ISKANIAN v. CLS TRANSPORTATION OF LOS ANGELES

Appellant’s Petition for Review

Cal.July 16, 2012

$204N32 & IN THE SUPREME COURT OF THE STATE OF CALIFORNIA No. ARSHAVIR ISKANIAN,an individual, Petitioner, sue COURT FILED Vv. JUL 16 2012 CLS TRANSPORTATION OF LOS ANGELES, Respondent. Frank A. ieGuire Clerk Deputy AFTER DECISION BY THE COURT OF APPEAL, SECOND APPELLATE DISTRICT, DIVISION TWO CASE B235158 FROM THE SUPERIOR COURT, COUNTY OF LOS ANGELES, CASE No. BC 356521, ASSIGNED FOR ALL PURPOSES TO JUDGE ROBERT HESS, DEPARTMENT 24 PETITION FOR REVIEW INITIATIVE LEGAL GROUP APC MARCPRIMO (SBN 216796) GLENN A. DANAS (SBN 270317) RYAN H. Wu (SBN 222323) 1800 CENTURY PARK EAST, 2ND FLOOR LOS ANGELES, CA 90067 TELEPHONE: (310) 556-5637 FACSIMILE: (310) 861-9051 MPRIMO@INITIATIVELEGAL.COM GDANASG@INITIATIVELEGAL.COM RWU@INITIATIVELEGAL.COM Attorneys for Petitioner ARSHAVIR ISKANIAN No. IN THE SUPREME COURT OF THE STATE OF CALIFORNIA ARSHAVIR ISKANIAN,an individual, Petitioner, Vv. CILS TRANSPORTATION OF LOS ANGELES, Respondent. AFTER DECISION BY THE COURT OF APPEAL, SECOND APPELLATE DISTRICT, DIVISION TWO CASE B235158 FROM THE SUPERIOR COURT, COUNTY OF LOS ANGELES, CASE No. BC 356521, ASSIGNED FOR ALL PURPOSES TO JUDGE ROBERT HESS, DEPARTMENT 24 PETITION FOR REVIEW INITIATIVE LEGAL GROUP APC MARCPRIMO (SBN 216796) GLENN A. DANAS(SBN 270317) RYAN H. Wu (SBN 222323) 1800 CENTURY PARK EAST, 2ND FLOOR Los ANGELES, CA 90067 TELEPHONE: (310) 556-5637 FACSIMILE: (310) 861-9051 MPRIMO@INITIATIVELEGAL.COM GDANAS@INITIATIVELEGAL.COM RWU@INITIATIVELEGAL.COM Attorneysfor Petitioner ARSHAVIR ISKANIAN TABLE OF CONTENTS TABLE OF AUTHORITIES......cccccscssssscssesssssesesscssussessuecessssecesesesssecsssecessuecessseeeses iii ISSUES PRESENTED FOR REVIEW. .u.ccscsssssssssscecssessssseessscsuessesssesscsssessessesesseess 1 INTRODUCTION.....cccsscsssessssesessuessesssessesssessvessssucsusecurssusesssarssuessuessecsussavesseceseesee 2 STATEMENTOF THE CASE wu.cccscescsssssssssssssssssssssecssecsucessecsussucsssessvcssssssessecssecseee 9 ARGUMENT....ccccscsssesssessscssecssssscsssessssssessecucssvsssssvessucsasssussstesisssuessseatesssessesssvensees ll I. THE COURT OF APPEAL’S RULING COMPELLING PETITIONER’S PAGA CLAIMSTO INDIVIDUAL ARBITRATION DIRECTLY CONFLICTS WITH CALIFORNIA APPELLATE AUTHORITY AND PREVAILING PRINCIPLES OF PREEMPTION..........cccccccccseseeseeeseeees 11 A. The Court OfAppeal’s Ruling Creates A Direct Conflict " With Brown And Franco ....cecccccescssscessssessccssessesesessesessseessesceserscsens 11 B. The Court of Appeal’s Ruling Creates A Direct Conflict With REVES oo. eeececceeceseeseeseeeseesescecesesscsaecsssacececcsesssssecseesscsnsvssearees 13 C. The Court of Appeal’s Ruling Contravenes The United States Supreme Court’s Waffle House Decision By Forcing The Non-Party State To Waive Its PAGA Rights.............. 15 D. The Court of Appeal’s Ruling Conflicts With The Strong Presumption Against Implied Preemption OfA State’s Exercise of Its Police POWErS.........ccccccccccesseseesesccecssssenlesssvasenaesereaees 16 I. THE COURT OF APPEAL’S RULING CONFLICTS WITH THIS COURT DECISONS BY EXPRESSLY “OVERRULING” GENTRY0eecccccscsseccescsescceseseneessesenecseaesenssstssesseacaucsesesscaccnsssvscssuseestseacnevavaey 17 A. The Court OfAppeal Disregards The FAA’s Doctrine Protecting The Vindication Of Statutory Rights That Provided The Foundation For Gentry ....c.cccecceccccccscesecesseesesecenseesees 17 B. The Court of Appeal Erred In Holding That The FAA MayBe Applied To Eviscerate Petitioner’s Unwaivable Statutory Rights .........:cccccccseesscseeseesscesseseecsscscsscessevacsscessensvereseeaseass 19 I. THE COURT OF APPEAL’S REFUSAL TO FIND WAIVER DESPITE CLS’S DILATORY CONDUCT CONTRAVENES CALIFORNIA WAIVER LAW...occccccccccccsscccsscssessssssecesessssssesesvsnssevareeens 21 A. The Facts In This Case Were Some Of The Most Compelling Presented In Any Reported Waiver Case..........eee 21 B. The Court OfAppeal Improperly Found Futility WhenIt Was Not Legally Impossible To Compel Arbitration Prior TO CONCEPCION ....eeeccescesseseesceesseseessessesscessesessesscessesssssecsecssesstacersees 24 IV. THE COURT MUST CORRECT THE COURT OF APPEAL’S REFUSAL TO DEFER TO THE NLRB IN CONFLICT WITH THE SUPREME COURT’S ABFFREIGHTSYSTEMS AND KAISER STEEL DECISIONS, AMONG OTHERS.........cccccccsesceseeeseeeeees 25 CONCLUSIONoccceceeesesssscesssescceeeseeaeecseseeeneseesesseseeuseseseeenecaeessesecsesssssesensees 27 CERTIFICATE OF WORD COUNT.....ccccccecsscssssessenseseeseseseeescesescsecsesestscneesues 29 il TABLE OF AUTHORITIES STATE CASES Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443vw2,22 Arias v. Super. Ct. (2009) 46 Cal4th 969 .o....ccccccccsccsssssscssssssssesessssssssssseseeee 5,15 Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 ooocscesesecsesseseseeeeseeseseesesesceseseeeseeseseessseesesssesseateserseensacspassim Augusta v. Heehn & Associates (2011) 193 Cal.App.4th 331] 0...ceceeens 22 Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066 .......ccececeeeee 12, 13 Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, rev. den., 2011 Cal.Lexis 10809 (Oct. 19, 2011), cert. den., 2012 U.S.Lexis 2934 (April 16, 2012) (No. 11-880) oo.cececesceeeeessesseeseeeeseseescsseens+.passim Burton v. Cruise (2010) 190 Cal.App.4th 939 ......cccccccccsccesccescesscessessseeesseeeees 2,22 Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334 woe.3 Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 .......cccce eee 12, 13 Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205 wo...ccceececeeeeee 22 Farm Raised Salmon Cases (2008) 42 Cal.4th 1077 wo..cccccccccccsescessesssccssctseeeseees 16 Francov. Athens Disposal Co. (2009) 171 Cal.App.4th 1277 oo... 2,11,12 Gentry v. Super. Ct. (2007) 42 Cal.4th 443 oo..ccccccccecccccsccsecescessesssscsseseneeespassim Guess?, Inc. v. Super. Ct. (2000) 79 Cal.App.4th 553 occcecccscseeeeeneeees 21,22 Home Depot U.S.A., Inc. v. Super. Ct. (2010) 191 Cal.App.4th 210.0... 