Olson v. Lyft, Inc.

Filed 10/29/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
BRANDON OLSON,
Plaintiff and Respondent,
A156322
v.
LYFT, INC., (San Francisco County
Super. Ct. No.
Defendant and Appellant.
CGC-18-566788)
Brandon Olson is a driver for Lyft, Inc. (Lyft), whose terms of service
include an agreement he could not bring a Private Attorney General Act
(PAGA) claim in court and that disputes with Lyft must be resolved by
individual arbitration. Olson sued Lyft alleging six PAGA claims, which Lyft
petitioned to compel to arbitration. The petition acknowledged that Iskanian
v. CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348 (Iskanian)
precluded enforcement of PAGA waivers, but asserted that Iskanian was
wrongly decided and in any event was no longer good law in light of the 2018
opinion of the United States Supreme Court in Epic Systems Corp. v. Lewis
(2018) 138 S. Ct. 1612 (Epic Systems). The trial court denied the petition in a
comprehensive order rejecting Lyft’s arguments.
Lyft appeals and, represented by two prominent law firms, provides us
with 96 pages of briefing, beginning with an argument as to what we “must
follow” from United States Supreme Court opinions, going on to reassert its
unsuccessful arguments below. Lyft’s opening brief cites 12 United States
1
Supreme Court cases, two cases from the Fifth Circuit Court of Appeals, and,
indeed, a 2013 case from an Ohio District Court. Olson, represented by a
well-known appellate boutique, provides 54 pages of his own, included within
which is a scholarly exposition of California jurisprudence dealing with
arbitration.
We need not engage in any similar discussion, as we reject Lyft’s
position based on Correia v. NB Baker Electric, Inc. (2019) 32 Cal. App. 5th
602 (Correia), an opinion that thoughtfully analyzed—and rejected—the
identical argument Lyft makes here. Other post-Epic Systems cases have
agreed, including the only two other published Court of Appeal decisions and
numerous California federal cases. Accordingly, we affirm the order denying
arbitration.
BACKGROUND
Olson worked as a driver for Lyft, and as such had to agree to its Terms
of Service (TOS) which, as pertinent here, begin with this:
“THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN
HOW CLAIMS YOU AND LYFT HAVE AGAINST EACH OTHER CAN BE
BROUGHT (SEE SECTION 17 BELOW). THESE PROVISIONS WILL,
WITH LIMITED EXCEPTION, REQUIRE YOU TO SUBMIT CLAIMS YOU
HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION ON AN
INDIVIDUAL BASIS, NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY
CLASS, GROUP OR REPRESENTATIVE ACTION OR PROCEEDING. AS
A DRIVER OR DRIVER APPLICANT, YOU HAVE AN OPPORTUNITY TO
OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS
PROVIDED IN SECTION 17.”
The referenced section 17 then provides in pertinent part as follows:
2
“17. DISPUTE RESOLUTION AND ARBITRATION
AGREEMENT
“(a) Agreement to Binding Arbitration Between You and Lyft.
“YOU AND LYFT MUTUALLY AGREE TO WAIVE OUR
RESPECTIVE RIGHTS TO RESOLUTION OF DISUPTES IN A COURT OF
LAW BY A JUDGE OR JURY AND AGREE TO RESOLVE ANY DISPUTE
BY ARBITRATION, as set forth below. This agreement to arbitrate
(‘Arbitration Agreement’) is governed by the Federal Arbitration Act and
survives after the Agreement terminates or your relationship with Lyft
ends. . . . Except as expressly provided . . . [¶] . . . ALL DISPUTES AND
CLAIMS BETWEEN US . . . SHALL BE EXCLUSIVELY RESOLVED BY
BINDING ARBITRATION SOLELY BETWEEN YOU AND LYFT. [¶] . . . [¶]
“BY AGREEING TO ARBITRATION, YOU UNDERSTAND THAT
YOU AND LYFT ARE WAIVING THE RIGHT TO SUE IN COURT OR
HAVE A JURY TRIAL FOR ALL CLAIMS, EXCEPT AS EXPRESSLY
OTHERWISE PROVIDED IN THIS ARBITRATION AGREEMENT. This
Arbitration Agreement is intended to require arbitration of every claim or
dispute that can lawfully be arbitrated, except for those claims and disputes
which by the terms of this Arbitration Agreement are expressly excluded
from the requirement to arbitrate. [¶] . . . [¶]
“(c) Representative PAGA Waiver.
