Federal Arbitration Act (FAA)

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On January 8, 2019, the United States Supreme Court issued a unanimous opinion in Henry Schein, Inc. v. Archer & White Sales, Inc. strengthening the enforceability of arbitration “delegation clauses.” These clauses have been previously upheld by the U.S. Supreme Court and allow parties to agree that an arbitrator, rather than a court, will decide the threshold issue of whether a dispute must be arbitrated, as well as the merits of the dispute. The Supreme Court in Henry Schein rejected a doctrine adopted by several federal Circuit Courts of Appeals and the California Court of Appeal, which permitted courts to decline to enforce delegation clauses if the underlying assertion of arbitrability was “wholly groundless.” Under Henry Schein, courts must refer questions of arbitrability to the arbitrator when the parties have agreed to a clear and unmistakable delegation, even if the court believes the claim of arbitrability is frivolous.
Continue Reading U.S. Supreme Court Rejects ‘Wholly Groundless’ Exception to Delegation Clauses in Arbitration Agreements

Many employers require employees to sign arbitration agreements at the inception of the employment relationship and prior to any disputes, such as part of their new hire packets or as a condition of their employment.  Recently, Congressional Democrats have introduced legislation to invalidate such pre-dispute arbitration agreements.
Continue Reading Congress Considers Limiting Pre-dispute Arbitration Agreements in the Employment Context

On August 22, 2016, the Ninth Circuit joined the Seventh Circuit in the split amongst U.S. Circuit Courts of Appeal on the issue of enforceability of employment arbitration agreements precluding class actions.

The Ninth Circuit, similar to the Seventh Circuit in Lewis v. Epic Sys. Corp., held in 2-1 decision that an employer violates the National Labor Relations Act (NLRA) when it requires employees to sign an agreement precluding them from pursuing, in any forum, wage-and-hour claims against the employer on a collective basis.  To the contrary, the Fifth Circuit has upheld such arbitration agreements in D.R. Horton, Inc. v. NLRB and Murphy Oil USA, Inc. v. NLRB, finding that class action waivers do not violate the NLRA.Continue Reading Ninth Circuit Invalidates Arbitration Agreement

On May 26, 2016, in the matter of Lewis v. Epic Systems Corporation, the U.S. Court of Appeals for the Seventh Circuit held that an arbitration agreement, which required employees to submit to individual arbitration for any wage and hour claims against the company, violates the National Labor Relations Act (“NLRA”) and is unenforceable under the Federal Arbitration Act (“FAA”).  In issuing this decision, the Seventh Circuit gave credence to the National Labor Relations Board’s (“NLRB”) decision in D. R. Horton and, in doing so, has created a split amongst U.S. Circuit Courts of Appeal regarding the enforceability of arbitration agreements that preclude class actions.
Continue Reading Seventh Circuit Holds Class Action Waivers are Unlawful and Unenforceable Creating a Circuit Split

A recent ruling by the New York State Court of Appeals underscores the Federal Arbitration Act’s (“FAA”) strong policy favoring enforcement of arbitration agreements—even in the insurance industry and despite federal policy generally favoring state regulation of the business of insurance. 
Continue Reading New York’s Highest Court Enforces Arbitration Provision in California Workers’ Compensation Insurance Agreement, Rejecting McCarran-Ferguson “Reverse Preemption”

The United States Supreme Court recently reversed a decision by the California Court of Appeal wherein the state court refused to enforce a class action waiver in an arbitration agreement. The Supreme Court enforced the class arbitration waiver holding that the Court of Appeal’s decision was pre-empted by the Federal Arbitration Act (FAA) as interpreted by the Court in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), which held that class arbitration waivers are enforceable unless grounds exist at law or in equity for the revocation of any contract.
Continue Reading Arbitration Wars: Supreme Court Continues To Affirm The Supremacy of the FAA

On September 28, 2015, the Ninth Circuit Court of Appeals issued a 2-1 decision in the long-awaited case of Sakkab v. Luxottica Retail North America, Inc. (No. 13-55184, D.C. No. 3:12-cv-00436-GPC-KSC) (“Sakkab”). The Court held that an arbitration agreement that requires arbitration of PAGA claims arising out of employment is unenforceable under California law.
Continue Reading Ninth Circuit Blesses Iskanian

On June 24, 2014, the California Supreme Court issued a controversial decision in Iskanian v. CLS Transportation Los Angeles, LLC.  While the Court in Iskanian confirmed that an express class action waiver in an employment arbitration agreement is enforceable under California law, it also held that an arbitration agreement provision barring arbitration of a workers’ representative Private Attorneys General Act (PAGA) claim is invalid as a matter of California public policy.  Under PAGA, employees can sue their employer for certain workplace violations on behalf of themselves, as well as other current or former employees, in “representative suits” similar to class actions.
Continue Reading UPDATE: SCOTUS Denies Petition For Cert In Iskanian

On June 23, 2014, the California Supreme Court issued its decision in Iskanian v. CLS Transportation Los Angeles, LLC, confirming that an express class action waiver in an employment arbitration agreement is enforceable under California law.  In its decision, the Court held that its earlier decision in Gentry is no longer good law under the United States Supreme Court’s rulings as to enforceability of the Federal Arbitration Act (FAA) and also rejected the NLRB’s D.R. Horton decision that the National Labor Relations Act (NLRA) invalidates class action waivers.  Meanwhile, the California Supreme Court also held that an arbitration agreement provision barring arbitration of PAGA representative claims is invalid as a matter of California public policy.  Thus, employers in California now have a little more certainty as to the enforceability of their arbitration agreements and their ability to prevent their employees from bringing class actions.  However, it still is possible that the matter will be appealed and the United States Supreme Court will weigh in on the applicable PAGA issues.
Continue Reading California Supreme Court Issues Iskanian Decision, Ruling that Class Action Waivers in Arbitration Agreements Are Enforceable, But Still Allows PAGA Claims to Proceed on Representative Basis

Earlier this week, on December 3, 2013, the Fifth Circuit Court of Appeals held that arbitration agreements lawfully can contain class-action waivers.  In its ruling in D.R. Horton, Inc. v. National Labor Relations Board, the Fifth Circuit overturned a National Labor Relations Board (the “Board”) administrative decision, finding that D.R. Horton, Inc. did not violate the National Labor Relations Act (NLRA) by requiring its employees to sign an arbitration agreement in which they waived their right to pursue employment claims in collective or class actions.  Specifically, the Court concluded that the Board failed to “give proper weight to the Federal Arbitration Act [FAA],” which requires that arbitration agreements be enforced as written, subject to two exceptions, both inapplicable here.  However, the Court upheld the Board’s determination that the arbitration agreement could be reasonably construed to prohibit employees from filing an unfair labor practice charge, in violation of Section 8(a)(1) of the NLRA.
Continue Reading Fifth Circuit Upholds The Validity Of Class-Action Waivers In Arbitration Agreements