While likely subject to appeal by the plaintiff’s lawyer in the case, California employers received a welcome decision by a California Court of Appeal. The Court upheld a class action waiver in an arbitration agreement and also found the plaintiff could not bring claims under the California Private Attorney General Act (“PAGA”) in light of the arbitration agreement. The California Court of Appeal involved was the Second Appellate District, Division Two. See, Iskanian v. CLS Transportation etc. (CA2/2 B235158 6/4/12).

The Court followed the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion (2011) __ U.S. __ [131 S. Ct. 1740] (Concepcion), which found that the Federal Arbitration Act (FAA) required arbitration agreements with class action waivers to be enforceable. The Court wrote:


Applying this binding authority, we conclude that the trial court properly ordered this case to arbitration and dismissed class claims


Importantly, the Court declined to follow D.R. Horton, 357 NLRB No. 184 (Jan. 3, 2012), where the National Labor Relations Board ("NLRB") held that “employers may not compel employees to waive their NLRA right collectively to pursue litigation of employment claims in all forums, arbitral and judicial.” The Court declared:


As the FAA is not a statute the NLRB is charged with interpreting, we are under no obligation to defer to the NLRB’s analysis. “[C]ourt’s do not owe deference to an agency’s interpretation of a statute it is not charged with administering or when an agency resolves a conflict between its statute and another statute.” (Association of Civilian Technicians v. F.L.R.A. (9th Cir. 2000) 200 F.3d 590, 592; see also Hoffman Plastic Compounds, Inc. v. N.L.R.B. (2002) 535 U.S. 137, 144 [“we have accordingly never deferred to the Board’s remedial preferences where such preferences potentially trench upon federal statutes and policies unrelated to the NLRA”]. . .


We decline to follow D.R. Horton. In reiterating the general rule that arbitration agreements must be enforced according to their terms, Concepcion (which is binding authority) made no exception for employment-related disputes.


Employers also received welcome news when the Court found that the plaintiff could not pursue the PAGA claims. The Court found that the FAA “preempts any attempt by a court or state legislature to insulate a particular type of claim from arbitration.” The Court’s decision provides employers with several positive developments. However, there are conflicting decisions regarding some of the issues in other California Court decisions and in other forums. As a result, employers should consult with their legal counsel when reviewing the enforceability of arbitration agreements.