`
`IN THE
`Supreme Court of the United States
`
`UBER TECHNOLOGIES, INC. AND RASIER-CA, LLC,
`Petitioners,
`
`v.
`
`JONATHON GREGG,
`
`Respondent.
`
`On Petition for a Writ of Certiorari
`to the California Court of Appeal
`
`PETITION FOR A WRIT OF CERTIORARI
`
`THEANE D. EVANGELIS
` Counsel of Record
`BLAINE H. EVANSON
`BRADLEY J. HAMBURGER
`GIBSON, DUNN & CRUTCHER LLP
`333 South Grand Avenue
`Los Angeles, CA 90071
`213.229.7000
`tevangelis@gibsondunn.com
`
`SOPHIA BEHNIA
`LITTLER MENDELSON, P.C.
`333 Bush Street
`34th Floor
`San Francisco, CA 94104
`415.433.1940
`sbehnia@littler.com
`
`ANDREW SPURCHISE
`LITTLER MENDELSON, P.C.
`900 Third Avenue
`New York, NY 10022
`212.583.2684
`aspurchase@littler.com
`
`Counsel for Petitioners
`September 21, 2021
`
`
`
`i
`
`QUESTION PRESENTED
`The Federal Arbitration Act (“FAA”) provides that
`arbitration agreements “shall be valid, irrevocable,
`and enforceable, save upon such grounds as exist at
`law or in equity for the revocation of any contract.” 9
`U.S.C. § 2. In Epic Systems Corp. v. Lewis, 138 S. Ct.
`1612 (2018), this Court held that the FAA “protect[s]”
`individual arbitration agreements “pretty absolutely,”
`and requires courts “to enforce, not override, the
`terms of [an] arbitration agreement[]” “providing for
`individualized proceedings.” Id. at 1619, 1621, 1623.
`Courts in California have created a broad but
`unwritten exception to the FAA’s otherwise “emphatic
`directions.” Epic Sys., 138 S. Ct. at 1621. According
`to the California Supreme Court, claims arising under
`the California Labor Code Private Attorneys General
`Act
`(“PAGA”)—which
`threaten employers with
`massive penalties for even trivial legal violations—are
`wholly exempt from the FAA, and agreements calling
`for individual arbitration are therefore unenforceable
`as to PAGA claims. See Iskanian v. CLS Transp. L.A.,
`LLC, 59 Cal. 4th 348, 360 (2014). The Ninth Circuit
`upheld this conclusion in Sakkab v. Luxottica Retail
`North America, Inc., 803 F.3d 425 (9th Cir. 2015).
`And both courts have declined to reassess this
`conclusion after Epic Systems.
`The question presented is:
`individual
`for
`Whether agreements
`calling
`arbitration are enforceable under the Federal
`Arbitration Act with respect to claims asserted under
`the California Labor Code Private Attorneys General
`Act.
`
`
`
`
`
`
`
`
`ii
`
`PARTIES TO THE PROCEEDING AND
`CORPORATE DISCLOSURE STATEMENT
`The caption contains the names of all the parties
`to the proceedings below.
`Pursuant to this Court’s Rule 29.6, undersigned
`counsel state that Uber Technologies, Inc. is a publicly
`held corporation and not a subsidiary of any entity.
`Based solely on SEC filings regarding beneficial
`ownership of the stock of Uber, Uber is unaware of any
`shareholder who beneficially owns more than 10% of
`Uber’s outstanding stock. Rasier-CA, LLC is a wholly-
`owned subsidiary of Uber.
`
`
`
`iii
`
`STATEMENT OF RELATED PROCEEDINGS
`This case arises from and is related to the following
`proceedings in the California Superior Court for the
`County of Los Angeles, the California Court of Appeal,
`and the California Supreme Court:
`• Gregg v. Uber Technologies, Inc., No. BC719085
`(Cal. Super. Ct.), order issued Dec. 5, 2019;
`• Gregg v. Uber Technologies, Inc., No. B302925
`(Cal. Ct. App.), opinion issued Apr. 21, 2021;
`• Gregg v. Uber Technologies, Inc., No. S269000
`(Cal.), petition for review denied June 30, 2021.
`There are no other proceedings in state or federal
`trial or appellate courts directly related to this case
`within the meaning of this Court’s Rule 14.1(b)(iii).
