Opposition Brief — Shipt, Inc., Petitioner v. Jade Green

No. 21-1079

IN THE

Supreme Court of the United States

SHIPT, INC.,

Petitioner,

v.

JADE GREEN,

Respondent.

On Petition for a Writ of Certiorari to the

California Court of Appeal

RESPONDENT’S BRIEF IN OPPOSITION

NORMAN BLUMENTHAL

Counsel of Record

BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP

2255 Calle Clara

La Jolla, CA 92037

(858) 551-1223

Norm@bamlawca.com

Attorneys for Respondent

April 29, 2022

i

QUESTION PRESENTED

Whether the Federal Arbitration Act requires

state courts to enforce waivers of statutory rights of

action to collect civil penalties on behalf of the state,

in violation of neutral principles of state law prohibiting such a waiver, if the waiver is set forth in an

arbitration agreement.

ii

TABLE OF CONTENTS

QUESTION PRESENTED .......................................... i

TABLE OF AUTHORITIES ...................................... iv

INTRODUCTION ....................................................... 1

STATEMENT .............................................................. 5

1.

PAGA .................................................................... 5

2.

Iskanian ................................................................ 7

3.

Sakkab .................................................................. 9

4.

This Case ............................................................ 12

REASONS FOR DENYING THE WRIT .................. 14

I.

Epic does not support Shipt’s request for

review. ................................................................ 15

II. Iskanian is fully consistent with this Court’s

precedents........................................................... 17

A. This Court’s FAA decisions do not require

enforcement of agreements that bar assertion

of statutory rights. ......................................... 18

B. This Court’s decisions do not require

enforcement of agreements that strip states of

police power to authorize enforcement actions

on their behalf. ............................................... 20

C. Iskanian and Sakkab do not reflect hostility

to arbitration. ................................................ 22

D. Iskanian does not impose procedures

incompatible with arbitration. ...................... 25

III. This case does not present the question

whether Iskanian forecloses arbitration of

PAGA claims. ..................................................... 28

iii

IV. Shipt’s objections to PAGA provide no basis for

review. ................................................................ 30

CONCLUSION.......................................................... 33

iv

TABLE OF AUTHORITIES

Cases

Page(s)

14 Penn Plaza LLC v. Pyett,

556 U.S. 247 (2009) ................................. 19, 25, 27

Allied-Bruce Terminix Cos. v. Dobson,

513 U.S. 265 (1995) ............................................. 22

Am. Express Co. v. Italian Colors Rest.,

570 U.S. 228 (2013) ............................... 7, 8, 19, 27

Apple Am. Group, LLC v. Salazar,

577 U.S. 1048 (2015) ........................................... 12

Arias v. Super. Ct.,

209 P.3d 923 (Cal. 2009) ............................. 5, 6, 24

Arizona v. United States,

567 U.S. 387 (2012) ............................................. 22

AT&T Mobility LLC v. Concepcion,

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

Baumann v. Chase Inv. Servs. Corp.,

747 F.3d 1117 (9th Cir. 2014),

cert. denied, 574 U.S. 870 (2014) ........................ 10

Bloomingdale’s, Inc. v. Tanguilig,

138 S. Ct. 356 (2017) ........................................... 12

Bloomingdale’s, Inc. v. Vitolo,

137 S. Ct. 2267 (2017) ......................................... 12

Booker v. Robert Half Int’l, Inc.,

413 F.3d 77 (D.C. Cir. 2005) ............................... 11

Bridgestone Retail Operations, LLC v. Brown,

575 U.S. 1037 (2015) ............................................. 9

CarMax Auto Superstores Cal., LLC v. Areso,

577 U.S. 1048 (2015) ........................................... 12

v

Cohen v. UBS Fin. Servs., Inc.,

799 F.3d 174 (2d Cir. 2015) ................................. 15

DIRECTV, Inc. v. Imburgia,

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

Doctor’s Assocs., Inc. v. Casarotto,

517 U.S. 681 (1996) ............................................. 22

EEOC v. Waffle House, Inc.,

534 U.S. 279 (2002) ..................................... 8, 9, 21

Epic Sys. Corp. v. Lewis,

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

Five Star Sr. Living Inc. v. Mandviwala,

138 S. Ct. 2680 (2018) ......................................... 12

Gentry v. Super. Ct.,

165 P.3d 556 (Cal. 2007) ....................................... 7

Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991) ......................................... 19, 27

Granite Rock Co. v. In’tl Bhd. Of Teamsters,

561 U.S. 287 (2010) ............................................. 30

Iskanian v. CLS Transp. Los Angeles, LLC,

327 P.3d 129 (Cal. 2014), cert. denied,

574 U.S. 1121 (2015) .................................... passim

Kim v. Reins Int’l Cal., Inc.,

459 P.3d 1123 (Cal. 2020) ................................. 2, 3

Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

137 S. Ct. 1421 (2017) ..................23, 24, 25, 30, 32

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

999 F.3d 668 (9th Cir. 2021) ............................... 31

Marmet Health Care Ctr., Inc. v. Brown,

565 U.S. 530 (2012) ............................................... 9

vi

Medtronic, Inc. v. Lohr,

518 U.S. 470 (1996) ............................................. 12

Metro. Life Ins. Co. v. Massachusetts,

471 U.S. 724 (1985) ....................................... 12, 22

Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc.,

473 U.S. 614 (1985) ................................. 18, 19, 27

PennyMac Fin. Servs., Inc. v. Smigelski,

140 S. Ct. 223 (2019) ........................................... 12

Perry v. Thomas,

482 U.S. 483 (1987) ....................................... 22, 23

Preston v. Ferrer,

552 U.S. 346 (2008) ......................................... 9, 19

Printz v. United States,

521 U.S. 898 (1997) ............................................. 22

Prudential Overall Supply v. Betancourt,

138 S. Ct. 556 (2017) ........................................... 12

Reyes v. Macy’s, Inc.,

135 Cal. Rptr. 3d 832 (Cal. Ct. App. 2011) ........... 2

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

842 F. Appx. 55 (9th Cir. 2021) ........................... 17

Rodriguez de Quijas v. Shearson/Am. Express, Inc.,

490 U.S. 477 (1989) ............................................. 19

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

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

Securitas Sec. Servs. USA, Inc. v. Super. Ct.,

184 Cal. Rptr. 3d 568 (Cal. Ct. App. 2015) ......... 17

vii

Shearson/Am. Express, Inc. v. McMahon,

482 U.S. 220 (1987) ....................................... 19, 27

Smith v. Bayer Corp.,

564 U.S. 299 (2011) ............................................... 6

Viking River Cruises, Inc. v. Moriana,

142 S. Ct. 734 (2021) ............................................. 5

Winns v. Postmates, Inc.,

165 P.3d 556 (Cal. 2007) ..................................... 17

ZB, N.A. v. Super. Ct.,

448 P.3d 239 (Cal. 2019) ..................6, 7, 10, 29, 31

Constitutional Provisions, Statutes, and Rules:

Federal Arbitration Act, 9 U.S.C. § 1 et seq. ..... passim

§ 2 ............................................................... 9, 18, 20

Private Attorneys General Act (PAGA),

Cal. Lab. Code § 2698 et seq. ........................ passim

§ 2699(g) ................................................................. 5

§ 2699(i).................................................................. 5

S. Ct. R. 10 ................................................................ 18

INTRODUCTION

California’s Private Attorneys General Act in California Labor Code §2699 (“PAGA”) was created to

establish a right of action for the State of California

in which individual employees bring actions as the

proxy of the state on behalf of the state to recover civil penalties from employers for violations of California’s Labor Code as the representative of the state.

