Amicus Curiae Brief — Viking River Cruises, Inc., Petitioner v. Angie Moriana

No. 20-1573

VIKING RIVER CRUISES, INC.,

Petitioner,

v.

ANGIE MORIANA,

Respondent.

On Writ of Certiorari to the

California Court of Appeal

BRIEF OF THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA,

THE CALIFORNIA CHAMBER OF COMMERCE,

AND THE NATIONAL FEDERATION OF

INDEPENDENT BUSINESS SMALL BUSINESS

LEGAL CENTER AS AMICI CURIAE

IN SUPPORT OF PETITIONER

ANDREW J. PINCUS

Counsel of Record

ARCHIS A. PARASHARAMI

DANIEL E. JONES

CARMEN N. LONGORIA-GREEN

Mayer Brown LLP

1999 K Street, NW

Washington, DC 20006

(202) 263-3000

apincus@mayerbrown.com

(additional counsel listed on signature page)

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES...................................... iii

INTEREST OF THE AMICI CURIAE .......................1

INTRODUCTION AND SUMMARY OF

ARGUMENT ..........................................................3

ARGUMENT ...............................................................6

I. The FAA Preempts California’s Refusal To

Enforce Arbitration Agreements With

Respect To Representative PAGA Claims. ...........6

A. The FAA requires enforcement of

agreements requiring individualized

arbitration and prohibiting assertion of

representative PAGA claims. ...........................7

1. Representative PAGA claims are

incompatible with traditional, oneon-one arbitration. ......................................7

2. California’s rule prohibiting waivers

of representative PAGA actions is

preempted for the additional reason

that it is not a ground for revocation

of any contract. .......................................... 16

B. Iskanian’s attempt to shield PAGA

claims from the FAA conflicts with this

Court’s precedents. ......................................... 17

II. Iskanian And Sakkab Have Invalidated

Countless Arbitration Agreements And, If

Permitted To Stand, Will Open The Door

To Wholesale Circumvention Of The FAA. ......... 24

A. Plaintiffs’ lawyers have flooded the

courts with PAGA claims to avoid

individual arbitration. .................................... 24

ii

B. If upheld, Iskanian and Sakkab could be

employed broadly to block enforcement

of arbitration agreements............................... 26

C. Upholding Iskanian and Sakkab would

deprive businesses and individuals of

the benefits of arbitration. ............................. 28

CONCLUSION .......................................................... 32

iii

TABLE OF AUTHORITIES

Page(s)

Cases

14 Penn Plaza LLC v. Pyett,

556 U.S. 247 (2009) .............................................. 28

American Express Co. v. Italian Colors

Rest.,

570 U.S. 228 (2013) .................................. 17, 20, 22

Amey v. Cinemark USA Inc.,

2015 WL 2251504

(N.D. Cal. May 13, 2015) ..................................... 12

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ...................................... passim

Blair v. Rent-A-Center, Inc.,

928 F.3d 819 (9th Cir. 2019) ................................ 28

Campbell v. Regents of Univ. of Cal.,

106 P.3d 976 (Cal. 2005) ...................................... 23

Chu v. Wells Fargo Invs., LLC,

2011 WL 672645

(N.D. Cal. Feb. 16, 2011) ..................................... 25

Circuit City Stores, Inc. v. Adams,

532 U.S. 105 (2001) .............................................. 28

Clarke v. First Transit, Inc.,

2010 WL 11459322

(C.D. Cal. Aug. 11, 2010) ..................................... 31

Cline v. Kmart Corp.,

2013 WL 2391711

(N.D. Cal. May 13, 2013) ..................................... 12

iv

TABLE OF AUTHORITIES—continued

Page(s)

Deck v. Miami Jacobs Bus. Coll. Co.,

2013 WL 394875

(S.D. Ohio Jan. 31, 2013) ..................................... 21

DIRECTV, Inc. v. Imburgia,

577 U.S. 47 (2015) ............................................ 3, 23

Driscoll v. Granite Rock Co.,

2011 WL 10366147

(Cal. Super. Ct. Sept. 20, 2011) ........................... 11

EEOC v. Waffle House,

534 U.S. 279 (2002) ...................................... passim

Epic Sys. Corp. v. Lewis,

138 S. Ct. 1612 (2018) .................................. passim

Ferguson v. Corinthian Colls., Inc.,

733 F.3d 928 (9th Cir. 2013) ................................ 22

Franco v. Ruiz Food Prods., Inc.,

2012 WL 5941801

(E.D. Cal. Nov. 27, 2012) ..................................... 25

Garcia v. Gordon Trucking, Inc.,

2012 WL 5364575

(E.D. Cal. Oct. 31, 2012) ...................................... 25

Huff v. Securitas Sec. Servs. USA, Inc.,

233 Cal. Rptr. 3d 502 (Ct. App. 2018) ............. 9, 10

Iskanian v. CLS Transp. L.A., LLC,

327 P.3d 129 (Cal. 2014) .............................. passim

Jones v. Longs Drug Stores Cal., Inc.,

2010 WL 11508656

(S.D. Cal. Sept. 13, 2010) ..................................... 31

v

TABLE OF AUTHORITIES—continued

Page(s)

Kilby v. CVS Pharmacy, Inc.,

739 F.3d 1192 (9th Cir. 2013) .............................. 15

Kim v. Reins Int’l Cal., Inc.,

459 P.3d 1123 (Cal. 2020) .................................... 10

Lamps Plus, Inc. v. Varela,

139 S. Ct. 1407 (2019) ........................................ 3, 7

Magadia v. Wal-Mart Assocs., Inc.,

999 F.3d 668 (9th Cir. 2021) .......................... 10, 22

Mays v. Wal-Mart Stores, Inc.,

804 F. App’x 641 (9th Cir. 2020).......................... 31

McGill v. Citibank, N.A.,

393 P.3d 85 (Cal. 2017) .................................. 27, 28

McKenzie v. Fed. Express Corp.,

2012 WL 2930201

(C.D. Cal. July 2, 2012) ........................................ 25

Nguyen v. City of Cleveland,

121 F. Supp. 2d 643

(N.D. Ohio 2000) .................................................. 21

Nordstrom Comm’n Cases,

112 Cal. Rptr. 3d 27 (Ct. App. 2010) ................... 25

O’Bosky v. Starbucks Corp.,

2015 WL 2254889

(Cal. Super. Ct. May 4, 2015) .............................. 12

Ortiz v. CVS Caremark Corp.,

2014 WL 2445114

(N.D. Cal. Jan. 28, 2014) ..................................... 12

vi

TABLE OF AUTHORITIES—continued

Page(s)

Perry v. Thomas,

482 U.S. 483 (1987) ................................................ 3

Preston v. Ferrer,

552 U.S. 346 (2008) ................................................ 3

Rivas v. Coverall N. Am., Inc.,

842 F. App’x 55 (9th Cir. 2021) ..................... 13, 16

Sakkab v. Luxottica Retail N. Am., Inc.,

803 F.3d 425 (9th Cir. 2015) ........................ passim

Sanchez v. McDonald’s Rests. of Cal., Inc.,

2017 WL 4620746

(Cal. Super. Ct. July 6, 2017) .............................. 12

Southland Corp. v. Keating,

465 U.S. 1 (1984) .................................................... 3

Stolt-Nielsen S.A. v. AnimalFeeds Int’l

Corp.,

559 U.S. 662 (2010) ................................................ 7

Valdez v. Terminix Int’l Co. Ltd. P’ship,

681 F. App’x 592 (9th Cir. 2017).......................... 21

Wesson v. Staples the Office Superstore,

LLC,

283 Cal. Rptr. 3d 846 (Ct. App. 2021) ..... 11, 12, 14

Williams v. Super. Ct.,

398 P.3d 69 (Cal. 2017) ........................................ 14

Statutes

9 U.S.C. § 2 .................................................... 16, 17, 23

Cal. Gov’t Code § 12652 ............................................ 23

vii

TABLE OF AUTHORITIES—continued

Page(s)

Cal. Labor Code § 2699(a) ................................. passim

Cal. Labor Code § 2699(f)(2) ..................................... 12

Cal. Labor Code § 2699(l)(2) ..................................... 20

Cal. Labor Code § 2699.3(a) ...................................... 19

Other Authorities

Janet Cooper Alexander, To Skin A Cat:

Qui Tam Actions As A State

Legislative Response to Concepcion,

46 U. Mich. J. L. Reform 1203 (2013). .......... 26, 27

Robyn Ridler Aoyagi & Christopher J.

