Opposition Brief — Coverall North America, Inc., Petitioner v. Carlos Rivas

No. 21-268

IN THE

Supreme Court of the United States

COVERALL NORTH AMERICA INC.,

Petitioner,

v.

CARLOS RIVAS, IN HIS CAPACITY AS PRIVATE ATTORNEY

GENERAL REPRESENTATIVE,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF THE RESPONDENT CARLOS RIVAS

IN OPPOSITION TO CERTIORARI

Shannon Liss-Riordan, Counsel of Record

LICHTEN & LISS-RIORDAN, P.C.

729 Boylston Street, Suite 2000

Boston, Massachusetts 02116

(617) 994-5800

sliss@llrlaw.com

Counsel for Respondent

December 2021

i

QUESTION PRESENTED

Whether the Federal Arbitration Act (“FAA”) requires enforcement of a waiver of the statutory right

to bring a representative claim on behalf of the state

for penalties, even where state law prohibits the enforcement of such waivers in all contracts, including

arbitration agreements.

ii

TABLE OF CONTENTS

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

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

COUNTER-STATEMENT OF THE CASE ................ 4

A. The Private Attorney General Act

(PAGA) ....................................................... 4

B. The California Supreme Court’s

Decision in Iskanian .................................. 6

C. The Ninth Circuit’s Decision in Sakkab ... 8

D. Factual & Procedural Background of

This Case.................................................. 10

E. The District Court’s Decision .................. 13

F. The Ninth Circuit’s Decision ................... 14

REASONS FOR DENYING THE WRIT .................. 15

A. This Court’s Decisions in Epic Systems

and Lamps Plus do not create FAA

preemption of the Iskanian rule. ............ 15

B. Iskanian and Sakkab are fully

consistent with this Court’s precedents. . 17

1. Representative PAGA Claims Are

Distinct From Class Claims And

Do Not Implicate This Court’s

iii

Precedents Regarding Class

Action Waivers. .............................. 17

2. Representative Claims Do Not

Impose Procedures or Costs That

Are Incompatible with the

Arbitral Process.............................. 21

3. Contrary to Petitioner’s

contentions, the Iskanian rule is a

rule of general applicability. .......... 24

4. Contrary to Petitioner’s

contentions, the Iskanian rule

does not target ‘bilateral’

arbitration. ..................................... 25

C. There is no conflict among lower courts

that supports review. ............................... 26

D. This case is a poor vehicle for review. ..... 28

CONCLUSION.......................................................... 30

iv

TABLE OF AUTHORITIES

Cases

14 Penn Plaza LLC v. Pyett

556 U.S. 247 (2009) ........................................ 22, 23

American Express Co. v. Italian Colors

Restaurant

570 U.S. 228 (2013) ................................ 2, 7, 22, 23

Arias v. Superior Court

46 Cal. 4th 969 (2009) ............................ 5, 6, 18, 19

AT&T Mobility LLC v. Concepcion

563 U.S. 333 (2011) ................................ 1, 7, 15, 24

Awuah v. Coverall N. Am., Inc.

707 F. Supp. 2d 80 (D. Mass. 2010) ..................... 10

Baumann v. Chase Inv. Servs. Corp.

747 F.3d 1117 (9th Cir. 2014) .............................. 18

CLS Transp. Los Angeles, LLC v. Iskanian

135 S. Ct. 1155 (2015) ............................................ 8

Coverall N. Am., Inc. v. Com’r of Div. of

Unemployment Assistance

447 Mass. 852, N.E.2d 1083 (2006) ..................... 10

Da Costa v. Vanguard Cleaning Sys., Inc.

No. CV 15-04743, 2017 WL 4817349 (Mass.

Super. Sept. 29, 2017) .......................................... 10

v

Davidson v. O'Reilly Enterprises, LLC

2018 WL 3359681 (C.D. Cal. June 5, 2018) ......... 20

De Giovanni v. Jani-King Int’l, Inc.

Civ. A. No. 07-10066-MLW (D. Mass. June

6, 2012) .................................................................. 10

Dynamex Operations W. v. Superior Ct.

4 Cal. 5th 903, 416 P.3d 1 (2018) ......................... 27

E.E.O.C. v. Waffle House, Inc.

534 U.S. 279 (2002) .............................................. 18

Epic Sys. Corp. v. Lewis

138 S. Ct. 1612 (2018) ...................................... 2, 13

Five Star Senior Living Inc. v. Mandviwala

138 S. Ct. 2680 (2018) ............................................ 3

Gentry v. Super. Ct.

165 P.3d 556 (Cal. 2007) ........................................ 6

Gilbert Enterprises, Inc. v. Amazon.com

2019 WL 6481697 (C.D. Cal. Sept. 23, 2019) ...... 27

Gilmer v. Interstate/Johnson Lane Corp.

500 U.S. 20 (1991) ................................................ 22

Gonzales v. Emeritus Corp.

407 F. Supp. 3d 862 (N.D. Cal. 2019) .................. 26

Iskanian v. CLS Transportation Los Angeles,

LLC

59 Cal. 4th 348, 327 P.3d 129 (2014) ............ passim

vi

Kim v. Reins Int'l California, Inc.

9 Cal. 5th 73, 459 P.3d 1123 (2020) ............... 4, 5, 6

Lamps Plus v. Varela

139 S. Ct. 1407 (2019) ...................................... 2, 16

Medtronic, Inc. v. Lohr

518 U.S. 470 (1996) ................................................ 9

Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc.

473 U.S. 614 (1985) .............................. 3, 20, 22, 23

Monaghan v. Telecom Italia Sparkle of N. Am.,

Inc.

647 F. App'x 763 (9th Cir. 2016) .......................... 20

Morgan v. Sundance Inc.

No. 21-328 (2021) .................................................. 29

Olson v. Lyft, Inc.

56 Cal.App.5th 862 (2020) .................................... 27

PennyMac Financial Services, Inc. v. Smigelski

140 S. Ct. 223 (2019) .............................................. 3

Perez v. U-Haul Co. of California

3 Cal.App.5th 408 (2016) ...................................... 20

Preston v. Ferrer

552 U.S. 346, 359 (2008) ...................................... 23

Rejuso v. Brookdale Senior Living

Communities, Inc.|

2019 WL 6735124 (C.D. Cal. May 22, 2019)........ 27

vii

Reyes v. Macy's, Inc.