“Notwithstanding any other provision of this Agreement or the
Arbitration Agreement, to the fullest extent permitted by law: (1) you and
Lyft agree not to bring a representative action on behalf of others under the
Private Attorneys General Act of 2004 (PAGA), California Labor Code § 2698
et seq., in any court or in arbitration, and (2) for any claim brought on a
private attorney general basis, including under the California PAGA, both
3
you and Lyft agree that any such dispute shall be resolved in arbitration on
an individual basis only (i.e., to resolve whether you have personally been
aggrieved or subject to any violations of law), and that such an action may
not be used to resolve the claims or rights of other individuals in a single or
collective proceeding (i.e., to resolve whether other individuals have been
aggrieved or subject to any violations of law) (collectively ‘representative
PAGA Waiver’). [¶] . . . [¶]
“(g) Exceptions to Arbitration.
“This Arbitration Agreement shall not require arbitration of the
following types of claims: (1) small claims actions brought on an individual
basis that are within the scope of such small claims court’s jurisdiction; (2) a
representative action brought on behalf of others under PAGA or other
private attorneys general acts, to the extent the representative PAGA Waiver
in Section 17(c) of such action is deemed unenforceable by a court of
competent jurisdiction under applicable law not preempted by the FAA;
(3) claims for workers’ compensation, state disability insurance and
unemployment insurance benefits; and (4) claims that may not be subject to
arbitration as a matter of generally applicable law not preempted by the
FAA.”
The TOS are updated periodically, and drivers had to agree to the
updated terms in order to continue offering rides through the Lyft app. In
May 2018, Olson agreed to the updated terms and that same month filed a
class action lawsuit alleging that Lyft misclassified him as an independent
contractor rather than an employee. The complaint asserted violations of the
Labor Code and the Unfair Competition Law (Bus. & Prof. Code, § 17200 et
seq.).
4
In August, Olson filed a first amended complaint in which he was
replaced as class representative by a new plaintiff, which amended complaint
also added representative claims under PAGA. And in October, Olson filed a
second amended complaint, the operative complaint here. The second
amended complaint added a new class representative who alleged six non-
PAGA claims, and also alleged six PAGA claims on behalf of Olson.
Lyft petitioned to compel arbitration of Olson’s PAGA claims. The
petition argued that although Olson asserted PAGA claims as a
representative for “aggrieved employees,” the arbitration provision to which
he agreed contained a PAGA representative-action waiver, and was thus
governed by the Federal Arbitration Act (FAA), which, Lyft argued, required
that Olson arbitrate on an individual basis. Lyft’s petition acknowledged
that Iskanian precluded the enforcement of PAGA representative-action
waivers, but argued that Iskanian was wrongly decided under prior FAA
precedent and in any event was no longer good law because of Epic Systems.1
Finally, Lyft argued that even if Iskanian survived Epic Systems, Olson
should be compelled to arbitrate the request for victim-specific relief alleged
in the PAGA claims because this request did not seek representative relief.
Olson opposed the petition based on Iskanian, asserting that Epic
Systems had no bearing on the issue.
Following Lyft’s reply, the petition (along with other matters) came on
for hearing before a most experienced superior court judge, the Honorable
Curtis Karnow. Following a lengthy hearing, Judge Karnow issued a 14-page
order, which, as pertinent here, rejected Lyft’s arguments, holding as follows:
1 Arguing that a California Supreme Court case was “wrongly
decided” is not productive in a trial court. Or here. (Auto Equity Sales,
Inc. v. Superior Court (1962) 57 Cal. 2d 450, 456.)
5
“Under Iskanian v. CLS Transportation Los Angeles, LLC (2014)
59 Cal. 4th 348 the PAGA waiver is unenforceable; see e.g., Tanguilig v.
Bloomingdale’s Inc. (2016) 5 Cal. App. 5th 665, 670, 673–680. [¶] . . . [¶]
“Lyft contends that Iskanian is no longer good law as a result of Epic
Systems Corp. v. Lewis (2018) 138 S. Ct. 1612. Lyft argues that Iskanian
held that the Federal Arbitration Act (FAA) is inapplicable to statutory
claims. Not true. Iskanian knew ‘the high court has found the FAA
applicable to statutory claims between parties to an arbitration agreement.’
