Sakkab v. Luxottica Retail N. Am., No. 13-55184 (9th Cir. 2015)
Annotate this CasePlaintiff filed a putative class action against Luxottica asserting four causes of action arising out of his employment with Luxottica, including (1) unlawful business practices, (2) failure to pay overtime compensation, (3) failure to provide accurate itemized wage statements, and (4) failure to pay wages when due. The district court subsequently granted Luxottica's motion to compel arbitration and dismissed the first amended complaint. This appeal presents issues of first impression regarding the scope of Federal Arbitration Act (FAA) preemption, 9 U.S.C. 2 et seq., and the meaning of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion. The court must decide whether the FAA preempts the California rule announced in Iskanian v. CLS Transportation Los Angeles, which bars the waiver of representative claims under the Private Attorneys General Act of 2004 (PAGA), Cal. Lab. Code 2698 et seq. The court concluded that the FAA does not preempt the Iskanian Rule because the Rule leaves parties free to adopt the kinds of informal procedures normally available in arbitration. It only prohibits them 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. Accordingly, the court reversed the district court’s order dismissing the complaint and returned the issue to the district court and the parties to decide in the first instance where plaintiff's representative PAGA claims should be resolved, and to conduct further proceedings.
Court Description: Federal Arbitration Act / CA Private Attorney. General Act The panel reversed the district court’s order granting Luxottica Retail North America, Inc.’s motion to compel arbitration of claims and dismissing plaintiff’s first amended complaint, in a putative class action raising class employment-related claims and a non-class representative claim for civil penalties under the Private Attorney General Act. Luxottica sought to compel arbitration under a dispute resolution agreement contained in its Retail Associate Guide. Plaintiff argued that the portion of the alternative dispute resolution agreement prohibiting him from bringing any PAGA claims on behalf of other employees was unenforceable under California law. After the district court entered judgment in this case, the California Supreme Court announced the rule in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), barring the waiver of representative claims under PAGA. SAKKAB V. LUXOTTICA RETAIL N. AM. 3 The panel held that the waiver of plaintiff’s representative PAGA claim could not be enforced. The panel held that the Federal Arbitration Act did not preempt the California rule announced in Iskanian. Specifically, the panel held that following the logic of AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the Iskanian rule is a “generally applicable” contract defense that may be preserved by the FAA’s § 2 savings clause, provided it did not conflict with the FAA’s purposes. The panel further found that the Iskanian Rule did not conflict with the FAA’s purposes. The panel held that the non-PAGA claims in the first amended complaint must be arbitrated. The panel remanded for the district court and the parties to decide in the first instance where plaintiff’s representative PAGA claim should be resolved, and to conduct other proceedings consistent with this opinion. Dissenting, Judge N.R. Smith would hold that the majority should have applied Concepcion and deferred to the FAA’s “liberal federal policy favoring arbitration.” Judge N.R. Smith would hold that the Iskanian rule is preempted by the FAA, and he would affirm the district court.
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