`
`
`
`
`
`
`
`iv
`
`TABLE OF CONTENTS
`
`Page
`QUESTION PRESENTED........................................... i
`PARTIES TO THE PROCEEDING AND
`CORPORATE DISCLOSURE STATEMENT ........... ii
`STATEMENT OF RELATED PROCEEDINGS....... iii
`OPINIONS BELOW .................................................... 5
`JURISDICTION .......................................................... 5
`STATUTORY PROVISIONS INVOLVED ................. 5
`STATEMENT OF THE CASE .................................... 6
`A. Legal Background ........................................... 6
`B. Factual and Procedural History .................. 14
`REASONS FOR GRANTING THE PETITION ....... 16
`A. The Decision Below Conflicts with
`This Court’s Decisions Interpreting the
`FAA ............................................................... 17
`B. The Iskanian Rule Will Remain the
`Law in California Absent This Court’s
`Intervention .................................................. 20
`C. Whether PAGA Claims Are Beyond
`the Scope of the FAA Is an Important
`and Recurring Issue ..................................... 24
`CONCLUSION .......................................................... 26
`
`
`
`
`
`
`
`
`
`v
`
`TABLE OF APPENDICES
`
`Page
`
`APPENDIX A: Minute Order of the California
`Supreme Court (June 30, 2021) ......................... 1a
`
`APPENDIX B: Order of the California Court of
`Appeal (Apr. 21, 2021) ........................................ 2a
`
`APPENDIX C: Order of the Superior Court of
`Los Angeles County (Dec. 5, 2019) ................... 15a
`
`APPENDIX D: Statutory Provisions Involved ...... 17a
`
`9 U.S.C. § 2 ................................................. 17a
`
`Cal. Labor Code § 2699 .............................. 18a
`
`
`
`
`
`vi
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`Arias v. Superior Court,
`46 Cal. 4th 969 (2009) .................................... 2, 8, 9
`
`AT&T Mobility LLC v. Concepcion,
`563 U.S. 333 (2011) .............................. 1, 4, 6, 7, 20
`
`Correia v. NB Baker Elec., Inc.,
`32 Cal. App. 5th 602 (2019) ................................. 21
`
`EEOC v. Waffle House, Inc.,
`534 U.S. 279 (2002) ........................................ 17, 18
`
`Epic Sys. Corp. v. Lewis,
`138 S. Ct. 1612 (2018) ..... 1, 4, 6, 11, 12, 13, 16, 17,
` ........................................................................ 19, 20
`
`Gilmer v. Interstate/Johnson Lane
`Corp.,
`500 U.S. 20 (1991) .................................................. 6
`
`Henry Schein, Inc. v. Archer & White
`Sales, Inc.,
`139 S. Ct. 524 (2019) ...................................... 13, 14
`
`Iskanian v. CLS Transp. L.A., LLC,
`59 Cal. 4th 348 (2014) .......... 2, 3, 10, 11, 17, 18, 23
`
`James v. City of Boise,
`577 U.S. 306 (2016) ............................................. 21
`
`
`
`
`
`vii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Kilby v. CVS Pharmacy, Inc.,
`739 F.3d 1192 (9th Cir. 2013) ................................ 8
`
`Kim v. Reins Int’l Cal., Inc.,
`9 Cal. 5th 73 (2020) ................................................ 9
`
`Lamps Plus, Inc. v. Varela,
`139 S. Ct. 1407 (2019) .......................................... 13
`
`Magadia v. Wal-Mart Assocs., Inc.,
`999 F.3d 668 (9th Cir. 2021) ...................... 9, 10, 18
`
`Nitro-Lift Techs., LLC v. Howard,
`568 U.S. 17 (2012) .......................................... 21, 23
`
`Rivas v. Coverall N. Am., Inc.,
`842 F. App’x 55 (9th Cir. 2021) ........... 3, 19, 20, 22
`
`Sakkab v. Luxottica Retail N. Am., Inc.,
`803 F.3d 425 (9th Cir. 2015) ...... 3, 8, 10, 11, 20, 23
`
`Southland Corp. v. Keating,
`465 U.S. 1 (1984) .................................................... 6
`
`Statutes
`
`9 U.S.C. § 2 ........................................................ 5, 6, 17
`
`Cal. Lab. Code § 2698 et seq. ....................................... 7
`
`Cal. Lab. Code § 2699(i) .............................................. 8
`
`Cal. Lab. Code § 2699(a) ....................................... 2, 15
`
`
`
`
`
`viii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`Cal. Lab. Code § 2699(f)(2) .................................... 8, 25
`
`Cal. Lab. Code § 2699(g)(1) ......................................... 8
`
`Cal. Lab. Code § 2699(h) ............................................. 9
`
`Cal. Lab. Code § 2699.3(b)(2)(A)(i) ............................. 9
`
`Other Authorities
`
`2d Substitute H.B. 1076, 67th Leg., Reg.
