Arbitration Agreements

Authored by Holger G. Besch 

Perhaps signaling the importance of the issue for American businesses and jurisprudence, the U.S. Supreme Court‎ chose the first day of its term beginning in October as the date to set oral arguments in three petitions for certiorari asking whether employees can be required to waive their rights via arbitration agreements to file class and collective actions against their employers. The arguments in Ernst & Young LLP v. Morris; Epic Systems Corp. v. Lewis; and NLRB v. Murphy Oil USA Inc., will all be heard on October 2nd, so mark your calendars.

The cases before the Supreme Court originated either before the National Labor Relations Board, which had ruled that such agreements violate workers’ rights under the National Labor Relations Act to take collective action to ameliorate their working conditions, or with district courts that had used the NLRB’s ruling to reject employers’ motions to compel bilateral arbitration of putative collective and class actions.

SCOTUS will be resolving the resulting Circuit split, in which the Ninth and Seventh Circuits backed the NLRB’s position when they ruled against Ernst & Young and Epic Systems, respectively, and the Fifth Circuit ruled in favor of Murphy Oil. Opening briefs are already on file and address, at bottom, whether the Federal Arbitration Act or the NLRA should take precedence.

Co-authored by Robert S. Whitman and Howard M. Wexler

Seyfarth Synopsis: A New York intermediate appellate court with jurisdiction over Manhattan weighed in on the enforceability of arbitration agreements with class and collective action waivers.  Its decision, issued on July 18, 2017, holds that waivers are unenforceable as they interfere with employees’ rights under the National Labor Relations Act to engage in protected concerted activity by depriving them of the ability to bring class or collective actions.

As our loyal readers are well aware, the U.S. Supreme Court is scheduled to hear oral argument in its Fall 2017 term regarding the enforceability of arbitration agreements with class and collective action waivers.  This has been a “hot button” issue ever since the NLRB’s highly controversial D.R. Horton decision in 2012, which held that these waivers violate employees’ right to engage in protected concerted activity.   Three circuits—the Second, Fifth, and Eighth—have concluded that such agreements are enforceable, while three circuits—the Sixth, Seventh, and Ninth— have held that they are not.

As practitioners eagerly await the Supreme Court’s decision (oral argument is scheduled for the October 2017 term, with a decision expected in early 2018), a New York intermediate appellate court with jurisdiction over Manhattan weighed in on this divisive question.  Its decision, issued on July 18, 2017, holds that waivers are unenforceable as they interfere with employees’ rights under the National Labor Relations Act to engage in protected concerted activity by depriving them of the ability to bring class or collective actions.

In reaching its decision, the court weighed “an individual’s right to resort to the courts, on the one hand, and this State’s preference for enforcing arbitration agreements.” The court found there to be “no reason that the [Federal Arbitration Act] policy favoring arbitration should trump the NLRA policy prohibiting employers from preventing collective action by employees.”  Accordingly, the court came down on the side of the Sixth, Seventh, and Ninth Circuits and held “that waiver of collective claims violates the NLRA, and is void and invalid under the FAA’s saving clause.”

In a vigorous dissent, Judge Andrias noted that, “although the NLRA gives employees a right to bargain collectively, the statute does not expressly give employees the right to arbitrate or litigate disputes as a class or collective action, and the legislative history lacks any indication of a congressional command precluding courts from enforcing collective-action waivers according to their terms.”

This critically important question has significant implications for employers within Manhattan, many of whom implemented class waivers in their arbitration agreements with employees following the approval of such clauses in decisions issued by the U.S. Supreme Court and the Second Circuit. In light of this decision, those New York employers are now subject to contrary decisions issued by the state and federal courts with authority over their place of operation.  Until the Supreme Court decides the issue in the coming months, or the New York Court of Appeals somehow steps in during the interim (which is unlikely), employers may face more state court filings by employees seeking to nullify their class action waivers.  We will be watching these developments closely, so stay tuned!

Co-authored by Noah Finkel and Andrew Scroggins

Employers have faced questions about the enforceability of arbitration agreements with class and collective action waivers since the NLRB’s highly controversial D.R. Horton decision in 2012, which held that the waivers violate employees’ right to engage in protected concerted activity. The Fifth Circuit refused to enforce the decision, and other courts followed, but the NLRB refused to change course. In 2016, the Seventh and Ninth Circuits also adopted the NLRB’s view, as has the Sixth Circuit in 2017.

