Fred Sanderson and Brian Wong Published in Law360
"Waiving PAGA Action In Employment Arbitration Agreement"

Seyfarth Shaw Sacramento partner Alfred "Fred" Sanderson and San Francisco associate Brian Wong wrote an article published in California, Class Action and Employment Law360 on August 1. The article discussed a recent court decision in which waivers of Private Attorneys General Act (PAGA) actions were ruled unenforceable under California state law.

Fred and Brian provide background on the case Brown v. Ralphs Grocery Co., in which a plaintiff who signed Ralph's Mediation and Binding Arbitration Policy prohibiting class or reprehensive actions, argued that the waivers were "unconscionable" and therefore unenforceable, and the court agreed. This spurred two issues on the appeal:

• Did Brown fulfill her evidentiary burden to establish the four factors required under Gentry v. Superior Court in order to invalidate a class action waiver in an employment arbitration agreement? They include modest size of potential individual recovery, potential for retaliation against members of the class, absent members of the class may not be informed about their rights, and other real-world obstacles to the vindication of class members' rights through individual arbitration.
• In light of the ruling in AT&T Mobility v. Concepcion, which held that the Federal Arbitration Act (FAA) preempted a California state rule prohibiting class action waivers in arbitration agreements, does the FAA preempt state law that prohibits waivers of representative class actions?

The Court of Appeal reversed the decision but failed to address the issue regarding AT&T Mobility, missing "a chance to provide guidance on an issue that will certainly recur," commented Fred and Brian.

However, the Brown decision did provide guidance by inviting "plaintiffs seeking to avoid arbitration to rely on PAGA representative actions, which can be brought without asserting the PAGA claim as a class action."