202 Cal. App. 4th 1119 (2011) .............................. 20

Rimler v. Postmates Inc.

No. A156450, 2020 WL 7237900 (Cal. Ct.

App. Dec. 9, 2020) ................................................. 27

Sakkab v. Luxottica Retail North America, Inc.

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

Seifu v. Lyft, Inc.

No. B301774, 2021 WL 2200878 (Cal. Ct.

App. June 1, 2021), review denied (Aug. 18,

2021) ...................................................................... 27

Shearson/American Express v. McMahon

482 U.S. 220 (1987) .............................................. 22

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

559 U.S. 662 (2010) ................................................ 2

System4, LLC v. Ribeiro

275 F. Supp. 3d 297 (D. Mass. 2017) ................... 10

Viking River Cruises Inc. v. Moriana

No. 20-1573 ............................................................. 4

Whitworth v. SolarCity Corp.

336 F. Supp. 3d 1119 (N.D. Cal. 2018) ................ 27

ZB, N.A. v. Superior Court

8 Cal. 5th 175, 448 P.3d 239 (2019) ..................... 19

viii

Statutes

California’s Private Attorneys General Act

(“PAGA”

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

Federal Arbitration Act (“FAA”)

9 U.S.C. § 1, et seq. ........................................ passim

Rules

Fed. R. Civ. P. 23 ...................................................... 17

S. Ct. R. 10 ................................................................ 28

INTRODUCTION

The Court should deny certiorari. This case presents the question of whether the Federal Arbitration

Act (“FAA”), 9 U.S.C. § 1, et seq., preempts the California Supreme Court’s decision in Iskanian v. CLS

Transportation Los Angeles, LLC, 59 Cal. 4th 348,

327 P.3d 129 (2014), barring the prospective waiver

of the statutory right to bring a representative claim

under California’s Private Attorneys General Act

(“PAGA”), Cal. Lab. Code § 2698, et seq. The PAGA

allows the state to deputize individual plaintiffs to

enforce the state’s Labor Code and collect penalties

for violations of state law. The vast majority of those

penalties go to the state, and the state is bound by

the outcome of the suit. In Iskanian, the California

Supreme Court held that a PAGA claim is essentially

a “a type of qui tam action,” see Iskanian, 327 P.3d at

148, and that a waiver of such claims would undermine the statute’s purpose to increase enforcement of

the Labor Code for the public’s benefit. Id. at 149.

Accordingly, a waiver of the right to bring a PAGA

claim violates public policy and is not enforceable,

whether that waiver appears in an arbitration provision or in any other type of contract or employment

agreement.

Petitioner Coverall North America Inc. (“Coverall”) insists that representative claims under PAGA

interfere with arbitration’s fundamental attributes—

specifically, the ability to resolve claims on an individual basis—and that Iskanian’s rule is therefore

preempted by the FAA. It cites this Court’s case law

finding that rules mandating class-wide proceedings

are preempted by the FAA, including AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 341 (2011), Stolt-

2

Nielsen S.A. v. AnimalFeeds Int’l Corp. 559 U.S. 662,

685 (2010), and more recently, Epic Sys. Corp. v.

Lewis, 138 S. Ct. 1612, 1621 (2018), and Lamps Plus

v. Varela, 139 S. Ct. 1407 (2019). But a representative PAGA claim is fundamentally a claim brought by

the state of California for penalties, not an aggregation of individual claims for damages like a class action. An agreement “to waive ‘representative’ PAGA

claims—that is, claims for penalties arising out of violations against other employees—is effectively an

agreement to limit the penalties an employeeplaintiff may recover on behalf of the state.” Sakkab

v. Luxottica Retail North America, Inc., 803 F.3d 425,

436 (9th Cir. 2015).

Both the California Supreme Court in Iskanian

and the Ninth Circuit in Sakkab concluded that Iskanian’s bar on the outright waiver of the right to

bring representative PAGA claims is not preempted

by the FAA. The Iskanian court reasoned that its

holding was not preempted because the FAA is primarily concerned with the resolution of private disputes, and the state of California is the real party in

interest in a PAGA action, not the deputized PAGAplaintiff standing in for the state. Iskanian, 59

Cal.4th at 386. In a concurring opinion, several Justices agreed, noting that although “the FAA generally requires enforcement of arbitration agreements

according to their terms, [this Court] has recognized

an exception to this requirement for ‘a provision in

an arbitration agreement forbidding the assertion of

certain statutory rights.’” Id. at 395 (quoting Am.

Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 236

(2013) ). “Accordingly, the conclusion that the arbitration agreement here is invalid insofar as it forbids

3

Iskanian from asserting his statutory right under

PAGA in any forum does not run afoul of the FAA.”

Id.

The Ninth Circuit in Sakkab found that the Iskanian rule was a generally applicable contract defense that did not single out arbitration agreements

or interfere with fundamental attributes of arbitration because parties remain free to arbitrate PAGA

claims and to contract for informal or streamlined

procedures when they do so; the only thing they may

not do is the waive the claim altogether. This holding

is fully consistent with this Court’s precedent, including the admonition that “[b]y 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 ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985).

The sound reasoning of Iskanian and Sakkab has

not been undermined by this Court’s recent decisions

in Epic Systems and Lamps Plus. As the Ninth Circuit correctly determined below, those decisions

simply “reiterated and reapplied” the principles of

Concepcion and Stolt-Nielsen, which were robustly

considered by the Iskanian and Sakkab courts at the

time of those decisions. App.3.1 Moreover, there is no

––––––––––––––––––––––––

Coverall’s assertion that Epic Systems and Lamps Plus

were game-changers overlooks that this Court has denied review of this very issue three times since Epic Systems was decided. See Five Star Senior Living Inc. v. Mandviwala, 138 S.

Ct. 2680 (2018) (denying certiorari); PennyMac Financial Services, Inc. v. Smigelski, 140 S. Ct. 223 (2019) (same); DoorDash,

Inc. v. Campbell, No. 21-220, 142 S.Ct. 342 (Oct. 12, 2021). Alt(Footnote continued)

1

4

conflict among courts on this issue that would warrant review. On the contrary, courts have uniformly

rejected the position Coverall advances here. Finally,

this case is a poor vehicle for review because multiple

alternate grounds exist on which to affirm the decision below.

In sum, because Iskanian and Sakkab do not conflict with this Court’s precedents or with decisions of

other state or federal courts, there is no basis for

granting review of the Ninth Circuit’s decision in this

case, and the petition should be denied.

