Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-55184/USCOURTS-ca9-13-55184-0/pdf.json

Parties Involved:
Chamber of Commerce of the United States
Amicus Curiae
Luxottica Retail North America, Inc.
Appellee
Retail Litigation Center, Inc.
Amicus Curiae
Shukri Sakkab
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SHUKRI SAKKAB, an individual, on

behalf of himself, and on behalf of

all persons similarly situated,

Plaintiff-Appellant,

v.

LUXOTTICA RETAIL NORTH

AMERICA, INC., an Ohio corporation,

Defendant-Appellee.

No. 13-55184

D.C. No.

3:12-cv-00436-

GPC-KSC

OPINION

Appeal from the United States District Court

for the Southern District of California

Gonzalo P. Curiel, District Judge, Presiding

Argued and Submitted

June 3, 2015—Pasadena, California

Filed September 28, 2015

Before: Milan D. Smith, Jr., and N. Randy Smith, Circuit

Judges, and Joan H. Lefkow,* Senior District Judge.

* The Honorable Joan Humphrey Lefkow, Senior District Judge for the

United States District Court for the Northern District of Illinois, sitting by

designation.

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2 SAKKAB V. LUXOTTICA RETAIL N. AM.

Opinion by Judge Milan D. Smith, Jr.;

Dissent by Judge N.R. Smith

SUMMARY**

Federal Arbitration Act / CA Private Attorney

General Act

The panel reversed the district court’s order granting

Luxottica Retail North America, Inc.’s motion to compel

arbitration of claims and dismissing plaintiff’s first amended

complaint, in a putative class action raising class

employment-related claims and a non-class representative

claim for civil penalties under the Private Attorney General

Act. 

Luxottica sought to compel arbitration under a dispute

resolution agreement contained in its Retail Associate Guide. 

Plaintiff argued that the portion of the alternative dispute

resolution agreement prohibiting him from bringing any

PAGA claims on behalf of other employees was

unenforceable under California law.

After the district court entered judgment in this case, the

California Supreme Court announced the rule in Iskanian v.

CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348

(2014), barring the waiver of representative claims under

PAGA.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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SAKKAB V. LUXOTTICA RETAIL N. AM. 3

The panel held that the waiver of plaintiff’s representative

PAGA claim could not be enforced. The panel held that the

Federal Arbitration Act did not preempt the California rule

announced in Iskanian. Specifically, the panel held that

following the logic of AT&T Mobility LLC v. Concepcion,

131 S. Ct. 1740 (2011), the Iskanian rule is a “generally

applicable” contract defense that may be preserved by the

FAA’s § 2 savings clause, provided it did not conflict with

the FAA’s purposes. The panel further found that the

Iskanian Rule did not conflict with the FAA’s purposes.

The panel held that the non-PAGA claims in the first

amended complaint must be arbitrated. The panel remanded

for the district court and the parties to decide in the first

instance where plaintiff’s representative PAGA claim should

be resolved, and to conduct other proceedings consistent with

this opinion.

Dissenting, Judge N.R. Smith would hold that the

majority should have applied Concepcion and deferred to the

FAA’s “liberal federal policy favoring arbitration.” Judge

N.R. Smith would hold that the Iskanian rule is preempted by

the FAA, and he would affirm the district court.

COUNSEL

Kyle R. Nordrehaug (argued), Norman B. Blumenthal, and

Aparajit Bhowmik, Blumenthal, Nordrehaug&Bhowmik, La

Jolla, California, for Plaintiff-Appellant.

Keith A. Jacoby (argued), Scott M. Lidman, and Judy M.

Iriye, Littler Mendelson, P.C., Los Angeles, California, for

Defendant-Appellee.

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4 SAKKAB V. LUXOTTICA RETAIL N. AM.

Andrew J. Pincus (argued) and Archis A. Parasharami, Mayer

Brown LLP, Washington, D.C., for Amici Curiae.

OPINION

M. SMITH, Circuit Judge:

This appeal presents issues of first impression regarding

the scope of Federal Arbitration Act (FAA) preemption,

9 U.S.C. § 2 et seq., and the meaning of the Supreme Court’s

decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct.

1740 (2011). We must decide whether the FAA preempts the

California rule announced in Iskanian v. CLS Transportation

Los Angeles, LLC, 59 Cal. 4th 348 (2014), which bars the

waiver of representative claims under the Private Attorneys

General Act of 2004 (PAGA), Cal. Lab. Code § 2698 et seq. 

After closely examining Concepcion and the Court’s other

statements regarding the purposes of the FAA, we conclude

that the Iskanian rule does not stand as an obstacle to the

accomplishment of the FAA’s objectives, and is not

preempted. We reverse the judgment of the district court and

remand for further proceedings.

FACTS AND PROCEDURAL BACKGROUND

The Plaintiff-Appellant, Shukri Sakkab (Sakkab), is a

former employee of Lenscrafters, an eyewear retailer owned

by the Defendant-Appellee, Luxottica Retail North America,

Inc. (Luxottica). On January 17, 2012, Sakkab filed a

putative class action complaint against Luxottica in the

Superior Court of the State of California in and for the

County of San Diego. The complaint asserted four causes of

action arising out of Sakkab’s employment by Luxottica,

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including (1) unlawful business practices, (2) failure to pay

overtime compensation, (3) failure to provide accurate

itemized wage statements, and (4) failure to pay wages when

due. The complaint alleged that Luxottica misclassified

Sakkab and other employees as supervisors so that they

would be exempt from overtime wages and meal and rest

breaks. Luxottica answered and timely removed the case to

federal court. On March 27, 2012, Sakkab filed a first

amended complaint (FAC) adding a non-class, representative

claim for civil penalties under the PAGA.

On April 23, 2012, Luxottica filed a motion to compel

arbitration under the dispute resolution agreement contained

in its “Retail Associate Guide.” The agreement provided, in

pertinent part:

You and the Company each agree that, no

matter in what capacity, neither you nor the

Company will (1) file (or join, participate or

intervene in) against the other party any

lawsuit or court case that relates in any way to

your employment with the Company or

(2) file (or join, participate or intervene in) a

class-based lawsuit, court case or arbitration

(including any collective or representative

arbitration claim).1

1 According to Luxottica, two different versions of the dispute resolution

agreement existed during the time that Luxottica employed Sakkab. In

June 2011, Luxottica circulated a revised version of the dispute resolution

agreement. The revised version provided:

You and the Company each agree that, no matter in

what capacity, neither you nor the Company will

(1) file (or join, participate or intervene in) against the

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Sakkab signed an acknowledgment indicating that he

understood and agreed to the terms of the dispute resolution

agreement on June 25, 2010.

On January 10, 2013, the district court granted

Luxottica’s motion to compel arbitration and dismissed the

FAC. The court noted that Sakkab did not dispute that his

first four claims were arbitrable. Sakkab argued, however,

that the portion of the alternative dispute resolution

agreement prohibiting him from bringing any PAGA claims

on behalf of other employees was unenforceable under

California law. For this reason, Sakkab argued, even if he

was required to arbitrate his claims, he could not be denied a

forum for his representative PAGA claim. The district court

rejected Sakkab’s argument that the right to bring a

other party any lawsuit or court case that relates in any

way to your employment with the Company or (2) file

(or join, participate or intervene in) a class-based

lawsuit or court case (including any collective action)

that relates in any way to your employment with the

Company or (3) file (or join, participate or intervene in)

a class-based arbitration (including any collective

arbitration claim) with regard to any claim relating in

any way to your employment with the Company to the

extent permitted by applicable law.

Sakkab acknowledged that he understood and agreed to the terms of the

revised version. For reasons that are not entirely clear, the district court

assumed that the earlier version governed the arbitrability of this dispute. 

We need not resolve which version of the agreement governs. Neither

party has argued that the district court erred by construing the earlier

version of the agreement instead of the later version, or that the results

would be any different if one version applied instead of the other. On

appeal, Sakkab concedes that the version relied on by the district court

governs, and that this version purports to prohibit him from arbitrating

representative PAGA claims.

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SAKKAB V. LUXOTTICA RETAIL N. AM. 7

representative PAGA claim is unwaivable under California

law. At the time, the California Supreme Court had not yet

considered whether PAGA waivers were enforceable under

California law. Relying on the Supreme Court’s decision in

AT&T Mobility LLC v. Concepcion, the district court

concluded that the FAA would preempt a state rule barring

waiver of PAGA claims. The court then granted the motion

to compel arbitration of the claims in the FAC, dismissed

Sakkab’s complaint, and entered judgment. This timely

appeal followed.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction under 28 U.S.C.

§ 1332(d)(2). We have appellate jurisdiction under 28 U.S.C.

§ 1291 because this is an appeal from a final judgment of the

district court.

“The district court’s decision to grant or deny a motion to

compel arbitration is reviewed de novo.” Knutson v. Sirius

XM Radio Inc., 771 F.3d 559, 564 (9th Cir. 2014) (quoting

Bushley v. Credit Suisse First Boston, 360 F.3d 1149, 1152

(9th Cir. 2004)).

DISCUSSION

After the district court entered judgment in this case, the

California Supreme Court ruled that PAGA waivers are

unenforceable under California Law. Iskanian, 59 Cal. 4th

348. On appeal, Luxottica argues that the FAA preempts the

Iskanian rule. After considering the history of the PAGA

statute and the Supreme Court’s FAA preemption cases, we

hold that the FAA does not preempt the Iskanian rule.