16 Hoover v. American Incomelife Ins. Co. (May 16, 2012) 2012 Cal.App.Lexis 687 oo... cccccccccccsecsecssccsccsscsecseesesecscesecsseessssesscesecsenssaveevere 2, 22, 23 Iskanian v. CLS Transp. L.A. LLC (Cal.Ct.App., May 27, 2008, No. B198999) 2008 Cal.App.Unpub.Lexis 4302 oo. ccccccccccccecteseccseteesssessensenes 10, 24 Kashaniv. Tsann Kuen China Enterprise Co. (2004) 118 Cal.App.4th SB ieee ecceseneceseeecaeceeesesessessessesseseeseesesessessesesssseessssessescacsacssessssscsecisensserecaetaesenes 26 Kinecta Alternative Fin. Solutions, Inc. v. Super. Ct. (Apr. 12, 2012) 205 Cal.App.4th 506occecccccescessecsssessesseseseeseccecssecsecscsaccsessesssessssecsevreetes 2,17 Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436vocePassim Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064 w...ccccccccecsseescsscesesecererens 17 Reyes v. Macy, Inc. (2011) 202 Cal.App.4th 1119...eeeeeecens terrespassim Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832.....00.ccceepassim il Sierra Club v. Department ofParks & Recreation (2012) 202 CalApp.4th 735 woesececcessecssessessensesecessesesseesecsesseenscsessesssessessesecsususeessseaveaseas 15 Sobremonte v. Sup. Ct. (1998) 61 CalApp.4th 980 oo...cccceccssceseeseeseteeesens 22 St. Agnes Medical Center v. PacifiCare ofCalifornia (2003) 31 Cal.4th 1187oeeeesceseesceeseseeseeseseesesseseseesecsesecsscsessssssssscsecsusacessessesseseeneate 21 Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191.cccesscsessesceseeseeeees 16 Walnut Producers ofCalifornia v. Diamond Foods, Inc. (2010) 187 CalApp.4th 634 oocccsccsesscesceeesceseceeseessesesesseesenscsscssssssessussssscsevacusassesectarsasars 25 FEDERAL CASES ABF Freight System, Inc. v. NLRB (1994) 510 U.S. 317 voccecccececeesseecscceessessseenes 25 Anderson v. Comcast Corp. (Ast Cir. 2007) 500 F.3d 66 ....ccccceceeeeeecesceecteeeeeees 19 AT&TMobility v. Concepcion (2011) 563 U.S. __ [131 S.Ct. 1740]...passim AT&TMobility, LLC v. Concepcion, No. 09-893 (U.S. Jan. 25, 2010) 2009 U.S. Briefs 893 oo. ceeccscecesssessesseeseesscessecsesscssssssssceessesssseaecssesssnerseeaueees 20 Booker v. Robert HalfInt’l, Inc. (D.C.Cir. 2005) 413 F.3d 77 o..cccceccesecesseeesesseeee 19 Borrero v. Travelers Indem. Co. (E.D.Cal. October 15, 2010, No. CIV S-10-322 KJM) 2010 U.S.Dist. Lexis 114004 oo...ccccece ceecseeceneceseeeeeaes 25 Chamber ofCommerce ofthe United States v. Whiting, 131 S.Ct. 1968 QOL] )eeeececeecneeeessesseeesessecseeeseessecssecsscesecessesecsseessssssssevaseessesseeseess 16 Chevron U.S.A. v. NRDC (1984) 467 U.S. 837 ..cccceccccccccessesceseseesessseceeevsseessrseesens 25 CompuCredit Corp. v. Greenwood (2012) 132 S.Ct. 665 voce ccececccececessceeseesesseees 26 EEOC v. Waffle House (2002) 534 U.S. 279 voecccccccccccccsssescssessescescsscaevereneeespassim Fisher v. AG Becker Paribas, Inc. (9th Cir. 1986) 791 F.2d 691 ooo cceececseesseeees 24 Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20 woe cecceseeeeeeeespassim Green Tree Fin. Corp.-Alabama v. Randolph (2000) 531 U.S. 79 wo. .eeeceeeepassim Inre Elec. Books Antitrust Litig. (S.D.N.Y. June 27, 2012) 2012 ULS. Dist.Lexis 90190 oo. cceeeceeeeeseescscesseesecsecsccsssscessvscsesssesssassesssevsseverseaseaeranens 6 In re Toyota Motor Corp. Hybrid Brake Mktng. (C.D.Cal. 2011) 828 FSupp.2d 1150eeeeescceececceeeseceeeeseeseesecsscsecsaccscsscssesessscsslesesssessesseneaeens 24 In Re: American Express Merchants’ Litigation, Italian Colors Rest. (2d Cir. Feb. 1, 2012) 667 F.3d 204 rev. en banc denied May 29, 2012........ 6, 18, 19 Kaiser Steel Corp. v. Mullins (1982) 455 U.S. T2cccccccccccccsssssscsssessevscsssessenseeees 7,26 iv Kilgore v. KeyBank, Nat’s Ass’n (9th Cir. Mar. 7, 2012) 673 F.3d 947.......... 12, 13 Kingsbury v. U.S. Greenfiber, LLC (C.D.Cal. June 29, 2012) 2012 ULS.Dist.Lexis 94854 ooocecceccecessesescesseesesssseesesecaeesesecsecsesseeeesassesseeecsececsesesens 24 Kristian v. Comcast Corp. (1st Cir. 2006) 446 F.3d 25 occ ccccceseeessessessesecssereees 13 Machado v. M.A.T. & Sons Landscape, Inc. (E.D.Cal. July 23, 2009) 2009 U.S.Dist.Lexis 63414occcccccsecscssceseseesecseesestesseseseescesesseesseessecseseessseecasens 14 Mitsubushi Motors Corp. v. Soler Chrysler-Plymouth (1985) 473 US. 614 occseeeceseececeseneecseeseeeesstesacesesaecsscssesscsecssesscaseseesscneeseeeressespassim Morton v. Mancari (1974) 417 U.S. 535 .occcccecccscssssceccecsescesssessseecsesssscessessseeneveas 27 Preston v. Ferrer (2008) 552 U.S. 346 w..cccccccccccscsscsssesscsseeseeseseesrsesssesssssessseneevens 18 Ranierev. Citigroup, Inc.(S.D.N.Y. Nov. 22, 2011) 827 F.Supp.2d 294 ..ccccssseessse 6 San Diego Bldg. Trades Council v. Garmon (1959) 359 U.S. 236 sassesaneneneensnsaneens 26 Southland Corp. v. Keating (1984) 465 U.S. 1 vcccccccccccccscssccsecseeescescesceseeseeseeas 4,16 Sutherland v. Ernst & Young (S.D.N.Y. Jan. 17, 2012, No. 10 Civ. 3332 (KMW)) 2012 U.S. Dist.Lexis 5024 o..cecccccccsccscsseseesessescsesscesessesesesecssas 6, 20 Thomasv. Aetna Health ofCalif. (E.D.Cal. June 2, 2011) 2011 U.S. Dist.Lexis 59377 ooo. ceecesceceeseesessessesessesseseeseceecseceecsecsecssecascessecsssseenseseesees 14 Wal-Mart Stores, Inc. v. Dukes (2011) 131 S.Ct. 2541 oo ccccccceccescsseeeveeteevees 19 Wyeth v. Levine (2009) 555 U.S. 555 cocccccccccescssccesecseceeeeneceseceseeseessssssscasensevsensaees 16 STATE STATUTES Cal. Bus. & Prof. Code § 17200 et seg. (Unfair Comp. Law (UCL)).......000.0000. 12 Cal. Civ. Code § 1750 et seg. (Cons. Legal Remedies Act (CLRA)).....00.000000. 