Currently, the state has to police 1.6 million businesses and only had the resources to conduct 1,734

inspections. In 2019, the State of California collected

$88 million from the enforcement of PAGA. In Iskanian v. CLS Transportation Los Angeles, LLC, 327

P.3d 129 (Cal. 2014), the California Supreme Court

held that the right to bring a PAGA action cannot be

waived prospectively, whether in an arbitration

agreement or any other type of contract. In Sakkab v.

Luxottica Retail North America, Inc., 803 F.3d 429

(9th Cir. 2015), the Ninth Circuit agreed with the

California Supreme Court that Iskanian’s neutral

rule is not preempted by the Federal Arbitration Act

(FAA) because it does not prohibit arbitration of specific types of claims or otherwise disfavor arbitration.

As such, Iskanian and Sakkab do not conflict either

with this Court’s precedents or with decisions of other state supreme courts or federal courts of appeals.

This case involves an intermediate California appellate court’s unpublished application of Iskanian to

an agreement that purported to waive altogether the

right to bring any PAGA action against her alleged

employer in any forum as the proxy of the state. The

agreement waives the PAGA claim because PAGA

claims are inherently “representative” of the State of

California and there is no such thing as an individual

2

PAGA claim under state law. The employer, Shipt,

Inc., applying this catch 22 now seeks review in this

Court arguing that Iskanian and Sakkab were

wrongly decided and attempting to immunize itself

from the enforcement of PAGA in all forums. In a

legal fiction, Shipt makes the disingenuous argument

that the individual can pursue their own PAGA claim

which is simply not true because there is no such

claim as an individual PAGA claim as all PAGA

claims are by their very legal nature a representative

claim on behalf of the state. Kim v. Reins Int'l Cal.,

Inc., 9 Cal. 5th 73, 87, 259 Cal. Rptr. 3d 769, 778-79,

459 P.3d 1123, 1131 (Cal. 2020).

As a result, two important issues are misrepresented by Shipt’s petition.

First, under California state law, a PAGA claim is

a qui tam type action, where Respondent steps into

the shoes of the LWDA and pursues its interests in

enforcement of the Labor Code “as ‘the proxy or

agent’ of the state”, “not on behalf of other employees”. Iskanian, supra, 59 Cal.4th at 384, 388. As a

result, the arbitration agreement itself precludes the

argument that arbitration can be ordered as to a

PAGA action seeking civil penalties, which is a dispute between an employer and the State of California, with Respondent acting only as the proxy. A

“plaintiff asserting a PAGA claim may not bring the

claim simply on his or her own behalf but must bring

it as a representative action”. Reyes v. Macy's, Inc.,

202 Cal. App. 4th 1119, 1123, 135 Cal. Rptr. 3d 832,

835 (2011). Thus, under the PAGA statute, Green

“may bring a PAGA claim only as the state's designated proxy” for all of the employer’s PAGA violations, which is an inherently representative capacity,

3

and is res judicata as to all violations which could be

brought by the state. Kim, supra, 9 Cal. 5th at 87.

Second, there is no dispute that the Shipt agreement purports to waive this inherently representative claim brought solely on behalf of the State of

California to enforce the rights of the State of California for all PAGA violations including those suffered by the individual. This is not about other employees. Rather, it is about the express nature of the

PAGA statute conferring standing to represent the

State of California as its proxy. “There is no individual component to a PAGA action because ‘every PAGA action … is a representative action on behalf of

the state.’ (Iskanian, supra, 59 Cal.4th at p. 387.)” for

all PAGA violations committed by the employer.

Kim, supra, 9 Cal. 5th at 87.

Shipt also recycles the argument that Iskanian

“prohibits outright the arbitration of a particular

type of claim.” Pet. 22 (quoting AT&T Mobility LLC

v. Concepcion, 563 U.S. 333, (2011)). Iskanian, however, did not hold that an agreement to arbitrate

PAGA claims is unenforceable. It held “that representative PAGA claims may not be waived outright,”

but it did “not prohibit the arbitration of any type of

claim.” Sakkab, 803 F.3d at 434. Although some intermediate California courts have suggested that

PAGA claims may be nonarbitrable, the California

Supreme Court has never decided that question.

And in any event, this case does not present it.

The lower courts did not refuse to enforce an agreement to arbitrate PAGA claims, because Shipt’s

agreement unambiguously prohibited arbitration (as

well as litigation in court) of any PAGA claim as all

PAGA claims are inherently representative of the

4

State’s interest and penalties for all violations and

cannot be limited to only the individua’ PAGA claims

as there is no such limitation under the PAGA. In

holding that the employee’s PAGA claims must proceed in court, the lower court gave effect to the

agreement’s exclusion of representative PAGA claims

from arbitration and held the agreement invalid only

insofar as it precluded PAGA claims completely. Because the FAA prohibits courts from compelling parties to arbitrate matters that they have expressly

agreed not to arbitrate, the only remedy for the invalid waiver was to allow the PAGA claim to be litigated in Court.

Shipt’s petition, like those that came before it,

fails to come to grips with the central fact that California’s rule that the right to bring PAGA claims

cannot be waived is not an effort to declare individualized arbitration proceedings off-limits. Rather,

Shipt’s invocation of the FAA is an attempt to avoid

bilateral resolution of the state’s claim for penalties

through the representative chosen by California

lawmakers—an individual aggrieved employee and

not to limit the PAGA claim to the individual’s PAGA

claim as all PAGA claims are representative claims

and the judgment is res judicata to all PAGA claims

that could be brought by the state. This is the catch

22 of Shipt’s argument for inventing an individual

non-representative PAGA claim, as there is no such

claim. Shipt does not seek to compel arbitration of

that PAGA claim, but to enforce a waiver of the right

to bring the PAGA claim in any forum—something

no decision of this Court has ever held that the FAA

countenances, let alone requires.

Finally, Shipt’s petition does not require this

Court’s intervention, as any impact on the lower

5

court decision from the impending decision in Viking

River Cruises, Inc. v. Moriana, 142 S. Ct. 734 (2021),

can be addressed in the lower court, and need not be

resolved by this Court in the first instance.

STATEMENT

1. PAGA

PAGA provides for enforcement of California’s

Labor Code by deputizing an aggrieved employee as

a private attorneys general to recover civil penalties

for the state. “Of the civil penalties recovered, 75

percent goes to the Labor and Workforce Development Agency, leaving the remaining 25 percent for

the ‘aggrieved employees.’” Arias v. Superior

Court, 46 Cal.4th 969, 980–981, 95 Cal. Rptr. 3d 588,

209 P.3d 923 (Cal. 2009). Before PAGA’s enactment,

only the state could obtain such civil penalties. See

Iskanian, 327 P.3d at 145–46. PAGA authorizes an

“aggrieved employee” to recover penalties for Labor

Code violations committed against herself and other

employees in a representative civil action. Cal. Lab.