COUNTER-STATEMENT OF THE CASE

A. The Private Attorney General Act (PAGA)

The PAGA provides a mechanism for enforcement

of California’s Labor Code by enlisting individual

plaintiffs as private attorneys general to recover civil

penalties for the State, with a smaller share also going to affected employees. Before the PAGA was enacted, only the State could bring suit to recover such

penalties. See Iskanian, 327 P.3d at 145–46. However, “[g]overnment enforcement proved problematic.”

Kim v. Reins Int'l California, Inc., 9 Cal. 5th 73, 81,

459 P.3d 1123, 1127 (2020). Thus, “[t]o facilitate

broader enforcement, the Legislature enacted PAGA,

––––––––––––––––––––––––

hough the Court recently granted review in Viking River Cruises Inc. v. Moriana, No. 20-1573, that fact only underscores that

there is no reason for the Court to take up this case. As described infra, pp. 28-30, this case is a poor vehicle for review as

there are multiple other grounds on which the decision below

can be affirmed.

5

authorizing ‘aggrieved employees’ to pursue civil

penalties on the state’s behalf.” Id.

A PAGA claim is fundamentally a claim on behalf

of the state of California. Before bringing a PAGA

claim, a litigant must first provide notice of the particular Labor Code violations at issue to the Labor &

Workforce Development Agency (LWDA) and must

give the LWDA an opportunity to act before the employee can be “authorized” by the state to pursue the

claim. Kim, 9 Cal. 5th at 81, 459 P.3d at 1127; Iskanian, 327 P.3d at 151. The PAGA authorizes the

“aggrieved employee” to recover penalties for Labor

Code violations committed against himself and other

employees in a representative civil action. See Cal.

Lab. Code § 2699(g). Seventy-five percent of any penalties recovered are distributed to the LWDA “for enforcement of labor laws and education of employers

and employees about their rights and responsibilities” while the remaining 25 percent is distributed to

the aggrieved employees. Id. § 2699(i). When settling

a PAGA action, the deputized PAGA plaintiff must

again inform the LWDA of the terms of the settlement at the same time it seeks court approval and

provide an opportunity for the state to weigh in. See

Cal. Lab. Code § 2699(l)(2). Likewise, any judgment

awarding or denying PAGA penalties must be provided to the LWDA within ten days. See Cal. Lab.

Code § 2699(l)(3).

PAGA actions do not require class certification or

notice to other employees. Arias v. Super. Ct., 46 Cal.

4th 969 (2009). Furthermore, other employees are

bound by a PAGA adjudication only with respect to

civil penalties, just as they would be “bound by a

6

judgment in an action brought by the government.”

Id. at 933. The state is also bound by the outcome of

the suit, just as if the LWDA itself had brought the

case.

For all these reasons, the California Supreme

Court has described a PAGA representative action as

“a type of qui tam action.” Iskanian, 327 P.3d at 148.

An employee suing under PAGA “does so as the

proxy or agent of the state’s labor law enforcement

agencies.” Arias, 46 Cal.4th at 986. In this sense,

“[e]very PAGA claim is ‘a dispute between an employer and the state.’” Kim, 9 Cal. 5th at 81, 459 P.3d

at 1127 (quoting Iskanian, 59 Cal.4th at p. 386).

B. The California Supreme Court’s Decision in

Iskanian

Ten years after the passage of the PAGA, the California Supreme Court considered the enforceability

of a waiver of the right to bring a representative PAGA claim in Iskanian v. CLS Transportation Los

Angeles, LLC, 59 Cal. 4th 348, 327 P.3d 129 (2014).

In Iskanian, the plaintiff filed both class claims and a

representative claim under the PAGA, based on the

defendant’s violations of the California Labor Code.

The defendant moved to compel arbitration under an

agreement that purported to bar both class actions

and representative actions like a PAGA action. The

California Supreme Court considered the validity of

both the class action waiver and the PAGA waiver.

With respect to the first issue, the California Supreme Court overruled its prior decision in Gentry v.

Super. Ct., 165 P.3d 556 (Cal. 2007), that class action

7

waivers were unenforceable under state law when

certain criteria were satisfied, finding that Gentry’s

holding was now foreclosed by this Court’s rulings in

AT&T Mobility LLC v. Concepcion, 563 U.S. 333

(2011), and American Express Co. v. Italian Colors

Restaurant, 570 U.S. 228 (2013). See Iskanian, 327

P.3d at 133. In reaching this conclusion, the Iskanian

court also considered and rejected the argument that

the National Labor Relations Act precluded enforcement of the class action waiver in Iskanian’s agreement. See id. at 141. The decision proved prescient,

as it anticipated this Court’s holding in Epic Systems.

As to the second issue, after careful consideration,

the Iskanian court unanimously agreed that, unlike

the class action waiver, the bar on representative

PAGA claims in the agreement was unenforceable

under state law, and that this rule was not preempted by the FAA. See id. at 149; 150–53. In support of

this holding, the Court noted that the real party in

interest under PAGA is the state, and that a bar on

the pursuit of representative PAGA actions really

amounted to a waiver of the state’s right to pursue its

claim through its authorized agent, the PAGA plaintiff.

The

Iskanian

court

reasoned

that

“[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. Instead, they directly enforce the state's interest in penalizing and

deterring employers who violate California's labor

laws.” Iskanian, 327 P.3d at 152 (emphasis in original). The court concluded that an agreement purporting to waive an individual’s ability to pursue a PAGA

8

claim on behalf of the state was unenforceable, and

that the FAA did not preempt a state-law rule preserving a plaintiff’s ability to bring such a claim in

some forum.

This Court declined to review the result in CLS

Transp. Los Angeles, LLC v. Iskanian, 135 S. Ct.

1155 (2015).

C. The Ninth Circuit’s Decision in Sakkab

The validity of Iskanian’s holding was considered

anew by the Ninth Circuit Court of Appeals a year

later in Sakkab. There, the court considered whether

the Iskanian rule was preempted by the FAA, and,

like the California Supreme Court, it concluded it

was not. The Ninth Circuit held that the rule was a

“generally applicable” contract defense because it

“bars any waiver of PAGA claims, regardless of

whether the waiver appears in an arbitration agreement or a non-arbitration agreement.” Sakkab, 803

F.3d at 432. The court then turned to the question

whether the rule “conflicts with the FAA’s purposes”,

and it concluded that it does not. Id. at 433-40. The

court noted that litigants remain free to litigate or

arbitrate PAGA claims, and that parties remain free

to select the procedures they want to apply in arbitration. Id. at 434. The court noted that PAGA claims

and class claims are fundamentally different and

that “PAGA arbitrations therefore do not require the

formal procedures of class arbitrations. Id. at 435-36.