Iskanian, 59 Cal. 4th at 384 (emphasis supplied).
“And Lyft is wrong to compare the statutory claims it says were at
issue in Epic Systems (i.e., the Fair Labor Standards Act (FLSA) claims) with
PAGA. First, the argument was not even made in the U.S. Supreme Court
that the FLSA ‘overcomes’ the FAA to permit collective actions in court. Epic
Sys., 138 S. Ct. at 1626. Second, Iskanian did not hold that representative
PAGA actions are beyond the scope of the FAA because a PAGA action is a
statutory procedure; rather, Iskanian held that a PAGA action is a dispute
between the state on the one hand, and the employer on the other. Iskanian
59 Cal. 4th at 385–387. And since the state was not a party to the arbitration
agreement, the agreement does not control. This is a decision which rests on
state (i) contract law and (ii) statutory interpretation, both committed to the
state supreme court in the final instance; these were not grounds expressly or
implicitly overruled by the U.S. Supreme Court.”
Lyft filed a timely appeal.
DISCUSSION
Lyft’s opening brief begins with arguments that “California courts must
follow intervening United States Supreme Court decisions, instead of prior
California Supreme Court decisions, when they address similar issues
6
differently,” going on that “Courts of Appeal are not bound by California
State Supreme Court decisions that are in conflict with subsequent United
States Supreme Court decisions.” The essence of Lyft’s position begins on
page 26 of its brief, where it argues: “Due to intervening United States
Supreme Court precedent, the Iskanian PAGA Rule prohibiting the
enforcement of a representative-action waiver is no longer good law, and the
trial court erred in following it.” The argument has two subparts: (1) “Epic
Systems undermines Iskanian’s distinction between public and private
actions”; and (2) “Epic Systems precludes the Iskanian PAGA Rule’s outright
ban on arbitration of representative PAGA claims.”
We reject the arguments based on Correia, joining other courts as well.
But before discussing Correia, we begin with brief discussion of the two cases
involved.
The holdings of Iskanian are accurately distilled by Lyft, its brief
describing the case as one “in which the California Supreme Court held, as a
matter of state law, that California courts may not enforce an arbitration
agreement’s waiver of representative PAGA proceedings, and further held, as
a matter of federal law, that the . . . FAA did not preempt this prohibition.”
Reaching those holdings, our Supreme Court noted that the Legislature
enacted PAGA to enhance the state’s enforcement of labor laws by “allow[ing]
aggrieved employees, acting as private attorneys general, to recover civil
penalties for Labor Code violations, with the understanding that labor law
enforcement agencies [are] to retain primacy over private enforcement
efforts.” (Iskanian, supra, 59 Cal.4th at p. 379.) And while PAGA empowers
aggrieved employees to act as the agent of the Labor Commissioner to bring
representative actions to recover statutory civil penalties for their employers’
7
violations, the governmental entity “is always the real party in interest.”
(Id. at p. 382.)
“A PAGA representative action is therefore a type of qui tam action.”
(Iskanian, supra, 59 Cal.4th at p. 382.) “ ‘Traditionally, the requirements for
enforcement by a citizen in a qui tam action have been (1) that the statute
exacts a penalty; (2) that part of the penalty be paid to the informer; and
(3) that, in some way, the informer be authorized to bring suit to recover the
penalty.’ [Citation.] The PAGA conforms to these traditional criteria, except
that a portion of the penalty goes not only to the citizen bringing the suit but
to all employees affected by the Labor Code violation.” (Ibid.) And “[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.” (Id. at p. 381.) In sum, a suit to recover civil penalties is
“ ‘ “fundamentally a law enforcement action designed to protect the public
and not to benefit private parties.” ’ ” (Id. at p. 387.)