In January 2017, the U.S. Supreme Court agreed to hear the issue, consolidating cases from the Fifth, Seventh, and Ninth Circuits. Oral argument is scheduled to take place during its Fall 2017 term.

The tea leaves at the Supreme Court give many reason to believe that the NLRB’s position will be struck down. Newly-appointed Justice Neal Gorsuch is considered by many observers to be likely to follow the pro-arbitration stance of his predecessor, Justice Scalia. The Office of the Solicitor General recently reversed its position, filing an amicus brief in support of the employers that details the flaws it sees in the NLRB’s position and leaving the NLRB on its own to argue the case before the Court. And the appointment of new Board members and the end of the NLRB General Counsel Richard Griffin’s term in November 2017 raise the possibility the agency may revisit its position, thus eliminating any argument that courts should defer to the NLRB’s current position on the legality of class waivers.

Some, from both sides of the bar, speculate that if the Supreme Court rejects the D.R. Horton theory nearly all well-advised employers seeking to minimize their risks will adopt mandatory arbitration programs with class waivers, and that wage-hour litigation as we know it will be over. That hope/fear, however, may be overstated.

This post is the first of several that will consider what the future may hold if employers find themselves confident that they will be able to issue enforceable, mandatory arbitration programs containing class and collective waivers. To what extent will the wage-hour class and collective action landscape change?

A recent Sixth Circuit decision, Taylor v. Pilot Corporation, et al., provides a glimpse into one part of the future. The employer had in place an arbitration agreement with a collective action waiver that applied to most, but not all, of its 50,000 hourly employees. One of the employees who was not bound by the agreement filed an FLSA collective action alleging that she had not been paid for all of her overtime hours. She asked the court to authorize sending notice of conditional certification to those “similarly situated” to her, which she contended included all 50,000 hourly employees.

The employer protested that the plaintiff was not similarly situated to the tens of thousands of employees bound by the arbitration agreement. After all, even if those employees opted in to the suit, the court would lack subject matter jurisdiction, and their claims would be dismissed and sent to arbitration. The district court disagreed, reasoning that it would determine whether the arbitration agreements were enforceable only after learning who had opted-in to the litigation. Notice to all 50,000 hourly employees was approved. The decision was affirmed on appeal, with the Sixth Circuit concluding it did not have jurisdiction to consider questions about the enforceability of the arbitration agreement at this stage.

The decision illustrates how even carefully prepared arbitration agreements can have unintended consequences if not carefully rolled out. Suppose that notice to 50,000 employees results in just 1,000 opt-in plaintiffs, and all of them have signed enforceable arbitration agreements with a collective action waiver. While those employees ultimately may not be able to participate in the collective action for which they received notice, they nonetheless have now been in touch with a lawyer or group of lawyers who can file individual arbitration demands on behalf of all 1,000 employees who had filed consents to join the lawsuit for which they received a collective action notice after conditional certification.

And it gets worse. Consider that most third-party arbitration services require that the employer pay an initial fee when the employee’s claim is filed. The American Arbitration Association, for example, imposes a non-refundable fee of at least $1,500 on the employer for cases filed by an employee. Continuing with the example from above, the employer could be hit with $1,500,000 in costs just as the price to play. Costs begin to rise exponentially when it comes time to mount a defense and arbitrator and hearing fees begin.

In other words, employers should not expect that a Supreme Court endorsement of arbitration agreements with class and collective action waivers will act as a complete bar to collective claims. After all, to adopt a famous movie phrase, plaintiffs’ lawyers “find a way.” The Taylor decision shows the potential power of finding the “unicorn” plaintiff who is not bound by the same agreement as her co-workers, and shows that employers will have to ensure that each and every one of their employees will have to be bound by an arbitration program to maximize a class waiver’s protection. But even then, the unicorn for a plaintiff’s lawyer may merely be someone who had been employed by the defendant-employer within the last three years (the longest of the FLSA’s potential limitations periods), but whose employment had ended before the arbitration program had been enacted. Other novel workarounds are sure to arise if new rules about arbitration force plaintiffs to get more creative.

Authored by Kiran A. Seldon

Seyfarth Synopsis: Three decisions issued earlier this month reveal an increasing tension between the Ninth Circuit and California appellate courts on whether representative PAGA actions can be arbitrated. As a result, employers wishing to compel arbitration of representative PAGA claims are likely to be better off in federal court than in state court.