Pallanch, The PAGA Problem: The

Unsettled State of PAGA Law Isn’t

Good for Anyone, 2013-7 Bender’s

California Labor & Employment Bulletin 01 (2013) ..................................................... 25

Dorothy Atkins, Safeway’s $1.45M

PAGA Deal Over Pay Stubs Gets

Initial OK, Law360 (Aug. 16, 2019) .................... 31

Dorothy Atkins, Target’s $9M PAGA

Deal Ending Seating Suits OK’d,

Law360 (July 24, 2018) ........................................ 31

Dorothy Atkins, Walgreens’ $15M PAGA

Deal Ending Seating Suit Gets OK’d,

Law360 (Aug. 6, 2019) ......................................... 31

viii

TABLE OF AUTHORITIES—continued

Page(s)

Aaron Blumenthal, Circumventing

Concepcion: Conceptualizing

Innovative Strategies to Ensure the

Enforcement of Consumer Protection

Laws in the Age of the Inviolable

Class Action Waiver,

103 Cal. L. Rev. 699 (2015). ................................. 26

Michael Delikat & Morris M. Kleiner, An

Empirical Study of Dispute Resolution

Mechanisms: Where Do Plaintiffs Better

Vindicate Their Rights?,

58 Disp. Resol. J. 56 (Nov. 2003–Jan. 2004) ....... 30

Matthew J. Goodman, Comment, The

Private Attorney General Act: How to

Manage the Unmanageable,

56 Santa Clara L. Rev. 413 (2016). ............... 15, 25

Lyra Haas, The Endless Battleground:

California’s Continued Opposition to

the Supreme Court’s Federal

Arbitration Act Jurisprudence,

94 B.U. L. Rev. 1419 (2014). .................................. 3

Lewis L. Maltby, Private Justice:

Employment Arbitration and Civil

Rights,

30 Colum. Hum. Rts. L. Rev. 29 (1998)............... 29

Nam D. Pham, Ph.D. & Mary Donovan,

Fairer, Better, Faster: An Empirical

Assessment of Employment

Arbitration, NDP Analytics (2019) ................ 29, 30

ix

TABLE OF AUTHORITIES—continued

Page(s)

Sheila B. Scheuerman, Due Process

Forgotten: The Problem of Statutory

Damages and Class Actions,

74 Mo. L. Rev. 103 (2009) .................................... 30

Joanna Shepherd, An Empirical Survey

of No-Injury Class Actions (Emory

Univ. Sch. of L., Legal Studies

Research Paper Series No. 16-402,

Feb. 1, 2016) ......................................................... 30

David Sherwyn, Samuel Estreicher, &

Michael Heise, Assessing the Case

for Employment Arbitration: A New

Path for Empirical Research,

57 Stanford L. Rev. 1557 (2005) .......................... 30

Theodore J. St. Antoine, Labor and

Employment Arbitration Today: MidLife Crisis or New Golden Age?,

32 Ohio St. J. on Disp. Resol. 1 (2017) ................ 29

INTEREST OF THE AMICI CURIAE

The Chamber of Commerce of the United States of

America (Chamber) is the world’s largest business

federation. It represents approximately 300,000 members and indirectly represents the interests of more

than three million companies and professional organizations of every size, in every industry sector, and

from every region of the country. An important function of the Chamber is to represent the interests of its

members in matters before Congress, the Executive

Branch, and the courts. To that end, the Chamber regularly files amicus curiae briefs in cases, like this one,

that raise issues of concern to the Nation’s business

community.1

The California Chamber of Commerce (CalChamber) has more than 13,000 members, both individual

and corporate, representing virtually every economic

interest in the state. While CalChamber represents

several of the largest corporations in California, seventy-five percent of its members have 100 or fewer

employees. CalChamber acts on behalf of the business

community to improve the state’s economic and employment climate by representing business on a broad

range of legislative, regulatory, and legal issues.

The National Federation of Independent Business

Small Business Legal Center (NFIB Legal Center) is

a nonprofit, public interest law firm established to

provide legal resources and be the voice for small businesses in the nation’s courts through representation

Pursuant to Rule 37.6, amici affirm that no counsel for a party

authored this brief in whole or in part and that no person other

than amici, their members, or their counsel made a monetary

contribution to its preparation or submission. All parties have

filed blanket consents to the filing of amicus briefs.

1

2

on issues of public interest affecting small businesses.

The National Federation of Independent Business

(NFIB) is the nation’s leading small business association, representing members in Washington, D.C., and

all 50 state capitals. Founded in 1943 as a nonprofit,

nonpartisan organization, NFIB’s mission is to promote and protect the right of its members to own, operate and grow their businesses. To fulfill its role as

the voice for small business, the NFIB Legal Center

frequently files amicus briefs in cases that will impact

small businesses.

Many of amici’s members regularly employ arbitration agreements. Arbitration allows them to resolve disputes promptly and efficiently while avoiding

the costs associated with traditional litigation. Arbitration is speedy, fair, inexpensive, and less adversarial than litigation in court. Based on the principles

embodied in the Federal Arbitration Act (FAA) and

this Court’s consistent affirmation of the legal protections that the FAA provides for arbitration agreements, amici’s members have structured millions of

contractual relationships around arbitration agreements.

Amici have a strong interest in this Court’s reversal of the decision below to ensure that the FAA’s proarbitration mandate applies uniformly nationwide.

The decisions in Iskanian v. CLS Transportation L.A.,

LLC, 327 P.3d 129 (Cal. 2014), Sakkab v. Luxottica

Retail North America, Inc., 803 F.3d 425 (9th Cir.

2015), and their progeny have precluded the enforcement of millions of arbitration agreements—significantly eroding the benefits of bilateral arbitration as

an alternative to litigation. Reversal is critical to end

this circumvention of the FAA and this Court’s precedents.

3

INTRODUCTION AND

SUMMARY OF ARGUMENT

The case brings before the Court a new, and extremely significant, chapter in the long and well-documented history of California courts inventing new

“devices and formulas” aimed at circumventing arbitration agreements and the strong federal policy favoring arbitration embodied by the FAA. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 342 (2011)

(quotation marks omitted); see also, e.g., DIRECTV,

Inc. v. Imburgia, 577 U.S. 47 (2015); Preston v. Ferrer,

552 U.S. 346 (2008); Perry v. Thomas, 482 U.S. 483

(1987); Southland Corp. v. Keating, 465 U.S. 1 (1984);

Lyra Haas, The Endless Battleground: California’s

Continued Opposition to the Supreme Court’s Federal

Arbitration Act Jurisprudence, 94 B.U. L. Rev. 1419,

1433-40 (2014).

