From JDSupra, Jennifer Santa Maria discusses a recent case in which a California Court of Appeal said an arbitration agreement was not enforceable because it contained a waiver of California’s Private Attorneys General Act (PAGA) claims and the clause could not be severed. Jennifer writes:
On appeal, the California Court of Appeal agreed with the trial court, finding that the arbitration agreement must be construed as waiving both the right to bring class action claims and the right to bring representative PAGA claims. Relying on Iskanian, the court determined that because the agreement compels the waiver of representative claims under PAGA, it is unenforceable. The court also found that the agreement “does not authorize severance of unenforceable terms in the employee agreement itself.” Because of this, the PAGA waiver cannot be severed from the employee agreement, rendering the entire agreement unenforceable. Notably, the MAP, which contained a separate PAGA waiver, provided that an arbitrator or court could sever MAP procedures that were not in compliance with the FAA, but the court determined that the PAGA waivers violated state law, not the FAA, and thus the provision did not apply.