`Sess. (Wash. 2021) ............................................... 25
`
`Assemb. B. 5876, 2021 Reg. Sess. (N.Y.
`2021) ..................................................................... 25
`
`Braden Campbell, Calif. Private AG
`Law: Coming to a State Near You?,
`Law360 (Feb. 21, 2020),
`https://bit.ly/3hxPHCp ......................................... 26
`
`Charles Thompson et al., Employers
`Must Brace for PAGA-Like Bills
`Across US (June 18, 2021),
`https://bit.ly/3BAFGfH ................................... 25, 26
`
`Christine Baker & Len Welsh,
`California Private Attorneys General
`Act of 2004: Outcomes and
`Recommendations (Mar. 2021),
`https://bit.ly/3rajTqj ....................................... 24, 25
`
`
`
`
`
`ix
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Emily Green, State Law May Serve as
`Substitute for Employee Class
`Actions, Daily Journal (Apr. 17,
`2014), https://bit.ly/3AVQ5lY .............................. 24
`
`H.B. 1959, 192nd Gen. Court (Mass.
`2021) ..................................................................... 25
`
`H.B. 483, 2019 Gen. Assemb., Reg. Sess.
`(Vt. 2019) .............................................................. 25
`
`H.B. 5381, 2020 Gen. Assemb., Reg.
`Sess. (Conn. 2020) ................................................ 25
`
`Jathan Janove, More California
`Employers Are Getting Hit with
`PAGA Claims, Society for Human
`Resource Management (Mar. 26,
`2019), https://bit.ly/3wzkHX1 .............................. 24
`
`Legis. Doc. 1693, 129th Leg., 1st Reg.
`Sess. (Me. 2019) ................................................... 25
`
`Matthew J. Goodman, The Private
`Attorney General Act: How to
`Manage the Unmanageable, 56
`Santa Clara L. Rev. 413 (2016) ........................... 24
`
`
`
`
`
`x
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Maureen A. Weston, The Clash:
`Squaring Mandatory Arbitration
`with Administrative Agency and
`Representative Recourse, 89 S. Cal.
`L. Rev. 103 (2015) ................................................ 24
`
`Oral Argument (9th Cir. Nov. 19, 2020)
`Rivas v. Coverall North America, No.
`20-55140, https://bit.ly/3x6ee67 ........................... 22
`
`S.B. 1179, 192nd Gen. Court (Mass.
`2021) ..................................................................... 25
`
`S.B. 12, 2021 Reg. Sess. (N.Y. 2021) ......................... 25
`
`S.B. 139, 2019 Gen. Assemb., Reg. Sess.
`(Vt. 2019) .............................................................. 25
`
`S.B. 750, 80th Legis. Assemb., Reg.
`Sess. (Or. 2019) .................................................... 25
`
`Toni Vranjes, Doubts Raised About New
`California PAGA Requirements,
`Society for Human Resource
`Management (Dec. 6, 2016),
`https://bit.ly/36tlRZl ............................................. 24
`
`U.S. Bureau of Labor Statistics,
`Economy at a Glance: California,
`https://bit.ly/3xybqzK ........................................... 25
`
`
`
`
`
`xi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Zachary D. Clopton, Procedural
`Retrenchment and the States, 106
`Cal. L. Rev. 411 (2018) ......................................... 25
`
`Page(s)
`
`
`
`
`
`
`
`
`
`
`1
`
`PETITION FOR A WRIT OF CERTIORARI
`The Federal Arbitration Act (“FAA”) requires
`courts to “enforce arbitration agreements according to
`their
`terms—including
`terms
`providing
`for
`individualized proceedings.” Epic Sys. Corp. v. Lewis,
`138 S. Ct. 1612, 1619 (2018). California courts refuse
`to follow that mandate with respect to an entire
`category of claims: those brought under an expansive
`statute, the California Labor Code Private Attorneys
`General Act (“PAGA”), that permits
`individual
`employees to seek penalties on behalf of themselves
`and any other purportedly “aggrieved” employees.