The FAA directs 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). Because

the Act protects an “individualized form of arbitration,” Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1416

(2019) (citing Epic, 138 S. Ct. at 1622-23)), “courts

may not allow a contract defense to reshape traditional individualized arbitration,” Epic, 138 S. Ct. at

1623.

Despite these clear holdings, the California appellate courts and the Ninth Circuit have allowed plaintiffs asserting Private Attorneys General Act (PAGA)

claims to circumvent agreements requiring individualized arbitration.

4

PAGA authorizes an “aggrieved employee” to recover civil penalties on a representative basis by raising alleged violations of California’s Labor Code experienced by “himself or herself” and “other current or

former employees.” Cal. Labor Code § 2699(a). These

claims, brought by a single “representative” plaintiff,

routinely seek recovery for Labor Code violations allegedly suffered by hundreds, thousands, or tens of

thousands of employees.

The California Supreme Court in Iskanian announced a state-law rule barring enforcement of

agreements waiving an employee’s ability to assert

representative PAGA claims. It then analogized

PAGA claims to government enforcement actions and

qui tam lawsuits—and held for that reason that

agreements for individualized arbitration are unenforceable with respect to representative PAGA claims,

notwithstanding the Concepcion Court’s holding that

the FAA protects agreements requiring one-on-one arbitration. Iskanian, 327 P.3d at 152-53.

But—as this Court explained in holding that a private party’s arbitration agreement did not apply to a

government enforcement action in EEOC v. Waffle

House, 534 U.S. 279 (2002)—the defining characteristic of a government enforcement action is that it is

brought and controlled by government officials. Even

in a federal qui tam action, where a private party may

step in to represent the government’s interests, the

suit is subject to the oversight and control of the government. PAGA lawsuits, by contrast, are initiated

and controlled by the private party; the State cannot

exercise any control once the claim is brought. Iskanian’s rationale for circumventing the FAA is unsupportable.

5

The Ninth Circuit adopted a similarly flawed reading of the FAA. Ignoring the Iskanian court’s misguided government-enforcement analogy, the divided

panel in Sakkab declared Concepcion inapplicable by

relying on formal distinctions between representative

PAGA actions and class actions under Rule 23. In fact,

the relevant features of PAGA claims and class actions are the same—they are brought by employees

against their employers on behalf of not only the

named employees, but also others similarly situated.

And representative PAGA claims have the same complexity and high stakes as the class arbitrations rejected in Concepcion as incompatible with the FAA.

This Court’s decision in Epic makes even more

clear the flaws in Sakkab’s reasoning, explaining that

Concepcion stands for the “essential insight” that

“courts may not allow a contract defense to reshape

traditional individualized arbitration.” 138 S. Ct. at

1623. That is the precise effect of Sakkab: it conditions

the enforcement of arbitration agreements on the

availability of representative PAGA claims—allowing

individuals to circumvent their agreements for individual arbitration and instead pursue broad representative relief under PAGA.

Finally, the massive practical impact of the loophole created by Iskanian and Sakkab underscores the

adverse consequences for enforceability of arbitration

agreements that would result if either of those rulings

were permitted to stand.

PAGA claims were once an afterthought tacked

onto putative employment class actions in California.

But since the Iskanian decision seven years ago,

PAGA filings have skyrocketed as plaintiffs’ counsel

seek to evade their clients’ arbitration agreements.

6

The result has been the effective invalidation of millions of workplace arbitration agreements that should

have been protected by the FAA and severe adverse

consequences for businesses with workers in California.

If Iskanian and Sakkab were upheld, other States

hostile to arbitration would inevitably follow California’s roadmap. And that roadmap is not limited to the

employment context—States could enact copycat statutes governing other areas of law, such as consumerprotection laws, invalidating hundreds of millions

more arbitration agreements. Indeed, the Ninth Circuit has already applied Sakkab in refusing to hold

preempted a California law requiring arbitration of

consumer claims seeking the equivalent of class-wide

relief.

This Court should reaffirm the FAA’s protection of

individualized arbitration and hold that the FAA

preempts California’s state-law rule refusing to enforce bilateral arbitration agreements with respect to

representative PAGA claims.

ARGUMENT

I.

The FAA Preempts California’s Refusal To

Enforce Arbitration Agreements With Respect To Representative PAGA Claims.

Iskanian and Sakkab violate the FAA and this

Court’s precedents.

7

A. The FAA requires enforcement of agreements requiring individualized arbitration and prohibiting assertion of representative PAGA claims.

The Ninth Circuit in Sakkab attempted to distinguish representative PAGA claims from the class-action device at issue in Concepcion. But representative

PAGA claims are at least as incompatible—if not more

so—with the individual, one-on-one arbitration protected by the FAA.

1. Representative PAGA claims are incompatible with traditional, one-on-one arbitration.

This Court has repeatedly made clear that the

FAA “protect[s] pretty absolutely” arbitration agreements that require “one-on-one arbitration” using “individualized * * * procedures.” Epic, 138 S. Ct. at

1619, 1621; see also Concepcion, 563 U.S. at 344;

Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S.

662, 686-87 (2010). That protection enables parties

agreeing to “individual arbitration” to “‘forgo the procedural rigor and appellate review of the courts in order to realize the benefits of private dispute resolution,’” including “‘lower costs’” and “‘greater efficiency

and speed.’” Lamps Plus, 139 S. Ct. at 1416 (quoting

Stolt-Nielsen, 559 U.S. at 685).

The FAA preempts state-law rules that “interfere[]” with this “traditionally individualized and informal nature of arbitration.” Epic, 138 S. Ct. at 162223. A State therefore may not invalidate an arbitration agreement on the ground that it prohibits procedures other than individualized arbitration.

Epic, which involved opt-in collective actions under the Fair Labor Standards Act, explains that this

8

FAA principle is not limited to the class actions under

Federal Rule of Civil Procedure 23 addressed in Concepcion. Rather, this “essential insight” governs regardless of the garb in which the state-law contract

defense is dressed: “Just as judicial antagonism toward arbitration before the Arbitration Act’s enactment ‘manifested itself in a great variety of devices

and formulas declaring arbitration against public policy,’ Concepcion teaches that we must be alert to new

devices and formulas that would achieve much the

same result today.” Epic 138 S. Ct. at 1623 (quoting

Concepcion, 563 U.S. at 342).

Iskanian’s state-law holding—that California law

bars enforcement of the parties’ agreement to engage

in individualized arbitration when employees assert

representative PAGA claims—plainly overrides the

parties’ choice of one-on-one arbitration. The Ninth

Circuit nonetheless held in Sakkab that the FAA does

not preempt California’s rule because (in that court’s

view) representative PAGA actions are materially different from class or collective actions.

That determination is wrong. Representative

PAGA actions in fact have the very characteristics

that this Court has cited in explaining why class and

collective actions are incompatible with the FAA’s protection of individualized arbitration. They require a

focus on third parties that is antithetical to a “traditional individualized” or “one-on-one” arbitration.

Epic, 138 S. Ct. at 1619, 1623. They “‘make the process

slower, more costly, and more likely to generate procedural morass than final judgment.’” Id. at 1623

(quoting Concepcion, 563 U.S. at 347-48). They require complex procedures “incompatible with arbitration” to resolve. Concepcion, 563 U.S. at 351. And they

“greatly increase[] risks to defendants.” Id. at 350.