In 2014, the California Supreme Court held in Iskanian v. CLS Transportation Los Angeles, LLC that pre-dispute arbitration agreements cannot require employees to waive representative claims under California’s Labor Code Private Attorneys General Act (“PAGA”). The following year, the Ninth Circuit agreed with Iskanian and held in Sakkab v. Luxottica Retail North America, Inc. that PAGA representative actions cannot be waived.

While state and federal courts agree that pre-dispute waiver of PAGA actions is prohibited, they disagree on the next logical question: can private arbitration agreements require PAGA claims to be arbitrated on a representative basis? In a pair of recent unpublished decisions, the Ninth Circuit has answered “yes.” Two state appellate courts, in contrast, have expressed the view that representative PAGA claims cannot be arbitrated—even if the employer and employee agreed to do so in a pre-dispute arbitration agreement—unless the State has also consented.

The Ninth Circuit. Earlier this month, Wulfe v. Valero Refining Co. California considered a pre-dispute arbitration agreement that was silent regarding waiver of PAGA claims. The Ninth Circuit held that “the district court’s order compelling arbitration did not run afoul of Sakkab and Iskanian because the order did not prevent [the employee] from bringing a representative PAGA claim in arbitration.” It is only “pre-dispute agreements to waive the right to bring a representative PAGA claim [that] are unenforceable,” the Court held.

Two days later, in another unpublished decision, the Ninth Circuit reached the same result. In Valdez v. Terminix International Company Limited Partnership, it reversed a district court, which had held that PAGA claims categorically cannot proceed to arbitration.” The Ninth Circuit again concluded that “Iskanian does not require that a PAGA claim be pursued in the judicial forum; it holds only that a complete waiver of the right to bring a PAGA claim is invalid.” It also interpreted Sakkab as “likewise recogniz[ing] that individual employees may pursue PAGA claims in arbitration.”

California appellate courts.  Days after Wulfe and Valdez, a state appellate court opined in Betancourt v. Prudential Overall Supply that PAGA claims cannot be arbitrated without the State of California’s consent. The “fact that [the employee] may have entered into a pre-dispute agreement to arbitrate does not bind the state to arbitration,” the court concluded. However, these statements arguably were not necessary to the Court of Appeal’s ultimate holding, which was that the arbitration agreement was unenforceable because it contained a PAGA waiver in violation of Iskanian.

Betancourt is in line with Tanguilig v. Bloomingdale’s, Inc., another state appellate court opinion issued in November 2016. Tanguilg also opined that “a PAGA plaintiff’s request for civil penalties on behalf of himself or herself is not subject to arbitration under a private arbitration agreement between the plaintiff and his or her employer. This is because the real party in interest in a PAGA suit, the state, has not agreed to arbitrate the claim.” As in Betancourt, however, the arbitration agreement had a PAGA waiver in violation of Iskanian, arguably making the Court of Appeal’s broader discussion unnecessary to its holding.

As a result of the current tension between state and federal courts, employers who wish to compel arbitration of a PAGA claim on a representative basis should pay careful attention to the forum in which they are litigating. Though Wulfe and Valdez are unpublished, they are persuasive Ninth Circuit authority, making the chances for success higher in federal court than in state court. Unless the issue is resolved by the California Supreme Court, the uncertainty surrounding arbitration of PAGA representative claims is likely to continue.

Co-authored by David D. Kadue and Rocio Herrera

Seyfarth Synopsis: A California appellate court has held that unless a collective bargaining agreement includes an explicitly stated, clear, and unmistakable intent to waive the right to a judicial forum for statutory claims, arbitration of those claims will not be compelled. The CBA in the case, Vasserman v. Henry Mayo Newhall Memorial Hospital, did not waive the right to a judicial forum because its “Grievance and Arbitration” section failed to specify the California Labor Code provisions that would have to be arbitrated.

The Facts

Tanya Vasserman, a registered nurse, worked for Henry Mayo Newhall Memorial Hospital, under a CBA between the Hospital and the California Nurses Association. The CBA’s “Grievance and Arbitration” section provided for grievances culminating in arbitration, and defined a grievance as any dispute “arising out of the interpretation or application of a specific Article and Section of this Agreement during the term of the Agreement … as to events or incidents arising only at the Hospital.” The CBA outlined a three-step grievance procedure. Step three required the Hospital or the California Nurses Association to “file the grievance for binding arbitration pursuant to the rules of the Federal Mediation and Conciliation Service.” The CBA included articles on compensation, including overtime, and meal and rest periods. None of these articles referred to the grievance procedure or to remedies for violations.