The court explained:

Whether a claim is technically denominated “representative” is an imperfect proxy for whether re-

9

fusing to enforce waivers of that claim will deprive parties of the benefits of arbitration. Instead, Concepcion requires us to examine whether

the waived claims mandate procedures that interfere with arbitration, as the class claims in Concepcion did. Here, they do not.

Id. at 436-37. PAGA claims, the court elaborated, are

not aggregations of individual actions and do not require notice to class members as is required in class

actions for due process purposes. In a PAGA action,

the parties remain free to engage in streamlined discovery or other methods to simplify proceedings. And

insofar as a PAGA claim may be high-stakes or complex, the same is true of numerous causes of action,

including anti-trust claims. Id. at 437-39.

Finally, the Ninth Circuit also noted “the PAGA’s

central role in enforcing California’s labor laws.” Id.

at 439. It found that “‘in all pre-emption cases’ we

must ‘start with the assumption that the historic police powers of the States were not to be superseded

by the Federal Act unless that was the clear and

manifest purposes of Congress.’” Id. (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)). Given

that the PAGA creates a type of qui tam action and

that “qui tam actions predate the FAA by several

centuries”, see id. at 439, the court found that the

state’s right to authorize qui tam actions to enforce

the Labor Code was not preempted by the FAA. Id. at

440.

10

D. Factual & Procedural Background of This

Case

Plaintiff Carlos Rivas is a cleaning worker, performing services subject to a “franchise agreement”

with Petitioner Coverall North America Inc. (“Coverall”). A number of courts have found cleaning “franchisees” like Rivas are actually misclassified employees of their cleaning franchisor under state laws that

utilize a similar or identical “ABC” test for employee

status to California’s test. Indeed, Coverall itself was

found liable for misclassifying its cleaning franchisees under the Commonwealth of Massachusetts’

identical “ABC” test for employee status on multiple

different occasions. See Coverall N. Am., Inc. v. Com’r

of Div. of Unemployment Assistance, 447 Mass. 852,

858, 857 N.E.2d 1083, 1087 (2006) (finding Massachusetts Coverall franchisee was misclassified under

state unemployment law); Awuah v. Coverall N. Am.,

Inc., 707 F. Supp. 2d 80, 82 (D. Mass. 2010) (finding

Massachusetts Coverall franchisees were misclassified under state wage law).2

––––––––––––––––––––––––

See also De Giovanni v. Jani-King Int’l, Inc., Civ. A. No.

07-10066-MLW (D. Mass. June 6, 2012) (finding Massachusetts

cleaning franchisees were misclassified under state wage law);

Da Costa v. Vanguard Cleaning Sys., Inc., No. CV 15-04743,

2017 WL 4817349, at *7 (Mass. Super. Sept. 29, 2017) (finding

Connecticut and Massachusetts cleaning franchisees were misclassified under state wage laws); System4, LLC v. Ribeiro, 275

F. Supp. 3d 297 (D. Mass. 2017) (confirming arbitrator award,

holding that Massachusetts cleaning franchisee was misclassified).

2

11

Consistent with this body of law finding that Coverall has misclassified its cleaning workers under the

laws of various states, Rivas filed a letter with California’s Labor & Workforce Development Agency

(LWDA) on December 1, 2017, alleging that Coverall

has misclassified its cleaning worker “franchisees” in

California as independent contractors rather than

employees and has committed various violations of

the Labor Code as a result.3 When he received no response from the LWDA, Rivas filed the PAGA claim

in court on June 7, 2018.

Eighteen months after the case was filed, and after filing a motion to dismiss and an answer and

counterclaim against Mr. Rivas in court, Coverall

suddenly changed course and moved to compel Rivas’s PAGA claim to individual arbitration pursuant

to the terms of his franchise agreement.4 That

agreement states:

––––––––––––––––––––––––

Under Coverall’s business model, cleaning workers like

Mr. Rivas are sold “franchise” packages, allowing them to perform work cleaning commercial buildings. These franchise

packages cost thousands of dollars, which are typically paid in

an up-front down payment and then financed in part over time

through deductions from the workers’ pay. In addition, the

workers have various expenses taken out of their paychecks,

including deductions for worker’s compensation insurance,

cleaning supplies, and “charge-backs” when a customer fails to

pay Coverall for cleaning work and that money is deducted from

the worker’s pay. See D. Ct. Dkt. No. 39, ¶¶ 8, 17.

3

Below, Rivas argued that Coverall waived its right to

compel arbitration by litigating its motion to dismiss and Rivas’s motion to dismiss its counterclaim before moving to arbitrate, but the district court found it unnecessary to reach this

issue because it determined that the PAGA claim was outside

(Footnote continued)

4

12

Franchisee and Coverall agree that arbitration

shall be conducted on an individual, not a class

wide basis, which restriction shall be enforceable

to the fullest extent permitted by law. An arbitration between Coverall and Franchisee shall not be

consolidated with any other proceeding between

Coverall and any other Franchisee. Only Coverall

(and its officers, directors, agents and/or employees) and Franchisee (and Franchisee’s owners, officers, directors and/or guarantors) may be parties

to any arbitration proceeding described in this

Paragraph 21.A.

See D. Ct. Dkt. No. 65-3, ¶ 21(A)(11).

In its Motion to Compel Arbitration, Coverall asserted that its arbitration agreement does not allow

for arbitration of representative claims. See D. Ct.

Dkt. No. 65-1 at p. 8 (noting that the arbitration

“provision prohibits any type of action other than one

brought on an individual basis.”). Coverall also expressly asked that the district court (and not an arbitrator) be the one to decide whether Rivas could proceed on his PAGA claim in arbitration on a representative basis. See id. at pp. 1-2.

––––––––––––––––––––––––

the scope of the arbitration agreement, or alternatively, that the

agreement was unenforceable insofar as it purported to waive

the right to bring a representative PAGA claim. The Ninth Circuit also found it unnecessary to address waiver.