`This is not the first time that California has tried
`to circumvent the FAA. In AT&T Mobility LLC v.
`Concepcion, 563 U.S. 333
`(2011), this Court
`confronted the California Supreme Court’s Discover
`Bank rule that rendered class action waivers in
`arbitration agreements unenforceable on the ground
`that they were against public policy. Id. at 338, 348.
`This Court held that the FAA preempted the Discover
`Bank rule because “[r]equiring the availability of
`classwide arbitration interferes with fundamental
`attributes” of the traditional, bilateral arbitration
`favored by the FAA. Id. at 344.
`in Epic Systems
`More recently, the Court
`reaffirmed that the FAA requires “rigorous[]”
`enforcement of class and collective action waivers in
`arbitration agreements calling
`for
`“one-on-one
`arbitration,” regardless of countervailing federal
`policy interests in federal labor laws. 138 S. Ct. at
`1619, 1621.
` Despite
`this Court’s
`“emphatic
`direction[]” that individual arbitration agreements
`must be enforced, id. at 1621, state and federal courts
`
`
`
`
`
`2
`
`in California have carved out an exception to that rule
`for PAGA claims.
`As it currently stands, employees in California can
`escape otherwise valid and binding agreements to
`arbitrate disputes with their employers on an
`individual basis by asserting their claims under
`PAGA. PAGA authorizes an “aggrieved employee” to
`seek civil penalties “on behalf of himself or herself and
`other current or former employees” for a wide-range
`of violations of the California Labor Code. Cal. Lab.
`Code § 2699(a). The California Supreme Court has
`interpreted PAGA to permit the entry of judgments
`binding on employees who are not parties to the action
`without notice or any showing that the named
`plaintiff has typical claims or that his counsel is
`adequate. Arias v. Superior Court, 46 Cal. 4th 969,
`985–87 (2009).
`In Iskanian v. CLS Transportation Los Angeles,
`LLC, 59 Cal. 4th 348 (2014), the California Supreme
`Court held that arbitration agreements requiring
`employees to arbitrate disputes with their employers
`individually rather than bring a PAGA action in court
`are void as a matter of public policy. Id. at 360. As a
`result, the so-called “Iskanian rule” allows employees
`in California to bring PAGA claims on behalf of
`themselves and hundreds or thousands of other
`“aggrieved employees” in court, often for millions of
`dollars in penalties—even if they expressly agreed
`with their employers to resolve all disputes in
`individual arbitration.
`Both the California Supreme Court and the Ninth
`Circuit have concluded that the Iskanian rule is not
`preempted by the FAA. The California Supreme
`
`
`
`
`
`3
`
`Court held that a PAGA claim “lies outside the FAA’s
`coverage because it is not a dispute between an
`employer and an employee arising out of their
`contractual relationship.” Iskanian, 59 Cal. 4th at
`386–87. Iskanian reasoned that a PAGA claim “is a
`dispute between an employer and the state,” meaning
`that the state is “the real party in interest,” id.
`(emphasis in original)—even though in PAGA actions
`it is the employee who actually files the action and has
`complete control over the litigation. And in Sakkab v.
`Luxottica Retail North America, Inc., 803 F.3d 425
`(9th Cir. 2015), a divided panel of the Ninth Circuit
`held that the Iskanian rule was not preempted by the
`FAA, but declined to adopt the California Supreme
`Court’s reasoning. Instead, the Ninth Circuit held
`that the Iskanian rule falls within the FAA’s saving
`clause because it supposedly “bars any waiver of
`PAGA claims, regardless of whether the waiver
`appears in an arbitration agreement or a non-
`arbitration agreement.” Id. at 432–40.
`Both the California Supreme Court and the Ninth
`Circuit have repeatedly refused to reconsider these
`holdings. They have done so even though, as Judge
`Bumatay recently explained, “the writing is on the
`wall” that Iskanian and Sakkab have “been seriously
`undermined” by Epic Systems. Rivas v. Coverall N.