Code § 2699(g). Penalties recovered under PAGA

“shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws and education of employers and

employees about their rights and responsibilities under this code …; and 25 percent to the aggrieved employees.” Id. § 2699(i).

“A PAGA representative action is … a type of qui

tam action.” Iskanian, 327 P.3d at 148. PAGA actions

are commonly maintained by individual plaintiffs.

See Arias, 209 P.3d at 929–34. They require neither

class certification nor notice to other employees. See

id. Other employees are bound by a PAGA adjudication only with respect to civil penalties, just as they

6

would be “bound by a judgment in an action brought

by the government.” Id. at 933. The effect of a PAGA

judgment does not rest on the principles that make

class action judgments binding on class members.

See Smith v. Bayer Corp., 564 U.S. 299, 312–13

(2011). Rather, it rests on a very different basis:

“When a government agency is authorized to bring

an action … a person who is not a party but who is

represented by the agency is bound by the judgment

as though the person were a party.” Arias, 209 P.3d

at 934.

PAGA reflects the legislature’s determination

that limitations on the state’s enforcement resources

render it “in the public interest to allow aggrieved

employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, with

the understanding that labor law enforcement agencies … retain primacy over private enforcement efforts.” Id. at 929–30. “In a lawsuit brought under the

act, the employee plaintiff represents the same legal

right and interest as state labor law enforcement

agencies.” Id. at 933. The action “is a dispute between an employer and the state, which alleges directly or through its agents—either the Labor and

Workforce Development Agency or aggrieved employees—that the employer has violated the labor

code.” Iskanian, 327 P.3d at 151.

Because PAGA aims to deter and penalize Labor

Code violations rather than compensate individuals,

“[t]he government entity on whose behalf the plaintiff files suit is always the real party in interest in

the suit.” Id. Thus, “[a]ll PAGA claims,” whether involving violations affecting one or a thousand employees, “are ‘representative’ actions in the sense

that they are brought on the state’s behalf.” ZB, N.A.

7

v. Super. Ct., 448 P.3d 239, 243 (2019). Accordingly,

the plaintiff may “seek any civil penalties the state

can,” id., but the PAGA right of action does not provide a mechanism for seeking compensatory remedies, such as lost wages, either for the plaintiff or for

other employees, id. at 245–52.

2. Iskanian

The plaintiff in Iskanian filed both a putative

class action and a representative claim under PAGA,

based on alleged violations of California wage-andhour laws. The defendant sought to compel arbitration under an agreement that barred both class actions and representative actions.

The California Supreme Court held the class action ban valid and enforceable. The court concluded

that Concepcion, 563 U.S. 333, and American Express

Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013),

required it to overrule its earlier decision in Gentry v.

Super. Ct., 165 P.3d 556 (Cal. 2007), which had held

class bans in employment arbitration agreements

unenforceable in some circumstances. See Iskanian,

327 P.3d at 133. The California court also anticipated

this Court’s ruling in Epic that federal labor laws do

not preclude enforcement of class-action bans. See id.

at 141. All seven justices, however, agreed that the

agreement was unenforceable to the extent it left no

forum in which the plaintiff could pursue a PAGA

claim. The court began by holding that employment

agreements in which employees prospectively waive

the right to bring PAGA representative actions are

unenforceable under state law. See id. at 149. The

court then held that the FAA does not require enforcement of such purported waivers. See id. at 150–

53.

8

The court’s five-justice majority opinion on this

point rested in part on the state-law holding that the

real party in interest under PAGA is the State, on

whose behalf the PAGA plaintiff seeks penalties. As

the court observed, a PAGA action is by definition a

representative action on the State’s behalf. See id. at

151. Thus, enforcing an employment agreement banning representative actions would prevent the State

from pursuing its claim through the agent authorized

by law to represent it: the PAGA plaintiff. Because “a

PAGA action is a dispute between an employer and

the state Labor and Workforce Development Agency,”

id. at 149, and because the State is not a party to the

agreement invoked to bar the claim, the court held

that permitting the PAGA action to proceed would

not conflict with the FAA’s requirement that private

arbitration agreements be enforced as between the

parties, id. at 151 (citing EEOC v. Waffle House, Inc.,

534 U.S. 279 (2002)). Having held that the PAGA

claims must be available in “some forum,” id. at 155,

the court remanded for consideration of whether they

would be arbitrated or litigated in court.

Justices Chin and Baxter, concurring in the

judgment, set forth an alternate basis for the result.

Invoking this Court’s statements that the FAA does

not require enforcement of “a provision in an arbitration agreement forbidding the assertion of certain

statutory rights,” id. at 157 (quoting Am. Express Co.

v. Italian Colors Rest., 570 U.S. 228, 236 (2013)),

they concluded that holding prospective PAGA waivers unenforceable “does not run afoul of the FAA,” id.

This Court denied certiorari in Iskanian, 574 U.S.

1121 (2015), and, soon after, in another case where

the California Supreme Court had applied Iskanian.

9

Bridgestone Retail Operations, LLC v. Brown, 575

U.S. 1037 (2015).

3. Sakkab

In Sakkab, the Ninth Circuit agreed with the California Supreme Court that the FAA does not

preempt Iskanian’s prohibition on waivers of the

right to bring PAGA representative claims. 803 F.3d

at 429 (M. Smith, J.). The court held that the Iskanian rule falls within the FAA’s savings clause,

which makes agreements to arbitrate enforceable

“save upon such grounds as exist at law or in equity

for the revocation of any contract.” 9 U.S.C. § 2. Applying this Court’s teaching that “a state contract defense must be ‘generally applicable’ to be preserved

by § 2’s saving clause,” 803 F.3d at 432 (quoting Concepcion, 563 U.S. at 339), the court held that the Iskanian rule is “generally applicable” because it

“place[s] arbitration agreements on equal footing

with non-arbitration agreements.” Id. Iskanian, the

court held, bars prospective waiver of PAGA claims,

“regardless of whether the waiver appears in an arbitration agreement or a non-arbitration agreement.”

Id.

Sakkab further concluded that Iskanian does not

conflict with the FAA’s purposes. The court recognized that the FAA’s purpose is to overcome judicial

hostility to arbitration and that it “therefore

preempts state laws prohibiting the arbitration of

specific types of claims.” Id. at 434 (citing Marmet

Health Care Ctr., Inc. v. Brown, 565 U.S. 530 (2012),

and Preston v. Ferrer, 552 U.S. 346, 356–59 (2008)).

Iskanian, however, “expresses no preference” as to

whether PAGA claims “are litigated or arbitrated.”

Id. Iskanian “provides only that representative PA-

10

GA claims may not be waived outright” and “does not

prohibit the arbitration of any type of claim.” Id.; accord ZB, 448 P.3d at 241 (explaining that Iskanian

“held that a court may not enforce an employee’s alleged predispute waiver of the right to bring a PAGA

claim in any forum”).

