9th Circuit Denies Review of PAGA Waivers in Arbitration Agreements
CJAC Liability Reform Insider (April 19, 2021) – The Ninth
Circuit Court of Appeals has
ruled in Carlos Rivas v. Coverall North
America that it won’t review en banc a panel decision
that continues to exempt actions under the California Private
Attorney Generals Act (PAGA) from arbitration agreements.
Coverall North America, Inc., brought a petition for rehearing en
banc following a January 2021 panel ruling upholding
California’s Iskanian rule – that PAGA claims are
inherently representative and thus, not bound by individual
arbitration agreements.
The panel relied upon its 2015 circuit decision
in Sakkab v. Luxottica Retail North America Inc.
that the Iskanian rule is not preempted by the Federal
Arbitration Act (FAA). The FAA generally prohibits state laws
that interfere with arbitration. Coverall argued
that Sakkab was overruled by two recent U.S. Supreme
Court decisions — Epic Systems Corp. v.
Lewis in 2018, and Lamps Plus Inc. v.
Varela in 2019.
The U.S. Chamber of Commerce supported the rehearing with an
amicus brief in February, arguing that employees using PAGA to
get around arbitration is a “massive loophole” in the FAA.
A lawsuit against Coverall was originally filed in 2018, alleging
that Coverall misclassified a group of janitorial workers as
independent contractors.