`Am., Inc., 842 F. App’x 55, 57–58 (9th Cir. 2021)
`(Bumatay, J., concurring) (“Recent Supreme Court
`decisions . . . make clear that our precedent is in
`serious need of a course correction.”). The Court
`should grant review to make clear that parties may
`not “sidestep an arbitration agreement simply by
`filing a PAGA claim.” Id.
`
`
`
`
`
`4
`
`Like class and collective actions, PAGA actions
`“‘fundamental[ly]’
`change
`. . .
`the
`traditional
`arbitration process” Congress sought to promote when
`it enacted the FAA. Epic Sys., 138 S. Ct. at 1623
`(quoting Concepcion, 563 U.S. at 347–48). In seeking
`to adjudicate alleged violations of the California Labor
`Code for hundreds or thousands of employees in a
`single action, PAGA actions “sacrific[e] the principal
`advantage of arbitration—its
`informality”—“and
`mak[e] the process slower, more costly, and more
`likely to generate procedural morass than final
`judgment.” Id. (quotation marks omitted; alterations
`in original).
` Like California’s since-overruled
`prohibition on class-action waivers,
`Iskanian’s
`prohibition on the arbitration of PAGA claims on an
`individual basis “stands as an obstacle to the
`accomplishment and execution of the full purposes
`and objectives” of the FAA. Concepcion, 563 U.S. at
`352 (quotation marks omitted).
` Iskanian also
`invalidates arbitration “agreements precisely because
`they require individualized arbitration proceedings
`instead of [representative] ones.” Epic Sys., 138 S. Ct.
`at 1622.
`Granting review would resolve an important and
`recurring issue affecting thousands of companies in
`the country’s most populous state. Since Iskanian,
`PAGA has become the preferred avenue for plaintiffs
`(and their attorneys) to sidestep binding individual
`arbitration agreements. The number of PAGA filings
`has dramatically
`increased
`in the years after
`Iskanian, and thousands of PAGA actions are filed
`every year. The California Supreme Court and the
`Ninth Circuit have made clear that they will not
`change course. And absent this Court’s intervention,
`
`
`
`
`
`5
`
`the unwritten and unprincipled “PAGA exception” to
`the FAA may spread beyond California, as other
`states are considering adopting laws like PAGA.
`The Court should grant review to make clear that
`the FAA applies equally to claims asserted under
`PAGA, and reaffirm once again that individual
`arbitration agreements must be enforced according to
`their terms.
`
`OPINIONS BELOW
`The California Supreme Court’s order denying
`Petitioners’ petition for review is unpublished and is
`reproduced at App.1a. The California Court of
`Appeal’s opinion is unpublished but available at 2021
`WL 1561297 and reproduced at App.2a.
` The
`judgment of the California Superior Court of Los
`Angeles County is unpublished and is reproduced at
`App.15a.
`
`JURISDICTION
`This Court has jurisdiction under 28 U.S.C.
`§ 1257(a). The California Supreme Court denied
`Petitioners’ petition for review on February 24, 2021.
`On March 19, 2020, this Court extended the deadline
`to file a petition for writ of certiorari due on or after
`that date to 150 days.
`
`STATUTORY PROVISIONS INVOLVED
`Section 2 of the Federal Arbitration Act, 9 U.S.C.
`§ 2, states: “A written provision in any maritime
`transaction or a contract evidencing a transaction
`involving commerce to settle by arbitration a
`controversy thereafter arising out of such contract or
`transaction, or the refusal to perform the whole or any
`
`
`
`
`
`6
`
`part thereof, or an agreement in writing to submit to
`arbitration an existing controversy arising out of such
`a contract, transaction, or refusal, shall be valid,
`irrevocable, and enforceable, save upon such grounds
`as exist at law or in equity for the revocation of any
`contract.”
`
`STATEMENT OF THE CASE
`A. Legal Background
`1. Congress enacted the FAA in 1925 in response
`to “longstanding judicial hostility to arbitration
`agreements.” Gilmer v. Interstate/Johnson Lane
`Corp., 500 U.S. 20, 24 (1991). Congress recognized
`that arbitration has much to offer, “not least the
`promise of quicker, more informal, and often cheaper
`resolutions for everyone involved.” Epic Sys., 138 S.