Further, Sakkab held that Iskanian does not “interfere[] with arbitration.” 803 F.3d at 434 (quoting

Concepcion, 563 U.S. at 346). Iskanian’s prohibition

on PAGA waivers, the court explained, is unlike the

rule at issue in Concepcion, under which bans on

class-action procedures were deemed unconscionable.

Concepcion held that rule preempted because it

“‘interefere[d] with fundamental attributes of arbitration,’ by imposing formal classwide arbitration

procedures on the parties against their will.” Id. at

435 (quoting Concepcion, 563 U.S. at 344). By contrast, “‘fundamental[]’ differences between PAGA actions and class actions” render Concepcion’s concerns

inapplicable to the Iskanian rule. Id. (quoting Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1123

(9th Cir. 2014), cert. denied, 574 U.S. 1060 (2014)).

A class action, Sakkab elaborated, is a “procedural device” in which individual claims of multiple

plaintiffs are adjudicated together, creating the necessity for formal procedures such as class certification, classwide notice, and opt-out rights, to protect

each class member’s rights with respect to his individual claim. Id. “By contrast, a PAGA action is a

statutory action” in which the State, represented by

the employee who brings the action “as the proxy or

agent of the state’s labor law enforcement agencies,”

litigates one-on-one against the defendant to recover

penalties “measured by the number of Labor Code

violations committed by the employer.” Id. (citations

11

omitted). Because the plaintiff is not employing a

procedure for aggregating claims belonging to other

employees, but is pursuing the state’s claims for penalties, “there is no need to protect absent employees’

due process rights in PAGA arbitrations,” and “PAGA arbitrations therefore do not require the formal

procedures of class arbitrations.” Id. at 436. Thus,

the court continued, “prohibiting waiver of such

claims does not diminish parties’ freedom to select

the arbitration procedures that best suit their needs.”

Id. Enforcing such a waiver would not preserve fundamental attributes of arbitration, but would “effectively … limit the penalties an employee-plaintiff

may recover on behalf of the state.” Id.

Sakkab acknowledged that the liabilities defendants incur for PAGA violations may be large and that

some defendants might hesitate to agree to arbitrate

such claims. Id. at 437. The court reasoned, however,

that “the FAA would not preempt a state statutory

cause of action that imposed substantial liability

merely because the action’s high stakes would arguably make it poorly suited to arbitration.” Id. “Nor …

would the FAA require courts to enforce a provision

limiting a party’s liability in such an action, even if

that provision appeared in an arbitration agreement.” Id. (citing Booker v. Robert Half Int’l, Inc., 413

F.3d 77, 83 (D.C. Cir. 2005) (Roberts, J.)). Likewise,

the FAA does not preempt a rule prohibiting parties

“from opting out of the central feature of the PAGA’s

private enforcement scheme—the right to act as a

private attorney general to recover the full measure

of penalties the state could recover.” Id. at 439.

Finally, the court invoked this Court’s instruction

that “’[i]n all pre-emption cases’ we must ‘start with

the assumption that the historic police powers of the

12

States were not to be superseded by the Federal Act

unless that was the clear and manifest purpose of

Congress.’” Id. (quoting Medtronic, Inc. v. Lohr, 518

U.S. 470, 485 (1996)). Here, the state exercised its

“broad authority under [its] police powers to regulate

the employment relationship to protect workers within the State,” id. (quoting Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756 (1985)), by “creating a

form of qui tam action” to supplement the state’s limited enforcement resources. Id. “The FAA,” the court

concluded, “was not intended to preclude states from

authorizing qui tam actions to enforce state law” or

to “require courts to enforce agreements that severely limit the right to recover penalties” in such actions. Id. at 439–40.

The Ninth Circuit denied rehearing en banc in

Sakkab, and no judge requested a vote on the petition.

Since Sakkab, this Court has denied certiorari at

least seven more cases seeking review of whether the

FAA preempts Iskanian: Smigelski, 140 S. Ct. 223;

Mandviwala, 138 S. Ct. 2680; Prudential Overall

Supply v. Betancourt, 138 S. Ct. 556 (2017); Bloomingdale’s, Inc. v. Tanguilig, 138 S. Ct. 356 (2017);

Bloomingdale’s, Inc. v. Vitolo, 137 S. Ct. 2267 (2017);

CarMax Auto Superstores Cal., LLC v. Areso, 577

U.S. 1048 (2015); Apple Am. Group, LLC v. Salazar,

577 U.S. 1048 (2015).

4. This Case

Respondent Jade Green worked for petitioner

Shipt, Inc. Ms. Green, together with other Shipt employees, was subjected to violations of California’s

Labor Code. Ms. Green filed this action under PAGA

in a California state court in 2020. As Shipt acknowl-

13

edges, her operative complaint asserts only a PAGA

claim seeking recovery of penalties for these violations.

Shipt moved to compel arbitration. As Shipt admits, the arbitration agreement purports to waive

Respondent’s right to bring a representative PAGA

claim on behalf of the State of California. The language and scope of the arbitration agreement is written solely in the singular involving a bilateral

agreement between “SHIPT” and the Respondent.

There is no language which could be reasonably read

to encompass representative claims. In fact, the

agreement expressly disclaims any arbitration of

PAGA claims by limiting arbitration solely to individual claims and not permitting the claims of the

State of California to be brought by it representative

proxy, Green. Pet. App. 7a. Shipt acknowledged that

Iskanian holds that such a waiver of the right to

bring a representative or private attorney general

action under PAGA is unenforceable as a matter of

California law, but it argued that this Court’s decision in Epic had effectively overruled Iskanian. The

trial court noted that California appellate decisions

had held that Epic did not address the enforceability

of an agreement, such as this one, barring a PAGA

representative action in any forum, and, citing Iskanian, it denied Shipt’s motion. Pet. App. 7a.

The California Court of Appeal affirmed in an unpublished opinion. Citing previous appellate decisions holding that Epic does not affect Iskanian’s

holding that predispute waivers of PAGA claims are

unenforceable, the court rejected Shipt’s argument

that Epic effectively overruled Iskanian. Iskanian’s

non-waiver rule, the court held, is not an impermissible device to evade a valid requirement that indi-

14

vidual claims be arbitrated, but a permissible rule

aimed at preventing employers from escaping liability by a “procedure would frustrate the core objectives of the PAGA.” Pet. App. 14a. The court also rejected Shipt’s argument that Green’s ‘individual PAGA claim’ should be compelled to arbitration.” Id.

The court explained that “the right to bring a representative PAGA case could neither be waived nor bifurcated and compelled to arbitration on an "individual" basis. (Iskanian, at p. 384.).” Id. Because

Green’s complaint contained only a single cause of

action for penalties under PAGA, id. at 15a, the court

held that the operative complaint alleges only a “single cause of action for civil penalties under the PAGA.,” id. at 6a, that fell within the agreement’s unenforceable waiver of representative claims. She had

“there is nothing in Green's operative PAGA-only

complaint to compel to arbitration.” Id. at 15a.

The California Supreme Court denied Shipt’s petition for review.