12 Cal. Lab. Code § 2698 et seq. (Priv. Atty’s. Gen. Act (PAGA)) uu...eeepassim Cal. R. Ct. 8. SOO(D)(D) oo. eee cceeeeeseeeseeeesseseseecseecsecsesessccseceescssseatecsecstssesessesseensesats8 D.C. Code § 2-140 1 et SQ. ieee ceececcescesescesesseesessesscstesenacsecsseeesssesssseasstscssesseseessesees 19 FEDERAL STATUTES 9 U.S.C. § 1 et seg. (Arb. Act (FAA)).....cece ee cceeeeeeeee becteceaceeesseeesseeseeespassim 29 U.S.C. § 150 et seg. (Nat’]. Lab. Rel. Act (NLRA)).o...cccceeeeeepassim 29 U.S.C. § 160) eeeccc cescsecsessecseesecsecsscsecsssseesecsecsessscacssecsscssssecaversvssesasens 25 29 U.S.C. § 201 et seq. (Fair Lab. Stand. Act (FLSA)) -.sccccsssscccsssccssssscscsssesesssseesse 6 SECONDARY AUTHORITIES D.R. Horton (N.L.R.B. Jan. 3, 2012) 2012 NLRB LEXIS 11, 357 NERB No.184 o.oo ecccesessesesseseeseseeesesseseesssseeeseseensstsscssessssvsssuseusseenseveeeaespassim H.R. Rep. No. 96, 68th Cong., Ist Sess., 1 (1924)oeccecesscsessessssessesereeeeees 16 Nagareda, The Litigation-Arbitration Dichotomy Meets the Class Action (2011) 86 Notre Dame L.Rev. 1069 .......ccccccccseesessesescescssessscescsessnscsaeessetacenees 20 vi ISSUES PRESENTED FOR REVIEW 1. Must California courts enforce representative action waivers requiring the aggrieved employee bringing a Private Attorneys General Act of 2004 (“PAGA”)action to forfeit his or her substantive statutory right to represent “current and former employees”or to seek statutory penalties as a private attorney general? 2. Canthe State of California, the real party in interest ina PAGA action, be forcedto forfeit its right to PAGA penalties via a private agreement to which it was not a party? 3. Doesthe Federal Arbitration Act (“FAA”) impliedly preemptthe California legislature’s exerciseofits police power to promulgatearbitration- neutral statutes to enforce the state’s employment laws? 4. Musta trial court enforce an arbitration agreement containing a collective action waiver even when a party demonstrates, by evidence, that his or her substantive statutory rights would be extinguished if the agreement were enforced? 5. Doesa party that engages in over three years of active merits- litigation waiveits right to compel arbitration by waiting until just beforetrial to seek to compel arbitration, simply because enforcing the class action waiver earlier would have been difficult but not impossible? Does being made to conduct class discovery, win a contested class certification motion, and begintrial preparation Constitute prejudice to the plaintiff, when nearly all of that effort would be useless in “individual”arbitration? 6. Is a federal agency’s interpretation of the statute within its core mandate entitled to deference by a state appellate court? May a California appellate court enforce a mandatory employment agreementcontaining a collective action waiver, even though the National Labor Relations Board (“Board”), authorized by Congressto interpret the National Labor Relations Act (“NLRA”), has held that such waivers violate Section 7 of the NLRA? INTRODUCTION Advancing an unprecedented reading of the FAA, the Court ofAppeal issued a decision that threatens to sweep away,in one stroke, years of firmly- established California case law protecting substantive statutory rights from forfeiture by adhesion agreements. These decisions include: Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489,rev. den., 2011 Cal.Lexis 10809 (Oct. 19, 2011), cert. den., 2012 U.SLexis 2934 (April 16, 2012) (No. 11-880) and Franco v. Athens Disposal Co. (2009) 171 Cal.App.4th 1277, holding that PAGA waivers are unenforceable; Reyes v. Macy’s, Inc. (2011) 202 Cal.App.4th 1119, holding that PAGA claimsare inherently representative under Labor Code § 2699(a); Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, which prohibited enforcement of adhesion contracts that prospectively limit statutory remedies; Gentry v. Super. Ct. (2007) 42 Cal.4th 443, which promulgateda fact- intensive test in accordance with the U.S. Supreme Court’s longstanding requirementthat a party must be permitted to vindicate her statutory rights in whichever forum the claim is brought; Kinecta Alternative Fin. Solutions, Inc. v. Super. Ct. (Apr. 12, 2012) 205 Cal.App.4th 506, which, along with Brown, recognized that Gentry remains the law in California unless and until the Supreme Court abrogatesit; NumerousCalifornia decisions on waiver, including Hoovery. American Incomelife Ins. Co. (May 16, 2012) 206 Cal.App.4th 1193, Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, Roberts y. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, Burton v. Cruise (2010) 190 Cal.App.4th 939, and Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, all of which found the defendants to have waived arbitration on far less extreme facts. Byrejecting, implicitly or explicitly, no fewer than nine decisions from other California appellate courts and at least two from this Court, the Court ofAppeal has engendered substantial doctrinal confusion requiring this Court’s review. The Court of Appeal reached its unprecedented holding without grappling with any of the numerous U.S. Supreme Court decisions that have limned the “vindication of rights” doctrine over the past quarter century-plus. Seizing on select passages from AT&TMobility v. Concepcion (2011) 131 S.Ct. 1740 divorced from the facts of that case and the larger body ofFAA jurisprudence, the Court ofAppeal applies them mechanically to the very different record beforeit. In Concepcion, the Court found that the “aggrieved customers would be * ‘essentially guaranteed’ to be made whole,” a finding that demonstrated that the plaintiffs statutory rights would be vindicated. (131 S.Ct. at 1753.) Here, the Court of Appeal’s analysis appears to begin and end with the premisethat the FAA’s purposeis to “ensure the