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Sakkab v. Luxottica Retail – 9th Circuit Holds FAA Does not Preempt Iskanian and PAGA

On Behalf of | Sep 28, 2015 | in Class Actions, Courts, Overtime, Wage & Hour

In a victory over mandatory arbitration, the 9th Circuit panel reversed the United States District Court’s Order granting Luxottica Retail North America’s motion to compel arbitration of claims and dismissing the remainder of plaintiff’s first amended complaint in a putative class action raising class Labor Code claims and a non-class representative claim for civil penalties under the Private Attorney General Act [“PAGA”].

Luxottica sought to compel arbitration under an arbitration agreement contained in its Retail Associate Guide. Plaintiff argued that the portion of the arbitration agreement prohibiting him from bringing any PAGA claims on behalf of other employees was unenforceable under California law.

After the district court entered judgment in this case, the California Supreme Court announced the rule in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), barring the waiver of representative claims under PAGA.

The panel held that the waiver of the representative PAGA claim could not be enforced. The panel held that the Federal Arbitration Act did not preempt the California rule announced in Iskanian. Specifically, the panel held that following the logic of AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the Iskanian rule is a “generally applicable” contract defense that may be preserved by the FAA’s § 2 savings clause, provided it did not conflict with the FAA’s purposes. The panel further found that the Iskanian Rule did not conflict with the FAA’s purposes.

The panel held that the non-PAGA claims in the first amended complaint must be arbitrated. The panel remanded for the district court and the parties to decide in the first instance where plaintiff’s representative PAGA claim should be resolved, and to conduct other proceedings consistent with the opinion.  For a copy of the opinion please see http://cdn.ca9.uscourts.gov/datastore/opinions/2015/09/28/13-55184.pdf

If you are an employee who is owed wages, overtime, expenses, or seeking to enforce your rights under the California Labor Code, please feel free to contact Richard E. Quintilone II Esq at Quintilone & Associates email or call 949-458-9675.