13

E. The District Court’s Decision

Having been asked to decide this issue, the district court ruled that Coverall’s agreement does not

permit the arbitration of representative claims because the agreement requires that the arbitration

“shall not be consolidated with any other proceeding”

between Coverall and any other franchisee and that

“[o]nly Coverall… and [Plaintiff]… may be parties to

any arbitration proceeding”—not the state of California. App.13-14. The district court held that because

the PAGA claim is inherently representative in nature, this language in the arbitration agreement precluded arbitration of the claim. App.14-15. The district court reasoned that the PAGA claim—as a representative claim that ultimately belongs to the state

of California—either fell outside the scope of the

agreement altogether, or the agreement implicitly

waived the right to bring the PAGA claim and was

unenforceable under Iskanian. Either way, the claim

could not be compelled to arbitration under Coverall’s franchise agreement. App.15-16.

The district court next considered Coverall’s argument that this Court’s recent decisions in Epic

Systems and Lamps Plus overruled Sakkab and

mandated that the FAA preempts California’s public

policy prohibiting the waiver of representative PAGA

claims. The district court rejected this argument, noting that “the axiom that a contract may not be rendered unenforceable ‘just because it requires bilateral arbitration’ was well known to the Sakkab court”

and did not originate with this Court’s decision in

Epic Systems. App.16 (quoting Epic Systems, 138 S.

Ct. at 1623). Similarly, the holding of Lamps Plus—

14

that class arbitration and individual arbitration are

so ‘crucially different,’ that even general contract

principles neutral towards arbitration could be

preempted by the FAA if they compel class arbitration without the clear consent of the parties”—was

“contemplated and held inapplicable” by the Ninth

Circuit in Sakkab. App.17. The district court found

that Sakkab remained good law, and it denied Coverall’s Motion to Compel arbitration.

F. The Ninth Circuit’s Decision

The Ninth Circuit affirmed. The Court found that

neither Epic Systems nor Lamps Plus “expanded upon Concepcion in such a way as to abrogate Sakkab.”

App.3. The Court also rejected Coverall’s arguments

that arbitration of a representative PAGA claim

would involve the same complexity and procedural

formality of a class arbitration, finding that this argument was likewise rejected by Sakkab and that a

PAGA action was fundamentally different from a

class action. The Court also rejected Coverall’s argument that the rule against the waiver of PAGA

claims does not qualify as a generally applicable contract defense. App.4.

The Ninth Circuit denied Coverall’s petition for

rehearing en banc on April 6, 2021.

15

REASONS FOR DENYING THE WRIT

A. This Court’s Decisions in Epic Systems and

Lamps Plus do not create FAA preemption

of the Iskanian rule.

Since Iskanian was decided seven years ago, defendants have repeatedly argued that its bar on predispute PAGA waivers is preempted by this Court’s

decision in Concepcion. There, this Court found that

a bar on class action waivers was preempted by the

FAA because it interfered with fundamental

attributes of arbitration by imposing formal

classwide arbitration procedures on the parties. 563

U.S. at 347-49. Both Iskanian and Sakkab carefully

considered Concepcion and concluded that PAGA

actions and class actions are fundamentally different

and that Iskanian’s rule against an outright waiver

of represntative PAGA claims was not preempted by

the FAA.

Coverall now attempts to breathe new life into

this issue by insisting that this Court’s recent precedents in Epic Systems and Lamps Plus mandate a

different result. But as the Ninth Circuit correctly

found below, this Court merely “reiterated and reapplied [Concepcion’s] rule in Epic Systems and Lamps

Plus.” App.3. “[N]either case expanded upon Concepcion in such a way as to abrogate Sakkab.” Id. Nothing in Epic Systems or Lamps Plus treads new

ground or supports Coverall’s request for review.

Epic Systems does not speak to the Iskanian rule

at all, as it addresses whether the National Labor

Relations Act requires the availability of class adju-

16

dication procedures. Likewise, Lamps Plus is an extension of this Court’s decision in Stolt-Nielsen insofar as it holds that parties cannot be compelled to arbitrate class claims unless there is a clear contractual basis for doing so. See Lamps Plus, 139 S. Ct. at

1416 (“[C]ourts may not infer consent to participate

in class arbitration absent an affirmative ‘contractual basis for concluding that the party agreed to do

so.’”) (quoting Stolt-Nielsen, 559 U.S. at 684). Neither

case addresses whether parties can effectively waive

a representative claim for penalties on behalf of the

state because the claim is allegedly inconsistent with

“fundamental attributes” of arbitration.

Put simply, Epic Systems and Lamps Plus do not

apply to PAGA claims because class action procedures are fundamentally different from representative PAGA claims on behalf of the state. PAGA

claims do not seek to pursue “victim-specific relief by

a party to an arbitration agreement on behalf of other parties to an arbitration agreement,” see Iskanian,

59 Cal. 4th at 387, which would run afoul of Epic

Systems (if the agreement contained a class waiver)

and Lamps Plus (if the agreement did not clearly allow for class arbitration). Instead, PAGA claims seek

penalties on behalf of the state of California; “any resulting judgment is binding on the state and any

monetary penalties largely go to state coffers.” Iskanian, 59 Cal. 4th at 388.

In any case, as set forth further below, Coverall’s

arguments regarding why Epic Systems and Lamps

Plus require preemption of the Iskanian rule fail on

the merits.

17

B. Iskanian and Sakkab are fully consistent

with this Court’s precedents.

The Iskanian Rule does not interfere with the

fundamental attributes of arbitration. Coverall argues that “the Iskanian rule … is preempted because

it replaces the streamlined dispute resolution mechanism the parties agreed to use with a substantially

more onerous process.” Pet. at 19. But Iskanian and

Sakkab do not impose a “more onerous process” on

defendants; they simply disallow the outright waiver

of a particular type of claim. Even if Coverall’s characterization of PAGA claims as necessarily more

complex or onerous to arbitrate than other claims

were correct (it is not), that fact still would not provide a basis for preemption under the FAA. As set

forth further below, each of the arguments Coverall

advances in favor of review are erroneous.

1. Representative PAGA Claims Are Distinct

From Class Claims And Do Not Implicate

This Court’s Precedents Regarding Class

Action Waivers.

