By Daniel Whang
In plaintiff-friendly California, it may be surprising to learn that the California Supreme Court threw a few bones to employers during 2014. First, although lower courts seem determined to make it easier for plaintiffs to obtain certification in wage and hour class actions, the California Supreme Court’s decision in Duran v. U.S. Bank signaled that certification of wage and hour claims has become too perfunctory.
The Duran decision, covered in far more detail in a client alert, requires trial courts to consider an often neglected requirement for class certification: that the trial of the certified claims would be manageable. Duran is one of the few wage and hour class actions that went to trial, and the disastrous consequences of a poorly planned trial provided a powerful lesson that courts need to be far more careful in certifying class actions.
If Duran provided a useful weapon to oppose class certification, the California Supreme Court threw employers another bone by solidifying an employer’s ability to enforce class action waivers in arbitration agreements. In Iskanian v. CLS Transportation Los Angeles, LLC, the California Supreme Court acknowledged that, under the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, class action waivers in arbitration agreements are enforceable.
But this was not a total employer victory. The California Supreme Court also held that claims under the Private Attorneys General Act of 2004 (“PAGA”) are not subject to mandatory arbitration, because the State (and not the employee) is the real party in interest and the State is not a party to an employer’s arbitration agreement. While employers were hopeful that the United States Supreme Court would grant the petition to review the PAGA exception that the California Supreme Court had created, the U.S. Supreme Court declined to hear the petition, leaving Iskanian good law for now, and permitting employees to pursue PAGA claims in court even if they have signed arbitration agreements that waive the right to pursue class and representative actions.