Sakkab v. Luxottica Retail North America, Inc.

Case Updates

The U.S. Chamber encouraged the U.S. Court of Appeals for the Ninth Circuit to grant a petition for rehearing en banc after a divided panel held that a rule forbidding bilateral arbitration of claims under California’s Private Attorneys General Act (“PAGA”) was not preempted under the Federal Arbitration Act (“FAA”). In its brief filed with the Retail Litigation Center, Inc. and the California Chamber of Commerce, the U.S. Chamber argued that the panel’s majority decision is inconsistent with the FAA and the Supreme Court’s Decision in Concepcion, and opens a massive loophole in the FAA that should be closed immediately.

Brendan P. Cullen of Sullivan & Cromwell LLP served as co-counsel for the amici.

Previously in Iskanian v. CLS Transportation, the California Supreme Court held that representative actions brought under California’s Private Attorneys General Act (“PAGA”) cannot be waived in a pre-dispute arbitration agreement.

On 9/28/2015, a divided panel of the Ninth Circuit held that that such a rule was not preempted under the Federal Arbitration Act. Judge N.R. Smith dissented and explained that California’s judge-made rule in Iskanian was indistinguishable from the one rejected by the U.S. Supreme Court in AT&T v. Concepcion.

The Chamber and the Retail Litigation Center, Inc. filed an amicus brief urging the Ninth Circuit to affirm the judgment of the district court, which enforced the plaintiff’s arbitration agreement. The brief argues that under the Federal Arbitration Act (FAA), the arbitration agreements are indeed valid and enforceable as a matter of federal law and the claim, under PAGA for alleged wage-and-hour violations must be resolved through arbitration on an individual basis. The brief reasons that if the decision were to be overturned, it would aggravate the intent of contracting parties, undermine their existing agreements, and wear away the benefits of arbitration as an alternative to litigation. The brief points out that collective resolution of claims on an aggregate basis is incompatible with the arbitration as envisioned by the FAA and also lacks the simplicity, informality and expediency that are characteristic of arbitration.

Andrew J. Pincus, Archis Parasharami and Scott M. Noveck of Mayer Brown LLP represented the U.S. Chamber as co-counsel to the U.S. Chamber Litigation Center.