As an initial matter, Coverall’s analogy between

class action claims and representative PAGA claims

is flawed, and as a result, this Court’s jurisprudence

regarding class action waivers in Concepcion, Epic

Systems, and Lamps Plus does not apply to preempt

the Iskanian rule. Both the Ninth Circuit and the

California Supreme Court have made clear that representative PAGA claims do not entail use of the procedural mechanism for bringing class action claims

under Fed. R. Civ. P. 23, but involve one-on-one litigation between the state and the defendant. See,

18

e.g., Baumann v. Chase Inv. Servs. Corp., 747 F.3d

1117, 1124 (9th Cir. 2014) (“A PAGA action is at

heart a civil enforcement action filed on behalf of and

for the benefit of the state, not a claim for class relief.”); Arias v. Superior Court, 46 Cal. 4th 969, 98486 (2009). In a PAGA case, the “dispute [is] between

an employer and the state…”, not the employer and

employee. Iskanian, 59 Cal. 4th at 386. “The fact that

any judgment in a PAGA action is binding on the

government confirms that the state is the real party

in interest.” Id. at 387. Moreover, the vast majority of

penalties in a PAGA action benefit the state, not the

workers.

Because the FAA is not concerned with arbitration of disputes between private parties and states or

public agencies, its purposes are not frustrated by

the Iskanian rule. This Court’s case law interpreting

FAA preemption focuses on agreements to arbitrate

between private parties. Indeed, in one of the only

cases in which this Court has considered the enforcement of an arbitration agreement against a

state or public agency, the Court held that an agreement to arbitrate between a private party and his

employer did not impact the ability of the EEOC to

bring claims on behalf of the employee in question or

to seek victim-specific relief on his behalf. This Court

held that “[d]espite the FAA policy favoring arbitration agreements . . . [t]he FAA does not mention enforcement by public agencies; it ensures the enforceability of private agreements to arbitrate, but otherwise does not purport to place any restriction on a

nonparty’s choice of a judicial forum.” E.E.O.C. v.

Waffle House, Inc. 534 U.S. 279, 280 (2002). If an arbitration agreement were permitted to bar the state’s

19

recovery of PAGA penalties, it would “turn[ ] what is

effectively a forum selection clause into a waiver of a

nonparty’s statutory remedies.” Id. at 295.

Here, a PAGA action, like the claim at issue in

Waffle House, is not in essence a dispute between an

employer and an employee “arising out of their contractual relationship,” Iskanian, 59 Cal.4th at 386,

but rather “functions as a substitute for an action

brought by the government itself.” Arias v. Superior

Court, 46 Cal.4th 969, 986 (2009). The Iskanian rule

is therefore wholly consistent with this Court’s FAA

preemption jurisprudence, as set forth in Waffle

House. As the California Supreme Court recognized

in Iskanian, “[n]othing 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.” 327 P.3d at 151.

Coverall insists that “the ability to resolve claims

on an individual basis… [is a] fundamental attribute” of arbitration, and “the FAA preempts state-law

rules that interfere with parties’ agreements to do

so.” Pet. at 5. But there is no such thing as an “individual” PAGA claim, and Coverall’s approach would

effectively require outright waiver of a representative

PAGA claim. As explained above, PAGA claims are

inherently representative in nature because, unlike

class claims, they are claims brought on behalf of the

state of California. Indeed, the California Supreme

Court has made clear that “[a]ll PAGA claims are

‘representative’ actions in the sense that they are

brought on the state’s behalf.” ZB, N.A. v. Superior

Court, 8 Cal. 5th 175, 185, 448 P.3d 239, 243 (2019).

Likewise, the Ninth Circuit has acknowledged that

20

“courts have time and again reiterated that the PAGA creates only a representative right of action” and

courts have not “permitted a PAGA claim to be

brought in an individual capacity.” Monaghan v. Telecom Italia Sparkle of N. Am., Inc., 647 F. App'x 763,

770 (9th Cir. 2016).5 In sum, there is no such thing

as an “individual PAGA claim.” The claim belongs to

the state of California and is necessarily representative in nature. By analogizing a waiver of the right to

bring representative PAGA claims to a class action

waiver, Coverall is comparing apples and oranges. A

litigant can still bring individual Labor Code claims

and agree to forgo the procedural mechanism of a

class action, but a litigant cannot bring an “individual PAGA claim.” Thus, the representative action

waiver amounts to an outright waiver of the PAGA

claim itself. FAA preemption does not mandate the

enforcement of an agreement to waive claims where

the state has granted a non-waivable claim under the

PAGA. Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985) (“By agree––––––––––––––––––––––––

5 See also Perez v. U-Haul Co. of California, 3 Cal.App.5th

408, 421 (2016) (holding that an employer may not compel an

employee to submit part of his PAGA claim to arbitration under

an agreement that bars assertion of representative claims); Davidson v. O'Reilly Enterprises, LLC, 2018 WL 3359681, at *3

(C.D. Cal. June 5, 2018) (“Because PAGA is a representative

action undertaken on behalf of the state to enforce the Labor

Code, a plaintiff cannot bring a PAGA claim on an individual

basis.”); Reyes v. Macy's, Inc., 202 Cal. App. 4th 1119, 1123

(2011) (“[P]laintiff may not and does not bring the PAGA claim

as an individual claim, but as the proxy or agent of the state's

labor law enforcement agencies. 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 ….”) (internal citation omitted).

21

ing to arbitrate a statutory claim, a party does not

forgo the substantive rights afforded by the statute…”).

2. Representative Claims Do Not Impose

Procedures or Costs That Are Incompatible with the Arbitral Process.

Insofar as Coverall complains that resolving representative PAGA claims is “slower [and] more costly,” than bilateral arbitration, see Pet. at 20, its argument is misplaced. As an initial matter, PAGA

claims do not impose the type of procedural complexity that Coverall claims. As the Ninth Circuit recognized in Sakkab, parties remain free to agree to

streamlined procedures and limited discovery in arbitration, just as in any other case. Sakkab, 803 F.3d

at 438. Moreover, “[i]t is not true … that PAGA actions are necessarily ‘procedurally’ complex” at all.

Sakkab, 803 F.3d at 438. Any alleged complexity in a

PAGA action typically stems from the number of violations involved, which may or may not involve many

other employees depending on the size of the employer and the nature of the alleged violations. Id. As the

Ninth Circuit recognized in Sakkab, “the complexity

[of a PAGA action] flows from the substance of the

claim itself, rather than any procedures required to

adjudicate it (as with class actions),” see id., and in

that sense PAGA claims are no different from myriad

other claims that involve significant discovery or

high stakes.6

––––––––––––––––––––––––

Coverall argues that more significant discovery is required in PAGA actions to allow the PAGA plaintiff to ascertain

information about how many other aggrieved employees exist

(Footnote continued)

6

22

Indeed, there are many types of arbitrable claims

that may be complex to litigate or have high stakes

because of the nature of the claims involved; however, the FAA does not require that such claims be

waived outright because they are not conducive to

individual arbitration. As the Ninth Circuit recognized in Sakkab, “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.”