REASONS FOR DENYING THE WRIT

This case is not about whether the FAA requires

enforcement of an agreement providing for arbitration of a particular claim on an individual basis. Rather, the agreement at issue purports to bar PAGA

claims altogether, regardless of the forum. The lower

courts agree that the FAA does not require enforcement of an arbitration clause that waives PAGA

claims altogether rather than requiring their arbitration, and no decision of this Court has held that the

FAA overrides state laws prohibiting waivers of specific rights of action. Epic, the principal decision on

which Shipt rests its request for review, holds that

the FAA provides for enforcement of agreements by

15

individuals to arbitrate their claims individually rather than collectively, but says nothing to suggest

that the FAA requires enforcement of a waiver of an

individual’s right to pursue a unitary, representative

claim on behalf of the state. Shipt’s petition merits

review no more than did any of the previous petitions

contending that the Iskanian and Sakkab decisions

were erroneous.

I.

Epic does not support Shipt’s request for

review.

The core holding of Iskanian that drove the outcome below is that an agreement, arbitration or otherwise, cannot prospectively waive an employee’s

right to bring a PAGA action in some forum. Iskanian, 327 P.3d at 155. Shipt does not claim that

there is any conflict among federal courts of appeals

or state supreme courts over whether the FAA

preempts that holding. It concedes that the Ninth

Circuit agrees that the FAA does not preempt a rule

that “only prohibits [parties] from opting out of the

central feature of the PAGA’s private enforcement

scheme—the right to act as a private attorney general to recover the full measure of penalties the state

could recover.” Sakkab, 803 F.3d at 439; see Pet. 11.

Indeed, although PAGA claims may be brought outside California and the Ninth Circuit, see, e.g., Cohen

v. UBS Fin. Servs., Inc., 799 F.3d 174, 180 (2d Cir.

2015), no federal appellate or state supreme court

has rejected Iskanian’s non-waiver rule. Moreover,

Shipt cites no decisions of this Court holding that the

FAA requires enforcement of an agreement that

waives a claim rather than requiring its arbitration.

And it acknowledges that this Court has repeatedly

denied petitions for certiorari arguing that Iskanian

16

and Sakkab erred in applying FAA preemption doctrine.

Iskanian does not conflict with Epic. Indeed, in

Iskanian itself, the California Supreme Court anticipated Epic’s holding and articulated its rationale:

Iskanian rejected the argument that the National

Labor Relations Act “prohibits contracts that compel

employees to waive their right to participate in class

proceedings to resolve wage claims.” 327 P.3d at 138.

Iskanian held that “a rule against class waivers” was

incompatible with the FAA because it “interferes

with fundamental attributes of arbitration and, for

that reason, disfavors arbitration in practice,” and it

further concluded that the NLRA does not “overrid[e]

the FAA’s mandate.” Id. at 141, 142. That analysis

exactly tracks this Court’s reasoning in Epic. See 138

S. Ct. at 1621–26.

Moreover, Epic’s holding that collective proceedings that aggregate the separate claims of individuals are incompatible with “arbitration’s fundamental

attributes,” id. at 1622, says nothing about whether

states must enforce agreements that waive individuals’ rights to assert unitary claims on behalf of the

state in bilateral proceedings. The arbitration

agreements at issue in Epic, like those in Concepcion

before it, prohibited class or collective proceedings.

But they did not bar an individual from asserting

any claim that she could otherwise assert in a bilateral proceeding. In contrast, the agreements that Iskanian holds unenforceable do just that. Thus here,

Shipt’s agreement is unenforceable under Iskanian

because its prohibition of “private attorney general”

17

claims forecloses any assertion of a PAGA claim, in

any manner, in any forum.1

Iskanian’s condemnation of such agreements does

not “attack[] (only) the individualized nature of …

arbitration proceedings.” Epic, 138 S. Ct. at 1622. It

attacks only the waiver of an individual’s entitlement

to pursue a particular claim and the concomitant

waiver of the state’s entitlement to pursue its claims

through an individual authorized to do so under state

law. Epic does not consider, let alone resolve, whether a state-law rule precluding such waivers violates

the FAA, any more than do any of this Court’s prior

holdings, including Concepcion. Indeed, Shipt points

to nothing in Epic that adds materially to Shipt’s underlying argument that Iskanian conflicts with Concepcion. See Pet. 16–20; see also Rivas v. Coverall N.

Am., Inc., 842 F. Appx. 55, 56 (9th Cir. 2021).

II. Iskanian is fully consistent with this

Court’s precedents.

Beyond Shipt’s mistaken assertion that Epic is a

game-changing decision, its request for review rests

on its argument that Iskanian conflicts with this

Court’s FAA jurisprudence. Such arguments that

––––––––––––––––––––––––

1 Shipt

observes that Ms. Green did not out of the PAGA

waiver, but Iskanian’s holding that a waiver of the right to

bring a PAGA action is unenforceable does not depend on its

voluntariness. See Securitas Sec. Servs. USA, Inc. v. Superior

Court, 234 Cal. App. 4th 1109, 1122, 184 Cal. Rptr. 3d 568, 579

(2015) (the “opportunity to opt out of the agreement did not take

this case outside of Iskanian.”); Winns v. Postmates Inc., 66 Cal.

App. 5th 803, 811, 281 Cal. Rptr. 3d 460 (2021) (“Iskanian did

not turn on how the worker entered into the arbitration agreement, or the mandatory or voluntary nature of the worker's

consent to the agreement.”)

18

lower courts have misapplied settled precedents

“rarely” justify a grant of certiorari. S. Ct. R. 10. And

as this Court’s repeated rejection of petitions presenting the same arguments underscores, this case is

not one of those rare instances. This Court’s FAA decisions have never held that an arbitration agreement may be used as a vehicle to waive the right to

assert a claim, let alone a claim on behalf of a state

that is not a party to the agreement. Moreover, both

Iskanian and Sakkab carefully follow and apply this

Court’s admonitions that state laws may not reflect

hostility to arbitration or impose procedures incompatible with its fundamental attributes.

A. This Court’s FAA decisions do not

require enforcement of agreements that

bar assertion of statutory rights.

As the concurring Justices in Iskanian pointed

out, this Court has never held that the FAA requires

enforcement of agreements waiving rights to assert

particular claims. The FAA makes agreements to arbitrate claims enforceable; it does not provide for enforcement of agreements that claims cannot be pursued at all. See 9 U.S.C. § 2. Allowing defendants to

excuse themselves from liability for specific kinds of

claims or particular forms of relief is not the FAA’s

objective.

This Court’s decisions enforcing arbitration

agreements thus repeatedly emphasize that arbitration involves choice of forum, not waiver of claims:

“By agreeing to arbitrate a statutory claim, a party

does not forgo the substantive rights afforded by the

statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

19

614, 628 (1985); accord Waffle House, 534 U.S. at

295, n.10; Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20, 26 (1991); Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 481 (1989);

Shearson/Am. Express, Inc. v. McMahon, 482 U.S.

220, 229–30 (1987).

An agreement to arbitrate is thus not “a prospective waiver of the substantive right.” Pyett, 556 U.S.

at 265 (2009). Indeed, this Court has agreed that an

arbitration clause containing “a prospective waiver of

a party’s right to pursue statutory remedies” would

be “against public policy,” Mitsubishi, 473 U.S. at

637, n.19—precisely Iskanian’s rationale.

