty action on behalf of the State against an employer for alleged California Labor Code violations affecting the employee and similarly aggrieved fellow employees. The Coverall appeal requests the Supreme Court to overturn the Iskanian rule, which the Ninth Circuit upheld in Sakkab v. Luxottica Retail North America, Inc., 803 F.3d 425 (9th Cir. 2015).

Issue Areas:

Free Enterprise

Case:

Coverall North America, Inc. v. Rivas, No. 21-268 (Supreme Court) (petition stage)
Read the Amicus Brief:
Question(s) Presented:

Whether the Federal Arbitration Act preempts a state-law rule which precludes the enforcement of an agreement to arbitrate claims on an individual basis when a state declares that a private litigant has an unwaivable right to pursue certain claims on a representative basis.

ALF’s Amicus Brief:

The Atlantic Legal Foundation, joined by Washington Legal Foundation, have filed an amicus brief urging the Supreme Court to grant review in the Coverall  case. The amicus brief was drafted pro bono by Peder Batalden, Felix Shafer, and John Querio of Horvitz & Levy LLP. The brief argues that the FAA preempts the Iskanian rule, which is based on the California Supreme Court’s erroneous view that PAGA creates public qui tam claims that belong to the State, rather than private claims which, in reality, are controlled by the named plaintiffs and their counsel. Further, the amicus brief argues that even if PAGA is construed as authorizing public qui tam claims rather than private claims, such claims are nonetheless subject to the FAA, and thus precluded by representative-action waivers in employer-employee arbitration agreements.

Status:

The Petition For a Writ of Certiorari was docketed on August 24, 2021. The Court on June 27, 2022 simultaneously granted certiorari, vacated the Ninth Circuit’s opinion, and remand the case to the Ninth Circuit for further consideration in light of the Court’s June 15, 2022 decision in Viking River Cruises v. Moriana. 

Date Originally Posted: November 17, 2021

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