Epic Systems was one of three cases consolidated by the United States
Supreme Court that raised the issue of the FAA’s preemptive effect over
private employment arbitration agreements prohibiting class and collective
actions. The Court considered whether the FAA was in conflict with other
federal laws, including section 7 of the National Labor Relations Act (NLRA),
which guarantees workers the right to self-organization, to form, join, or
assist labor organizations, to bargain collectively through representatives of
their own choosing, and to engage in other concerted activities for the
purpose of collective bargaining or other mutual aid or protection. (Epic
Systems, supra, 138 S.Ct. at p. 1624.) The Court found no such conflict, and
refused to “read a right to class actions into the NLRA” and rejected any
NLRA exception to the FAA. (Id. at p. 1619.) So, in each of the three
8
consolidated cases, the Supreme Court upheld collective action waivers and
compelled individualized arbitration. (Id. at p. 1632.)
Nine months later came Correia.
In Correia, supra, 32 Cal. App. 5th 602, the trial court granted an
employer’s petition to compel arbitration on all causes of action except the
PAGA claims. The employer appealed, contending in part that “Iskanian is
no longer binding as it is inconsistent with . . . Epic Systems.” (Id. at p. 608.)
In a comprehensive, well-reasoned opinion authored by Justice Haller, the
Fourth District Court of Appeal rejected the argument and affirmed, holding
that the purported waiver of PAGA representative claims was unenforceable
under Iskanian—an opinion with which we agree.
As pertinent here, Justice Haller began with a lengthy description of
Epic Systems, where an accountant sued his employer for violations of the
federal Fair Labor Standards Act (FLSA) and California overtime law,
seeking to litigate the FLSA claim on behalf of a nationwide class under
FLSA’s collective action procedures (29 U.S.C. § 216(b)), and to pursue the
state law claim as a class action. (Epic Systems, supra, 138 S.Ct. at p. 1620.)
Justice Haller went on to explain, in her detailed fashion, with numerous
citations to Epic Systems, what ensued: “The Epic employer moved to compel
arbitration under a provision in the parties’ arbitration agreement requiring
individualized arbitration. [Citation.] The Ninth Circuit held this provision
was unenforceable because it violates the NLRA by barring employees from
engaging in ‘ “concerted activit[y].” ’ [Citation.] In Epic, the United States
Supreme Court disagreed. The court reconfirmed Concepcion’s2 holding that
the FAA requires enforcement of class action waivers, and—as did the
Iskanian court—determined the NLRA does not take precedence over the
2 [AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333.]
9
FAA on this issue. [Citation.] Although most of the Epic opinion concerned
an analysis of the NLRA as it relates to the FAA, the court also strongly
reiterated the settled principles regarding the breadth of FAA preemption,
and made clear that the FAA requires courts ‘ “rigorously” to “enforce
arbitration agreements according to their terms, including terms that specify
with whom the parties choose to arbitrate their disputes and the rules under
which that arbitration will be conducted.” ’ [Citation.] The court observed:
‘The parties . . . contracted for arbitration. They proceeded to specify the
rules that would govern their arbitrations, indicating their intention to use
individualized rather than class or collective action procedures. And this
much the [FAA] seems to protect pretty absolutely.” (Epic, at p. ___ [138 S.Ct.
at p. 1621], italics added), citing Concepcion, supra, 563 U.S. 333; [Am.
Express Co. v.] Italian Colors [Rest. (2013)] 570 U.S. 228; and DIRECTV,
Inc. v. Imburgia (2015) 577 U.S. ___ [193 L. Ed. 2d 365, 136 S. Ct. 463], each of
which involved disputes between private parties.” (Correia, supra,
32 Cal.App.5th at pp. 618–619.)
Following this exposition of Epic Systems, Justice Haller turned to her
“Analysis,” three pages addressing, and rejecting, the identical argument Lyft
makes here:
“Relying on Epic’s reiteration of the FAA’s broad preemptive scope
barring state laws interfering with arbitration provisions requiring
individual arbitrations, [appellant] urges us to disavow Iskanian’s continuing
validity on PAGA claims. We decline to do so.
“On federal questions, intermediate appellate courts in California must
follow the decisions of the California Supreme Court, unless the United
States Supreme Court has decided the same question differently. (Auto
Equity Sales, Inc. v. Superior Court (1962) 57 Cal. 2d 450, 455; see Tanguilig,
10
supra, 5 Cal.App.5th at p. 673; Truly Nolen of America v. Superior Court
(2012) 208 Cal. App. 4th 487, 507.)
