On January 20, the United States Supreme Court denied a motion for certiorari filed by CLS Transportation which was appealing the California Supreme Court’s decision in Iskanian v. CLS Transportation, about which we blogged in June. While Iskanian generally vindicated employers’ right to enforce class action bans in arbitration agreements, the California Supreme Court distinguished representative claims under the California Labor Code Private Attorneys General Act (Labor Code § 2698 et seq.). The California Supreme Court decision would result in individual employees subject to appropriately drafted arbitration agreements being barred from bringing class actions for damages while they are permitted to bring actions for penalties where they stand in for other current and former employees – a class action for penalties in fact, if not in name.

The denial of review by the United States Supreme Court leaves California employers in a difficult predicament. Presumably state courts will continue to follow Iskanian. However, the federal courts are generally not doing so. Three decisions from the US District Court for the Central District of California issued between August and October 2014 declined to follow Iskanian on the ground that Iskanian’s holding with respect to PAGA is hostile to arbitration in violation of the Federal Arbitration Act. The Eastern District of California added a similar view in October 2014, and now have been joined by the Northern District at the end of November and the Southern District in December. Perhaps the US Supreme Court wanted to wait for the Ninth Circuit Court of Appeal to take up this issue before the Supreme Court wades into this arena again. In the meantime, employers will be well advised to remove to federal court, if possible, cases involving arbitration agreement bans on representative PAGA claims. Employers interested in this issue should also consider the NLRB’s recent decision reaffirming their opposition to workplace arbitration agreements circumscribing the right to bring class or collective actions.