Instead of filing a grievance, Vasserman sued in state court for violation of the California Labor Code, including claims for a failure to pay all regular and overtime wages and a failure to provide meal and rest breaks. The Hospital moved to stay the case and compel arbitration. The Hospital argued that Vasserman and the other employees she sought to represent in her putative class action were all covered by a CBA that included a Grievance and Arbitration section that clearly required the Hospital or the union to file a grievance for mandatory arbitration at step three. The Hospital argued that the grievance procedure explicitly waived the right to pursue claims in a judicial forum and Vasserman had to arbitrate her claims. The trial court denied the Hospital’s motion to compel arbitration, and the Hospital appealed to the California Court of Appeal.

The Court of Appeal’s Decision

The Court of Appeal affirmed the trial court’s decision. It found that the Grievance and Arbitration section defined a grievance as “any complaint or dispute arising out of the interpretation or application of a specific Article or Section of this Agreement.” The section also described a three-step grievance procedure, including step three in which any unresolved grievances may be submitted to arbitration. But it also limited the power of the arbitrator. The section provided that the arbitrator “shall be without authority to decide matters specifically excluded or not included in this Agreement.”

The court held that because the Grievance and Arbitration section did not specifically refer to the California Labor Code or other state or federal statutes, or include any language suggesting that the union intended to waive employees’ rights to bring statutory claims in court, the CBA contained no explicitly stated, clear, and unmistakable waiver of a judicial forum.

The court also rejected the Hospital’s argument that the parties, by including specific articles on pay and meal and rest breaks in the CBA, clearly and unmistakably intended to submit all disputes regarding those subjects to the grievance or arbitration process. The articles on pay and meal breaks did not refer to state laws. A waiver cannot be inferred from “broad, nonspecific language … not coupled with an explicit incorporation of statutory requirements.”

What Vasserman Means for Employers

We are reminded that to preclude judicial litigation of statutory rights, CBAs should specify any statutory rights that will be subject to grievance and arbitration procedures. These grievance procedures should also be incorporated by reference in any other section of the CBA discussing statutory rights, to ensure that the parties clearly and unmistakably state their intent to submit all disputes regarding those subjects to the grievance and arbitration procedures set forth in the CBA.

Authored by Robert J. Carty, Jr.

As our regular readers already know, the Supreme Court is poised to decide one of the most contentious issues facing the wage-and-hour world—namely, whether class- and collective-action waivers render workplace arbitration agreements unenforceable.

Well, it seemed poised until today.  Now we need to sit tight until at least October.

First, a quick recap.  A few weeks ago, the Supreme Court consolidated and granted certiorari in three appeals, one each from the Fifth, Seventh, and Ninth Circuits.  As consolidated, these cases ask the Court to decide whether Section 7 of the National Labor Relations Act (which protects certain “concerted activities”) prohibits class- and collective-action waivers in workplace arbitration agreements—even though the Federal Arbitration Act strongly favors such provisions.

Given the timing of the Court’s actions, many had speculated that oral argument would occur this April, likely leading to a decision by the end of June.  Today, however, the Court notified the parties that oral argument will be scheduled in the 2017 term, which begins this October.  In other words, we don’t expect this issue to be decided until sometime after argument—and the earliest argument will occur is October.

We can’t be sure why the Court has decided to set oral argument in the next term, but we can make an educated guess that the new Administration and the pending nomination of Judge Neil Gorsuch played a role.  Regardless, we have our eye on the situation and will keep you updated as things develop.  Stay tuned.

Co-authored by David S. Baffa, Candice T. Zee, and Alexius Cruz O’Malley

Seyfarth Synopsis: The U.S. Supreme Court has agreed to decide whether workplace arbitration agreements containing class and collective action waivers are enforceable under the FAA, notwithstanding the provisions of the NLRA.

Earlier today, the United States Supreme Court granted and consolidated three petitions for certiorari, to consider whether employers can require employment-related disputes to be resolved through individual arbitration, and waive class and collective proceedings, are enforceable under the Federal Arbitration Act, notwithstanding the provisions of the National Labor Relations Act.

Three circuits—the Second, Fifth, and Eighth—have concluded that agreements that waive class and collective proceedings, thus requiring that claims be arbitrated on an individual basis, are fully enforceable. Two circuits—the Seventh and Ninth Circuit—as well as the National Labor Relations Board, have concluded that waivers in mandatory arbitration programs are unenforceable because the waivers prevent employees from engaging in concerted activities under the National Labor Relations Act.