“Iskanian held that a ban on bringing PAGA actions in any forum
violates public policy and that this rule is not preempted by the FAA because
the claim is a governmental claim. (Iskanian, supra, 59 Cal.4th at pp. 384–
389.) Epic did not consider this issue and thus did not decide the same
question differently. (See Whitworth v. SolarCity Corp. (N.D. Cal. 2018)
336 F. Supp. 3d 1119, 1122–1123 [Epic is not irreconcilable with Sakkab [v.
Luxottica Retail N. Am., Inc. (2015) 803 F.3d 425]].) Epic addressed a
different issue pertaining to the enforceability of an individualized
arbitration requirement against challenges that such enforcement violated
the NLRA. (Epic, supra, 584 U.S. at p. ___ [138 S.Ct. at pp. 1619, 1623–
1630].)
“Moreover, the cause of action at issue in Epic differs fundamentally
from a PAGA claim. Epic held that an employee who agrees to individualized
arbitration cannot avoid this agreement by asserting claims on behalf of other
employees under the FLSA or federal class action procedures. (Epic, supra,
584 U.S. at p. ___ [138 S.Ct. at pp. 1619–1632].) The Iskanian court
distinguished this type of factual scenario from the PAGA context.
Forecasting Epic’s outcome, the Iskanian court said: ‘Our opinion today
would not permit a state to circumvent the FAA by, for example, deputizing
employee A to bring a suit for the individual damages claims of employees B,
C, and D. This pursuit of victim-specific relief by a party to an arbitration
agreement on behalf of other parties to an arbitration agreement would be
tantamount to a private class action, whatever the designation given by the
Legislature. Under Concepcion, such an action could not be maintained in
the face of a class waiver.’ (Iskanian, supra, 59 Cal.4th at pp. 387–388.) The
11
Iskanian court found the PAGA claim was outside this rule because the
employee had been deputized by the state to bring the qui tam claim on
behalf of the state, not on behalf of other employees. (Iskanian, at pp. 384–
389.) Although on somewhat different grounds, the Sakkab court also found
a refusal to enforce a total ban on the PAGA claim was not preempted by the
FAA. (Sakkab, supra, 803 F.3d at pp. 431–440.)
“Epic’s interpretation of the FAA’s preemptive scope does not defeat
Iskanian’s holding or reasoning for purposes of an intermediate appellate
court applying the law. The Iskanian court reached a different conclusion
from Concepcion on the enforceability of the contractual waiver—not because
the Iskanian court interpreted the FAA differently from Concepcion on the
preemption issue, but based on the unique nature of a PAGA claim as a qui
tam type action, and the ‘PAGA litigant’s status as “the proxy or agent” of the
state’ and his or her ‘substantive role in enforcing our labor laws on behalf of
state law enforcement agencies.’ (Iskanian, supra, 59 Cal.4th at p. 388,
italics added.)
“Because the California Supreme Court found a PAGA claim involved a
dispute not governed by the FAA, and the waiver would have precluded the
PAGA action in any forum, it held its PAGA-waiver-unenforceability
determination was not preempted. Epic did not reach the issue regarding
whether a governmental claim of this nature is governed by the FAA, or
consider the implications of a complete ban on a state law enforcement
action. Because Epic did not overrule Iskanian’s holding, we remain bound
by the California Supreme Court’s decision. (See Auto Equity, supra,
57 Cal.2d at p. 455.” (Correia, supra, 32 Cal.App.5th at pp. 619–620.)
In sum, Epic Systems addressed the question whether the NLRA
renders unenforceable arbitration agreements containing class action waivers
12
that interfere with workers’ right to engage in “concerted activities.” (Epic
Systems, supra, 138 S.Ct. at pp. 1624–1628.) It did not address private
attorney general laws like PAGA or qui tam suits.
Arguing that we should reject Correia, Lyft refers to it in varying
disparaging terms, including that it was “mistaken about the basic facts of
Epic Systems,” and also “mistaken” because it failed to discuss the “logic” of
Epic Systems, a position apparently based on Lyft’s assertion that we are
bound to “follow not only the specific holdings of the [United States Supreme
Court], but also the ‘logic’ and ‘principle[s]’ underlying the analysis.” Lyft
also describes Correia as a “stray” decision.