9

Conditioning the enforcement of arbitration

agreements on the availability of representative

PAGA actions therefore is just as preempted as the

state-law rule in Concepcion that conditioned enforcement on the availability of class actions.

a. Representative PAGA claims, by their very nature, “interfere with one of arbitration’s fundamental

attributes,” Epic, 138 S. Ct. at 1622, because they necessarily involve arguments relating to, and seek relief

on behalf of, large numbers of third-party employees

in addition to the named plaintiff. That is why the

claim is “representative”—the named plaintiff is seeking recovery on behalf of others.

Often, as in this case (see Pet. Br. 27-28), the representative PAGA plaintiff cites Labor Code violations

that she allegedly suffered and seeks to represent all

other employees claiming injury from the same violations. Resolving such claims requires assessment of

the factual and legal situation of each of those absent

third parties—to determine whether and to what extent each alleged Labor Code violation applies to each

employee within a potentially wide range of employees.

But PAGA goes much further—permitting a representative plaintiff to pursue penalties for Labor

Code violations that the plaintiff did not personally

experience. In Huff v. Securitas Security Services

USA, Inc., 233 Cal. Rptr. 3d 502 (Ct. App. 2018), the

California Court of Appeal explained “that any Labor

Code penalties recoverable by state authorities may

be recovered in a PAGA action by a person who was

employed by the alleged violator” so long as that private plaintiff was “affected by at least one of the violations alleged in the complaint.” Id. at 507 (emphasis

10

added); see also id. at 509 (“not being injured by a particular statutory violation presents no bar to a [PAGA]

plaintiff pursuing penalties for that violation”). 2

In addition, even if a PAGA plaintiff’s own Labor

Code claim is no longer viable, that plaintiff can still

pursue a representative action. In Kim v. Reins International California, Inc., 459 P.3d 1123 (Cal. 2020),

the court held that an employee who completely resolves her own wage-and-hour claims against her employer through a settlement remains an “aggrieved

employee” who may still serve as a representative

PAGA plaintiff and pursue remedies for alleged Labor

Code violations on behalf of other employees. Id. at

1128-32.

Representative PAGA actions thus necessarily

will involve determinations regarding Labor Code violations allegedly suffered by third parties who are

not before the court. Indeed, even the Ninth Circuit

has recognized this reality, stating that “PAGA explicitly * * * implicates the interests of nonparty aggrieved employees.” Magadia, 999 F.3d at 676.

b. Just as the “fundamental change to the arbitration process” resulting from a class or collective arbitration “would ‘sacrifice the principal advantage of arbitration—its informality—and make the process

slower, more costly, and more likely to generate procedural morass than final judgment,’” Epic, 138 S. Ct.

at 1623 (quoting Concepcion, 563 U.S. at 347-48), so

In federal court, Article III independently constrains the ability of plaintiffs to pursue penalties for asserted Labor Code violations that they did not personally experience. See Magadia v.

Wal-Mart Assocs., Inc., 999 F.3d 668, 674-78 (9th Cir. 2021). But

Huff makes clear that no such limitation applies in California

state courts.

2

11

too would arbitration of a representative PAGA action.

Experience in the California courts demonstrates

that resolving representative PAGA claims requires

an unwieldy process that bears no resemblance to traditional individualized arbitration.

The California Court of Appeal recently recognized that “PAGA claims may well present more significant manageability concerns than those involved

in class actions,” requiring “dozens, hundreds, or

thousands of minitrials involving diverse questions.”

Wesson v. Staples the Office Superstore, LLC, 283 Cal.

Rptr. 3d 846, 859-60 (Ct. App. 2021) (emphasis

added). The “parties agreed” in Wesson that litigating

the alleged Labor Code violations—which were asserted on behalf of 346 employees—and the defendant’s affirmative defenses to each employee’s claim

“would require a trial spanning several years with

many hundreds of witnesses.” Id. at 866 (emphasis

added).

In Driscoll v. Granite Rock Co., 2011 WL

10366147 (Cal. Super. Ct. Sept. 20, 2011), the parties

proceeded to a bench trial on representative PAGA

claims. That bench trial lasted 14 days and involved

55 witnesses and 285 exhibits, including expert witnesses to prove violations as to each employee. Id. at

*1.

If anything, Wesson and Driscoll understate the

complexity of most PAGA actions, because those cases

involved relatively small groups of 346 and 200 current and former employees. See Wesson, 283 Cal.

Rptr. 3d at 866; Driscoll, 2011 WL 10366147, at *1.

The burdens multiply exponentially for larger PAGA

12

actions, which often include alleged violations involving thousands, if not tens of thousands, of absent employees, “each of whom may have markedly different

experiences relevant to the alleged [Labor Code] violations,” Wesson, 283 Cal. Rptr. 3d at 859 (emphasis

added).3

The assessment of remedies in a representative

PAGA action adds to the complexity. Remedies are assessed against the employer on a “per pay period” basis for each “aggrieved employee” affected by each

claimed violation proven by the representative plaintiff. Cal. Labor Code § 2699(f)(2).

Thus, in contrast to an individual wage-and-hour

dispute in which the arbitrator focuses solely on the

individual circumstances of the claimant, resolving

representative PAGA actions requires “specific factual determinations regarding (1) the number of other

employees affected by the labor code violations, and

(2) the number of pay periods that each of the affected

employees worked.” Sakkab, 803 F.3d at 445 (N.R.

Smith, J., dissenting). “Because of the high stakes involved in these determinations, both of these issues

See, e.g., Sanchez v. McDonald’s Rests. of Cal., Inc., 2017 WL

4620746, at *2 (Cal. Super. Ct. July 6, 2017) (nine-day bench trial

for claims on behalf of approximately 10,000 employees at 119

restaurants); Amey v. Cinemark USA Inc., 2015 WL 2251504, at

*17 (N.D. Cal. May 13, 2015) (PAGA claim with “more than

10,000 class members”); see also Compl., O’Bosky v. Starbucks

Corp., 2015 WL 2254889, at *2 (Cal. Super. Ct. May 4, 2015) (approximately 65,000 employees); Defs.’ Mot. to Strike, Ortiz v.

CVS Caremark Corp., 2014 WL 2445114, at *4 (N.D. Cal. Jan.

28, 2014) (more than 50,000 employees across 850 stores); Def.’s

Opp. to Class Certification, Cline v. Kmart Corp., 2013 WL

2391711, at *1-2 (N.D. Cal. May 13, 2013) (13,000 cashiers at 101

stores statewide).

3

13

would likely be fiercely contested by parties.” Ibid.

And resolving them requires “individual factual determinations regarding * * * hundreds or thousands of

employees.” Ibid. (emphasis added).4

Resolving claims of alleged Labor Code violations

across hundreds, thousands, or even tens of thousands

of absent employees thus creates a proceeding that is

dramatically different from the individualized dispute

resolution protected by the FAA. Conditioning enforcement of an arbitration provision on agreement to

resolve these representative claims in arbitration

would necessarily and dramatically “reshape traditional individualized arbitration.” Rivas v. Coverall N.

Am., Inc., 842 F. App’x 55, 59 (9th Cir. 2021) (Bumatay, J., concurring) (quoting Epic, 138 S. Ct. at 1623),

petition for cert. filed (U.S. Aug. 24, 2021) (No. 21268). And that is precisely the outcome that this Court

held incompatible with the FAA in Epic and Concepcion.

c. Relatedly, the complex procedures needed to resolve a representative PAGA action transform the

proceeding into one that bears no resemblance to the

individualized arbitration “envisioned by the FAA”

and therefore “lacks its benefits.” Concepcion, 563

U.S. at 351.

4 Arbitration is more efficient than litigation, but resolution of a

representative PAGA claim in arbitration would still require assessment of each alleged violation with respect to each of the employees that the named plaintiff “represents.” It is the need to

address the situation of those third parties—demonstrated by

the court cases just discussed—that is incompatible with one-toone arbitration.