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I. The Labor Code Private Attorneys General Act

California’s Labor Code Private Attorneys General Act of

2004, Cal. Lab. Code § 2698 et seq., “authorizes an employee

to bring an action for civil penalties on behalf of the state

against his or her employer for Labor Code violations

committed against the employee and fellow employees, with

most of the proceeds of that litigation going to the state.” 

Iskanian, 59 Cal. 4th at 360. An action brought under the

PAGA is a type of qui tam action. Id. at 382.

The PAGA was enacted to correct two perceived flaws in

California’s Labor Code enforcement scheme. Id. at 378–79. 

The first flaw was that civil penalties were not available to

redress violations of some provisions of the Labor Code. Id.

at 378. Those provisions only provided for criminal

sanctions, not civil fines, and could only be enforced in

criminal prosecutions brought by district attorneys, not in

civil actions brought by the Labor Commissioner. See id. at

379. As a result, many violations of the Labor Code went

unpunished. Id. The PAGA addressed this problem by

providing for civil penalties for most Labor Code violations. 

“For Labor Code violations for which no penalty is provided,

the PAGA provides that the penalties are generally $100 for

each aggrieved employee per pay period for the initial

violation and $200 per pay period for each subsequent

violation.” Id. (citing Cal. Lab. Code § 2699(f)(2)).2

2 A court may award a lesser amount “if, based on the facts and

circumstances of the particular case, to do otherwise would result in an

award that is unjust, arbitrary and oppressive, or confiscatory.” Cal. Lab.

Code § 2699(e)(2).

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The second flaw the PAGA addressed was that, even

where the Labor Code provided for civil penalties, “there was

a shortage of government resources to pursue enforcement.” 

Id.; see also 2003 Cal. Stat. ch. 906 § 1. The legislative

history of the PAGA describes the legislature’s perception of

the seriousness of this problem:

“Estimates of the size of California’s

‘underground economy’—businesses

operating outside the state’s tax and licensing

requirements—ranged from 60 to 140 billion

dollars a year, representing a tax loss to the

state of three to six billion dollars annually.

Further, a U.S. Department of Labor study of

the garment industry in Los Angeles, which

employs over 100,000 workers, estimated the

existence of over 33,000 serious and ongoing

wage violations by the city's garment industry

employers, but that DIR was issuing fewer

than 100 wage citations per year for all

industries throughout the state. [¶] Moreover,

evidence demonstrates that the resources

dedicated to labor law enforcement have not

kept pace with the growth of the economy in

California.” (Assembly Com. on Labor and

Employment, Analysis of Sen. Bill No. 796

(Reg.Sess. 2003–2004) as amended July 2,

2003, p. 4.)

Iskanian, 59 Cal. 4th at 379. To compensate for the lack of

“[a]dequate financing of essential labor law enforcement

functions,” the legislature enacted the PAGA to permit

aggrieved employees to act as private attorneys general to

collect civil penalties for violations of the Labor Code. 2003

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Cal. Stat. ch. 906 § 1(d). Labor Code section 2699(a)

provides:

any provision of [the Labor Code] that

provides for a civil penalty to be assessed and

collected by the Labor and Workforce

Development Agency or any of its

departments, divisions, commissions, boards,

agencies, or employees, for a violation of this

code, may, as an alternative, be recovered

through a civil action brought by an aggrieved

employee on behalf of himself or herself and

other current or former employees . . . .

Seventy-five percent of the civil penalties recovered by

aggrieved employees3under the PAGA are distributed to the

Labor and Workforce Development Agency, while the

remainder is distributed to the aggrieved employees. Cal.

Lab. Code § 2699(i).4

3 An “aggrieved employee” is “any person who was employed by the

alleged violator and against whom one or more of the alleged violations

was committed.” Cal. Lab. Code § 2699(c).

4 Prior to bringing a PAGA action, an employee must notify the

employer and the Labor and Workforce Development Agency of the

specific provisions of the Labor Code alleged to have been violated. Cal.

Lab. Code § 2699.3(a)(1). The Agency is required to notify the employee

and employer of whether it intends to investigate the alleged violations. 

Id. § 2699.3(a)(2)(A). An aggrieved employee may commence an action

if he receives notice that the Agency does not intend to investigate the

alleged violations, or if he does not receive notice from the Agency within

33 days of notifying the Agency and the employer. Id. An employee may

also bring a PAGA action if the Agency investigates the alleged violations

and does not issue a citation to the employer within a specified period of

time. Id. § 2699.3(a)(2)(B).

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Pre-dispute agreements to waive PAGA claims are

unenforceable under California law. In Iskanian v. CLS

Transportation Los Angeles, Inc., the California Supreme

Court held that two state statutes prohibited the enforcement

of PAGA waivers. 59 Cal. 4th at 382–83. The first,

California Civil Code §1668, codifies the general principle

that agreements exculpating a party for violations of the law

are unenforceable.5 The Iskanian court observed that

allowing employees to waive the right to bring PAGA actions

would “disable one of the primary mechanisms for enforcing

the Labor Code.” Id. at 383. It reasoned that “[b]ecause such

an agreement has as its ‘object, . . . indirectly, to exempt [the

employer] from responsibility for [its] own . . . violation of

law,’ it is against public policy and may not be enforced.” Id.

(alterations in original) (quoting Cal. Civ. Code § 1668). The

Iskanian court also found that agreements waiving the right

to bring PAGA actions violated California Civil Code § 3513. 

Id. Civil Code § 3513 codifies the general principle that a

law established for a public reason may not be contravened

by private agreement.6 The court reasoned that “agreements

requiring the waiver of PAGA rights would harm the state’s

interests in enforcing the Labor Code and in receiving the

proceeds of civil penalties used to deter violations.” Id.

5 California Civil Code §1668 provides that “[a]ll contracts which have

for their object, directly or indirectly, to exempt anyone from

responsibility for his own fraud, or willful injury to the person or property

of another, or violation oflaw, whether willful or negligent, are against the

policy of the law.”

 

6 California Civil Code § 3513 provides that “[a]ny one may waive the

advantage of a law intended solely for his benefit. But a law established

for a public reason cannot be contravened by a private agreement.”

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Agreements waiving the right to bring “representative”

PAGA claims–that is, claims seeking penalties for Labor

Code violations affecting other employees–are also

unenforceable under California law. In Iskanian, the court

held that even if the PAGA authorized purely “individual”

claims,7an agreement to waive representative PAGA claims

would be unenforceable. Id. at 384. The court observed that

individual PAGA claims do not “result in the penalties

contemplated under the PAGA to punish and deter employer

practices that violate the rights of numerous employees under

the Labor Code.” Id. (quoting Brown v. Ralphs Grocery Co.,

197 Cal. App. 4th 489, 502 (Ct. App. 2011)).

II. The Federal Arbitration Act Does Not Preempt the

Iskanian Rule

If the Iskanian rule is valid, Sakkab’s waiver of his right

to bring a representative PAGA action is unenforceable. 

Therefore, this case turns on whether the FAA, 9 U.S.C. § 2

et seq., preempts the Iskanian rule. We conclude that it does

not.

“The FAA was enacted in 1925 in response to widespread

judicial hostility to arbitration agreements.” Concepcion,

131 S. Ct. at 1745. Section 2 is the “primary substantive

provision of the Act.” Id. (quoting Moses H. Cone Mem’l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). It

provides:

A written provision in any maritime

transaction or a contract evidencing a

7 The court declined to decide whether the PAGA authorizes purely

“individual” claims. Iskanian, 59 Cal. 4th at 384.

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transaction involving commerce to settle by

arbitration a controversy thereafter arising out

of such contract or transaction, or the refusal

to perform the whole or any part thereof, or an

agreement in writing to submit to arbitration

an existing controversy arising out of such a

contract, transaction, or refusal, shall be valid,

irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the

revocation of any contract.

9 U.S.C. § 2. While “[t]he FAA contains no express

pre-emptive provision” and does not “reflect a congressional

intent to occupy the entire field of arbitration,” Volt Info.

Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ.,

489 U.S. 468, 477 (1989), it preempts state law “to the extent

that it ‘stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress,’”

id. (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). 

The final clause of § 2, its saving clause, “permits agreements

to arbitrate to be invalidated by ‘generally applicable contract

defenses, such as fraud, duress, or unconscionability,’ but not

by defenses that apply only to arbitration or that derive their

meaning from the fact that an agreement to arbitrate is at

issue.” Concepcion, 131 S. Ct. at 1746 (quoting Doctor’s

Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)); see

also Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct.

1201, 1204 (2012). Even if a state-law rule is “generally

applicable,” it is preempted if it conflicts with the FAA’s

objectives. Concepcion, 131 S. Ct. at 1748.

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A. The Iskanian Rule is a Ground for the Revocation

of Any Contract

To fall within the ambit of § 2’s saving clause, the

Iskanian rule must be a “ground[] . . . for the revocation of

any contract.” 9 U.S.C. § 2 (emphasis added). We conclude

that it is.

