California Supreme Court Allows Arbitration Agreements With Class Waivers

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On Monday, June 23, 2014, the California Supreme Court held in Iskanian v. CLS Transportation of Los Angeles, LLC that a state’s refusal to enforce an arbitration agreement that waives the right to class proceedings on public policy or unconscionability grounds is preempted under the Federal Arbitration Act. In its previous decision in Gentry v. Superior Court, the California Supreme Court held that class action waivers may be unenforceable when considering certain factors. That decision led to the regular invalidation of class waivers. However, in the wake of the United States Supreme Court’s holding in AT&T Mobility v. Concepcion, the California high court announced that its decision in Gentry was no longer viable because states cannot require a procedure that interferes with the fundamental attributes of arbitration. The court further held that such waivers are not unlawful under the National Labor Relations Act, but did draw an exception for claims brought under the Private Attorneys General Act.

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