California Dreamin': The Rise of the Iskanian Exception and the Fall of the State Effective-Vindication Exception to Federal Arbitration Act Preemption of State Employment Arbitration Doctrine
Proceedings of the Sixty-Eighth Annual Meeting of the National Academy of Arbitrators (Bloomberg BNA 2016)
Posted: 12 Jul 2018
Date Written: 2016
This paper considers the extent to which a state may refuse to enforce an arbitration agreement so as to safeguard the public policies that ground that state’s employment statutes. A principal way in which states have regulated employment arbitration in an attempt to protect the public policies that ground their employment statutes is pursuant to the state effective-vindication exception. Thus, this paper begins by reviewing the suggested bases for the state effective-vindication exception as well as the basis for the related federal effective-vindication exception. Recent U.S. Supreme Court arbitration jurisprudence undermines the ability of states to utilize the state effective-vindication exception as a means to control the substance of their own employment law regimes. Indeed, this case law calls into question the very existence of the state effective-vindication exception. The paper discusses in particular the Supreme Court’s relatively recent decisions in AT&T Mobility LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant and explains how these cases limit the state effective-vindication exception, especially as applied to class and representative employment arbitration waivers.
The paper then focuses on California law in discussing the demise of the state effective-vindication exception. California has several employment arbitration doctrines grounded in the state effective-vindication exception. The paper details the unwaivability doctrine respecting the right to a Berman hearing process, the Gentry doctrine, and the unwaivability doctrine respecting representative Private Attorneys General Act of 2004 (PAGA) actions and evaluates how the California Supreme Court has applied Concepcion and Italian Colors Restaurant in ruling on whether the FAA preempts these doctrines. The paper focuses on the split that has developed within the federal district courts in California over whether the California Supreme Court was correct in holding in Iskanian v. CLS Transportation Los Angeles, LLC that the FAA does not preempt the unwaivability doctrine respecting representative PAGA actions. Finally, the paper examines the Broughton-Cruz doctrine and explores the implications of Iskanian, Concepcion, and Italian Colors Restaurant for the continuing viability of that doctrine.
Keywords: Federal Arbitration Act, Preemption, Concepcion, Italian Colors Restaurant, Effective Vindication Doctrine, Iskanian, PAGA, Berman Hearing, Gentry, Broughton-Cruz
Suggested Citation: Suggested Citation