Sakkab, 803 F.3d at 437. Indeed, this Court has repeatedly held that many complex claims, with extremely high stakes for those involved, are nonetheless arbitrable. See, e.g., Mitsubishi, 473 U.S. at 637

(antitrust claims); Shearson/American Express v.

McMahon, 482 U.S. 220, 229–33 (1987) (Securities

Exchange Act claims); id. at 238–42 (civil RICO

claims); Pyett, 556 U.S. at 258 (employment discrimination claims); Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20, 33–35 (1991) (federal civil rights

claims). For example, in American Express, this

Court held that antitrust claims could be subject to

arbitration despite the complexity and “the expense

involved in proving” a violation of the anti-trust laws,

which necessitate market-wide evidence. 570 U.S. at

236.

The fact that a state’s statutory scheme gives rise

to claims that defendants find particularly complex

or difficult to arbitrate does not mean that the FAA

––––––––––––––––––––––––

and the scope of the penalties owed. Pet. at 21. But the same is

true of many other types of claims that require extensive and

far-reaching evidence, such as anti-trust or civil RICO claims.

23

allows defendants like Coverall to require potential

plaintiffs to waive those claims entirely. An outright

waiver of Rivas’s PAGA claim is not required by this

Court’s jurisprudence; on the contrary, such a “a prospective waiver of a party’s right to pursue statutory

remedies” is “against public policy.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

614, 628 (1985). This court has repeatedly directed

that “[b]y 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.” Id.; see also 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 265

(2009) (agreement to arbitrate is not “a prospective

waiver of the substantive right.”); American Express,

570 U.S. at 238–39 (effective vindication exception to

enforcement of arbitration agreements “would certainly cover a provision in an arbitration agreement

forbidding the assertion of certain statutory

rights.”).7 By arguing that a representative PAGA

claim interferes with its right to “individual, bilateral

proceedings”, see Pet. at 22, Coverall is arguing for

nothing short of a waiver of the right to bring this

claim in the first instance. The FAA and this Court’s

jurisprudence plainly do not require such a waiver.

––––––––––––––––––––––––

The principle underlying this statement in American Express applies equally to statutory claims under state law. See,

e.g., Preston v. Ferrer, 552 U.S. 346, 359 (2008) (noting that “a

party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral ... forum”,

and here, “plaintiff relinquishes no substantive rights the TAA

or other California law may accord him.”).

7

24

3. Contrary to Petitioner’s contentions, the

Iskanian rule is a rule of general applicability.

The FAA’s saving clause “permits arbitration

agreements to be declared unenforceable ‘upon such

grounds as exist at law or in equity for the revocation

of any contract’ … but not by defenses that apply only to arbitration or that derive their meaning from

the fact that an agreement to arbitrate is at issue” or

that “interfere[] with fundamental attributes of arbitration and thus create[] a scheme inconsistent with

the FAA.” Concepcion, 563 U.S. at 339, 344 (quoting

9 U.S.C. § 2). The Iskanian rule is a rule of general

applicability that does not single out arbitration or

depend upon the fact that an agreement to arbitrate

is at issue. The Iskanian rule bars a predispute

waiver of a representative claim under PAGA as contrary to public policy. Iskanian, 59 Cal. 4th at 384.

By its plain terms, the “rule bars any waiver of PAGA claims, regardless of whether the waiver appears

in an arbitration agreement or a non-arbitration

agreement.” Sakkab, 803 F.3d at 432 (emphasis added). The rule does not depend on arbitration: if an

employer included a term requiring its employees to

waive all PAGA claims going forward, under Iskanian, that waiver would be invalid, regardless of

what type of contract included the waiver and regardless of whether the contract contained an arbitration provision. In short, the Iskanian rule does not

single out arbitration agreements for disfavored

treatment.

25

4. Contrary to Petitioner’s contentions, the

Iskanian rule does not target ‘bilateral’

arbitration.

Similarly, nothing about Iskanian’s rule against

pre-dispute PAGA waivers targets “individual” or “bilateral” arbitration either; PAGA claims are necessarily representative in nature, and thus, the notion

of an “individual”—that is, non-representative—

PAGA claim” is a contradiction in terms, as explained supra, pp. 22-23. Because PAGA claims are

inherently representative, they must go forward on a

representative basis, but this fact in no way targets

bilateral arbitration and is simply a feature of any

type of similar qui tam action, which likewise proceeds on a bilateral basis between the defendant and

the state, acting through its representative. See Iskanian, 59 Cal. 4th at 390 (noting that the ruling

“would apply not only to the PAGA but to all qui tam

actions, including the California False Claims Act,

which authorizes the prosecution of claims on behalf

of government entities without government supervision.”). The fallacy of Coverall’s argument is that by

requiring “individual” arbitration of a PAGA claim, it

effectively waives the claim altogether, and FAA

preemption does not provide it with the cover to do

so.

At bottom, Epic Systems and Lamps Plus speak to

entirely different issues than Iskanian and Sakkab.

Epic Systems holds that aggregating numerous individuals’ claims into a single proceeding interferes

with arbitration’s fundamental attributes whereas

Iskanian holds that the waiver of a unitary PAGA

claim on behalf of the state is unenforceable. Like-

26

wise, Lamps Plus holds that parties cannot be required to engage in class-wide arbitration without a

contractual basis for doing so, whereas Sakkab holds

that litigants can arbitrate PAGA claims if they so

choose, and that procedures to streamline and simplify such actions are readily available in a way that

they are not in class arbitrations. Nothing in Epic

Systems or Lamps Plus spoke to whether a defendant

could bar an individual from asserting any claim

they would otherwise be able to bring in a bilateral

proceeding.

C. There is no conflict among lower courts

that supports review.

