Pillsbury Winthrop Shaw Pittman

California Supreme Court: gentry is gone. PAGA lives on

By Paula M Weber, Ellen Connelly Cohen and Erica N Turcios

Compelled by US Supreme Court precedent-advancing arbitration as a method of dispute resolution, the California Supreme Court in Iskanian v CLS Transportation Los Angeles LLC (No. S20432, 23 June 2014) held that its decision in Gentry v Superior Court is no longer good law and that arbitration agreements with mandatory class action waivers are generally enforceable. However, the court carved out an exception for representative actions brought under California’s Private Attorneys General Act of 2004 (PAGA), holding that employers cannot force employees to waive their right to bring representative PAGA actions in any forum.

The court’s decision in Iskanian means that while employers may limit their exposure to wage and hour class actions by using arbitration agreements that include class action waivers, employers still face representative actions based on unwaivable PAGA claims, much of which remain uncharted territory.

The case arose when plaintiff Arshavir Iskanian, who worked as a driver for defendant CLS Transportation Los Angeles, signed an employment agreement providing that all employment disputes would be submitted to binding arbitration. The agreement also contained a class and representative action waiver. In 2006, Iskanian filed a class action complaint against CLS, alleging wage and hour violations under the California Labor Code. During a lengthy procedural process, which included two separate appeals pertaining to the enforcement of the arbitration agreement, two major cases bearing on the enforceability of arbitration agreements were decided by the US Supreme Court and the California Supreme Court…

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