On April 3, 2014, the California Supreme Court heard oral argument in front of a packed courtroom in Iskanian v. CLS Transportation, a case involving the enforceability of class/representative action waivers in employment arbitration agreements under California law. This is a very important decision for employers in California, and one that is very close to us at Fox Rothschild, since our own David Faustman argued the case.
At issue is whether the Court will follow the US Supreme Court’s lead and put the “Gentry” test to rest for good. Overruling “Gentry” will allow employers to include class action waivers in their employment arbitration agreements, and will not force them to arbitrate on a class-wide basis unless they specifically agree to. Another important issue is whether representative claims under PAGA can also be waived.
This case has a big practical impact for employers in California. There is nothing that takes the wind out a plaintiff’s attorneys’ sails than being presented with a signed arbitration agreement (one that is not unconscionable under California law), and that includes a class action and representative action waiver. Most attorneys do not want to take on this issue and would rather look for an easier target. Let’s hope that the California Supreme Court gets it right, and holds that such waivers are fully enforceable. A decision by the California Supreme Court should be issued this summer. Stay tuned.