The Supreme Court has clarified that a state contract

defense must be “generally applicable” to be preserved by

§ 2’s saving clause. Concepcion, 131 S. Ct. at 1746. It is

well established that the FAA preempts state laws that single

out arbitration agreements for special treatment. See, e.g.,

Doctor’s Assocs., 517 U.S. at 687. At minimum, then, § 2’s

“any contract” language requires that a state contract defense

place arbitration agreements on equal footing with nonarbitration agreements. See id. The Iskanian rule complies

with this requirement. The rule bars any waiver of PAGA

claims, regardless of whether the waiver appears in an

arbitration agreement or a non-arbitration agreement.

Some of our cases can be read to suggest that the phrase

“any contract” in § 2’s saving clause requires that a defense

apply generally to all types of contracts, in addition to

requiring that the defense apply equally to arbitration and

non-arbitration agreements. See Ting v. AT&T, 319 F.3d

1126, 1147–48 (9th Cir. 2003) (holding that California’s

Consumer Legal Remedies Act, Cal. Civ. Code § 1751, is

“not a law of ‘general applicability’” within the ambit of § 2’s

saving clause because it applies only to noncommercial

consumer contracts); Bradley v. Harris Research, Inc.,

275 F.3d 884, 890 (9th Cir. 2001) (holding that California

Business & Professions Code § 20040.05 does not apply to

“any contract” because it “applies only to forum selection

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clauses and only to franchise agreements”).8 However, the

Court’s decision in AT&T Mobility, LLC v. Concepcion,

131 S. Ct. 1740, cuts against this construction of the saving

clause. The Court in Concepcion held that the FAA

preempted California law providing that class action waivers

in certain consumer contracts of adhesion were

unconscionable and unenforceable. 131 S. Ct. at 1748–53. 

Even though the state-law rule at issue only applied to a

narrow class of consumer contracts, the Court strongly

implied that the rule was a “generally applicable contract

8 The reasoning of these cases was based on an ambiguous passage in

Southland Corp. v. Keating, 465 U.S. 1, 16 n.11 (1984). The Court in

Southland held that § 2 preempted a provision of California’s Franchise

Investment Law, Cal. Corp. Code § 31512 (1977), as applied to arbitration

agreements. Id. at 10. In a partial dissent, Justice Stevens argued that the

law was preserved by § 2 as a “ground[] . . . at law or in equity for the

revocation of any contract.” Id. at 18–20 (Stevens, J., concurring in part

and dissenting in part). The majority rejected this argument. It reasoned

that “the defense to arbitration found in the California Franchise

Investment Law is not a ground that exists at law or in equity ‘for the

revocation of any contract’ but merely a ground that exists for the

revocation of arbitration provisions in contracts subject to the California

Franchise Investment Law.” Id. at 16 n.11.

Cases following Southland appear to clarify that § 2’s “any contract”

language refers to whether a state law places arbitration agreements on

equal footing with non-arbitration agreements, not whether it applies to all

types of contracts. See Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987)

(“A court may not . . . construe [an arbitration] agreement in a manner

different from that in which it otherwise construes nonarbitration

agreements under state law.”); Doctor’s Assocs., 517 U.S. at 686–87

(“States may not . . . decide that a contract is fair enough to enforce all its

basic terms (price, service, credit), but not fair enough to enforce its

arbitration clause. . . . [T]hat kind of policywould place arbitration clauses

on an unequal ‘footing,’ directly contrary to the [FAA]’s language and

Congress’s intent.” (quoting Allied-Bruce Terminix Cos., Inc. v. Dobson,

513 U.S. 265, 281 (1995))).

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defense[].” See id. at 1748. The Court held that the rule was

preempted because it conflicted with the purposes of the

FAA, even though the rule purported to apply to “any

contract.” See id. (“Although § 2’s saving clause preserves

generally applicable contract defenses, nothing in it suggests

an intent to preserve state-law rules that stand as an obstacle

to the accomplishment of the FAA’s objectives.”).

Following the logic of Concepcion, we conclude that the

Iskanian rule is a “generally applicable” contract defense that

may be preserved by § 2’s saving clause, provided it does not

conflict with the FAA’s purposes.

B. The Iskanian Rule Does Not Conflict with the

FAA’s Purposes

We turn now to whether the Iskanian rule conflicts with

the FAA’s purposes. We apply ordinary conflict preemption

principles to determine whether a state-law rule conflicts with

a federal statute containing a saving clause. See Geier v. Am.

Honda Motor Co., Inc., 529 U.S. 861, 870–72 (2000). In

determining whether a state law is impliedly preempted,

“[t]he purpose of Congress is the ultimate touchstone.” 

Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996) (alteration

in original) (quoting Retail Clerks Int’l Ass’n, Local 1625,

AFL-CIO v. Schermerhorn, 375 U.S. 96, 103 (1963)). “What

is a sufficient obstacle is a matter of judgment, to be informed

by examining the federal statute as a whole and identifying its

purpose and intended effects . . . .” Crosby v. Nat’l Foreign

Trade Council, 530 U.S. 363, 373 (2000). In exercising our

judgment, we do not write on a blank slate, for the Supreme

Court has repeatedly identified the purposes of the FAA and

defined the scope of FAA preemption. See Allied-Bruce

Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 283 (1995)

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(O’Connor, J., concurring) (describing the Court’s FAA

preemption jurisprudence as “an edifice of [the Court’s] own

creation”). After considering the objectives of the FAA, we

conclude that the Iskanian rule does not conflict with those

objectives, and is not impliedly preempted.9

1. The FAA’s Purpose to Overcome Judicial

Hostility to Arbitration

The Supreme Court has stated that Congress enacted the

FAA to “overrule the judiciary’s longstanding refusal to

enforce agreements to arbitrate and to place such agreements

upon the same footing as other contracts.” Granite Rock Co.

v. Int’l Bhd. of Teamsters, 561 U.S. 287, 302 (2010) (quoting

Volt, 489 U.S. at 478). The FAA therefore preempts state

laws prohibiting the arbitration of specific types of claims. 

See, e.g., Marmet, 132 S. Ct. at 1203; Preston v. Ferrer,

552 U.S. 346, 356–59 (2008). The Amici Curiae argue that

the Iskanian rule conflicts with the FAA’s purpose to

overcome judicial hostility to arbitration because it prohibits

outright the arbitration of “individual” PAGA claims. We

reject this argument.

The California Supreme Court’s decision in Iskanian

expresses no preference regarding whether individual PAGA

claims are litigated or arbitrated. It provides only that

9 We reject Sakkab’s contention that the PAGA waiver is invalid

because it bars the assertion of statutory rights under American Express

Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), and Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985). 

“The ‘effective vindication’ exception, which permits the invalidation of

an arbitration agreement when arbitration would prevent the ‘effective

vindication’ of a federal statute, does not extend to state statutes.” 

Ferguson v. Corinthian Colls., Inc., 733 F.3d 928, 936 (9th Cir. 2013).

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representative PAGA claims may not be waived outright. 

59 Cal. 4th at 384. The Iskanian rule does not prohibit the

arbitration of any type of claim.

2. The FAA’s Purpose to Ensure Enforcement of

the Terms of Arbitration Agreements

The Supreme Court has stated that “[t]he ‘principal

purpose’ of the FAA is to ‘ensur[e] that private arbitration

agreements are enforced according to their terms.’”

Concepcion, 131 S. Ct. at 1748 (second alteration in original)

(quoting Volt, 489 U.S. at 478). The Court has also stated

that the FAA embodies “a liberal federal policy favoring

arbitration agreements, notwithstanding any state substantive

or procedural policies to the contrary.” Id. at 1749 (quoting

Moses H. Cone, 460 U.S. at 24). The Iskanian rule does not

conflict with these purposes.

Read broadly, these statements of the FAA’s purposes

would require strict enforcement of all terms contained in an

arbitration agreement, including terms that are unenforceable

under generally applicable state law. Such a broad

construction of the FAA’s purposes is untenable, of course,

because it would render § 2’s saving clause wholly

“ineffectual.” See Geier, 529 U.S. at 870; Prima Paint Corp.

v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967)

(“As the ‘saving clause’ in § 2 indicates, the purpose of

Congress in 1925 was to make arbitration agreements as

enforceable as other contracts, but not more so.”). Congress

plainly did not intend to preempt all generally applicable state

contract defenses, only those that “interfere[] with

arbitration,” Concepcion, 131 S. Ct. at 1750.

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A defense interferes with arbitration if, for example, it

prevents parties from selecting the procedures they want

applied in arbitration. See id. at 1748–53. Concepcion

illustrates how a generally applicable contract defense might

do so. The California rule at issue in Concepcion, which

provided that class action waivers in certain consumer

contracts of adhesion were unconscionable, did not explicitly

discriminate against arbitration. See id. at 1745. As applied

to arbitration agreements, however, the rule “interfere[ed]

with fundamental attributes of arbitration,” id. at 1748, by

imposing formal classwide arbitration procedures on the

parties against their will. Id. at 1750–51. As the Court

explained,

“In bilateral arbitration, parties forgo the

procedural rigor and appellate review of the

courts in order to realize the benefits of

private dispute resolution: lower costs, greater

efficiency and speed, and the ability to choose

expert adjudicators to resolve specialized

disputes.” But before an arbitrator may

decide the merits of a claim in classwide

procedures, he must first decide, for example,

whether the class itself may be certified,

whether the named parties are sufficiently

representative and typical, and how discovery

for the class should be conducted.

Id. at 1751 (citation omitted) (quoting Stolt-Nielsen S.A. v.