In American Express, this Court held that a classaction ban in an arbitration agreement was enforceable despite its practical effect of making antitrust

claims too costly for the plaintiffs, 570 U.S. at 238–

39, but reiterated that the FAA does not require enforcement of arbitration agreements that expressly

waive statutory claims and remedies. The Court explained that this principle “finds its origin in the desire to prevent ‘prospective waiver of a party’s right

to pursue statutory remedies.’” Id. at 236 (quoting

Mitsubishi, 473 U.S. at 637 n.19). That principle, the

Court added, “would certainly cover a provision in an

arbitration agreement forbidding the assertion of certain statutory rights.” Id.

The principle that the FAA does not require enforcement of agreements forbidding assertion of

claims applies equally to state and federal claims.

The Court’s decisions, including American Express,

have repeatedly stated that arbitration clauses may

not waive claims, without suggesting that state-law

claims differ in this respect. Indeed, in Preston v.

20

Ferrer, this Court held that an arbitration agreement

was enforceable in part because the signatory “relinquishe[d] no substantive rights … California law

may accord him.” 552 U.S. at 359.

The non-waiver principle applies to state-law

claims because the FAA makes agreements to arbitrate claims enforceable, 9 U.S.C. § 2, but does not

authorize enforcement of agreements to waive claims

regardless of their source. Thus, although federal law

may not affirmatively bar the enforcement of a waiver of state-law claims in an arbitration clause, see

Sakkab, 803 F.3d at 433 n.9, nothing in the FAA requires enforcement of such a waiver.

B. This Court’s decisions do not require

enforcement of agreements that strip

states of police power to authorize enforcement actions on their behalf.

Iskanian held—as a matter of state-law statutory

construction—that the state is the “real party in interest” in PAGA actions. 327 P.3d at 151. The lion’s

share of the recovery goes to the state, which is

bound by the outcome. An action for statutory penalties, whether brought by state officers or a PAGA qui

tam plaintiff, is thus “a dispute between an employer

and the state,” acting “through its agents.” Id. Enforcing a waiver of PAGA claims in an employment

agreement would effectively impose that waiver on a

governmental body that is not party to the agreement, preventing the state from asserting its claims

through a representative authorized by law. It is perfectly coherent, and consistent with the terms and

purposes of the FAA, to recognize that an employee

must be permitted to bring a PAGA representative

claim in some forum because the state is not bound to

21

a waiver to which it did not agree. See Iskanian, 327

P.3d at 155.

None of this Court’s decisions enforcing arbitration agreements suggests that such an agreement

can waive the right to bring a claim on behalf of a

state. As Iskanian correctly stated, this Court’s “FAA

jurisprudence—with one exception …—consists entirely of disputes involving the parties’ own rights

and obligations, not the rights of a public enforcement agency.” 327 P.3d at 150. The “one exception,”

Waffle House, “does not support [the] contention that

the FAA preempts a PAGA action.” Id. at 151. Quite

the contrary.

In PAGA cases, as in Waffle House, “[n]o one asserts that the [State of California] is a party to the

contract,” or that it agreed to waive its claims, and

“[i]t goes without saying that a contract cannot bind

a nonparty.” 534 U.S. at 294. As in Waffle House, allowing an arbitration agreement to preclude recovery

of penalties for the state would “turn[] what is effectively a forum selection clause into a waiver of a

nonparty’s statutory remedies.” Id. at 295. “Nothing

in Waffle House suggests that the FAA preempts a

rule prohibiting the waiver of this kind of qui tam

action on behalf of the state for such remedies.” Iskanian, 327 P.3d at 151.2

––––––––––––––––––––––––

2 Shipt may respond that some lower courts have held that

qui tam plaintiffs under the federal False Claims Act may be

compelled to arbitrate claims even though the United States is

not a party to the arbitration agreement. This change in forum,

however, is not the same as the argument that an arbitration

agreement can waive the right to bring a False Claims Act qui

tam action altogether.

22

Holding that a federal statute aimed at enforcing

agreements to resolve private disputes preempts a

state’s ability to assert its claims against those who

violate its laws would violate fundamental preemption principles. “[T]he historic police powers of the

States” are not preempted “unless that was the clear

and manifest purpose of Congress.” Iskanian, 327

P.3d at 152 (quoting Arizona v. United States, 567

U.S. 387, 400 (2012)). Enforcing wage-and-hour laws

falls squarely within those police powers, and the

structure of a state’s law enforcement authority is

central to its sovereignty. Id. (citing Metro. Life, 471

U.S. at 756; Printz v. United States, 521 U.S. 898,

928 (1997)).

The FAA’s purpose is to render arbitration

agreements in contracts affecting commerce enforceable as between contracting parties. It embodies no

manifest purpose to interfere with “the state’s interest in penalizing and deterring employers who violate California’s labor laws.” Iskanian, 327 P.3d at

152. The FAA does not allow parties to contract out

of liabilities for penalties imposed by state law, and

thus a state’s choice to grant citizens non-waivable

claims to enforce those liabilities does not conflict

with FAA.

C. Iskanian and Sakkab do not reflect hostility to arbitration.

Iskanian does not place arbitration agreements on

an “unequal ‘footing’” with other contracts, AlliedBruce Terminix Cos. v. Dobson, 513 U.S. 265, 281

(1995), and does not “invalidate arbitration agreements under state laws applicable only to arbitration

provisions,” Doctor’s Assocs., Inc. v. Casarotto, 517

U.S. 681, 687 (1996); see also Perry v. Thomas, 482

23

U.S. 483, 492 n.9 (1987). As Sakkab recognizes, Iskanian provides even-handedly that an employment

agreement may not prospectively forbid employees to

bring PAGA actions, whether or not the prohibition

is in an arbitration clause. 803 F.3d at 432–33; see

Iskanian, 327 P.3d at 133, 148–49.

That rule does not run afoul of this Court’s disapproval of rules “that apply only to arbitration or that

derive their meaning from the fact that an agreement to arbitrate is at issue.” Epic, 138 S. Ct. at 1622

(citation omitted); accord Kindred Nursing Ctrs. Ltd.

P’ship v. Clark, 137 S. Ct. 1421, 1426 (2017); see also

DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 58 (2015).

Iskanian does not “target arbitration either by name

or by more subtle methods.” Epic, 138 S. Ct. at 1622.

Rather, it comports with the FAA’s “‘equaltreatment’ rule for arbitration contracts,” id., and

falls well within the principle that the FAA does not

preempt state laws concerning the “enforceability of

contracts generally.” Perry, 482 U.S. at 492 n.9.

Moreover, unlike in Kindred, where it was difficult to imagine how the state rule at issue could apply to anything but an arbitration agreement, it is

not “utterly fanciful” to posit that, if PAGA waivers

were permissible, they would appear outside of arbitration clauses. 137 S. Ct. at 1427. It is not only likely, but inevitable, that if employers were given the

power to opt out of PAGA liability through employment agreements, they would do so regardless of

whether they also wished to require arbitration of

other claims. Thus, Iskanian does not “rely on the

uniqueness of an agreement to arbitrate as [its] basis.” Id. at 1426 (citation omitted). Allowing employers to use arbitration agreements to extract waivers

of PAGA claims that cannot be obtained through oth-

24

er employment agreements would uniquely favor arbitration agreements, an outcome the FAA neither

requires nor allows.