The National Labor Relations Board asked the Supreme Court to review and reverse the Fifth Circuit’s ruling, in which the Court rejected the Board’s position that such agreements unlawfully interfere with employees’ NLRA rights to engage in concerted activity for their mutual aid or protection.

Two employers also asked the Supreme Court to review decisions by the Ninth and Seventh Circuits in which the courts found the class waivers to be unlawful. The U.S. Supreme Court has consolidated all three cases and oral argument likely will be held in March.

The U.S. Supreme Court has decided time and again that the Federal Arbitration Act strongly favors private resolution of disputes, and that agreements to arbitrate that include these waivers must be afforded great deference and should be enforced. See AT&T Mobility LLC v. Concepcion, 563 U.S. 321 (2011); American Express Co. v. Italian Colors Restaurant, 570 U.S. ––, 133 S. Ct. 2304 (2013). Because the Supreme Court has not directly addressed these agreements in the context of employment arbitration or considered whether Section 7 of the National Labor Relations Act prohibits such agreements, the courts have come to opposite conclusions.

This critically important question has significant implications for employers, in that identical contractual provisions might be considered lawful and enforceable within some circuits, but not in others. Employers, particularly multi-state employers utilizing uniform arbitration agreements across the country, have been grappling with the uncertainty of the efficacy of their arbitration agreements for years. Stay tuned.

Authored by Simon L. Yang

Seyfarth Synopsis: When the California Supreme Court said no to PAGA waivers in its 2014 Iskanian ruling, we asked whether employers would boldly go where few have gone before and implement arbitration agreements requiring arbitration of PAGA claims. A recent California Court of Appeal decision issued in Perez v. U-Haul Company of California warrants revisiting that question.

Many employers stayed the course in 2014 and continued including PAGA waivers within their arbitration agreements, since numerous federal district courts continued disagreeing with and refusing to apply Iskanian’s logic.

And even when in 2015 the Ninth Circuit instructed federal district courts to apply Iskanian, many employers continued using arbitration agreements with PAGA waivers, since PAGA litigation could be severed and stayed while a plaintiff’s individual claims were arbitrated. If the employer prevailed on the individual claims in arbitration, the plaintiff would not be an aggrieved employee, would not have standing under PAGA, and would thus be unable to pursue mooted PAGA claims.

By 2016 plaintiffs have made the availability of that option scarcer. To avoid having to prove standing by prevailing on their individual claims before pursuing otherwise stayed PAGA claims, plaintiffs now commonly prefer to file PAGA-only lawsuits, without alleging individual claims.

The two putative Perez class representatives, however, had pursued both individual and PAGA claims. Predicting and seeking to avoid a stay of their PAGA claims, the Perez plaintiffs hopped onto the PAGA-only bandwagon by amending their complaints to allege a PAGA cause of action only—abandoning their individual claims, their roles as potential class representatives, and putative class members’ individual rights.

U-Haul fought back and sought to require arbitration of the predicate issue of whether the plaintiffs themselves had been subject to any Labor Code violations. Even though U-Haul was not seeking to preclude the PAGA cause of action but only to arbitrate the individual issues determinative of plaintiffs’ standing for their PAGA claims, the Court of Appeal rejected U-Haul’s argument. It reasoned that no individual issues remained at issue and that U-Haul’s arbitration agreement explicitly precluded arbitration of any representative issues.

Though Iskanian explicitly acknowledged that PAGA claims might be arbitrated, the Perez court then went full dictum. It opined that even if U-Haul’s arbitration agreement did not preclude its argument for arbitrating the plaintiff-specific issues determinative of PAGA standing, the PAGA cause of action could not be split between arbitration and litigation. But Iskanian doesn’t preclude this. What it precluded was the waiver of the right to pursue PAGA claims at all.

While it may be the case that an arbitration agreement cannot specify that an individual claim be created in a PAGA-only lawsuit, an arbitration agreement should be able to specify that representative claims be arbitrated—and specify that streamlined procedures be applied. Once again, will some enterprising employers consider going boldly where few have gone before?

Authored by Alex Passantino

‘Twas the week before Christmas, 2-0-1-5
When the poetry elves on the blog came alive.
Crafting their rhymes with a purpose so clear:
Presenting the wage-hour gems of the year.

In January, for new regs in this year our breath bated.
Then for six painful months, we speculated and waited.
And just as we geared up to celebrate Independence,
Out came a proposal that will create more defendants.

With a salary level that for 10 years has been flat,
They looked at New York’s and said “higher than that.”
More than double the old; and then they got clever …
The proposed sal’ry level will increase for forever.

