56 Cal.App.5th 862
Cal. Ct. App.2020Background
- Brandon Olson, a Lyft driver, agreed to Lyft’s Terms of Service containing a mandatory individual arbitration clause and a representative-action waiver for PAGA claims.
- Olson sued Lyft alleging wage-and-hour and UCL claims, and six representative PAGA claims; Lyft moved to compel arbitration of the PAGA claims.
- Lyft conceded Iskanian precludes enforcing PAGA representative-action waivers but argued Iskanian is wrong or undermined by Epic Systems (U.S. Supreme Court decision on class/collective waivers).
- The trial court (Judge Karnow) denied Lyft’s petition, reasoning Epic Systems did not address PAGA’s qui tam/state-enforcement character and thus did not overrule Iskanian.
- The Court of Appeal affirmed, following Correia and other authority holding Epic Systems does not defeat Iskanian; Olson awarded costs on appeal.
Issues
| Issue | Olson's Argument | Lyft's Argument | Held |
|---|---|---|---|
| Enforceability of PAGA representative-action waivers | Iskanian: PAGA waivers unenforceable because PAGA deputizes employees to enforce state interests | Waivers are enforceable; FAA requires enforcement of individual arbitration and bars representative PAGA suits | Court held Iskanian controls; PAGA representative-action waivers unenforceable |
| Effect of Epic Systems on Iskanian | Epic did not address PAGA; does not overrule state-law holding | Epic’s broad enforcement of individualized arbitration undermines Iskanian | Epic did not resolve the same question; intermediate courts must follow California Supreme Court |
| FAA preemption question | FAA does not preempt Iskanian because PAGA is a qui tam/state enforcement action | FAA preempts state rule and requires enforcement of arbitration terms | Court held FAA does not preempt Iskanian in this context (per Correia and Sakkab reasoning) |
| Arbitrability of victim-specific relief in PAGA claims | PAGA primarily vindicates state interests; representative relief cannot be waived away | Victim-specific (individual) aspects should be compelled to individual arbitration | Court rejected Lyft’s attempt to compel PAGA claims; representative PAGA relief not arbitrable under the waiver at issue |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (PAGA representative-action waivers unenforceable; PAGA actions are a qui tam/state enforcement mechanism)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (U.S. 2018) (enforces individualized arbitration and upholds class/collective-action waivers; addressed NLRA conflict)
- Correia v. NB Baker Elec., Inc., 32 Cal.App.5th 602 (Cal. Ct. App. 2019) (held Epic Systems did not overrule Iskanian; intermediate courts remain bound by California Supreme Court)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (endorsed Iskanian reasoning; PAGA rule not preempted by FAA)
- ZB, N.A. v. Superior Court, 8 Cal.5th 175 (Cal. 2019) (clarified scope of PAGA relief and the requirement that the state must have delegated enforcement to private plaintiffs for Iskanian to apply)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preempts state rules that unduly interfere with arbitration; key precedent upholding class-waiver enforcement)