enforcementofarbitration agreements according to their terms.” (Slip Op. at 7 [quoting Concepcion, at 1748].) But the Supreme Court has never endorsed the notion that “arbitration agreements must be enforced according to their terms” regardless of whether enforcement would eviscerate a party’s substantive rights, as the Court of Appeal did here. In fact, the FAA operates to make “arbitration agreements as enforceable as other agreements, but not more so.” (EEOC v. Waffle House (2002) 534 U.S. 279 294; see also Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, > 1366-67 (Baxter, J., concurring [discussing this maxim].) However, the rule adopted by the decision below actually elevates arbitration agreements over other contracts. Under the Court of Appeal’s reading, substantive statutory rights that cannot be waivedin an ordinary agreement can be waived in an arbitration agreement. This reasoning turns the FAA on its head, inverting the court’s duty to “place arbitration agreement on an equal footing with other contracts.” (Concepcion, at 1745.) Moreover, although the Court of Appeal apparently believes otherwise, nothing in Concepcion indicates that the Court intended to overturn decades of FAA jurisprudence,including the seminal Mitsubishi decision. Mitsubishi was the first Supreme Court decision to hold that statutory claims, like breach of contract claims, can be compelled to arbitration under the FAA. However, the Mitsubishi Court also recognized that substantive rights cannot by extinguished by enforcement of what should merely be a choice-of-forum provision. Integralto the Mitsubishi holdingis the principle that, “by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by statute; it only submitsto their resolution in an arbitral...forum.” (473 U.S. at 628.) Mitsubishi thus carefully circumscribed the FAA’S reach to ensure a “standard by which arbitration agreements andpractices are to be measured, and [to] disallow[ | forms of arbitration that in fact compel claimants to forfeit certain statutory rights.” (Armendariz, 24 Cal.4th at 99-100.) Mitsubishi’s explicit protection of substantive rights undergirds key decisions of this Court, such as Armendariz and Gentry. The Court of Appeal’s analysis ofPAGA furtherillustrates the dangers of its improper andselective application ofFAA doctrine. Under PAGA,a deputized aggrieved employeebrings a representative action on behalf of “himself or herself and current or former employees” to enforce the Labor Code, with 75% ofthe penalty recovery allocated to the state and 25% distributed to the aggrieved employee. The PAGAstatute contains no provision regarding arbitration. Nonetheless, the Court of Appeal proceeded to dismantle the entire statutory design ofPAGA byincorrectly treating PAGAlikea statute that categorically exempts claims from arbitration, like the statute at issue in Southland Corp. v. Keating (1984) 465 U.S. 1. (See Slip Op. at 15.) This comparisonfails. In Brown, the court, without reaching a conclusion asto arbitrability, only invalidated a representative action waiver because enforcing it would have eviscerated a substantive right and forced a party to arbitrate her “individual PAGAclaim”—a result wholly at odds with the PAGAstatute. Brown correctly emphasized that PAGA wasenacted as a “statutory representative action” designed to enforce the Labor Code throughprivate attorneys general. Subsequently, the Reyes court bolstered this conclusion, confirming that PAGAis inherently representative and cannot be brought as an individual claim in any forum. By holding that PAGAclaimscan be individually arbitrated, the Court of Appeal’s decision directly conflicts with these sister courts. Likewise, the Court of Appeal contravenes Armendariz’s prohibition against limitation of statutory remedies, as its enforcementofthe representative action waiveressentially caps the employer’s potential liability for PAGA statutory penalties—penalties that are measured on a representative basis—tojust those ofthe individual. ” The Court of Appeal also ignores the fact that; ina PAGAaction, the real party in interestis the state of California. Under the Supreme Court’s decision in Waffle House, the state cannot waive an enforcementright based ona private contract to which it was not a party. In a PAGAaction, the aggrieved employee proceedsas a proxy ofthestate, collects penalties for the state, and the state is bound by a judgmentin the employee’s favor. (Arias v. Super. Ct. (2009) 46 Cal.4th 969, 980.) Because thestate is the true holderof the claim, it cannot be forced to waiveits claims by proxy. These mistaken findings are premised on a sharp departure from prevailing preemption principles. PAGAis an arbitration-neutral exercise of the state’s police powerto regulate employer-employeerelationships. For this statute to be preempted,there mustbe a “clear and manifest intent of Congress” to occupy a field traditionally reserved for the states, an analysis entirely absent from the Court ofAppeal’s decision. By enforcing a waiverthat effectively exempts the employer from PAGAliability, the Court of Appeal has authorized the nullification of a state law enforcementaction without even attempting to identify ’ any Congressionalintent to do so. The Court of Appeal also creates a conflict by invalidating this Court’s Gentry decision. Gentry comports with Mitsubishi, Gilmer and Green Tree Fin. Corp.