Such disparagement aside, Lyft acknowledges “that some Courts of
Appeal have reached a different result” than that Lyft seeks, and, elaborating
on those Courts of Appeal, says this: “They have required the conflict
between federal and state Supreme Court decisions to be exact. They have
held that ‘intermediate appellate courts in California must follow the
decisions of the California Supreme Court, unless the United States Supreme
Court has decided the same question differently.’ (Correia (2019)
32 Cal. App. 5th 602, 619; accord e.g., Truly Nolen, supra, 208 Cal.App.4th at
p. 507; In re Marriage of Shaban (2001) 88 Cal. App. 4th 398, 409.)”
Lyft then goes on to discuss Correia, after which it cites three other
cases as “see also,” the first of which is Subcontracting Concepts (CT), LLC v.
De Melo (2019) 34 Cal. App. 5th 201, 213, which Lyft describes as “noting that
Iskanian held an employee’s right to bring a PAGA action was unwaivable.”
What Lyft does not point out is that De Melo is a case from this very court,
where we said exactly that—in 2019, after Epic Systems.
Since the briefing here was completed, two other opinions from the
Fourth District were filed following Correia: Collie v. The Icee Co. (2020)
13
52 Cal. App. 5th 477, 480 [“We also join Correia . . . in holding that Epic
Systems . . . does not undermine the reasoning of Iskanian”]; and Provost v.
YourMechanic (Oct. 15, 2020, No. 37-2017-00024056) ___ Cal.App.5th ___
[2020 Cal.App. LEXIS 955].
We join those cases and add a published opinion from the First District.
Likewise supporting the conclusion are numerous federal court
decisions that hold Iskanian remains sound after Epic Systems, decisions that
are best understood by reference to a Ninth Circuit case decided a year after
Iskanian that expressly endorsed its reasoning. That case is Sakkab v.
Luxottica Retail N. Am., supra, 803 F.3d 425, which concluded as follows:
“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.” (Id. at p. 427.) The Ninth Circuit reasoned that Iskanian
complies with the FAA requirement “that a state contract defense place
arbitration agreements on equal footing with non-arbitration agreements,”
because the “rule bars any waiver of PAGA claims, regardless of whether the
waiver appears in an arbitration agreement or a non-arbitration agreement.”
(Id. at p 432.) And the Court further explained, “a PAGA action is a form of
qui tam action,” and that the “ ‘FAA was not intended to preclude states from
authorizing qui tam actions to enforce state law.’ ” (Id. at pp. 439, 449.)
Since Epic Systems was decided, numerous district courts have
continued to follow Sakkab—and, implicitly, Iskanian—no fewer than six of
which are cited in Olson’s brief.3 All Lyft can say as to these decisions is that
3Whitworth v. SolarCity Corp. (N.D. Cal. 2018) 336 F. Supp. 3d
1119; Rejuso v. Brookdale Senior Living Cmtys., Inc. (C.D. Cal. May 22,
2019, No. 17 Civ. 5227) 2019 WL 6735124; Gonzales v. Emeritus Corp.
(N.D. Cal. 2019) 407 F. Supp. 3d 862, 868; Gilbert Enterprises, Inc. v.
14
they “make the same mistake as Olson: they ignore that Epic Systems
applied the FAA to a government enforcement action in Murphy Oil.”
This reference by Lyft is to Murphy Oil USA, Inc. v. N.L.R.B. (5th Cir.
2015) 808 F.3d 1013 (Murphy Oil), one of the three cases consolidated in Epic
Systems. Murphy Oil concerned an ongoing challenge to a NLRB decision
involving the enforceability of collective action waivers under section 7 of the
NLRA, and the NLRB ruled that representative action waivers were
unenforceable. The Fifth Circuit overruled the decision, and the United
States Supreme Court affirmed. From this, Lyft concludes that Epic Systems
overrules Iskanian because Murphy Oil involved “government enforcement
proceedings,” arguing as follows: “[T]he FAA requires the enforcement of a
representative-action waiver even where the statutory rights at issue are the
enforcement rights of a government agency or its proxy.” Lyft’s position finds
no support in either the text of Epic Systems or the claimed “logic” of its
reasoning: Murphy Oil did not involve the “enforcement rights” of the NLRB;
and there was no challenge to the NLRB’s inherent authority to interpret the
NLRA.