AnimalFeeds Int’l Corp., 559 U.S. 662, 685 (2010)). The

Court observed that “the switch from bilateral to class

arbitration sacrifices the principal advantage of arbitration–its

informality–and makes the process slower, more costly, and

more likely to generate procedural morass than final

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judgment.” Id. The parties could not opt out of the formal

procedures of class arbitration because the procedures were

required to protect the due process rights of absent parties. 

Id. Therefore, although the California rule prohibiting class

action waivers applied equally to both arbitration agreements

and non-arbitration agreements, it could not be applied to

arbitration agreements without interfering with parties’

freedom to select informal procedures.

The Iskanian rule prohibiting waiver of representative

PAGA claims does not diminish parties’ freedom to select

informal arbitration procedures. To understand why, it is

essential to examine the “fundamental[]” differences between

PAGA actions and class actions. See Baumann v. Chase Inv.

Servs. Corp., 747 F.3d 1117, 1123 (9th Cir. 2014) (quoting

McKenzie v. Fed. Express Corp., 765 F. Supp. 2d 1222, 1233

(C.D. Cal. 2011)). The class action is a procedural device for

resolving the claims of absent parties on a representative

basis. See Fed. R. Civ. P. 23; Ortiz v. Fibreboard Corp.,

527 U.S. 815, 832–33 (1999); Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 613–17 (1997). By contrast, a PAGA

action is a statutory action in which the penalties available are

measured by the number of Labor Code violations committed

by the employer. An employee bringing a PAGA action does

so “as the proxy or agent of the state’s labor law enforcement

agencies,” Iskanian, 59 Cal. 4th at 380 (quoting Arias v.

Superior Court, 46 Cal. 4th 969, 986 (2009)), who are the

real parties in interest, see id. at 382. As the state’s proxy, an

employee-plaintiff may obtain civil penalties for violations

committed against absent employees, Cal. Lab. Code

§ 2699(g)(1), just as the state could if it brought an

enforcement action directly. However, by obtaining such

penalties, the employee-plaintiff does not vindicate absent

employees’ claims, for the PAGA does not give absent

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employees any substantive right to bring their “own” PAGA

claims. See Amalgamated Transit Union, Local 1756, AFLCIO v. Superior Court, 46 Cal. 4th 993, 1003 (2009); see also

Iskanian, 59 Cal. 4th at 381 (explaining that “[t]he civil

penalties recovered on behalf of the state under the PAGA are

distinct from the statutory damages to which employees may

be entitled in their individual capacities”). An agreement to

waive “representative” PAGA claims–that is, claims for

penalties arising out of violations against other employees–is

effectively an agreement to limit the penalties an employeeplaintiff may recover on behalf of the state.

Because a PAGA action is a statutory action for penalties

brought as a proxy for the state, rather than a procedure for

resolving the claims of other employees, there is no need to

protect absent employees’ due process rights in PAGA

arbitrations. Compare Concepcion, 131 S. Ct. at 1751–52

(observing “it is . . . odd to think that an arbitrator would be

entrusted with ensuring that third parties’ due process rights

are satisfied”), with Arias, 46 Cal. 4th at 984–87. PAGA

arbitrations therefore do not require the formal procedures of

class arbitrations. See Baumann, 747 F.3d at 1123.10

10 A judgment in a PAGA action binds absent employees because it

binds the government agency tasked with enforcing the labor laws. Arias,

46 Cal. 4th at 986. As the California Supreme Court has explained,

[w]hen a government agency is authorized to bring an

action on behalf of an individual or in the public

interest, and a private person lacks an independent legal

right to bring the action, a person who is not a party but

who is represented by the agency is bound by the

judgment as though the person were a party.

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Unlike Rule 23(c)(2), PAGA has no notice

requirements for unnamed aggrieved

employees, nor may such employees opt out

of a PAGA action. In a PAGA action, the

court does not inquire into the named

plaintiff’s and class counsel’s ability to fairly

and adequately represent unnamed

employees—critical requirements in federal

class actions under Rules 23(a)(4) and (g). . . . 

Moreover, unlike Rule 23(a), PAGA contains

no requirements of numerosity, commonality,

or typicality.

Id. at 1122–23 (citations omitted). Because representative

PAGA claims do not require any special procedures,

prohibiting waiver of such claims does not diminish parties’

freedom to select the arbitration procedures that best suit their

needs. Nothing prevents parties from agreeing to use

informal procedures to arbitrate representative PAGA claims. 

This is a critically important distinction between the Iskanian

rule and the rule at issue in Concepcion.

The dissent emphasizes that both the Iskanian rule and the

rule at issue in Concepcion “interfere[] with the parties’

freedom to limit their arbitration only to those claims arising

between the contracting parties.” We do not read Concepcion

to require the enforcement of all waivers of representative

claims in arbitration agreements. Whether a claim is

technically denominated “representative” is an imperfect

proxy for whether refusing to enforce waivers of that claim

Id. Since the aggrieved employee bringing the action “does so as the

proxy or agent of the state’s labor law enforcement agencies,” absent

employees are also bound by any judgment regarding civil penalties. Id.

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will deprive parties of the benefits of arbitration.11Instead,

Concepcion requires us to examine whether the waived

claims mandate procedures that interfere with arbitration, as

the class claims in Concepcion did. Here, they do not.

We take the dissent’s broader point to be that the Iskanian

rule defeats the parties’ contractual expectations, as expressed

in their arbitration agreement. See Concepcion, 131 S. Ct. at

1752 (“Arbitration is a matter of contract, and the FAA

requires courts to honor parties’ expectations.”). We

recognize that Sakkab and Luxottica likely expected the

waiver of representative PAGA claims to be enforced, and

that the Iskanian rule prevents that expectation from being

fulfilled. Any generally applicable state law that invalidates

a mutually agreed upon term of an arbitration agreement will,

by definition, defeat the parties’ contractual expectations. 

However, the FAA’s saving clause clearly indicates that

Congress did not intend for the parties’ expectations to trump

any and all other interests. As we have explained, a rule

requiring that the parties’ expectations be enforced in all

circumstances, regardless of whether doing so conflicts with

generallyapplicable state law, would render the saving clause

wholly ineffectual.

We acknowledge that the Court in Concepcion also

expressed concern that “class arbitration greatly increases

risks to defendants” by aggregating claims and increasing the

11 For example, even an “individual” PAGA claim does not arise solely

between an employer and an employee. As the court in Iskanian

observed, “every PAGA action, whether seeking penalties for Labor Code

violations as to only one aggrieved employee–the plaintiff bringing the

action–or as to other employees as well, is a representative action on

behalf of the state.” Iskanian, 59 Cal. 4th at 387.

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amount of potential damages. Id. at 1752. As the Court

observed, arbitration is “poorly suited to the higher stakes of

class litigation,” because it does not provide for judicial

review. Id. Although PAGA actions do not aggregate

individual claims, they may nonetheless involve high stakes. 

Defendants may face hefty civil penalties in PAGA actions,

and may be unwilling to forgo judicial review by arbitrating

them. It does not follow, however, that the FAA preempts the

Iskanian rule just because the amount of civil penalties the

PAGA authorizes could make arbitration a less attractive

method than litigation for resolving representative PAGA

claims. By their nature, some types of claims are better

suited to arbitration than others. See Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991)

(recognizing that agreements to arbitrate federal statutory

claims are enforceable even if they do not appear to be

“appropriate for arbitration”). But the FAA would not

preempt a state statutory cause of action that imposed

substantial liability merely because the action’s high stakes

would arguably make it poorly suited to arbitration. Cf.

Medtronic, 518 U.S. at 485 (“[B]ecause the states are

independent sovereigns in our federal system, we have long

presumed that Congress does not cavalierly pre-empt statelaw causes of action.”). Nor, we think, would the FAA

require courts to enforce a provision limiting a party’s

liability in such an action, even if that provision appeared in

an arbitration agreement. Cf. Booker v. Robert Half Int’l,

Inc., 413 F.3d 77, 83 (D.C. Cir. 2005) (assuming, without

deciding, that a term in an arbitration agreement barring

punitive damages was unenforceable as applied to a claim

under the District of Columbia Human Rights Act). The

FAA contemplates that parties may simply agree ex ante to

litigate high-stakes claims if they find arbitration’s informal

procedures unsuitable. By the same token, the FAA does not

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require courts to enforce agreements to waive the right to

bring representative PAGA actions just because the amount

of penalties an aggrieved employee is authorized to recover

for the state makes the formal procedures of litigation more

attractive than arbitration’s informal procedures. Just as the

high stakes involved in antitrust actions may cause parties to

agree ex ante to exclude antitrust claims from arbitration,

parties may prefer to litigate representative PAGA claims.

It is true that PAGA actions, like many causes of action,

can be complex. It is not true, however, that PAGA actions

are necessarily“procedurally” complex, as the dissent claims. 

Rather, the potential complexity of PAGA actions is a direct

result of how an employer’s liability is measured under the

statute. The amount of penalties an employee may recover is

measured by the number of violations an employer has

committed, and the violations may involve multiple

employees. “[P]otential complexity should not suffice to

ward off arbitration,” Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 633 (1985), where, as

here, the complexity flows from the substance of the claim

itself, rather than any procedures required to adjudicate it (as

with class actions). Cf. id. (holding that an agreement to

arbitrate antitrust claims was enforceable).