`Ct. at 1621. Congress thus enacted the FAA to
`“ensur[e] that private arbitration agreements are
`enforced according to their terms,” Concepcion, 563
`U.S. at 344 (quotation marks omitted; alteration in
`original), and “to foreclose state legislative attempts
`to undercut
`the enforceability of arbitration
`agreements,” Southland Corp. v. Keating, 465 U.S. 1,
`16 (1984). To advance those goals, Section 2 of the
`FAA mandates that arbitration agreements “shall be
`valid, irrevocable, and enforceable, save upon such
`grounds as exist at law or in equity for the revocation
`of any contract.” 9 U.S.C. § 2.
`This Court has expansively interpreted the FAA’s
`preemptive scope, holding that the FAA preempts
`state laws that interfere with parties’ ability to choose
`the
`efficiency and
`informality
`of
`individual
`arbitration. Concepcion, 563 U.S. at 344. In
`Concepcion, this Court considered the enforceability
`
`
`
`
`
`7
`
`of a consumer contract providing for “arbitration of all
`disputes between the parties, but requir[ing] that
`claims be brought in the parties’ individual capacity,
`and not as a plaintiff or class member in any
`purported class or representative proceeding.” Id. at
`336 (quotation marks omitted). Concepcion held that
`the FAA preempts any rule prohibiting class action
`waivers
`in arbitration agreements,
`including
`California’s Discover Bank rule. Id. at 341–44.
`The Court explained that Section 2’s saving clause
`“permits agreements to arbitrate to be invalidated by
`‘generally applicable contract defenses, such as fraud,
`duress, or unconscionability,’” but offers no refuge for
`“defenses that apply only to arbitration or that derive
`their meaning from the fact that an agreement to
`arbitrate is at issue.” Concepcion, 563 U.S. at 339.
`The Court held that the Discover Bank rule
`“interfere[d] with
`fundamental attributes
`of
`arbitration”—namely, its informality, lower cost,
`greater efficiency, and speed—by “[r]equiring the
`availability of classwide arbitration.” Id. at 344. As
`the Court explained, “[t]he overarching purpose of the
`FAA . . . is to ensure the enforcement of arbitration
`agreements according to their terms so as to facilitate
`streamlined proceedings.” Id.
`2. PAGA authorizes aggrieved employees to file
`lawsuits to recover civil penalties for Labor Code
`violations on behalf of themselves, other employees,
`and the State of California. Cal. Lab. Code §§ 2698 et
`seq. For California Labor Code provisions that do not
`themselves specify a monetary penalty, PAGA
`provides statutory penalties of $100 per employee
`subjected to a violation per pay period for the first
`violation, and $200 per employee per pay period for
`
`
`
`
`
`8
`
`each subsequent violation. Id. § 2699(f)(2). These
`penalties may be recovered by “an aggrieved
`employee . . . in a civil action . . . filed on behalf of
`himself or herself and other current or former
`employees against whom one or more of the alleged
`violations was committed.” Id. § 2699(g)(1).
`PAGA provides that civil penalties collected from
`an employer “shall be distributed as follows: 75
`percent to the Labor and Workforce Development
`Agency” and “25 percent to the aggrieved employees.”
`Cal. Lab. Code § 2699(i). PAGA further provides that
`“[a]ny employee who prevails in any action shall be
`entitled to an award of reasonable attorney’s fees and
`costs.” Id. § 2699(g)(1). PAGA penalties can run into
`the hundreds of millions of dollars. See Sakkab, 803
`F.3d at 448 (Smith, J., dissenting) (explaining that a
`“representative PAGA claim could . . . increase the
`damages awarded . . . by a multiplier of a hundred or
`thousand times”); Kilby v. CVS Pharmacy, Inc., 739
`F.3d 1192, 1196 (9th Cir. 2013) (noting that “[e]ven a
`conservative estimate would put the potential
`penalties [under PAGA] in these cases in the tens of
`millions of dollars”).
`While PAGA claims “may be brought as class
`actions,” Arias, 46 Cal. 4th at 981 n.5, the California
`Supreme Court has held that they need not comply
`with California’s class action statute, see id. at 933.
