Post-Epic Systems Challenges To Iskanian Are Going Nowhere

• Published date: 15 November 2021
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Employee Rights/ Labour Relations, Arbitration & Dispute Resolution
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Mr Jonathan Slowik, Dorothy F. Kaslow, Gregory W. Knopp and Donna M. Mezias

In the landmark case of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), the California Supreme Court held that an arbitration agreement purporting to waive the right to bring a representative action under the Private Attorneys General Act (PAGA) was unenforceable under state law, and that the Federal Arbitration Act (FAA) did not preempt this rule.

At the time, it might have seemed inevitable that the Iskanian rule would be reviewed by the U.S. Supreme Court. The Court had taken at least one arbitration case in each of the last six years (and often more than one case), and had repeatedly reaffirmed that the "primary purpose of the FAA is to ensure that private agreements to arbitrate are enforced according to their terms." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 682 (2010). Moreover, even in the immediate aftermath of Iskanian, the large majority of district courts to address the issue found "that PAGA action waivers are enforceable because a rule stating otherwise is preempted by the FAA." E.g., Ortiz v. Hobby Lobby Stores, Inc., 52 F. Supp. 3d 1070, 1087 (E.D. Cal. 2014).

Thus, it came as some surprise when the Supreme Court declined a petition for certiorari in Iskanian in January 2015. Later that same year, the 9th Circuit overturned the weight of district court authority by holding that Iskanian's rule was not preempted by the FAA (Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 431 (9th Cir. 2015)), and in years since, the Court has repeatedly denied petitions seeking review of whether the FAA preempts Iskanian.

However, the Supreme Court breathed new life into the Iskanian debate in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). There, the Court rejected the argument that the National Labor Relations Act guaranteed a right for employees to bring class and collective actions against their employers, explaining that "the answer is clear" that "[i]n the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms'including terms providing for individualized proceedings." Id. at 1619.

If Epic Systems (and a 6-3 conservative majority) seemed to be an invitation to Iskanian's detractors, it appears they are about to be disappointed. In DoorDash, Inc. v. Campbell, Case No. 21-220, the petitioner asked the Supreme Court to take up the Iskanian rule, arguing that there is "no meaningful difference between the class action at issue in Con...