The Iskanian anti-waiver rule, moreover, does not

disfavor agreements based on whether they have

“the defining features of arbitration agreements.”

Kindred, 137 S. Ct. at 1426. In particular, the rule

does not “impermissibly disfavor[] arbitration” by

targeting its bilateral nature and rendering a contract “unenforceable just because it requires bilateral

arbitration.” Epic, 138 S. Ct. at 1623. As Iskanian

explains, “[r]epresentative actions under the PAGA,

unlike class action suits for damages, do not displace

the bilateral arbitration of private disputes between

employers and employees over their respective rights

and obligations toward each other.” 327 P.3d at 152.

Arbitration as to private rights proceeds wholly unaltered by Iskanian. The employer must only leave

open some forum in which a PAGA qui tam plaintiff

may pursue the state’s claims for penalties. See id.

Moreover, if parties agreed to arbitrate PAGA

representative claims for penalties on behalf of the

state, the proceedings would remain bilateral ones

between individual plaintiffs (acting as representatives of the state) and defendants. See Arias, 209

P.2d at 929–34; see also Sakkab, 803 F.3d at 435–39.

Although the recovery sought in a PAGA action encompasses “penalties … measured by the number of

Labor Code violations committed by the employer,”

Sakkab, 803 F.3d at 435, a PAGA action, whether in

litigation or arbitration, remains a one-on-one proceeding between the state, represented by the plaintiff, and the defendant. Id. Thus, Iskanian is not

premised on objection to bilateral proceedings as long

25

as they allow full assertion of PAGA claims. See Epic,

138 S. Ct. at 1623.

In short, Iskanian is not “tailor-made to arbitration agreements,” Kindred, 137 S. Ct. at 1427, but to

employment agreements waiving PAGA claims. Such

waivers are in no sense a “primary characteristic of

an arbitration agreement.” Id. Indeed, this Court has

repeatedly warned against “confus[ing] an agreement

to arbitrate … statutory claims with a prospective

waiver of the statutory right.” 14 Penn Plaza LLC v.

Pyett, 556 U.S. 247, 265 (2009). Prohibiting a prospective waiver of a statutory right of action does not

disfavor a primary characteristic of arbitration or

otherwise “interfere with one of arbitration’s fundamental attributes.” Epic, 138 S. Ct. at 1622.

D. Iskanian does not impose procedures

incompatible with arbitration.

The Iskanian rule also does not effectively impose

procedures incompatible with arbitration, as did the

prohibitions of class-action waivers addressed in

Concepcion and Epic. Sakkab thoroughly explained

how PAGA claims are consistent with arbitration’s

fundamental attributes, and Shipt’s disagreement

with that analysis provides no reason for granting

review.

In Concepcion, this Court held that California’s

rule against consumer contracts banning class actions “interfere[d] with fundamental attributes of arbitration and thus create[d] a scheme inconsistent

with the FAA,” 563 U.S. at 344, because it effectively

“allow[ed] any party to a consumer contract to demand” classwide arbitration. Id. at 346. The Court

held that classwide arbitration conflicted with the

FAA because it fundamentally changed the nature of

26

arbitration, requiring complex, formal procedures attributable to the inclusion of absent class members.

Id. at 346–51.

As explained above, however, PAGA cases are not

class actions, but bilateral proceedings between the

employer and the State of California. This is a matter of the clear state law nature of the PAGA statute.

The due-process protections of class certification, notice, opt-out rights, and other procedures that concerned the Court in Concepcion, 563 U.S. at 348–50,

are not features of PAGA proceedings. See Sakkab,

803 F.3d at 435–36. Thus, Iskanian’s anti-waiver

rule does not conflict with “Concepcion’s essential insight” that “courts may not allow a contract defense

to reshape traditional individualized arbitration by

mandating classwide arbitration procedures without

the parties’ consent.” Epic, 138 S. Ct. at 1623.

Shipt argues that PAGA claims involve complexity because they require addressing multiple violations and their “unanticipated risk. Pet. 11. Shipt’s

argument reduces to the proposition that if a state

creates claims of liability that an employer finds inconvenient or otherwise undesirable to arbitrate, the

FAA entitles defendants to require employees to

waive those claims and protections altogether. As

Sakkab pointed out, however, Concepcion does not

suggest that the FAA’s purposes require transforming it into a vehicle for preempting state-law rights of

action that involve large liabilities, are legally or factually complex, or may otherwise be unappealing for

defendants to arbitrate. And no decision of this

Court, or any state supreme court or federal court of

appeals, has so held. This Court’s decisions prohibit

states from mandating procedures incompatible with

arbitration, see Epic, 138 S. Ct. at 1622–23, not from

27

creating claims that parties may not want to arbitrate, see Sakkab, 803 F.3d at 437–39.

Indeed, many arbitrable claims require consideration of evidence concerning the defendant’s conduct

toward third parties and involve high stakes. An antitrust claim, for example, typically requires evidence

of the anticompetitive effect of the defendant’s conduct and any procompetitive justifications for it—

matters extending far beyond the parties’ individual

circumstances. And the stakes of a treble damages

antitrust action may be very high. No one could suggest, however, that arbitration of an antitrust claim

“is not arbitration as envisioned by the FAA.” Concepcion, 563 U.S. at 351. In Italian Colors, for example, this Court held that the FAA requires enforcement of agreements to arbitrate antitrust claims despite the cost of developing market-wide evidence.

570 U.S. at 238–39. This Court has likewise held

that many potentially high-stakes claims requiring

consideration of evidence beyond the individual parties are arbitrable. See, e.g., Mitsubishi, 473 U.S. at

637 (antitrust); McMahon, 482 U.S. at 229–33 (Securities Exchange Act claims); id. at 238–42 (civil RICO

claims); Pyett, 556 U.S. at 258 (employment discrimination claims); Gilmer, 500 U.S. at 33–35 (federal

civil rights claims). The FAA would not permit, let

alone require, enforcement of an arbitration provision that purported to waive altogether a party’s

right to bring such statutory claims in any forum. See

Mitsubishi, 473 U.S. at 637 n.19.

28

III. This case does not present the question

whether Iskanian forecloses arbitration

of PAGA claims.

In addition to its faulty argument that Iskanian is

incompatible with fundamental attributes of arbitration, Shipt argues that Iskanian “is such a device” to

declare arbitration proceeding off limits. Pet. 19.

Shipt’s argument that Iskanian categorically exempts PAGA claims from the FAA (Pet. 21), is misplaced for two reasons. First, Iskanian prohibits a

waiver of PAGA, not a categorical prohibition on arbitration of PAGA claims. Second, this case does not

turn on whether the state could prohibit arbitration

of PAGA claims because the arbitration agreement at

issue did not provide for arbitration of PAGA claims.

Instead, it excluded assertion of representative PAGA claims in arbitration proceedings—and in any

other forum.

