Ninth Circuit’s Twin Decisions May Signal Decline in Employment Class Actions and Rise in PAGA Claims

by Perkins Coie
Contact

The future of California labor and employment class actions took several blows this week.  First, the Supreme Court of California issued a decision in Iskanian v. CLS Transp. L.A., LLC, No S204032 (Cal. June 23, 2014) upholding a class action waiver in a dispute resolution policy.  A summary of that decision can be found here.

On the same day, the U.S. Court of Appeals for the Ninth Circuit issued two decisions upholding collective and class action waivers in employment contracts in Johnmohammadi v. Bloomingdale’s Inc., No. 12-5578 (9th Cir. June 23, 2014) and Davis v. Nordstrom, Inc., No. 4:11-cv-03956-CW (9th Cir. June 23, 2014).  Taken together, these three rulings suggest that properly drafted arbitration provisions—including waivers on class action litigation and classwide arbitration of employment claims—will likely be enforced when they are provided to employees with reasonable notice.  At the same time, after Iskanian, employers can likely expect an increase in representative claims brought under California’s Private Attorneys General Act. Here’s a brief summary of the Ninth Circuit decisions:

Johnmohammadi v. Bloomingdale’s Inc.

Bloomingdale’s informed its employees that they agreed to resolve employment-related disputes through individual arbitration unless they “opted out” within 30 days.  An employee, who had not opted-out, brought a purported class action to recover unpaid overtime wages.  The employer argued that the dispute resolution program precluded class action litigation, and that the employee’s individual claims must be arbitrated.  The district court granted the employer’s motion to compel arbitration and on appeal, the Ninth Circuit held the arbitration provision was enforceable under California law.  After concluding that the employee was “fully informed” of the consequences of declining to opt out of the arbitration requirements, the court found that neither the Norris-LaGuardia Act nor the National Labor Relations Act (NLRA) precluded an employee from waiving his or her right to litigate claims on a classwide basis. 

Davis v. Nordstrom, Inc.

Following the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the employer revised its employee arbitration policy contained in its employee handbook.  The change precluded employees from bringing most class action lawsuits.  The employer provided its employees with written notice of this change and did not enforce the new policy for 30 days to allow employees to consider the change and decide whether to continue employment.  The Ninth Circuit found the amended arbitration provision, including the class action waiver, was enforceable.  The court further held that the employer was not required to inform the employees that continued employment after receiving notice of the policy change constituted acceptance of the new terms of employment.

Conclusion

After Iskanian, Johnmohammadi and Davis, California law is clear that employees can waive their opportunity to litigate claims on a classwide basis in favor of individual arbitration and that companies doing business in California can mitigate the risk of facing class action litigation by including class waivers in properly drafted arbitration agreements. 

Employers should carefully consider whether to utilize mandatory arbitration provisions, including the manner they provide employees with notice of revisions to existing arbitration agreements or new arbitration agreements.  If the trends in Davis and Johmohammadi continue, employers with arbitration provisions will likely see a decrease in the number of class action claims but will likely see an increase in representative Private Attorneys General Act claims, which Iskanian held cannot be waived.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie
Contact
more
less

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!