The dissent argues that representative PAGA actions will

make the arbitration process “slower” and “more costly.” 

There is no support for this conclusion in the record. Cf.

Concepcion, 131 S. Ct. at 1751 (citing American Arbitration

Association statistics regarding the duration of class

arbitrations). Moreover, even if there were evidence that

representative PAGA actions take longer or cost more to

arbitrate than other types of claims, the same could be said of

any complex or fact-intensive claim. Antitrust claims, for

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example, have the potential to make arbitration slower and

more costly. This does not mean that a rule declining to

enforce waivers of such claims interferes with the FAA in any

meaningful sense, since, unlike class claims, parties are free

to arbitrate them using the procedures of their choice. In

many ways, arbitration is well suited to resolving complex

disputes, provided that the parties are free to decide how the

arbitration will be conducted. See id.; see also American

Arbitration Association Commercial Arbitration Rules

(describing separate procedures for “Large, Complex,

Commercial Disputes”).

The dissent also argues that representative PAGA claims

are “more likely to generate procedural morass.” But whether

arbitration of representative PAGA actions is likely to

“generate procedural morass” depends, first and foremost, on

the procedures the parties select. One way parties may

streamline the resolution of complex PAGA claims is by

agreeing to limit discovery in arbitration. See Dotson v.

Amgen, Inc., 181 Cal. App. 4th 975, 983 (Ct. App. 2010)

(observing that “arbitration is meant to be a streamlined

procedure. Limitations on discovery, including the number

of depositions, is one of the ways streamlining is achieved”). 

California courts have recognized that “discovery limitations

are an integral and permissible part of the arbitration

process.” Id. (citing Armendariz v. Found. Health Psychcare

Servs., Inc., 24 Cal. 4th 83, 106 n.11 (2000));see also Roman

v. Superior Court, 172 Cal. App. 4th 1462, 1476 (Ct. App.

2009). Notably, California law permits parties to arbitrate

under the American Arbitration Association’s employment

dispute resolution rules. See Roman, 172 Cal. App. 4th at

1476. The rules give arbitrators broad authority to decide

how much discovery is appropriate, “consistent with the

expedited nature of arbitration.” See American Arbitration

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Association Employment Arbitration Rules and Mediation

Procedures (2009), at 19.

Of course, whether representative PAGA claims are likely

to “generate procedural morass” will also depend on whether,

and to what extent, state law purports to limit parties’ right to

use informal procedures, including limited discovery, in

representative PAGA arbitrations. It is conceivable that a

state law imposing such limits could run afoul of the Court’s

decision in Concepcion by requiring a degree of formality

that is inconsistent with traditional arbitration procedures. 

See Concepcion, 131 S. Ct. at 1751. No such state law is

before us, however, and it is premature to conclude that

representative PAGA claims will necessarily result in

“procedural morass” when there is no indication that state law

limits parties’ freedom to select informal procedures, or limit

discovery, in PAGA arbitrations. Cf. Williams v. Superior

Court, 236 Cal. App. 4th 1151, 1156–58 (Ct. App. 2015)

(upholding trial court’s refusal to order statewide discovery

in a PAGA action and observing that “[p]laintiff’s proposed

procedure, which contemplates jumping into extensive

statewide discovery based only on the bare allegations of one

local individual having no knowledge of the defendant’s

statewide practices would be a classic use of discovery tools

to wage litigation rather than facilitate it”).

In sum, the Iskanian rule does not conflict with the FAA,

because it leaves parties free to adopt the kinds of informal

procedures normally available in arbitration. It only prohibits

them from opting out of the central feature of the PAGA’s

private enforcement scheme–the right to act as a private

attorney general to recover the full measure of penalties the

state could recover.

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Our conclusion that the FAA does not preempt the

Iskanian rule is bolstered by the PAGA’s central role in

enforcing California’s labor laws. The Court has instructed

that “[i]n all pre-emption cases” we must “start with the

assumption that the historic police powers of the States were

not to be superseded by the Federal Act unless that was the

clear and manifest purpose of Congress.” Medtronic,

518 U.S. at 485 (quoting Rice v. Santa Fe Elevator Corp.,

331 U.S. 218, 230 (1947)); see also Arizona v. United States,

132 S. Ct. 2492, 2503 (2012) (considering historic police

powers of the State in analyzing obstacle preemption). 

“States possess broad authority under their police powers to

regulate the employment relationship to protect workers

within the State.” Metro. Life Ins. Co. v. Massachusetts,

471 U.S. 724, 756 (1985) (quoting DeCanas v. Bica, 424 U.S.

351, 356 (1976)).

Both the PAGA statute and the Iskanian rule reflect

California’s judgment about how best to enforce its labor

laws. “[T]he Legislature’s purpose in enacting the PAGA

was to augment the limited enforcement capability of the

Labor and Workforce Development Agency by empowering

employees to enforce the Labor Code as representatives of

the Agency.” Iskanian, 59 Cal. 4th at 383. And the “sole

purpose” of the Iskanian rule “is to vindicate the Labor and

Workforce Development Agency’s interest in enforcing the

Labor Code.” Id. at 388–89. The explicit purpose of the rule

barring enforcement of agreements to waive representative

PAGA claims is to preserve the deterrence scheme the

legislature judged to be optimal. See id. at 384.

As the California Supreme Court has explained, a PAGA

action is a form of qui tam action. See id. at 382. Qui tam

actions predate the FAA by several centuries. See Vermont

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Agency of Natural Res. v. United States ex rel. Stevens,

529 U.S. 765, 773–76 (2000). The FAA was not intended to

preclude states from authorizing qui tam actions to enforce

state law. Nor, we think, was it intended to require courts to

enforce agreements that severely limit the right to recover

penalties for violations that did not directly harm the party

bringing the action. The right to inform the state of violations

that did not injure the informer is the very essence of a qui

tam action. See id. at 775. That qui tam actions can be

difficult to arbitrate does not mean that the FAA requires

courts to enforce private agreements opting out of the state’s

chosen method of enforcing its labor laws.

III. Severability of the PAGA Waiver

Sakkab has not argued that the PAGA waiver contained

in the arbitration agreement rendered the entire arbitration

agreement void. Nor has he disputed that he is required to

arbitrate the four non-PAGA claims in the FAC. It is

therefore clear that the non-PAGA claims in the FAC must be

arbitrated.

We have held that the waiver of Sakkab’s representative

PAGA claims may not be enforced. It is unclear, however,

whether the parties have agreed to arbitrate such surviving

claims or whether they must be litigated instead.12

Accordingly, we reverse the district court’s order dismissing

the FAC, and return the issue to the district court and the

parties to decide in the first instance where Sakkab’s

representative PAGA claims should be resolved, and to

12 We note that the dispute resolution agreement provides that Luxottica

“expressly does not agree to arbitrate any claim on a . . . representative

basis.”

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conduct such other proceedings as are consistent with this

opinion.

REVERSED and REMANDED.

N.R. SMITH, dissenting:

In 1925, “Congress enacted the [Federal Arbitration Act]

in response to widespread judicial hostility to arbitration.” 

Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304,

2308–09 (2013). Despite ninety years of Supreme Court

precedent invalidating state laws deemed hostile to

arbitration, the majority today displays this same “judicial

hostility” to arbitration agreements. Our court employed the

same “judicial hostility” in Laster v. AT&T Mobility LLC,

584 F.3d 849 (9th Cir. 2009), rev’d sub nom. AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 131 S. Ct. 1740 (2011), for

which we were subsequently reversed.

In this case, rather than upholding the purposes of the

Federal Arbitration Act (“FAA”), the majority upholds a

“judicially created” state rule that prevents parties to an

arbitration agreement from agreeing that their future

arbitration will address individual claims arising between one

employee and one employer. To conclude that the state rule

(created by Iskanian v. CLS Transp. Los Angeles, LLC,

327 P.3d 129 (Cal. 2014)) does not frustrate the purposes of

the FAA, the majority ignores the basic precepts enunciated

in Concepcion. Because the majority should have applied

Concepcion and deferred to the FAA’s “liberal federal policy

favoring arbitration,” Moses H. Cone Mem’l Hosp. v.

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Mercury Constr. Corp., 460 U.S. 1, 24 (1983), rather than

circumventing it, I must dissent.

I. Concepcion

Because the majority essentially ignores the Supreme

Court’s direction in Concepcion (a case very similar in detail

to this case), I begin by describing this important precedent

in some detail.

In Concepcion, a consumer contract provided for

“arbitration of all disputes between the parties, but required

that claims be brought in the parties’ individual capacity, and

not as a plaintiff or class member in any purported class or

representative proceedings.” 131 S. Ct. at 1744 (internal

quotation marks omitted). Relying on the California Supreme

Court’s decision in Discover Bank v. Superior Court,

113 P.3d 1100 (Cal. 2005), abrogated by AT&T Mobility LLC

v. Concepcion, 131 S. Ct. 1740 (2011), which established a

rule that invalidated class action waivers in contracts of

adhesion, a federal district court “found that the arbitration

provision was unconscionable.” Concepcion, 131 S. Ct. at

1745. We affirmed, holding that the Discover Bank rule was

not preempted by the FAA, because it was simply “a

refinement of the unconscionability analysis applicable to

contracts generally in California.” Id. Further, we rejected

AT&T’s argument that “class proceedings will reduce the

efficiency and expeditiousness of arbitration.” Id.

