Echevarria v. Aerotek, Inc.
5:16-cv-04041
N.D. Cal.Jul 16, 2019Background
- Plaintiff Jaime Echevarria, a former temporary employee of Aerotek, filed a putative class action and a representative PAGA claim in California state court; Aerotek removed under CAFA.
- After Epic Systems, the parties dismissed individual and class claims, leaving only the representative PAGA claim for adjudication.
- Aerotek moved to dismiss the representative PAGA claim and to compel arbitration of any individual PAGA claim; the district court denied Aerotek’s motion and remanded the PAGA claim to state court in an order dated June 17, 2019.
- Aerotek timely appealed and moved to stay all proceedings pending appeal; the district court considered the Nken four-factor stay test.
- The court found Aerotek raised serious legal questions about (1) whether Epic Systems undermines Ninth Circuit precedent in Sakkab concerning PAGA waivers/arbitration and (2) whether a district court must or may retain jurisdiction over a PAGA claim after CAFA-removable claims are dismissed.
- Balancing the factors, the court concluded Aerotek would suffer irreparable harm absent a stay and that the balance of hardships and public interest favored a stay, and therefore granted the stay pending appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of Epic Systems on Sakkab/Iskanian (arbitrability of representative PAGA claims) | Echevarria: Epic does not affect Iskanian; PAGA representative claims are not subject to arbitration and Sakkab remains good law. | Aerotek: Epic may have undermined Sakkab’s reasoning that Iskanian’s bar on waiving representative PAGA claims is not preempted by the FAA. | Court: Issue presents serious legal questions; Epic did not clearly abrogate Sakkab but the question is close enough to support a stay. |
| Jurisdiction/remand over PAGA claim after CAFA-triggering claims dismissed | Echevarria: District court properly declined to exercise supplemental jurisdiction and remanded; no serious legal question shown. | Aerotek: Unclear whether district courts must retain jurisdiction over PAGA claims after CAFA claims are dismissed; presents a significant, unresolved question. | Court: Few on-point authorities exist; question is a serious legal one and supports a stay. |
| Irreparable harm from denial of stay re: arbitration/enforcement | Echevarria: Appeal concerns procedural forum issues; defendant will still face the merits, so delay is not irreparable. | Aerotek: If forced to litigate in state court, Aerotek will incur litigation costs and lose arbitration’s advantages; if appeal succeeds, resources would be wasted. | Court: Loss of arbitration’s benefits and wasted litigation due to remand constitutes irreparable injury; factor favors a stay. |
Key Cases Cited
- Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) (Supreme Court decision on FAA and arbitration agreements that may affect Circuit precedent)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (Ninth Circuit holding Iskanian’s bar on waiving representative PAGA claims is not preempted by the FAA)
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (California Supreme Court: waivers of representative PAGA claims are contrary to public policy and unenforceable)
- Nken v. Holder, 556 U.S. 418 (2009) (Supreme Court outlining four-factor stay pending appeal framework)
- Leiva-Perez v. Holder, 640 F.3d 962 (9th Cir. 2011) (explaining standards for likelihood of success and irreparable harm in stay context)
- Lair v. Bullock, 697 F.3d 1200 (9th Cir. 2012) (applying Nken factors to stay analysis)