`As a result, in California state court, a plaintiff suing
`on behalf of other allegedly aggrieved employees
`under PAGA is not required to seek or obtain class
`certification or provide notice of the action to absent
`persons. Id. at 929–34. Nor is an employee barred
`from bringing a PAGA claim after already resolving
`their own wage-and-hour claims against an employer
`
`
`
`
`
`9
`
`through an individual settlement. Kim v. Reins Int’l
`Cal., Inc., 9 Cal. 5th 73, 82–39 (2020).
`These purportedly “non-class” PAGA actions can
`bind absent employees without notice or an
`opportunity to opt out. See Arias, 46 Cal. 4th at 987.
`They also are preclusive as to the defendant
`employers: “[I]f an employee plaintiff prevails in an
`action under [PAGA] for civil penalties by proving
`that the employer has committed a Labor Code
`violation, the defendant employer will be bound by the
`resulting judgment” and “[n]onparty employees may
`then, by
`invoking collateral estoppel, use the
`judgment against the employer to obtain remedies
`other than civil penalties for the same Labor Code
`violations.” Id.
`Under PAGA, “[a]n aggrieved employee can only
`sue if California declines to investigate or penalize an
`alleged violation; and California’s issuance of a
`citation precludes any employees from bringing a
`PAGA action for the same violation.” Magadia v. Wal-
`Mart Assocs., Inc., 999 F.3d 668, 677 (9th Cir. 2021)
`(citing Cal. Lab. Code §§ 2699(h), 2699.3(b)(2)(A)(i)).
`“But once California elects not to issue a citation, the
`State has no authority under PAGA to intervene in a
`case brought by an aggrieved employee.”
` Id.
`(emphasis added).
`PAGA is distinct from “a traditional qui tam
`action” because such actions serve “only as ‘a partial
`assignment’ of the Government’s claim,” while “PAGA
`represents a permanent,
`full assignment of
`California’s interest to the aggrieved employee” and
`the statute “lacks the ‘procedural controls’ necessary
`to ensure that California—not the aggrieved employee
`
`
`
`
`
`10
`
`suits)—retains
`in PAGA
`(the named party
`‘substantial authority’ over the case.” Magadia, 999
`F.3d at 677 (emphases in original). As the Ninth
`Circuit recently noted, “[a] complete assignment to
`this degree . . . undermines the notion that the
`aggrieved employee is solely stepping into the shoes of
`the State rather than also vindicating the interests of
`other aggrieved employees.” Id.
`3. In Iskanian, the California Supreme Court held
`that employees have a right to bring a PAGA action in
`court despite agreeing
`to arbitrate disputes
`individually. 59 Cal. 4th at 360. The court reasoned
`that “an arbitration agreement requiring an employee
`as a condition of employment to give up the right to
`bring representative PAGA actions in any forum is
`contrary to public policy” and would “frustrate[] the
`PAGA’s objectives.” Id. at 360, 384. The court further
`held that the rule it announced was not subject to the
`FAA, which “aims to ensure an efficient forum for the
`resolution of private disputes,” because a PAGA claim
`is “a type of qui tam action” between an employer and
`the state. Id. at 382, 384 (emphasis in original). The
`court thus held that “the FAA does not preempt a
`state
`law
`that prohibits waiver
`of PAGA
`representative actions in an employment contract.”
`Id. at 360, 388–89.
`In Sakkab, a divided panel of the Ninth Circuit
`held that the Iskanian rule was not preempted by the
`FAA but on different grounds. 803 F.3d at 432. The
`majority held that the Iskanian rule fits within
`Section 2’s saving clause because it supposedly “bars
`any waiver of PAGA claims, regardless of whether the
`waiver appears in an arbitration agreement or a non-
`arbitration agreement.” Id. The Ninth Circuit
`
`
`
`
`
`11
`
`further held that the Iskanian rule does not conflict
`with the FAA’s purpose to overcome judicial hostility
`to arbitration because it “does not prohibit the
`arbitration of [PAGA] claim[s],” but rather “provides
`only that representative PAGA claims may not be
`waived outright.” Id. at 434. And the court ruled that
`“the Iskanian rule does not conflict with the FAA,
`because it leaves parties free to adopt the kinds of
`informal
`procedures
`normally
`available
`in
`arbitration.” Id. at 439.
