Plaintiff, a former employee of defendant employer, sought review of a judgment from the Court of Appeal, Second Appellate District, Division Two (California), which affirmed the trial court's orders granting the employer's motion to compel individual arbitration of wage and hour claims and dismissing with prejudice the employee's class claims and Private Attorneys General Act (PAGA), Lab. Code, § 2968 et seq., representative claims.
Overview: disadvantages of joint ventures
The arbitration agreement contained a class action and representative action waiver. After a California decision invalidated some class action waivers in employment arbitration agreements, the employer voluntarily withdrew its motion to compel arbitration, renewing the motion only after the United States Supreme Court ruled that the Federal Arbitration Act (FAA) preempted state rules invalidating class waivers in arbitration agreements. The court concluded that the FAA preempted the rule in Gentry v. Superior Court (2007) 42 Cal.4th 443 and that the class action waiver was valid. The protection of concerted activity in 29 U.S.C. §§ 157, 158(a)(1) did not conflict with the FAA. The employer did not waive arbitration under Code Civ. Proc., § 1281.2, by pursuing litigation when the case law foreclosed arbitration. Pursuant to Civ. Code, §§ 1668, 3513, it was contrary to public policy to require employees to waive the right to bring an action for civil penalties under Lab. Code, § 2699, 2699.3. The PAGA claims did not interfere with the FAA because they were qui tam actions outside the scope of 9 U.S.C. § 2. There was no separation of powers violation under Cal. Const., art. III, § 3.
Outcome
The court reversed and remanded.