Iskanian’s holding was clear: An agreement must

leave open “some forum” for the assertion of a full

PAGA claim on behalf of the state for the aggrieved

employee acting as a deputy for the state. See 327

P.3d at 155; see also id. at 159 (Chin, J., concurring).

Iskanian did not foreclose the possibility that an employee could agree to arbitrate rather than waive a

PAGA representative claim. The California Supreme

Court did not resolve that question because the

agreement before it, which waived the right to bring

all representative claims, gave the court “no basis to

assume that the parties would prefer to resolve a

representative PAGA claim through arbitration.” Id.

at 155. Even so, the court did not foreclose the possibility that, on remand, the PAGA claims might be

arbitrated. See id.

29

For these reasons, Iskanian “does not prohibit the

arbitration of any type of claim.” Sakkab, 803 F.3d at

434. Rather, it “expresses no preference” between litigation and arbitration of PAGA claims and “provides

only that representative PAGA claims may not be

waived outright.” Id.

The California Supreme Court’s subsequent restatements of Iskanian’s holding are to the same effect. As the court recently put it: “Iskanian established an important principle: employers cannot

compel employees to waive their right to enforce the

state’s interests when PAGA has empowered employees to do so.” ZB, 448 P.3d at 252. The California

Supreme Court has never held that Iskanian is a

non-arbitrability rule. Read in context, it is best understood as meaning that an agreement waiving PAGA claims is outside the FAA’s coverage because, as

the court went on to elaborate, the FAA’s goal of enforcing private agreements to arbitrate does not extend to enforcing outright waivers of PAGA claims,

which “curtail the ability of states to supplement

their enforcement capability by authorizing willing

employees to seek civil penalties.” Id. at 152.

In any event, this case would not present that issue because it does not involve an agreement to arbitrate PAGA claims. The arbitration waivers of arbitration of any representative PAGA claim, Pet. App.

18, a prohibition that necessarily encompasses all

PAGA claims. The agreement’s bar on arbitration of

representative actions, id., likewise forecloses arbitration of any PAGA claim, because “[alll PAGA

claims are ‘representative’ actions in the sense that

they are brought on the state’s behalf” and assert its

claims for penalties for Labor Code violations. ZB,

448 P.3d at 243. This case, like Iskanian itself, pre-

30

sents only the question whether an agreement to

waive PAGA claims is enforceable, not whether an

agreement to arbitrate them must be enforced. And

this Court’s statements that the FAA preempts a

state law “prohibit[ing] outright the arbitration of a

particular type of claim,” Kindred, 137 S. Ct. at 1427,

say nothing at all about laws prohibiting outright the

waiver of a particular type of claim.

Indeed, the FAA allows courts to “order arbitration of a particular dispute only where the court is

satisfied that the parties agreed to arbitrate that

dispute.” Granite Rock, 561 U.S. at 297. Thus here, it

is the agreement and the FAA, not Iskanian, that

precludes arbitration of the alleged PAGA claim. Under the agreement, the lower courts could not order

arbitration of that claim, and the only available remedy for the invalid PAGA waiver was to allow it to

proceed in court. Whether California law permits arbitration of a PAGA claim, and, if not, whether the

FAA nonetheless requires such arbitration, are issues that could arise only under a completely different arbitration agreement: one that provided for rather than precluded arbitration of PAGA claims.

IV. Shipt’s objections to PAGA provide no basis for review.

Shipt’s criticisms of PAGA echo those advanced in

every previous petition for certiorari challenging Iskanian and provide no basis for review by this Court.

Shipt points to differences between PAGA and other

qui tam statutes that give the state less control over

a PAGA claim brought by an individual than the federal government has over a False Claims Act case.

Those differences, however, cannot obscure the central reason that the state is the real party in interest

31

in a PAGA action: An action in which the state is entitled to 75 percent of the recovery is the state’s in a

very real sense, regardless of the extent to which the

state has chosen to exercise control over its prosecution. The state’s dominant interest “reflects a PAGA

litigant’s substantive role in enforcing our labor laws

on behalf of state law enforcement agencies.” Iskanian, 327 P.3d at 152.3 The design of the statute is

a matter of policy choice concerning how the state

wants its claims pursued, and disagreement with the

wisdom of that choice has no bearing on whether the

FAA issues this case presents merit review.

Shipt’s argument that a PAGA enforcement action is like a class action is also fundamentally

wrong. In a PAGA claim, a plaintiff is limited to

seeking penalties on behalf of the state, a small percentage of which are distributed to employees affected by a violation. A class action that would aggregate

individuals’ own claims for monetary relief for Labor

Code violations, such as back wages or damages,

seeks compensatory remedies that are unavailable

under PAGA. See ZB, 448 P.3d at 241. Thus, Iskanian does not provide an end run around Concepcion and Epic. Its anti-waiver rule only applies when

a plaintiff moves to a different playing field and

seeks penalties on behalf of the state rather than

––––––––––––––––––––––––

3 In Magadia v. Wal-Mart Associates, Inc., 999 F.3d 668 (9th

Cir. 2021), a Ninth Circuit panel held that differences between

PAGA and conventional qui tam statutes were sufficient to take

PAGA claims outside the narrow Article III exception allowing

uninjured persons to bring qui tam actions. But the panel

acknowledged that PAGA plaintiffs represent the state’s interests pursuant to an assignment of its claim. See id. at 675.

32

compensatory relief for herself and similarly situated

employees.

That many employees may make that choice—in

part because individual arbitration does not provide

an opportunity for a recovery sufficient to make pursuing compensatory claims cost-effective—does not

suggest that the FAA should be extended to require

enforcement of PAGA waivers. The objective of the

FAA is not to shield defendants from liabilities to the

state for violations of valid laws. California has made

the judgment that widespread Labor Code violations

require enforcement mechanisms that exceed the

state’s own capacity to initiate actions. This Court

has no basis for second-guessing that judgment or for

using the FAA as a tool to limit assertion of the

state’s claims.

The FAA never created any legitimate expectation that employers could evade the state’s penalty

claims through arbitration agreements with employees, and California employers have been on notice for

over seven years since Iskanian that they cannot expect enforcement of PAGA waivers. In this case,

Shipt cannot possibly have relied on enforcement of a

PAGA waiver executed after Iskanian and a year after Sakkab.

Finally, even if Shipt’s policy objections to PAGA

and Iskanian had any arguable merit, this case

would be a particularly poor vehicle for addressing

Shipt’s FAA preemption arguments because it arises

from a state court. Justices of this Court continue to

disagree over whether the FAA applies in state

courts. See Kindred Nursing Ctrs. Ltd. P’ship v.

Clark, 137 S. Ct. 1421, 1429 (2017) (Thomas, J., dissenting). If this Court were to review this case on the

33

merits, the vote of at least one Justice would be to

affirm on the ground that the FAA does not apply to

state courts, and there would be a significant likelihood that no holding on the scope of FAA preemption

would command a majority. Review would threaten

to waste the time and efforts of the Court.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

NORMAN BLUMENTHAL

Counsel of Record

BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP

2255 Calle Clara

La Jolla, CA 92037

(858) 551-1223

Norm@bamlawca.com

Attorneys for Respondent

April 29, 2022