The Supreme Court reversed and concluded that a rule

“[r]equiring the availabilityof classwide arbitration interferes

with fundamental attributes of arbitration and thus creates a

scheme inconsistent with the FAA.” Id. at 1748. The Court

held that, despite § 2’s savings clause, even generally

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applicable contract defenses can violate the FAA if they serve

as an obstacle to the objectives of the FAA. Id. The Court

also identified the appropriate inquiry: If the state rule “stands

as an obstacle to the accomplishment and execution of the full

purposes and objectives of Congress,” the rule is preempted. 

Id. at 1753. As part of that inquiry, the Court clarified the

purpose and objective of the FAA. “The overarching purpose

of the FAA . . . is to ensure the enforcement of arbitration

agreements according to their terms so as to facilitate

streamlined proceedings.” Id. at 1748.

The Court then applied that analysis to the Discover Bank

rule prohibiting the class action waivers. The Court

explained that “arbitration is a matter of contract,” id. at

1745, and “[a]lthough the [Discover Bank ] rule does not

require classwide arbitration, it allows any party to a

consumer contract to demand it ex post,” id. at 1750. Thus,

rather than holding the parties to the terms of bilateral

arbitration agreed upon in their contract, the Discover Bank

rule allowed any party to subject the other to class-action

arbitration. Id. The Court reasoned that “class arbitration, to

the extent it is manufactured by Discover Bank rather than

consensual, is inconsistent with the FAA.” Id. at 1750–51.

The Court then provided three reasons why ex post, statemandated class arbitration worked as an obstacle to the

FAA’s purposes and objectives. First, “the switch from

bilateral to class arbitration sacrifices the principal advantage

of arbitration—its informality—and makes the process

slower, more costly, and more likely to generate procedural

morass than final judgment.” Id. at 1751. The Court

explained that “[i]n bilateral arbitration, parties forgo the

procedural rigor and appellate review of the courts in order to

realize the benefits of private dispute resolution: lower costs,

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greater efficiency and speed, and the ability to choose expert

adjudicators to resolve specialized disputes.” Id. (quoting

Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662,

685 (2010)). Because of the complex nature of class

litigation, those benefits are lost when parties are forced to

pursue class arbitration rather than the bilateral arbitration to

which the parties agreed in their agreement. See Concepcion,

131 S. Ct. at 1751.

Second, theCourtreasoned that “class arbitration requires

procedural formality.” Id. “For a class-action money

judgment to bind absentees in litigation, class representatives

must at all times adequately represent absent class members,

and absent members must be afforded notice, an opportunity

to be heard, and a right to opt out of the class.” Id. (citing

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811–12

(1985)). The Court found it unlikely that Congress, when

passing the FAA, envisioned requiring such complex

procedural requirements in an arbitration context. Id. at

1751–52.

Third, “class arbitration greatly increases risks to

defendants.” Id. at 1752. The Court explained:

Informal procedures do of course have a cost:

The absence of multilayered review makes it

more likely that errors will go uncorrected. 

Defendants are willing to accept the costs of

these errors in arbitration, since their impact is

limited to the size of individual disputes, and

presumably outweighed by savings from

avoiding the courts. But when damages

allegedly owed to tens of thousands of

potential claimants are aggregated and

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decided at once, the risk of an error will often

become unacceptable. Faced with even a

small chance of a devastating loss, defendants

will be pressured into settling questionable

claims. . . . Arbitration is poorly suited to the

higher stakes of class litigation. . . . We find it

hard to believe that defendants would bet the

company with no effective means of review,

and even harder to believe that Congress

would have intended to allow state courts to

force such a decision.

Id.

After presenting these three reasons why ex post, statemandated class arbitration worked as an obstacle to the

objectives of the FAA, the Court addressed the argument that

class arbitration was “necessary to prosecute small-dollar

claims that might otherwise slip through the legal system.” 

Id. at 1753. The Court rejected the argument, reasoning that

“States cannot require a procedure that is inconsistent with

the FAA, even if it is desirable for unrelated reasons.” Id.

Thus, the Court concluded that “[b]ecause ‘it stands as an

obstacle to the accomplishment and execution of the full

purposes and objectives of Congress,’ California’s Discover

Bank rule is preempted by the FAA.” Id. (quoting Hines v.

Davidowitz, 312 U.S. 52, 67 (1941)).

II. FAA’s preemption of the Iskanian rule

The majority cannot distinguish the present case from the

principles outlined in Concepcion. Concepcion dealt with a

state rule that prohibited class-action waivers in arbitration

agreements. The present case involves a state rule that

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prohibits representative action waivers in arbitration

agreements.

The Discover Bank rule and the Iskanian rule are

sufficiently analogous to guide our decision.1 Class actions

and PAGA actions both allow an individual (who can

normally only raise his or her own individual claims) to bring

an action on behalf of other people or entities. See Wal-Mart

Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550 (2011) (reasoning

that “[t]he class action is ‘an exception to the usual rule that

litigation is conducted by and on behalf of the individual

named parties only.’” (quoting Califano v. Yamasaki,

442 U.S. 682, 700–01 (1979)); Arias v. Superior Court,

209 P.3d 923, 986 (Cal. 2009) (explaining that an aggrieved

employee suing under PAGA “does so as the proxy or agent

of the state’s labor law enforcement agencies” and a

judgment binds the state law enforcement agencies and

1 The majority spends a significant portion of its decision discussing

whether Iskanian’s rule is a “generally applicable contract defense.” See

Concepcion, 131 S. Ct. at 1746 (quoting Doctor’s Assocs., Inc. v.

Casarotto, 517 U.S. 681, 687 (1996)). However, the parties do not

address the issue of whether the Iskanian rule is a generally applicable

contract defense. Therefore, I do not address the issue (although (a) I have

serious doubts that the rule established by Iskanian falls into the same

category as the common law contract defenses of duress or fraud, and

(b) the Supreme Court did not determine in Concepcion whether the

alleged unconscionability of failing to apply the Discover Bank rule was

a generally applicable contract defense). Further, declaring that the

Iskanian rule is a “generally applicable contract defense” does not help the

majority. Under Concepcion, even generally applicable contract defenses

may be preempted if they “stand as an obstacle to the accomplishment of

the FAA’s objectives.” Id. at 1748. The Iskanian rule stands as such an

obstacle to “[t]he overarching purpose of the FAA . . . to ensure the

enforcement of arbitration agreements according to their terms so as to

facilitate streamlined proceedings.” Id.

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nonparty aggrieved employees). Likewise, waivers of class

actions and representative actions both seek to prevent the

parties from raising claims on behalf of others by limiting

arbitration to only those claims arising between the parties to

the agreement.

Because the class action and representative action waivers

fulfill the same purpose, it should be no surprise that they are

often (if not always) grouped together and use similar

language.2 The common inclusion of both class action and

representative waivers in arbitration agreements indicates that

one waiver, without the other, would not be sufficient to

create the type of arbitration desired by the parties. For

example, an arbitration agreement that includes a class waiver

without including a representative waiver would not

effectively limit the arbitration to only individual claims

arising between the parties to the agreement. Thus, both the

Discover Bank rule and Iskanian rule (by invalidating these

waivers) act to prevent contracting parties from crafting

arbitration agreements in a way that limits the arbitration to

claims arising solely between the contracting parties.3

2

In Concepcion, the arbitration agreement required claimsto be brought

in the parties’ “individual capacity, and not as a plaintiff or class member

in any purported class or representative proceeding.” Concepcion, 131 S.

Ct. at 1744. Here, Sakab’s arbitration agreement requires that he will not

“file (or join, participate or intervene in) a class-based lawsuit, court case

or arbitration (including any collective or representative arbitration

claim).” Both waivers expressly prohibited both class and representative

actions.

3 The majority responds by claiming that this argument would require

courts to enforce all waivers ofrepresentative claims, including individual

claims in a representative capacity, in arbitration agreements. However,

this argument regarding individual claims in a representative capacity

again is not relevant to the facts at hand. Sakkab was given the right to

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The majority emphasizes the differences between class

actions and PAGA claims. But differences between the two

types of actions, no matter how plentiful the majority would

want to characterize them, do not change the fact that a rule

prohibiting the waiver of either type of action in an

arbitration agreement interferes with the parties’ freedom to

limit their arbitration only to those claims arising between the

contracting parties. The majority recognizes that one of the

key problems with the Discover Bank rule in Concepcion was

that “it could not be applied to arbitration agreements without

interfering with parties’ freedom to select informal

procedures” for their own arbitrations. Maj. Op. at 20

(emphasis added). In an attempt to apply that principle to the

Iskanian rule, the majority reasons that “the Iskanian rule

does not conflict with the FAA, because it leaves parties free

to adopt the kinds of informal procedures normally available

in arbitration.” Maj. Op. at 27 (emphasis added). However,

the majority’s reasoning overlooks the simple fact that, by

preventing parties from limiting arbitration only to individual

claims arising between the two contracting parties, the

Iskanian rule interferes with the parties’ freedom to craft

arbitration in a way that preserves the informal procedures

and simplicity of arbitration (just as did the Discover Bank

rule). By requiring the availability of representative PAGA

claims in arbitration (i.e., claims not specific to the

contracting parties), the Iskanian rule interferes with the

fundamental attributes of arbitration and thus creates a

pursue his individual PAGA claim in this arbitration. His employer did

not object to Sakkab pursuing such an individual claim. Sakkab refused,

instead pursuing the broader claim at issue here. That said, when parties

contractually agree to waive any representative claims in an arbitration

agreement and a state rule mandates a different decision, an analysis under

Concepcion is warranted.