-Alabama v. Randolph (2000) 531 U.S. 79 (“Randolph”) in holding that a class action waiver may beinvalidated if a party can demonstrate, through admissible evidence,that arbitration would not permit a party to vindicate her unwaivable statutory rights. Randolph, which directly implicated the vindication of rights doctrine, remains vital, providing the impetus for a recent trend in federal court decisions striking class action waivers in arbitration agreements. (See,e.g., In Re: American Express Merchants’ Litigation (2d Cir. Feb. 1, 2012) 667 F.3d 204, 214, rev. en banc denied May 29, 2012 (“AmEx IIT’) [invalidating a class _ waiver upon proofthat theplaintiffs’ statutory claims would be forfeitedin individual arbitration]; Jn re Elec. Books Antitrust Litig. (S.D.N.Y. June 27, 2012) 2012 U.S.Dist.Lexis 90190, *11 [invalidating class action waiver after the plaintiffs demonstrated that it would be “economically irrational for them to pursue their claims through individualarbitrations.”]; Sutherland v. Ernst & Young (S.D.N.Y. Jan. 17, 2012) 2012 U.S.Dist.Lexis 5024, *22-25 [following Randolph in invalidating a class action waiver on claims brought under the FLSA andstate employmentstatutes]; Raniere v. Citigroup, Inc.(S.D.N.Y. Nov. 22, 2011) 827 F.Supp.2d 294, 313-318 [same].) The Court of Appeal neither discussed nor distinguished Mitsubishi, Randolph, or any other Supreme Court cases setting out the “vindication of rights” doctrine. Without attempting to contend with Gentry’s foundation, the Court of Appealhastily “overruled” Gentry and, in the process, upended long-settled California law. Further, the Court of Appeal may not disregard the Board’s holding in D.R. Horton (2012) 357 NLRB No. 184. Ignoring the Supreme Court-mandated deference owedto the Boardin interpreting the NLRA, the Court of Appeal again misapprehendsthe issue asone of arbitrability even though the Board and the Petitioner madeit clear that the violation of the NLRAis,in this context, a contractual defense. A collective action waiver that violates Section 7 of the NLRA renders the contract unenforceable under clear Supreme Court precedent. (See Kaiser Steel Corp. v. Mullins (1982) 455 U.S. 72, 86 [holdingthat courts cannot enforce a contractual provision that promotes an unfair labor practice under the NLRA].) The Court ofAppeal simply did not addressthis argument. Finally, this ruling cannot be reconciled with California’s waiver doctrine, since no documented case where waiver was found has presented more compelling facts. CLSinitially filed its motion to compelarbitration in 2007, but subsequently abandonedits petition when the action was remanded on appeal for a factual showing under Gentry. Petitioner, relying on CLS’s demonstrated intent to defendthe actionin court,litigated the matter as a class action for the next three- and-a-half years. CLS actively participated in class discovery, contested (and lost) a motion for class certification, and filed a summary judgment motion. Just monthsbeforetrial, CLS sought to avoid class liability by “renewing”the same motion to compelarbitration that it had abandoned years prior. Thetrial court granted CLS’s motion notwithstanding this extraordinary delay, and the Court of Appealaffirmed. Bynot finding prejudice on such an extremesetoffacts, the Court of Appealhas castthe entire waiver doctrine into doubt. The decision also credits CLS’s “futility” defense, which excusesa party’s delay in invoking its right to arbitrate only if it had been legally impossible to enforceits arbitration agreementbefore a change in law. However,in the past year, two published decisions, Roberts and Lewis, expressly held that this defense is unavailable forlitigants citing Concepcionas the “changein law.” By excusing CLS’s conduct without even discussing these conflicting decisions, the Court of Appealfailed to articulate a sound rationale forits contrary holding. This opacity wasreinforced when the Court of Appeal summarily rejected Petitioner’s Petition for Rehearing, which focused on the decision’s omissionsof fact and errors of law regarding waiver. - - 8 Although this case should have been reversed on these narrow waiver grounds, the Court of Appeal unnecessarily seeks to generate a sea change in California arbitration and employment law, creating direct conflicts with and purportedly “overruling” numerous California precedents. The uncertainty caused by this decision amongthe trial courts requires this Court’s guidance. This decision emboldens California employers who will exempt themselves from civil liability by using arbitration agreements immunized from court scrutiny. If this decision takes root, California employers will demandarbitration not because of its traditional benefits of speed, cost-effectiveness and informality, but becauseit is a means to make any contract enforceable, thereby avoiding anyliability for violations of California law. Plenary review under Rule of Court 8.500(b)(1) is urgently neededto resolve these multiple conflicts and settle vital questions of law. In the alternative, the Court should grant review and hold based on co-extensive FAA preemption issues arising in Sanchez v. Valencia Holding Co., 8199119 (rev. granted March 21, 2012). STATEMENT OF THE CASE Plaintiff-Petitioner Arshavir Iskanian brought this wage-and-hourclass and representative action on August 6, 2006. (Slip Op. at 3) InFebruary 2007, CLS moved to compel the actionto arbitration, under an Arbitration Agreement signed by Petitioner in 2004. This Agreementpurportedto cover any disputes arising out of Iskanian’s employment, including both hiring by and separation from CLS. Thefinal paragraph bound all employees, whether or not the Agreement was signed: The foregoing provisions of this Policy/Agreement are binding upon EMPLOYEE and COMPANY irrespective of whether EMPLOYEE and/or - ’ COMPANYsignsthis Policy/Agreement. (7 Appellant’s Appendix [“AA”] 1975 [4 17].) The Agreementalso contained waivers aimedat precluding PAGA and other collective and representative actions: (1) EMPLOYEE and COMPANYexpressly intend and agree that