14

“In an individual arbitration, the employee already has access to all of his own employment records”; “[h]e knows how long he has been working for

the employer”; and he “can easily determine how

many pay periods he has been employed.” Sakkab, 803

F.3d at 446 (N.R. Smith, J., dissenting). By contrast,

in a representative PAGA action, “the individual employee does not have access to any of this information”

for “the other potentially aggrieved employees,” and

the “discovery necessary to obtain these documents

from the employer would be significant and substantially more complex than discovery regarding only the

employee’s individual claims.” Id. at 446-47.

Moreover, both the claimant and the employer often will require evidence from the third-party employees to determine whether the employer is liable for

each asserted Labor Code violation as to each employee. Employee-specific evidence is particularly necessary when there is “great variation” among the employees’ circumstances. Wesson, 283 Cal. Rptr. 3d at

865.

The California Supreme Court has confirmed the

extensive discovery required to adjudicate a representative PAGA claim, holding that California public

policy “support[s] extending PAGA discovery as

broadly as class action discovery has been extended.”

Williams v. Super. Ct., 398 P.3d 69, 81 (Cal. 2017)

(emphasis added). That holding alone makes a compelling case for FAA preemption: This Court has already held that class-wide discovery or another “discovery process rivaling that in litigation” is incompatible with arbitration “as envisioned by the FAA” and

“therefore may not be required by state law.” Concepcion, 563 U.S. at 351.

15

d. Representative PAGA actions also “greatly increase[] risks to defendants.” Concepcion, 563 U.S. at

350. The civil penalties available in a representative

PAGA action may total many millions of dollars when

sought for hundreds or thousands of potentially affected employees for pay periods extending over multiple years. “Even a conservative estimate would put

the potential penalties in [PAGA] cases in the tens of

millions of dollars.” Kilby v. CVS Pharmacy, Inc., 739

F.3d 1192, 1196 (9th Cir. 2013). Indeed, in some

PAGA cases, the potential fines are substantially

higher than the actual damages that would have been

awarded had the suit been brought as a class action.

See Matthew J. Goodman, Comment, The Private Attorney General Act: How to Manage the Unmanageable, 56 Santa Clara L. Rev. 413, 415 (2016).

These outsized civil penalties pose the same “unacceptable” risk of “devastating loss” that arises

“when damages allegedly owed to tens of thousands of

potential claimants are aggregated and decided at

once.” Concepcion, 563 U.S. at 350; see also Sakkab,

803 F.3d at 448 (N.R. Smith, J., dissenting) (“the concerns expressed in Concepcion are just as real in the

present case”). As one observer has explained, “[t]he

possibility of a ‘blackmail settlement’ looms even

larger in PAGA actions [than in class actions].” Goodman, supra, at 447-48. And the risk is even greater in

the context of representative PAGA arbitrations because an arbitrator’s decision will often be effectively

unreviewable. See Concepcion, 563 U.S. at 350-51.

In sum, representative PAGA actions are every

bit as incompatible with the “fundamental attributes

16

of arbitration” as the class or collective actions at issue in Epic and Concepcion. Concepcion, 563 U.S. at

344.5

2. California’s rule prohibiting waivers of

representative PAGA actions is preempted

for the additional reason that it is not a

ground for revocation of any contract.

In addition to conflicting with Epic and Concepcion, California’s rule refusing to enforce arbitration

agreements waiving representative PAGA claims is

not saved from preemption by Section 2’s saving

clause because it is not a ground for “revocation of any

contract.” 9 U.S.C. § 2 (emphasis added); see Pet. Br.

33-35; Rivas, 842 F. App’x at 58, 59 n.2 (Bumatay, J.,

concurring). Because the rule bars enforcement of

agreements specifying individualized arbitration and

falls outside the savings clause, it is preempted by

Section 2’s requirement that arbitration agreements

be enforced according to their terms.

Justice Thomas has explained that the FAA’s saving clause is limited to grounds concerning “the for-

As petitioner notes (Br. 15 n.1), Iskanian declined to decide

whether an employee may bring an “individual PAGA claim[]” or

whether PAGA actions can only be representative. 327 P.3d at

383. But even if California law required all PAGA actions to be

brought on a representative basis, such a policy choice must give

way to the FAA. In rejecting similar policy justifications advanced in Concepcion, this Court unequivocally held that “States

cannot require a procedure that is inconsistent with the FAA,

even if it is desirable for unrelated reasons.” 563 U.S. at 351. A

“[S]tate may not insulate causes of action [from arbitration under

the FAA] by declaring that the purposes of the statute can only

be satisfied via class, representative, or collective action.” Sakkab, 803 F.3d at 450 (N.R. Smith, J., dissenting).

5

17

mation of the arbitration agreement,” not “public-policy defense[s].” Epic, 138 S. Ct. at 1632-33 (Thomas,

J., concurring) (quotation marks omitted); see also

American Express Co. v. Italian Colors Rest., 570 U.S.

228, 239 (2013) (Thomas, J., concurring); Concepcion,

563 U.S. at 353 (Thomas, J., concurring). And in Epic,

the Court expressly “[p]ut to the side” whether this interpretation of the saving clause is the correct one.

138 S. Ct. at 1622.

Grounds for revoking a contract, “such as fraud,

duress, or mutual mistake,” Concepcion, 563 U.S. at

355 (Thomas, J., concurring), address whether the

contract was properly formed. The Iskanian rule, by

contrast, is a rule of enforceability—the California

court held that public policy bars enforcement of contracts waiving representative PAGA claims—and

therefore does not fall within the interpretation of the

saving clause outlined in Justice Thomas’s concurring

opinions. Indeed, the Iskanian rule is a specialized defense that uniquely prevents the waiver of a single

type of claim (representative claims under PAGA) in

a single type of contract (dispute resolution agreements with employees)—underscoring that it does not

qualify as a generally applicable defense for the revocation of any contract permitted by Section 2’s savings

clause.

B. Iskanian’s attempt to shield PAGA

claims from the FAA conflicts with this

Court’s precedents.

The California Supreme Court adopted a different

approach to evading Concepcion. It 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.” 327 P.3d

at 151. Instead, that court said, a PAGA claim “is a

18

dispute between an employer and the state”—with

“aggrieved employees” serving as “agents” of the

State. Ibid.

The Iskanian court attempted to draw support

from Waffle House, which held that the EEOC could

not be prevented from bringing an enforcement action

seeking employee-specific relief by an arbitration

agreement signed by that employee. See Iskanian, 327

P.3d at 151.

To begin with, the question in Waffle House was

whether an individual’s arbitration agreement restricted a lawsuit brought by a non-signatory—the

EEOC. Here, the issue is very different: whether the

arbitration agreement binds the individual who

signed it. The FAA provides a clear answer to that

question: arbitration agreements must be enforced according to their terms.

That is why the Waffle House Court stressed that

the statute governing EEOC enforcement actions

“clearly makes the EEOC the master of its own case.”

534 U.S. at 291. By contrast, the Court explained, if

the government agency had lacked direct and exclusive control over the case—for example, “[i]f it were

true that the EEOC could prosecute its claim only

with [the employee’s] consent, or if its prayer for relief

could be dictated by [the employee]”—then the employee’s arbitration agreement could have barred the

agency from pursuing employee-specific relief. Ibid.

The Court’s focus on who institutes and controls

the litigation in determining whether the FAA requires enforcement of an arbitration agreement

makes sense: if the party with the power to decide

whether to assert the claim, and control its prosecution, has entered into an arbitration agreement, then

19

the arbitration agreement binds that party with respect to actions relating to such claims and must be

enforced according to its terms.