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scheme inconsistent with the FAA. See Concepcion, 131 S.

Ct. at 1748.

Because the effect of the waivers before challenged in

Concepcion and now challenged in this case are similar, the

analytic framework and reasoning in Concepcion is directly

applicable. Just like the Discover Bank rule in Concepcion,

the Iskanian rule does not require the parties to arbitrate

representative PAGA claims. However, by invalidating

representative waivers in an arbitration agreement (as applied

to PAGA claims), the rule allows any party to an employment

contract to demand arbitration of a representative PAGA

claim ex post, despite the fact that the parties agreed to forgo

such a demand in the agreement, where the parties have

already agreed to waive all other forums. See id. at 1750. As

explained below, by (a) preventing parties from crafting

arbitration agreements to limit the arbitration only to

individual claims and (b) allowing ex post demand for the

arbitration of representative PAGA actions, the Iskanian rule

forces the parties to lose the benefits of arbitration and

frustrates the purposes of the FAA. The Iskanian rule

burdens arbitration in the same three ways identified in

Concepcion: it makes the process slower, more costly, and

more likely to generate procedural morass; it requires more

formal and complex procedure; and it exposes the defendants

to substantial unanticipated risk. See id. at 1751–52.

A. The Iskanian rule makes arbitration slower, more

costly, and more likely to generate procedural

morass.

First, the switch from the arbitration of only individual

claims to the arbitration of representative PAGA claims on

behalf of the State and all other aggrieved employees

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“sacrifices the principal advantage of arbitration—its

informality—and makes the process slower, more costly, and

more likely to generate procedural morass.” Concepcion, 131

S. Ct. at 1751.4 When an aggrieved employee raises a

representative PAGA claim, he must first show that his

employer violated the California Labor Code. If the PAGA

claimant is successful in proving that his or her employer

violated the Labor Code, civil penalties are assessed against

the employer in the amount of “one hundred dollars ($100)

for each aggrieved employee per pay period for the initial

violation and two hundred dollars ($200) for each aggrieved

employee per pay period for each subsequent violation.” Cal.

Labor Code § 2699(f)(2). Thus, rather than merely focusing

on the individual employee, the hours he worked, and the

damages due to him, an arbitrator overseeing a representative

PAGA claim would have to make specific factual

determinations regarding (1) the number of other employees

affected by the labor code violations, and (2) the number of

4 For some unknown reason, the majority states that there is no support

in the record for the conclusion that representative PAGA actions will

make the arbitration process “slower” and “more costly.” However, the

arbitration of representative PAGA actions is clearly slower and more

costly than bilateral arbitration for the reasons outlined herein (for

example, the review of labor code violations and number of pay periods

for affected employees will inherently be slower and more costly when

brought in a representative capacity for multiple employees than the

review of labor code violations and number of pay periods when brought

in bilateral arbitration for a single employee). This conclusion is not

unique and is adequately reflected in the record. Indeed, the Chamber of

Commerce of the United States of America and Retail Litigation Center,

Inc. filed an amicus brief in this case detailing how such representative

claims lack “the simplicity, informality, and expedition that are

characteristic of arbitration” and concluding that the arbitration of

representative PAGA claims is as incompatible with arbitration as a class

proceeding.

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pay periods that each of the affected employees worked. 

Because of the high stakes involved in these determinations,

both of these issues would likely be fiercely contested by

parties. In arbitrations involving large companies, the

arbitrator would be required to make individual factual

determinations regarding the employment status for hundreds

or thousands of employees, none of whom are party to such

arbitration. Further, the employee who brought the

representative PAGA claim would not initially have access to

the information needed to prove the number of affected

employees or the number of pay periods they worked. 

Therefore, some kind of discovery would need to take place,

requiring the employer to divulge the necessary documents

(potentially a tremendous number of payroll and employment

forms) to the PAGA claimant. This would not be a minor

undertaking. All of these additional tasks and procedures

necessarily makes the process substantially slower,

substantially more costly, and more likely to generate

procedural morass than non-representative, individual

arbitration.

Despite these additional procedural hurdles present in a

PAGA claim, the majority denies that representative PAGA

claims would make the process slower, substantially more

costly, and more likely to generate procedural morass. 

Instead, the majority reasons that any potential complexity of

PAGA claims does not render such claims incompatible with

arbitration. The majority holds that “arbitration is well suited

to resolving complex disputes, provided that the parties are

free to decide how the arbitration will be conducted.” Maj.

Op. at 26. However, that rationale ignores the problem the

Iskanian rule creates; the parties had already decided how

their arbitration would be conducted (individually, in a nonrepresentative capacity). The Iskanian rule instead allows the

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employee, ex post, to demand arbitration of representative

claims.5 Although two parties certainly could agree to

arbitrate representative PAGA claims when they construct

and sign the arbitration agreement, requiring the parties to

resolve representative actions (after a contrary agreement

between the parties has been struck) renders the arbitration

much more complex, costly, and time consuming than what

the parties had agreed to do. “Arbitration is a matter of

contract,” and “[t]he overarching purpose of the FAA . . . is

to ensure the enforcement of arbitration agreements according

to their terms so as to facilitate streamlined proceedings.” 

Concepcion, 131 S. Ct. at 1745, 1748. When the parties have

agreed to a specific, streamlined method of arbitration (such

as the arbitration of individual claims only), and a relevant,

state rule forces the parties to forego their chosen method of

dispute resolution in favor of a procedure that is more costly

and time consuming, the state rule frustrates the purposes of

the FAA. As the Concepcion Court explained in the class

arbitration context, “The conclusion follows that class

arbitration, to the extent it is manufactured by Discover Bank

rather than consensual, is inconsistent with the FAA.” Id. at

1750–51. Likewise, it follows that representative arbitration,

5 The majority holds that parties could, ex ante, craft their arbitration

agreements to deal with the complexity involved in the arbitration of

representative PAGA claims. However, Concepcion’s analysis was not

concerned with the effect of the Discover Bank rule on future arbitration

agreements, but instead focused on the ex post effect of the rule on

arbitration agreements containing class waivers. See Concepcion, 131 S.

Ct. at 1750 (“California’s Discover Bank rule similarly interferes with

arbitration. Although the rule does not require classwide arbitration, it

allows any party to a consumer contract to demand it ex post.”). 

Therefore, we also focus on Iskanian’s ex post effect on Sakkab’s

arbitration agreement.

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to the extent it is manufactured by Iskanian rather than

consensual, is inconsistent with the FAA.

The majority further reasons that, even if representative

PAGA actions will make the arbitration process slower or

more costly, the same could be said of any complex or factintensive claim. The majority compares representative

PAGA actions to antitrust claims as an example of another

type of claim that has the potential to make arbitration slower

and more costly. This comparison is incorrect. Instead, the

principle enumerated in Concepcion requires us to compare

a representative PAGA claim (what the Iskanian rule would

require) to individual, bilateral arbitration (what the parties

had agreed to do in their arbitration agreement). Had the

majority conducted the correct comparison, it would be

forced to conclude that the arbitration of representative

PAGA claims is certainly more likely to make the process

slower, substantially more costly, and more likely to generate

procedural morass than non-representative, individual

arbitration.

B. The Iskanian rule requires more formal and complex

procedure.

Second, representative PAGA actions are procedurally

more complex than the arbitration of solely individual claims. 

Specifically, the discoveryrequired in a representative PAGA

claim is vastly more complex than would be required in an

individual arbitration. In an individual arbitration, the

employee already has access to all of his own employment

records (or can easily obtain them from his employer). He

knows how long he has been working for the employer and

can easily determine how many pay periods he has been

employed. Likewise, he knows whether he has been affected

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by the Labor Code violations he is alleging and can provide

individual evidence to support his claims. However, in a

representative PAGA claim, the individual employee does not

have access to any of this information on behalf of all the

other potentially aggrieved employees. Therefore, the

employee must be able to obtain the information from the

employer or the other employees. The discovery necessary

to obtain these documents from the employer would be

significant and substantially more complex than discovery

regarding only the employee’s individual claims. The

majority’s proposed solution to this complexity, the use of

hypothetical informal procedures instead of more formal

ones, misses the mark. The procedural complexity present in

representative PAGA claims is not attributable to the use of

formal versus informal procedures. Instead, such complexity

is a function of the sheer number of tasks and procedural

hurdles present in bringing a representative PAGA claim.

The majority completely dismisses the procedural

complexity that a representative PAGA claim entails. As the

majority suggests, the arbitration of representative PAGA

claims may not be as procedurally complex as class

arbitrations. See Concepcion, 131 S. Ct. at 1751–52. 

However, (for the second time), the majority makes the

wrong comparison. Instead of comparing a representative

PAGA claim to individual, bilateral arbitration (i.e., what the

parties had agreed to versus what the Iskanian rule would

require, as the principle enumerated in Concepcion requires),

the majority compares a representative PAGA claims to class

arbitration and concludes that, because the two procedures are

different, a representative PAGA action is not inconsistent

with arbitration. Had the majority conducted the correct

comparison, the majoritywould be forced to conclude that the

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arbitration of representative PAGA claims is certainly more

procedurally complex than bilateral arbitration.