class action and representative action procedures shall not be asserted, nor will they apply, in any arbitration pursuant to this Policy/Agreement; (2) EMPLOYEE and COMPANYagreethat each will not assert class action or representative claims against the other in arbitration or otherwise; and (3) each of EMPLOYEE and COMPANYshall only submit their own, individual claimsin arbitration and will not seek to represent the interests of any other person. (Slip Op: at 2-3.) On March 13, 2007, thetrial court granted CLS’s motion to compel arbitration, which Iskanian timely appealed. (/d.) While the appeal was pending, this Court rendered its opinion in Gentry. Based on Gentry, the Court of Appeal directed the trial court to vacate its previous orderif it foundthat a class action would be a “more effective practical means of vindicating the rights of the affected employees than individuallitigation or arbitration.” (See Iskanian v. CLS Transp. L.A. LLC (May 27, 2008, No. B198999), 2008 Cal.App.Unpub.Lexis 4302 at *3.) On remand,rather than reassert its motion to compelarbitration, CLS abandonedits motion, electing to proceed withlitigation. (Slip Op. at 3.) The parties subsequently exchanged substantial written merits and class discovery, including three sets of special interrogatories, four sets of requests for production of documents, three sets of requests for admissions and twosets of form interrogatories. (2 AA 419-20; 2 AA 434-510.) With this supporting discovery, Iskanian movedto certify the class. Both parties contested this motion, debating every aspect of the certification analysis, including the admissibility and sufficiency of the evidence Iskanian offered in support. (See generally 2 AA 383-7 AA 1805.) Thetrial court granted Iskanian’s motionto certify the class by order dated October 29, 2010. (7 AA 1788-1805.) The parties then conducted post-certification discovery. CLS subsequently filed a motion for summary judgment. (Rep.’s Trans. of Proceedings of June 13, 2011 [at A-25:18-22].) Three months before the trial date of August 16, 2011, and after the Supreme Court issued Concepcion, CLS “renewed”its earlier motion to compel individual arbitration. (7 AA 1806.) Thetrial court granted the motion on June 13, 2011, and Petitioner timely appealed. Soon after the hearing on the appeal, the Court of Appeal issued a published decision on June 4, 2012,affirmingthetrial court’s decision. Petitioner filed a timely Petition for Rehearing, which was summarily denied on June 26, 2012. 10 “ARGUMENT I. THE COURT OF APPEAL’S RULING COMPELLING PETITIONER’S PAGA CLAIMS TO INDIVIDUAL ARBITRATION DIRECTLY CONFLICTS WITH CALIFORNIA APPELLATE AUTHORITY AND PREVAILING PRINCIPLES OF PREEMPTION A. The Court Of Appeal’s Ruling Creates A Direct Conflict With Brown And Franco Foremost, the Court of Appeal’s decision creates a direct conflict with Brown and Franco. Indeed, in rejecting Brown, the court below reached a holding that this Court and the U.S. Supreme Court both declined to make when presented with this very issue: that the FAA preempts PAGA’srepresentative right of action. (See Slip Op. at 14-16.) Prior to Brown, Franco had held thatenforcing a representative action waiver would preclude an employee “from seeking penalties on behalf of current and former employees, that is, from performing the core function of a private attorney general.” (171 Cal.App.4th at 1303.) Basedin part on Franco’s reasoning, Brown refused to enforce a representative action waiver, distinguishing Concepcion because PAGAis a public law enforcement action brought by the state through a proxy. The Brown court declined to hold that PAGAclaimsare inarbitrable, holding only that a PAGAaction cannot be nullified via a representative action waiver. (Brown, 197 Cal.App.4th at 503 [“Even ifa PAGA claim is subject to arbitration, it would not havetheattributes of a class action...’’].) While the Court of Appealclearly believes representative action waivers are enforceable without exception, its reasoning leaves much to be desired. Instead of challenging Brown’s reasoning head-on, the Court of Appeal knocks down the straw manofarbitrability. (Slip Op. at 14-17) Petitioner chiefly argued only that Brown supports the invalidation of a representative action waiver.' Both ' Petitioner did not argue that “a PAGAaction can only effectively benefit the public if it takes place in a judicial forum.” (Slip Op. at 15.) Petitioner’s arguments regarding PAGAon appeal centered on the unenforceability of the PAGAwaiver. (See AOBat 26-28; Reply at 15-17.) 11 Brown and Franco dealt with the protection of the substantive right afforded by PAGA,notwith arbitrability. On this issue, the Supreme Court hasrepeatedly held that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.” (Mitsubishi, 473 U.S. at 628.) If statutory remedies could be waivedbyarbitration agreement, a party couldbestripped of her ability to “vindicate [his or her] statutory cause ofactionin the arbitral forum.” (Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 27-28.) The Supreme Court emphasized that it would “condemn [{]... as against public policy” an arbitration agreement that operated “as a prospective waiverofa party’s right to pursue statutory remedies.” (Mitsubishi, 473 U.S. at 637, fn.19:) Yet the Court of Appealfailed to grapple with Mitsubishi, Gilmer, or any of the other critical Supreme Court cases. Moreover, Concepcion is inapplicable because the “vindication of rights” doctrine was not at issue in that case. Nor does the inapposite Kilgore v. KeyBank, Nat’s Ass’n (9th Cir. Mar. 7, 2012) 673 F.3d 947 support the decision below. (Slip Op. at 16-17.) Kilgore held that this Court’s Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066 and Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 decisions, which categorically exempted all UCL and CLRA claimsfor injunctiverelief from arbitration, were preempted by the FAA. (dd. at 960.) In contrast to Broughton- Cruz, Brown did not hold that PAGAclaimsare inarbitrable per se, but only that a PAGA claim must be brought as a representative action on behalf of other | aggrieved employees, in whichever forum it proceeds. In fact, Brown expressly distinguished these cases by noting that “Broughton and Cruz dealt with arbitrability, not with class and representative action waivers.” (197 Cal.App.4th at 500-501.) Rather, Brown heldthat an arbitration-neutral “representative statutory action”to enforce labor laws cannot benullified by the very party the law is enacted to police: the employer. (/d. at 501.) Whateverthe fate is of the 12 Broughton-Cruz rule in California,it has no application to PAGA” Kilgore’s ruling thus in no way undercuts Brown. CLS’s representative action waiver also operates as a limitation of a statutory remedy in direct conflict with Armendariz’s mandate “that an arbitration agreement maynotlimit statutorily imposed penalties.” (24 Cal.4th at 103.)° Under PAGA,an “aggrieved employee may recovercivil penalties ...filed on behalf of himself or herself and other current and former employees against whom one or moreofthe alleged violations was committed.” (Labor Code § 2699(g)(1).) So, the civil penalties that a PAGA litigant recovers are measured by the violations committed againstall the other aggrieved employees. However, by enforcing a clause that limits any PAGA recovery to which the aggrieved employee—andultimately, the state—is entitled by statute, the Court of Appeal’s ruling in effect caps a statutory remedy in violation ofArmendariz. ‘The multiple conflictsmanufactured by the Court of Appeal merit plenary review. B. The Court of Appeal’s Ruling Creates A Direct Conflict With Reyes In deciding whether to enforce CLS’s representative action waiver, the Court of Appealhad to determine whether a PAGAclaim can exist as an individual claim. On this point, the First Appellate District concludedthat a plaintiff asserting a PAGA claim may notbring the claim simply on his or her own behalfbut must bring it as a representative action and include “other current or former employees.” (Reyes, 202 Cal.App.4th at 1123 [citing Machadov. * While the vitality of the Broughton-Cruz rule does notaffect the merits of the PAGAissue, the Court should also review the decision belowsinceit adopted, for the first time in the state court, the Ninth Circuit’s holding in Kilgore to expressly abrogate two decisions from this Court. * This principle applies to agreements governed by the FAA. (See, e. g., Kristian v. Comcast Corp. (1st Cir. 2006) 446 F.3d 25, 47-48 [severing as unenforceable a provision limiting availability of treble damages underantitrust statute].) 13 M.A-:F-& Sons Landscape, Inc. (E.D.Cal. July 23, 2009) 2009 U.S.Dist.Léxis 63414, *6].) “[B]ecause the PAGA claim is not an individual claim, [the] individual claims [cannot] be submitted to arbitration.” (Id. at 1124.) In reaching this finding, Reyes relied on Machado’sdetailed analysis: The word “and” commonly connotes conjunction and is used “as a function word to indicate connection or addition.” Merriam-Webster’s Collegiate Dictionary 43 (10th ed. 2002). Giving effect to the “common acceptation” of the word “and,” the statute’s language indicates that a PAGA claim must be brought on behalf of other employees.” (2009 U.S.Dist.Lexis 63414 at **6-7.) A contrary reading makesnosense,as the Legislature could haveeasily defined the action in a different wayif it had intendedto allow “individual” PAGAclaims. Explicitly disagreeing with Reyes, the Court of Appeal undertakes a contrary reading, asserting that the use of the word “and”in § 2699(a) does not . have its ordinary meaning. Instead the Court of Appeal reasoned that “and”is meant “to clarify that an employee may pursue PAGAclaimson behalf ofothers only if he pursues the claims on his own behalf.” (Slip Op. at 17, fn.6.) Finding no support from PAGA’slegislative history, the Court of Appealrelies on Quevedo v. Macy’s, Inc. (C.D.Cal. 2011) 798 F.Supp.2d 1122, a pre-Brown decision that had already been rejected by Reyes. (See 202 Cal.App.4th at 1124 fn.3.) Other district courts support Reyes.* Byre-writing § 2699(a) to concoct an * A numberofdistrict courts hold that aggrieved employees’ PAGA claims are “common and undivided”and can be aggregated to determine the amountin controversy partly because in a PAGAaction, “aggrieved employeesare not united in a representative suit merelyfor convenience as Section 2699 requires that PAGA actions be broughtin a representative form on behalfofall aggrieved employees.” (Thomas y. Aetna Health ofCalif. (E.D.Cal. June 2, 201 1) 2011 U.S.Dist.Lexis 59377, *50; see also Urbino v. Orkin Services ofCalifornia, Inc. (C.D.Cal. Oct. 5, 2011), 2011 U.S.Dist.Lexis 114746, at *27-29.) 