Under PAGA, the State neither initiates nor controls the litigation. Instead, it is the plaintiff who

agreed to arbitration who exercises unfettered control

over the prosecution of the claim, subject to minimal

government oversight or control. See Cal. Labor Code

§ 2699.3(a). The State’s sole power is to prevent the

filing of a PAGA claim—but only if the State initiates

its own proceedings. Specifically, the party seeking to

assert a PAGA claim must notify the State and wait

65 days; if the State issues a citation against the employer after receiving notice of the alleged Labor Code

violations, the private party cannot assert the claim.

Ibid.; see Pet. Br. 8.

Otherwise, if the agency simply fails to act within

the statutory time period; or does not intend to investigate; or investigates but chooses not to issue a citation, the private PAGA plaintiff can initiate a lawsuit,

and no state official can stop the case—or exercise

even a modicum of control over it. Pet. Br. 8. Among

other things, the private PAGA plaintiff:



makes the decision whether to assert the

claim;



controls the allegations in the complaint;



defines the set of employees that he or she

seeks to represent; and



may settle the claims without the State’s

approval.

20

The lack of any state involvement or supervision

wholly undermines the notion that the private party

is in any way a state “agent.”6

As Justice Chin observed in his concurrence in Iskanian, “to the extent [Waffle House] is relevant,” it

“actually does suggest that the FAA preempts the majority’s rule.” Iskanian, 327 P.3d at 158 (Chin, J., concurring) (quotation marks and alterations omitted). 7

Iskanian is inconsistent with Waffle House for the

additional reason that the California court permitted

an aggrieved employee to agree to arbitrate representative PAGA claims if the parties so choose. See

327 P.3d at 155 (“Iskanian must proceed with bilateral arbitration on his individual damages claims, and

CLS must answer the representative PAGA claims in

some forum.”); see also Sakkab, 803 F.3d at 440 (re-

6 Prior to the June 2016 amendments to PAGA, private litigants

were not even required to notify the State of a proposed PAGA

settlement. The state agency must now be given notice of a proposed settlement, but the settlement is still subject only to the

court’s approval. See Cal. Labor Code § 2699(l)(2).

7 Justice Chin nonetheless concurred because, in his view, the

Iskanian rule was permissible based on statements in this

Court’s opinions indicating that the FAA might not permit enforcement of arbitration agreements that preclude effective vindication of the underlying claim. 327 P.3d at 157. But this Court’s

precedents make clear that the effective-vindication exception

simply does not apply to state-law claims. See American Express,

570 U.S. at 235. Even the dissent in American Express, which

would have read the exception more broadly with respect to federal statutory claims, recognized that a “state law * * * could not

possibly implicate the effective-vindication rule,” because “[w]e

have no earthly interest (quite the contrary) in vindicating [a

state] law” that is inconsistent with the FAA. 570 U.S. at 252

(Kagan, J., dissenting).

21

manding for determination of “where Sakkab’s representative PAGA claims should be resolved”); Valdez v.

Terminix Int’l Co. Ltd. P’ship, 681 F. App’x 592, 594

(9th Cir. 2017) (“Iskanian and Sakkab clearly contemplate that an individual employee can pursue a [representative] PAGA claim in arbitration.”).

Iskanian contradicts itself by concluding that a

private party can agree to arbitrate PAGA claims—

without the State’s consent. Representative PAGA actions cannot on the one hand belong to the State

enough to prevent application of this Court’s decision

in Concepcion, but on the other be sufficiently within

the control of the private party to enable her to agree

to arbitrate a representative PAGA claim. That conclusion amounts to little more than a blatant misuse

of Waffle House to justify the court’s unwillingness to

apply Concepcion.

Nor could the Iskanian court draw support from

its analogy to qui tam actions. To begin with, in the

federal context, several courts have required enforcement of the relator’s arbitration agreement, holding

that there is no “inherent conflict” between the False

Claims Act and the FAA.8

Moreover, any dispute on that score is immaterial

here: whether Congress has overridden the FAA’s generally applicable rule with respect to federal qui tam

actions is wholly irrelevant to the arbitrability of state

PAGA claims. The “inherent conflict exception[]” to

the enforcement of arbitration agreements is the flip

8 See Deck v. Miami Jacobs Bus. Coll. Co., 2013 WL 394875, at

*6-7 (S.D. Ohio Jan. 31, 2013) (collecting cases criticizing the contrary decision in Nguyen v. City of Cleveland, 121 F. Supp. 2d

643 (N.D. Ohio 2000)); Pet. Br. 40 (noting the “unsettled” status

of arbitration agreements in federal qui tam cases).

22

“side[] of the same coin” as the effective-vindication

exception—and both “are reserved for claims brought

under federal statutes.” Ferguson v. Corinthian Colls.,

Inc., 733 F.3d 928, 936 (9th Cir. 2013); see American

Express, 570 U.S. at 235; note 7, supra.

As the dissent in Sakkab put it, “[u]nder Concepcion, if a state rule authorizing a qui tam action frustrated the purposes or objectives of the FAA, that rule

would certainly be invalidated.” 803 F.3d at 449 n.7

(N.R. Smith, J., dissenting).9

Finally, the Iskanian court’s effort to imbue PAGA

claims with the State’s authority by pointing out that

75% of the recovery goes to the State (see 327 P.3d at

146) misses the point. The division of civil penalties

under PAGA has nothing to do with who institutes

and controls the litigation—which Waffle House

makes clear is the determinative factor. 534 U.S. at

291.

The California Supreme Court is of course entitled

to determine how PAGA actions or PAGA plaintiffs

are labeled as a matter of state law. But a label cannot

change the reality that respondent’s participation is

9 In all events, the Iskanian court’s qui tam analogy is fundamen-

tally flawed. In contrast to the government’s role in federal qui

tam litigation or litigation under California’s False Claims Act,

see note 10, infra, “the State has no authority to intervene in a

[PAGA] case brought by an aggrieved employee,” who may pursue her PAGA claim even if the State disagrees with it, Magadia,

999 F.3d at 677.

Thus, even assuming that there were a narrow exception to

valid arbitration agreements for employees seeking to sue their

employers as qui tam relators—an exception that this Court has

never recognized—claims under PAGA’s unique structure would

not qualify for that exception. See Pet. Br. 40-42.

23

required to institute and prosecute this representative PAGA action, and respondent in her arbitration

agreement expressly agreed to arbitrate “any dispute

arising out of or relating to [her] employment” and

that “[t]here will be no right or authority for any dispute to be brought, heard or arbitrated as a * * * representative or private attorney general action.” JA 86,

89-90.

The question here is one of federal law—whether

the FAA’s mandate to enforce arbitration agreements

“according to their terms,” including to “enforce the

parties’ chosen arbitration procedures,” Epic, 138 S.

Ct. at 1621, means that a party bound by an agreement cannot act inconsistently with that agreement.

The Court’s analysis in Waffle House provides clear

guidance that when, as here, participation of the signatory is required to institute and prosecute the

claim, she is bound by the arbitration agreement. 10

10 Alternatively, California’s state-law characterization of PAGA

claims cannot provide a basis for refusing to enforce the arbitration agreement’s prohibition on representative actions because it

does not qualify under Section 2’s savings clause as a ground for

“revocation of any contract.” Just like the state court’s construction of the phrase “law of your state” in DIRECTV, 577 U.S. at

58, the California Supreme Court’s characterization of PAGA

claims “does not place arbitration contracts ‘on equal footing with

all other contracts.’”