`In dissent, Judge N.R. Smith opined that “the
`majority ignore[d] the basic precepts enunciated in
`Concepcion” by holding that the Iskanian rule did not
`frustrate the purposes of the FAA. Sakkab, 803 F.3d
`at 440 (Smith, J., dissenting). Judge Smith explained
`that Iskanian’s prohibition of representative action
`waivers was sufficiently analogous to Discover Bank’s
`prohibition of class action waivers such that both are
`inconsistent with the FAA.
` Id. at 443–44.
`Specifically, Judge Smith reasoned that “[t]he
`Iskanian rule burdens arbitration” by “mak[ing] the
`process slower, more costly, and more likely to
`generate procedural morass; . . . requir[ing] more
`formal and complex procedure[s]; and . . . expos[ing]
`the defendants to substantial unanticipated risk.” Id.
`at 444.
`4. Four years after Iskanian, this Court held in
`Epic Systems
`that agreements
`to arbitrate
`individually must be enforced according to their
`terms. The Court rejected the argument that the
`National Labor Relations Act (“NLRA”) guarantees
`workers the right to bring class and collective actions
`against their employer, despite their agreements to
`arbitrate individually. Epic Sys., 138 S. Ct. at 1619.
`
`
`
`
`
`12
`
`In reciting the question presented, the Court
`framed the issue broadly: “Should employees and
`employers be allowed to agree that any disputes
`between them will be resolved through one-on-one
`arbitration?
` Or should employees always be
`permitted to bring their claims in class or collective
`actions, no matter what they agreed with their
`employers?” Epic Sys., 138 S. Ct. 1619 (emphasis
`added). And the Court reached a broad conclusion:
`“In the [FAA], Congress has instructed federal courts
`to enforce arbitration agreements according to their
`terms—including terms providing for individualized
`proceedings”—regardless whether
`the plaintiff
`attempts to bring a class, collective, or other type of
`representative action, and regardless whether the
`plaintiff seeks to represent private or public entities
`(or both). Id. (emphasis added).
`The Court explained that the plaintiffs in Epic
`Systems “object[ed] to their agreements precisely
`because they require
`individualized arbitration
`proceedings instead of class or collective ones.” 138 S.
`Ct. at 1622. But any “argument that a contract is
`unenforceable
`just because it requires bilateral
`arbitration” is “emphatic[ally]” at odds with the FAA.
`Id. at 1621, 1623 (emphasis in original). Arbitration
`has “traditionally [been] individualized,” and even a
`federal statute embodying important “public policy”
`interests cannot override an agreement to arbitrate
`individually—no matter how well intentioned the law
`is or whether it applies to all contracts generally. Id.
`at 1622–23.
`clear”—“arbitration
`is
`law
`Thus,
`“the
`agreements . . . must be enforced as written,” absent
`a “clear” congressional command to the contrary. Epic
`
`
`
`
`
`13
`
`Sys., 138 S. Ct. at 1632. And given the widespread
`“judicial antagonism toward arbitration” that led to
`the FAA’s enactment, courts “must be alert to new
`devices and formulas” that would expressly or
`implicitly “declar[e] arbitration against public policy.”
`Id. at 1623. “[A] rule seeking to declare individualized
`arbitration proceedings off limits is . . . just such a
`device.” Id.
`After Epic Systems, this Court held twice more
`that the FAA requires courts to enforce arbitration
`agreements according to their terms. In Lamps Plus,
`Inc. v. Varela, 139 S. Ct. 1407 (2019), the Court held
`that the FAA preempted “California’s rule that
`ambiguity in a contract should be construed against
`the drafter” when used to “infer from an ambiguous
`agreement that [the] parties have consented to
`arbitrate on a classwide basis.” Id. at 1417, 1419.
`Even though the rule was “neutral” and gave “equal
`treatment to arbitration agreements and other
`contracts alike,” “courts may not rely on state contract
`principles to
`‘reshape traditional
`individualized
`arbitration by mandating classwide arbitration
`procedures without the parties’ consent.’” Id. at 1418
`(quoting Epic Sys., 138 S. Ct. at 1623). “The FAA
`requires courts to ‘enforce arbitration agreements
`according to their terms,’” and state-law rules “based
`on public policy” that sideste