The majority holds that any potential procedural

complexity will depend on the arbitration procedures the

parties select and that the parties may streamline complex

PAGA claims by agreeing to informal procedures. However,

this type of reasoning was also considered and rejected in

Concepcion, where the plaintiff contended that because the

parties could agree to informal procedures, class procedures

were not necessarilyincompatible with arbitration. 131 S. Ct.

at 1752–53. Again, the majority fails to recognize that,

although the parties could choose to employ procedures to

address the complexity inherent in representative PAGA

actions, they cannot be required by a state to do so. As the

Court in Concepcion reasoned:

The Concepcions contend that because parties

may and sometimes do agree to aggregation,

class procedures are not necessarily

incompatible with arbitration. But the same

could be said about procedures that the

Concepcions admit States may not

superimpose on arbitration: Parties could

agree to arbitrate pursuant to the Federal

Rules of Civil Procedure, or pursuant to a

discovery process rivaling that in litigation. 

Arbitration is a matter of contract, and the

FAA requires courts to honor parties’

expectations. But what the parties in the

aforementioned examples would have agreed

to is not arbitration as envisioned by the FAA,

lacks its benefits, and therefore may not be

required by state law.

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Id. (citation omitted). Therefore, although parties may

choose to employ complex discoveryprocedures, as would be

required by a representative PAGA claim, state law cannot

demand that they do so. Here, Sakkab and Luxottica chose to

pursue individual, non-representative arbitration. Therefore,

the Iskanian rule frustrates the purposes of the FAA by

requiring them to undertake the procedural complexity of

representative PAGA claims.

C. The Iskanian rule exposes the defendants to

substantial unanticipated risk.

Third, the arbitration of representative PAGA claims

greatly increases the risk to employers. See id. at 1752. 

Rather than awarding damages for Labor Code violations for

just one employee, representative PAGA claims award

damages for all affected employees. Cal. Labor Code

§ 2699(f)(2). A representative PAGA claim could therefore

increase the damages awarded in arbitration by a multiplier

of a hundred or thousand times (depending on the size of the

company). Thus, the concerns expressed in Concepcion are

just as real in the present case:

The absence of multilayered review makes it

more likely that errors will go uncorrected. 

Defendants are willing to accept the costs of

these errors in arbitration, since their impact is

limited to the size of individual disputes, and

presumably outweighed by savings from

avoiding the courts. But when damages

allegedly owed to [hundreds or thousands] of

potential claimants are aggregated and

decided at once, the risk of an error will often

become unacceptable. Faced with even a

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small chance of a devastating loss, defendants

will be pressured into settling questionable

claims. . . . We find it hard to believe that

defendants would bet the company with no

effective means of review, and even harder to

believe that Congress would have intended to

allow state courts to force such a decision.

Concepcion, 131 S. Ct. at 1752.

The majority admits that representative PAGA actions

may involve high stakes, but then concludes that high stakes,

alone, cannot lead to invalidation of the Iskanian rule and

again compares PAGA actions to antitrust claims in

illustrating its argument. Once again, (for the third time), the

majority completely misses the point of Concepcion and

invokes an incorrect comparison. Parties to an arbitration

could agree to arbitrate high stakes issues. However, a state

court cannot “force such a decision.” Id. Comparing such

high stakes PAGA actions to antitrust claims is not relevant. 

Again, the majority should have compared high stakes PAGA

actions against the individual, bilateral arbitration that the

parties actually agreed to undertake. When Sakkab and

Luxottica entered into their arbitration agreement, they chose

to limit the risk to which they were subjecting themselves to

damages arising out of individual claims between the two

parties. That is all. The Iskanian rule invalidates that

decision and allows Sakkab to demand ex post arbitration of

claims outside of that framework. Concepcion declared that

this increased risk, to which the parties did not agree,

frustrated the purposes of the FAA. When combined with the

increased cost, time, and procedural complexity inherent in

the arbitration of representative PAGA claims (when

compared to solely individual arbitration), the increased risk

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to a defendant works as yet another way that the benefits of

arbitration are lost through application of the Iskanian rule.

D. The Iskanian rule cannot be justified on state policy

grounds.

The majority holds that its decision “is bolstered by the

PAGA’s central role in enforcingCalifornia’s labor laws” and

that “[b]oth the PAGA statute and the Iskanian rule reflect

California’s judgment about how best to enforce its labor

laws.” Maj. Op. at 28. However, under Concepcion, “States

cannot require a procedure that is inconsistent with the FAA,

even if it is desirable for unrelated reasons.” 131 S. Ct. at

1753. As is evidenced by our discussion of the effective

vindication exception to the FAA in Ferguson v. Corinthian

Colls., Inc., when it comes to arbitration agreements, “‘[w]e

have no earthly interest (quite the contrary) in vindicating’ a

state law.”6733 F.3d 928, 936 (9th Cir. 2013) (quoting

Italian Colors Rest., 133 S. Ct. at 2320 (Kagan, J.,

dissenting)). Thus, if a state law violates or frustrates the

FAA, the state law must give way, even if such a decision

prevents the state’s interest from being vindicated. Ferguson,

733 F.3d at 936–37. By relying so heavily on state policy

grounds to support its decision, the majority strays awfully

close to invocation of the effective vindication doctrine,

which the majority admits does not apply to the present case. 

Therefore, because the Iskanian rule serves as an obstacle to

6 Sakkab argues that he cannot be denied a forum for his representative

PAGA claims. However, Sakkab has no right to the vindication of a state

law claim, as the majority correctly recognizes.

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the objectives of the FAA, the desirability and importance of

the rule to the State’s policies and purposes cannot save it.7

Although the State’s interest in an employee’s ability to

bring PAGA claims is ultimately irrelevant to the Concepcion

analysis, it is important to note that preemption of the

Iskanian rule does not preempt PAGA itself. In fact, PAGA

could continue to play a meaningful role in California’s labor

law enforcement scheme without the Iskanian rule. First, any

employee not subject to an arbitration agreement waiving

such actions is free to bring a PAGA claim. In the present

case, Luxottica gave Sakkab the option to opt out of the

arbitration agreement if he simply returned the opt-out form

to Luxottica within a specified period of time. We have

previously reasoned that an opt out provision prevents an

arbitration agreement from being a contract of adhesion, and

supports the enforceability of the agreements. See Circuit

City Stores, Inc. v. Ahmed, 283 F.3d 1198, 1199–1200 (9th

Cir. 2002). Thus, employers are incentivized to include opt

out provisions in their arbitration agreements. Any

employees who opt out of arbitration, or whose employers do

not utilize arbitration, will be free to bring PAGA claims. 

Second, PAGA requires that potential claimants provide

notice to the State before pursuing a PAGA action. Cal.

Labor Code § 2699.3. As no one has asserted that the State

of California is prevented from raising the labor violations on

7 The majority holds that “[t]he FAA was not intended to preclude states

from authorizing qui tam actions to enforce state law.” Maj. Op. at 29. 

However, the majority provides no support for that declaration. Under

Concepcion, if a state rule authorizing a qui tam action frustrated the

purposes or objectives of the FAA, that rule would certainly be

invalidated. The majority provides no authority to support the contention

that state law can preempt federal law if the state law involves qui tam

actions.

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its own, the notice provision of PAGA and the

implementation of statutory damages for Labor Code

violations can continue to provide a meaningful benefit to the

State of California. Finally, inasmuch as a PAGA claim can

be limited to damages stemming from a single employee’s

employment, PAGA continues to provide an opportunity for

individuals to collect damages on behalf of the State, even in

arbitration. Luxottica has expressly argued that an

“individual” PAGA claim could be raised under its arbitration

agreement with Sakkab. Although the existence of

“individual” PAGA claims is disputed, see Reyes v. Macy’s,

Inc., 202 Cal. App. 4th 1119, 1123 (Ct. App. 2011) (holding

that a PAGA claimant may not bring an individual PAGA

claim), the Iskanian court expressly chose not to decide the

issue. See Iskanian, LLC, 327 P.3d at 384. Instead, the court

reasoned that, even if such claims are available, individual

PAGA claims would not “result in the penalties contemplated

under the PAGA to punish and deter employer practices that

violate the rights of numerous employees under the Labor

Code.” Id. But, once again, the state’s purpose is irrelevant. 

A state may not insulate causes of action from arbitration by

declaring that the purposes of the statute can only be satisfied

via class, representative, or collective action. If the rule

conflicts with the objectives of the FAA, the state rule must

give way. Concepcion, 131 S. Ct. at 1753.

Because the Iskanian rule stands as an obstacle to the

purposes and objectives of the FAA, there is no question—the

rule must be preempted. Preemption would be consistent

both with the Supreme Court’s controlling decision in

Concepcion and the FAA’s “liberal federal policy favoring

arbitration.” Moses H. Cone Mem’l Hosp., 460 U.S. at 24. 

Numerous state and federal courts have attempted to find

creative ways to get around the FAA. We did the same in

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Laster, and were subsequently reversed in Concepcion. The

majority now walks that same path. Accordingly, I would

affirm.

 Case: 13-55184, 09/28/2015, ID: 9697873, DktEntry: 73-1, Page 50 of 50