In other contexts where California characterizes claims as belonging to the State, such as under California’s False Claims Act,

Cal. Gov’t Code § 12652, the State has the authority to intervene

and “take primary responsibility for maintaining the action”—

including the authority to “dismiss or settle the action without

the qui tam plaintiff’s consent”—and the action may not be dismissed by the qui tam plaintiff without the State’s approval,

Campbell v. Regents of Univ. of Cal., 106 P.3d 976, 985 (Cal.

2005). Applying the same label in the absence of those controls

24

II. Iskanian And Sakkab Have Invalidated

Countless Arbitration Agreements And, If

Permitted To Stand, Will Open The Door To

Wholesale Circumvention Of The FAA.

Reversal is critical to prevent California from continuing to deprive businesses and workers alike of the

benefits of arbitration and to prevent other States

from following California down that misguided path.

Iskanian and Sakkab have effectively eviscerated

agreements providing for individualized arbitration in

the employment context. Making matters worse, the

Ninth Circuit has extended Sakkab to the consumer

context, undermining millions of additional arbitration agreements. If Iskanian and Sakkab are permitted to stand, the PAGA model threatens to expand to

other States and areas of the law. And the immediate

and far-reaching impact will be to deprive businesses

and individuals alike of the benefits of arbitration.

A. Plaintiffs’ lawyers have flooded the

courts with PAGA claims to avoid individual arbitration.

The large number of PAGA actions that have engulfed the California courts since Iskanian and Sakkab powerfully illustrates how plaintiffs’ lawyers have

seized on PAGA as a means of evading this Court’s

holdings in Epic and Concepcion protecting traditional “one-to-one” arbitration.

Before Iskanian, PAGA claims were brought, if at

all, only on “the coattails of traditional class claims,”

shows that, as in DIRECTV, Iskanian invented a special statelaw rule for the purpose of evading this Court’s decision in Concepcion.

25

largely because plaintiffs did not want to rely principally on a cause of action requiring them to remit 75%

of their recovery to the State. Robyn Ridler Aoyagi &

Christopher J. Pallanch, The PAGA Problem: The Unsettled State of PAGA Law Isn’t Good for Anyone,

2013-7 Bender’s California Labor & Employment Bulletin 01, at 1-2 (2013) (noting the “strong incentive”

for plaintiffs to prefer class claims over PAGA claims

because of the allocation of PAGA proceeds).

Even when plaintiffs tacked on PAGA claims to

complaints asserting other claims under federal and

state labor laws, court-approved settlements in those

cases reveal that the parties agreed to allocate only a

tiny fraction of the recovery to the PAGA claims.11

But as petitioner explains (Br. 45-47), the volume

of PAGA claims increased dramatically after the Iskanian and Sakkab decisions. The reason is clear:

“The fact that [representative] PAGA claims cannot

be waived by agreements to arbitrate” despite the

FAA “contributes heavily to the prevalence of these

suits.” Goodman, supra, at 415.

Reversal of the judgment below and ordering enforcement of the parties’ arbitration agreement would

11 See, e.g., Franco v. Ruiz Food Prods., Inc., 2012 WL 5941801,

at *2 (E.D. Cal. Nov. 27, 2012) ($10,000 allocated to PAGA claim

out of $2.5 million); Garcia v. Gordon Trucking, Inc., 2012 WL

5364575, at *7 (E.D. Cal. Oct. 31, 2012) ($10,000 out of $3.7 million); McKenzie v. Fed. Express Corp., 2012 WL 2930201, at *4

(C.D. Cal. July 2, 2012) ($82,500 out of $8.25 million); Chu v.

Wells Fargo Invs., LLC, 2011 WL 672645, at *1 (N.D. Cal. Feb.

16, 2011) ($10,000 out of $6.9 million); see also Nordstrom

Comm’n Cases, 112 Cal. Rptr. 3d 27, 37-38 (Ct. App. 2010) (upholding multimillion dollar settlement agreement that allocated

zero dollars to the PAGA claim).

26

preserve the benefits of arbitration for businesses and

workers alike. See pages 28-31, infra. And reversal

would not eliminate the ability of either the State or

private parties like respondent to obtain relief for alleged violations of California’s Labor Code. California

can enforce its wage-and-hour laws by filing its own

enforcement action. Workers, in turn, remain free to

pursue their own disputes in individualized arbitration seeking relief for violations that affect them personally.

B. If upheld, Iskanian and Sakkab could be

employed broadly to block enforcement

of arbitration agreements.

If Iskanian and Sakkab are permitted to stand,

their adverse consequences—the broad invalidation of

arbitration agreements—are likely to spread to other

States and to other areas of the law. Indeed, many observers hostile to arbitration have suggested that

PAGA provides a model that other States should

adopt in order to avoid this Court’s protection of traditional individualized arbitration in Epic and Concepcion.

One commentator, for example, has urged other

States to enact PAGA-like statutes for the specific

purpose of circumventing “binding arbitration

clauses.” Aaron Blumenthal, Circumventing Concepcion: Conceptualizing Innovative Strategies to Ensure

the Enforcement of Consumer Protection Laws in the

Age of the Inviolable Class Action Waiver, 103 Cal. L.

Rev. 699, 744 (2015). And a law professor has described PAGA claims as a model for “private aggregate enforcement of * * * employment laws without

triggering FAA preemption or vulnerability to contractual class waivers.” Janet Cooper Alexander, To

27

Skin A Cat: Qui Tam Actions As A State Legislative

Response to Concepcion, 46 U. Mich. J. L. Reform

1203, 1208-09 (2013).

Likewise, while PAGA itself is limited to employment claims, the reasoning in Sakkab already has

been applied by the Ninth Circuit in the consumer

context—effectively invalidating millions of consumer

arbitration agreements.

The California Supreme Court has held that, as a

matter of “California public policy,” agreements for individualized arbitration may not foreclose individuals

from seeking so-called “public injunctions” under California’s consumer-protection statutes, injunctions

that are “designed to prevent further harm to the public at large rather than to redress or prevent injury to

[the] plaintiff.” McGill v. Citibank, N.A., 393 P.3d 85,

86, 89-90, 96 (Cal. 2017) (quotation marks omitted).

Like a representative PAGA claim, a public-injunction

request must seek relief on behalf of absent third parties other than the claimant. As a matter of California

law, “[r]elief that has the primary purpose or effect of

redressing or preventing injury to an individual plaintiff * * * does not constitute public injunctive relief.”

Id. at 90. And like a representative PAGA claim, a

public-injunction request imposes massive risks on

defendants. A public injunction can force a defendant

to alter its practices, products, or services for every

one of its California customers—and, because businesses that operate in multiple States often cannot

create California-specific goods and services, perhaps

all of its customers nationwide.

In holding that the FAA does not preempt the

McGill rule, the Ninth Circuit relied on its prior reasoning in Sakkab, stating that “our decision in Sakkab

28

all but decides this case” and is “squarely on point.”

Blair v. Rent-A-Center, Inc., 928 F.3d 819, 825, 828

(9th Cir. 2019); see also id. at 827-31 (repeatedly citing Sakkab). Indeed, the Ninth Circuit concluded that

there was no relevant “distinction between arbitrating

PAGA claims and arbitrating public injunctive

claims” for purposes of FAA preemption. Id. at 829.

And the court insisted that the Sakkab court’s purported “distinction between substantive and procedural complexity is relevant to the preemption analysis” in the consumer setting as well, and suffices to

distinguish Concepcion. Ibid. The court thus concluded (incorrectly) that “[l]ike the Iskanian rule, the

McGill rule does not ‘mandate procedures that interfere with arbitration.’” Id. at 830 (quoting Sakkab, 803

F.3d at 437).