Anticipated changes to duties caused quite a fuss
When DOL said “If you’ve got some ideas, just tell us.”
Of the Department’s proposal, employers were understandably wary,
So we wrote down some ideas on how to make it less scary.

Nearly 300 thousand comments they have to review,
It will be late into next year before they are through.

Next up on the list of your wage-hour joy,
Are the efforts to change what it means to employ:
ContractorsJoint employment. Fissured industry.
Interns. The “third way” and gig economy.

Economic realityRight to control.
They’re integral to your business? Now you’re in a deep hole.
So many angles, it can drive you berserk.
As agencies and courts figure out what is “work.”

And if divergent decisions bring you a sense of elation,
Then please focus attention on class certification.
Approvals, denials, and some decerts, too.
No matter the side, there’s a case for you.

But as summer approached, there arose quite a stir,
A case that’d explain what the class cert rules were.
A Supreme explanation, o my-o, o me-o
We’d learn about class via Bouaphakeo.

They’ve argued, but there’s no decision, not yet,
And a limited ruling on records might be all that we get.
But the cases keep coming. Their numbers broke the charts.
Whether giant class actions or cases broken in parts.

And the response to those filings? The employers’ retort?
A wide range of ways to get them out of court.

Some cases get mooted. Some cases do not.
At Genesis’s open question, SCOTUS might take a shot.
Does an offer of judgment that’s not been accepted
Mean the plaintiff cannot proceed with his class as expected?

Increasingly used as a litigation life saver
Arbitration agreements with a class action waiver;
And when asked if state laws could class waivers prevent, yo,
The Supremes laid the smack-down to dear Sacramento.

With all of these options, it comes as a surprise then,
That one resolution keeps on getting the Heisman.
For reasons that many cannot understand,
To settle wage claims courts think they must hold your hand.

That’s our year in review, we whipped you right through it.
Next year? The new regs and a mad dash to review it.
But before 2015 joins the past’s ranks,
You keep on reading our blog, and for that we give thanks!

THANKS TO ALL OF OUR READERS. BEST WISHES FOR A HAPPY, HEALTHY, AND PROSPEROUS NEW YEAR!

Authored by Simon L. Yang

As discussed by our Consumer Class Defense Blog, this week’s Supreme Court decision in DirecTV, Inc. v. Imburgia reversed a California Court of Appeal that had applied the California Consumer Legal Remedies Act’s prohibition of class waivers in arbitration agreements. According to the lower court’s decision, an arbitration agreement’s terms—directing application of the “law of your state”—permitted the court to effect the California law’s ban on class waivers. But as DirecTV reiterated, courts cannot ignore the Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion, which held that the Federal Arbitration Act (“FAA”) trumps contrary state laws when it comes to class waivers.

But on the same day the Supreme Court reaffirmed that California’s continuing hostility to honoring class waivers is impermissible, the Supreme Court also declined an opportunity to weigh in on California’s similar hostility to “PAGA waivers” in arbitration agreement. By denying a petition to review in CarMax Auto Superstores California, Inc. v. Areso, the Supreme Court left standing California’s “Iskanian rule” that holds PAGA waivers—or representative action waivers concerning claims under California’s Private Attorney General Act—are unenforceable.

Even though this is the third time that the Supreme Court has passed up an opportunity to invalidate the Iskanian rule, employers shouldn’t jump to conclusions that this week’s action in DirecTV and inaction in CarMax suggests that the Supreme Court is tacitly approving the Iskanian rule.

The Supreme Court simply may be deferring the question, since a petition for rehearing en banc is pending before the Ninth Circuit in Sakkab v. Luxottica Retail North America, Inc. Unlike several prior federal district court decisions that considered the Iskanian rule and found it inconsistent with both the FAA and Concepcion, the Ninth Circuit upheld the Iskanian rule in Sakkab. The Supreme Court might be waiting to see how the en banc panel addresses the Iskanian rule and take up that decision, if necessary. Or the Supreme Court may believe review is not procedurally proper because the CarMax decision is not final, since it did not hold PAGA claims to be non-arbitrable but held only that representative claims under PAGA could not be waived entirely.

In any event, while employers can all take solace from DirecTV’s reaffirmation of Concepcion, employers need not despair that CarMax means the Iskanian rule shall remain the law of the land (in California) forever. Maybe an en banc Ninth Circuit panel will deliver justice. If not, maybe the Supreme Court finally will weigh in. The only certainty is we’ll keep you posted.