Like the petitioners in Iskanian and other cases

challenging its holding in which this Court has denied certiorari, Petitioner can point to no conflict

among federal appellate or state supreme courts over

whether the FAA mandates enforcement of an

agreement to waive PAGA claims or similar state enforcement actions. Iskanian and Sakkab are in full

agreement. Furthermore, numerous state and federal

courts have considered the same question Coverall

raises here—namely, whether this Court’s recent

precedents in Epic Systems and Lamps Plus dictate

that the Iskanian rule barring the pre-dispute waiver

of representative PAGA claims is preempted by the

FAA. These courts have unanimously agreed with

the Ninth Circuit in this case that Epic Systems and

Lamps Plus do not disturb the sound rulings of Iskanian and Sakkab.8

––––––––––––––––––––––––

8 See, e.g., Gonzales v. Emeritus Corp., 407 F. Supp. 3d 862,

867 (N.D. Cal. 2019); Gilbert Enterprises, Inc. v. Amazon.com,

(Footnote continued)

27

In an attempt to manufacture conflict and urgency, Petitioner raises the specter that “other states

and their courts also will feel free to promulgate laws

that are effectively arbitration-proof and beyond the

purview of the FAA.” Pet. at 17. But in the seven

years since Iskanian was decided, this speculative

fear has not come to fruition. Petitioner points to no

decisions arising under similar laws of other states

that would suggest that the Iskanian rule has given

rise to a tide of laws or lawsuits that seek to undermine the FAA.9

––––––––––––––––––––––––

2019 WL 6481697 at *7 n.3 (C.D. Cal. Sept. 23, 2019); Rejuso v.

Brookdale Senior Living Communities, Inc., 2019 WL 6735124,

at *6 (C.D. Cal. May 22, 2019); Whitworth v. SolarCity Corp.,

336 F. Supp. 3d 1119, 1123 (N.D. Cal. 2018); see also Olson v.

Lyft, Inc., 56 Cal.App.5th 862 (2020); Rimler v. Postmates Inc.,

No. A156450, 2020 WL 7237900, at *1 (Cal. Ct. App. Dec. 9,

2020), review denied (Feb. 24, 2021); Seifu v. Lyft, Inc., No.

B301774, 2021 WL 2200878, at *2 (Cal. Ct. App. June 1,

2021), review denied (Aug. 18, 2021).

9 Coverall insists that the number of PAGA actions has been

on the rise in recent years, which allegedly evinces a rising tide

of plaintiffs’ lawyers seeking to avoid arbitration. But there are

many reasons for that increase, including the fact that California adopted a new test for independent contractor misclassification in 2018, see Dynamex Operations W. v. Superior Ct., 4 Cal.

5th 903, 416 P.3d 1 (2018), which was codified by the Legislature in 2020, resulting in a larger number of violations by defendants not in compliance with the new law. An increase in

non-compliance with the Labor Code is the logical reason for an

increase in representative actions to enforce the law, and indeed, that is exactly what the PAGA is intended to achieve. In

any case, the statistics Coverall cites makes clear that its real

goal in filing this petition is to shield employers from liability

for Labor Code violations. However, it is not this Court’s role to

substitute its judgment for that of the state of California, which

(Footnote continued)

28

In light of the current agreement at the appellate

level among both state and federal courts over the

application of preemption principles to the PAGA

right of action, the reasons ordinarily justifying review by this Court are not present. See S. Ct. R.

10(b). This Court has repeatedly recognized as much

by denying review of this very issue before, and it

should do so again in this case.

D. This case is a poor vehicle for review.

Finally, even if this Court believed that its recent

decisions in Epic Systems and Lamps Plus warranted

review of Sakkab and its conclusion that the Iskanian rule is not preempted by the FAA, this would

not be the right case for this Court to take up this

question. In particular, there are several other

grounds on which the decision below can be affirmed,

regardless of the resolution of the issues raised by

Coverall here.

First, the district court rested its decision on two

alternate grounds: (1) that Coverall’s agreement

waived Plaintiff’s right to bring a PAGA claim in any

forum and was therefore unenforceable; or (2) that

the representative PAGA claim fell outside of the

scope of the agreement altogether because the

agreement requires that all “arbitration shall be conducted on an individual basis” and that “[o]nly Cov––––––––––––––––––––––––

has determined that widespread violations of the Labor Code

require augmented enforcement beyond the State’s own capacity to bring cases.

29

erall … and [Plaintiff] … may be parties to any arbitration proceeding” and a PAGA claim is a claim on

behalf of the state of California. App.13-14 (quoting

D. Ct. Dkt. 65-3 at § 21A). The Ninth Circuit primarily considered the first line of reasoning by the

district court, holding that “insofar as the … parties’

arbitration agreement bars Rivas from arbitrating

his PAGA claim in full, it remains unenforceable under California law.” App.4. But the district court’s

conclusion that a representative claim under the

PAGA falls outside the scope of Coverall’s arbitration

agreement because the agreement applies only to Rivas’s own individual claims provides an alternative

basis for affirmance, and, indeed, one that is logically

antecedent to consideration of whether the Iskanian

rule is preempted by the FAA. App.15. The Ninth

Circuit did not find it necessary to reach this issue,

but the existence of this alternative, fact-bound

ground for affirmance renders this case a poor vehicle for deciding whether this Court’s precedent has

overruled Sakkab.

Moreover, as Rivas argued below, both in the district court and the Ninth Circuit, Coverall waived its

right to compel Plaintiff’s claims to arbitration

through its litigation conduct, which included

months of litigation and briefing a motion to dismiss

(which led to a dismissal without prejudice and the

filing of an amended complaint), followed by the assertion of counterclaims against Rivas, and briefing a

motion to dismiss Coverall’s counterclaim. Here, unlike in Morgan v. Sundance Inc., No. 21-328 (2021),

which this Court recently voted to take up, Plaintiff

argued that he was prejudiced by Coverall’s actions,

and thus, Rivas’s waiver argument will be unaffected

30

by the outcome in Morgan, which concerns whether

prejudice is required for a finding of waiver. The

Ninth Circuit and the district court did not reach the

waiver issue because they denied Coverall’s Motion

to Compel arbitration on other grounds but were this

Court to grant Coverall’s petition for certiorari,

Plaintiff would argue that this additional issue requires affirmance. For all these reasons, this case is

a particularly poor vehicle for review of the question

of whether the FAA preempts the holdings of Iskanian and Sakkab.

CONCLUSION

The petition should be denied.

Respectfully submitted,

Shannon Liss-Riordan, Counsel of Record

LICHTEN & LISS-RIORDAN, P.C.

729 Boylston Street, Suite 2000

Boston, Massachusetts 02116

(617) 994-5800

sliss@llrlaw.com

December 2021