In short, upholding Sakkab will have the pernicious effect of encouraging States to engage in further

improper evasions of enormous numbers of workplace

and consumer arbitration agreements.

C. Upholding Iskanian and Sakkab would

deprive businesses and individuals of

the benefits of arbitration.

The flood of PAGA claims has undermined the

“real benefits to the enforcement of arbitration provisions” calling for traditional, bilateral arbitration, including “allow[ing] parties to avoid the costs of litigation.” Circuit City Stores, Inc. v. Adams, 532 U.S. 105,

122-23 (2001); see also, e.g., 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 257 (2009) (“Parties generally favor

arbitration precisely because of the economics of dispute resolution.”). As explained above (at 7-16), representative PAGA actions inflict huge litigation costs.

29

Moreover, the use of PAGA claims to avoid arbitration of employment-related disputes deprives employees and employers of the benefits of arbitration.

Employee claimants obtain outcomes in arbitration equal to—if not better than—the outcomes in litigation. A study released by the Chamber’s Institute

for Legal Reform found that employees were three

times more likely to win in arbitration than in court.

Nam D. Pham, Ph.D. & Mary Donovan, Fairer, Better,

Faster: An Empirical Assessment of Employment

Arbitration, NDP Analytics 5-7 (2019), https://bit.ly/

3GMVyxV (surveying more than 10,000 employment

arbitration cases and 90,000 employment litigation

cases resolved between 2014 to 2018). The Chamber

study found that employees who prevailed in arbitration “won approximately double the monetary award

that employees received in cases won in court.” Id. at

5-6, 9-10.

As another scholar found, “there is no evidence

that plaintiffs fare significantly better in litigation

[than in arbitration].” Theodore J. St. Antoine, Labor

and Employment Arbitration Today: Mid-Life Crisis

or New Golden Age?, 32 Ohio St. J. on Disp. Resol. 1,

16 (2017) (quotation marks omitted; alterations in

original). Rather, arbitration is generally “favorable to

employees as compared with court litigation.” Ibid.;

see also Lewis L. Maltby, Private Justice: Employment

Arbitration and Civil Rights, 30 Colum. Hum. Rts. L.

Rev. 29, 46 (1998).

Arbitration also typically is more efficient than litigation, allowing employees to resolve their claims

more quickly than they would in court. See Maltby, 30

Colum. Hum. Rts. L. Rev. at 55 (average resolution

time for employment arbitration was 8.6 months—

30

approximately half the average resolution time in

court); see also, e.g., Pham, supra, at 5-6, 11-12 (reporting that average resolution for arbitration was approximately 100 days faster than litigation); Michael

Delikat & Morris M. Kleiner, An Empirical Study of

Dispute Resolution Mechanisms: Where Do Plaintiffs

Better Vindicate Their Rights?, 58 Disp. Resol. J. 56,

58 (Nov. 2003–Jan. 2004) (reporting findings that

arbitration was 33% faster than analogous litigation);

David Sherwyn, Samuel Estreicher, & Michael Heise,

Assessing the Case for Employment Arbitration: A

New Path for Empirical Research, 57 Stanford L. Rev.

1557, 1573 (2005) (collecting studies reaching similar

conclusions).

Respondent may argue that representative PAGA

claims benefit employees because they provide the

equivalent of class-wide relief. But that policy argument is inapposite here, for the same reason that it

could not prevail in Epic and Concepcion.

There also are serious questions about the extent

to which PAGA claims actually benefit employees.

In the class-action context, commentators have

recognized that class actions seeking statutory damages for alleged technical statutory violations primarily benefit lawyers and “clearly do[] not achieve the[ir]

compensatory goals.” Joanna Shepherd, An Empirical

Survey of No-Injury Class Actions 2, 5, 22 (Emory

Univ. Sch. of L., Legal Studies Research Paper Series

No. 16-402, Feb. 1, 2016), https://ssrn.com/abstract=2726905; see also Sheila B. Scheuerman, Due

Process Forgotten: The Problem of Statutory Damages

and Class Actions, 74 Mo. L. Rev. 103, 111-15 (2009).

PAGA actions lack the procedural protections of class

actions—such as court assessment of the adequacy of

31

the plaintiff and counsel and of the appropriateness of

“class” treatment, as well as notice and opt-out for absent employees—and therefore provide an even

greater opportunity for abuse.

It therefore is no surprise that many PAGA claims

do not address any real harm to employees and instead appear to be designed to extract settlements and

collect attorneys’ fees. Among the flood of PAGA

claims, for example, are suits seeking massive statutory penalties for alleged technical errors in employees’ pay stubs.12 And, as petitioner notes (Br. 48), settlements in these and other PAGA cases benefit the

lawyers much more than the employees.13

The arbitration of workplace disputes benefits

businesses and workers alike. But if the judgment below is affirmed, Californians will be permanently deprived of these benefits—to the detriment of employees, consumers, businesses, and the state’s entire

economy.

12 See, e.g., Mays v. Wal-Mart Stores, Inc., 804 F. App’x 641, 643-

44 (9th Cir. 2020) (“Walmart” instead of “Wal-Mart Stores, Inc.”);

Clarke v. First Transit, Inc., 2010 WL 11459322, at *2 (C.D. Cal.

Aug. 11, 2010) (“First Transit” instead of “First Transit Transportation, LLC”); Jones v. Longs Drug Stores California, Inc.,

2010 WL 11508656, at *1 (S.D. Cal. Sept. 13, 2010) (“Longs Drug

Stores” instead of “Longs Drug Stores California, Inc.”).

13 See, e.g., Dorothy Atkins, Safeway’s $1.45M PAGA Deal Over

Pay Stubs Gets Initial OK, Law360 (Aug. 16, 2019),

https://bit.ly/34fWNaP (counsel would recover up to $483,333

and workers would receive an average of $23.19); Dorothy Atkins, Walgreens’ $15M PAGA Deal Ending Seating Suit Gets

OK’d, Law360 (Aug. 6, 2019), https://bit.ly/3gnmx7r (counsel collected $5.8 million); Dorothy Atkins, Target’s $9M PAGA Deal

Ending Seating Suits OK’d, Law360 (July 24, 2018),

https://bit.ly/34fXdxV (lawyers collected $3.9 million and cashiers received about $13 each).

32

CONCLUSION

The judgment of the California Court of Appeal

should be reversed.

33

Respectfully submitted.

DARYL JOSEFFER

PAUL LETTOW

JONATHAN D. URICK

U.S. Chamber

Litigation Center

1615 H Street, NW

Washington, DC 20062

(202) 463-5337

Counsel for Chamber of

Commerce of the United

States of America

HEATHER WALLACE

California Chamber of

Commerce

1215 K Street,

Suite 1400

Sacramento, CA 95814

(916) 444-6670

Counsel for California

Chamber of Commerce

KAREN R. HARNED

ELIZABETH MILITO

NFIB Small Business

Legal Center

555 12th Street, NW

Suite 1001

Washington, DC 20004

(202) 314-2061

Counsel for National

Federation of Independent

Business

FEBRUARY 2022

ANDREW J. PINCUS

Counsel of Record

ARCHIS A. PARASHARAMI

DANIEL E. JONES

CARMEN N. LONGORIA-GREEN

Mayer Brown LLP

1999 K Street, NW

Washington, DC 20006

(202) 263-3000

apincus@mayerbrown.com

Counsel for Amici Curiae