Nor is it correct to characterize Murphy Oil as a “government
enforcement action.” According to Lyft, because the case involved (1) a
government agency and (2) a collective action waiver, it follows that the FAA
preempts the type of government claims in a PAGA action. Such facile
reading does not withstand scrutiny. As explained above, Iskanian noted
that PAGA claims involve fundamentally public claims. (Iskanian, supra,
59 Cal.4th at pp. 384–385.) In Murphy Oil, the NLRB was not pursuing
Amazon.com (C.D. Cal. 2019, No. 19 Civ. 2453) 2019 WL 6481697;
Echevarria v. Aerotek, Inc. (N.D. Cal. 2019, No. 16 Civ. 04041) 814
Fed. Appx. 321; and Delisle v. Speedy Cash (S.D. Cal. 2019, No. 18 Civ.
2042) 818 Fed. Appx. 608.
15
public claims, but defending against a customary challenge to the Board’s
interpretation of section 7 of the NLRA.
This distinction is demonstrated by the recent case of ZB, N.A. v.
Superior Court (2019) 8 Cal. 5th 175 (ZB), an employee’s claim for unpaid
wages. The trial court granted the employer’s petition to compel arbitration,
and ordered that the claim be arbitrated as a representative action under
PAGA. The Court of Appeal granted the employer’s petition for writ of
mandate. And the Supreme Court affirmed and remanded, holding that an
amount of underpaid wages sought under Labor Code section 558 is not
included within the civil penalties recoverable by employees because it is in
the nature of compensatory relief and not a civil penalty. Because Labor
Code section 558 has no private right of action and a PAGA claim is not
available to recover unpaid wages, the employee lacked a cause of action that
could be compelled to arbitration. In other words, ZB held that PAGA did not
authorize the recovery of “victim-specific” relief in the form of wages because
PAGA claims are the state’s, not those of the aggrieved employees. In the
words of the Supreme Court, “Iskanian established an important principle:
employers cannot compel employees to waive their right to enforce the state’s
interests when the PAGA has empowered employees to do so. But for
Iskanian to apply, the state must in fact have delegated enforcement of its
interests to private citizens.” (ZB, supra, 8 Cal.5th at p. 197.)
Finally, we note that one of the cases cited in Correia and by Judge
Karnow was Tanguilig v. Bloomingdale’s, Inc, supra, 5 Cal. App. 5th 665.
There, our colleagues in Division Five expressly rejected the argument that
intervening United States Supreme Court decisions undermined Iskanian
where the decisions addressed “a narrow issue” that was “not pertinent” and
16
“dealt only with arbitration of private damage claims, and not enforcement of
civil penalties on behalf of the state.” (Id. at p. 675.)
Lyft’s last argument—one to which we need not respond—is that “the
FAA preempts the Iskanian PAGA rule even absent intervening precedent.”
This is followed by four pages contending that even if we reject Lyft’s
fundamental position, Lyft “summarize[es] why the FAA nonetheless
preempts it, to preserve the point for Supreme Court review.” Lyft then cites
seven bullet-point items, and concludes with this: “For any or all of these
reasons, a court empowered to consider the viability of the Iskanian PAGA
Rule should reject it as preempted by the FAA.”
DISPOSITION
The order denying the petition to compel arbitration is affirmed. Olson
shall recover his costs on appeal.
17
_________________________
Richman, Acting P.J.
We concur:
_________________________
Stewart, J.
_________________________
Miller, J.
Olson v. Lyft (A156322)
18
Trial Court: San Francisco County
Superior Court
Trial Judges: Honorable Curtis E.A.Karnow
Honorable Mary E. Weiss
Honorable Garrett L. Wong
Attorney for Plaintiff and Olivier Schreiber & Chao LLP,
Respondent Brandon Olson: Monique Olivier, Christian
Schreiber; Outten & Golden
LLP, Jahan Sagafi, Adam
Koshkin, Rachel Bien
Attorney for Defendant and Horvitz & Levy LLP, Andrea
Appellant Lyft, Inc.: Russi, Peder Batalden, Felix
Shafir; Keker, Van Nest &
Peters LLP, R. James
Slaughter, Erin E. Meyer,
Chessie Thacher, Ian Kanig.
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