14 “individual” PAGAclaim, the Court ofAppeal’s activist approach ignores the edict that “[c]ourts must take a statute as they find it” and exercise judicial restraint in their interpretation. (Sierra Club v. Department ofParks & Recreation (2012) 202 Cal.App.4th 735, 744.) This decision has causedsignificant, unnecessary confusion regarding whether PAGAis inherently representative, with vexed courts, arbitrators and parties uncertain as to how such a claim may proceed. Should PAGAbelitigated or arbitrated individually or, as intended, only as a representative claim? This Court’s guidanceis neededto settle this issue. C. The Court of Appeal’s Ruling Contravenes The United States Supreme Court’s Waffle House Decision By Forcing The Non- Party State To Waive Its PAGA Rights In a PAGAaction, “the employee plaintiff represents the same legal right and interest as state labor law enforcement agencies.” (Arias, 46 Cal.4th at 986.) A PAGAlitigant acts as “the proxy or agent ofthe state’s labor law enforcement agencies.” (/bid.) The PAGAaction thus “functions as a substitute for an action brought by the governmentitself.” (/bid.) In other words, the real party of interest, the one that recovers the lion’s share of penalties on a judgment, is the State of California. By forcing the state to forfeit its right to pursue a proxy representative action, the Court of Appeal’s ruling contravenes Waffle House, which held that an arbitration agreement cannot bind a governmental enforcement agencysituated as the State of California is here. (534 USS. at 294.) As in Waffle House, the decision below‘‘turns whatis effectively a forum selection clause into a waiver of a nonparty’s statutory remedies.” (/d. at 295.) In fact, “the proarbitration policy goals of the FAA do not require the agency to relinquishits statutory authorityifit has not agreed to do so.” (/d. at 294.) Here, the State of California cannot be forcedto relinquish its statutory authority to prosecute this action, either on its ownor by proxy, based on a private agreement to which it was not party. Because 15 the Court-of Appeal’s decision directly contravenes the Supreme Court’s Waffle House decision, review by the Court is necessary. D. The Court of Appeal’s Ruling Conflicts With The Strong Presumption Against Implied Preemption Of A State’s Exercise of Its Police Powers “States possess broad authority under their police powers to regulate the employmentrelationship to protect workers within the State...minimum wage and other wage laws [are] examples.” (Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, 1198.) PAGAis one suchstatute “validly adopted underthe police power.” (Home Depot U.S.A., Inc. v. Super. Ct. (2010) 191 Cal.App.4th 210, 225.) For statutes that implicate the state’s police powers, courts start “with the assumption that the historic police powersofthe States were notto be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” (Wyeth v. Levine (2009) 555 U.S. 555, 565.) Even in areas traditionally regulated by the federal government, the Court will adopt a strong presumption against implied preemption. In the same term that Concepcion was decided, the Court held that an Arizonastatute that punishes employers for hiring illegal immigrants was not preempted by federal immigration law due to Arizona’s interest in regulating employment. (Chamber ofCommerce ofthe United States v. Whiting (2011) 131 S.Ct. 1968, 1973-74.) Like the U.S. Supreme Court, this Court has consistently required a showing of “clear and manifest purpose of Congress”to preempt an exercise ofthe state’s police powers. (See, e.g., Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1088 [“[C]onsumer protection laws are subject to the presumption against preemption”].) Thereis no indication that the 1925 Congress soughtto displace state statutes designed to enforce the state’s labor laws, such as PAGA. Rather, in enacting the FAA,the “congressional intent [was to] place arbitration agreements ‘upon the samefooting as other contracts.’” (Southland, 465 U.S. at 16 fn.11 [quoting H.R.Rep. No. 96, 68th Cong., Ist Sess., 1 (1924)].) As noted above, 16 PAGAwaspromulgated to incentivize private’litigants to more effectively enforce labor laws. Without the representative action mechanism, California’s objective in creating this right of action to enforce labor laws “would be nullified.” (Brown, 197 Cal.App.4th at 502.) Yet that is exactly the consequenceofthe decision below. IfIskanian were permitted to stand, and implied preemption could be established without any demonstration of congressionalintent to enter a field traditionally occupied by the state, the California legislature would be crippled. Its powerto promulgate arbitration-neutral statutes to enforce not just its own labor laws but any ofits laws would be severely undercut. The staggering implications “arising from this decision require this Court’s review. i. THE COURT OF APPEAL’S RULING CONFLICTS WITH THIS COURT DECISONS BY EXPRESSLY “OVERRULING” GENTRY A. The Court Of Appeal Disregards The FAA’s Doctrine Protecting The Vindication Of Statutory Rights That Provided The Foundation For Gentry Marking a dramatic shift in California law, the Court of Appeal departs from its sister courts by holding that “Concepcion conclusively invalidates Gentry.” (Slip Op.at 9.) Other courts, including Brown and Kinecta, have affirmed the vitality of Gentry. (See Brown, 189 Cal.App.4th at 505; Kinecta, 205 Cal.App.4th at 516.) Reiterating that Gentry “remains the binding law in California,” Kinecta found that Gentry “must be considered separately” from the Discover Bank rule overruled by Concepcion. (Ibid.) This is because “in contrast to the unconscionability analysis in Discover Bank, the rule in Gentry concerns ‘the effect of a class action waiver on unwaivablestatutory rights regardless of unconscionability.”” (bid.) Gentry was explicitly founded on the Supreme Court’s vindication of rights doctrine adopted by this Court in Armendariz and Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1079, which relied on Gilmer in holding that, when a ceeparty submits claims“‘to their resolution in an arbitral, rather than a judicial, 17 forum,’ arbitration cannot be misused to accomplish a de facto waiverof these” rights.” (See Gentry, 42 Cal.4th at 456-458.) Nonetheless, the Court ofAppeal held otherwise, asserting without any analysis that the “far-reaching effect of the FAA” renders the “vindication of unwaivable statutory rights”doctrine irrelevant. (Slip Op. at 9-10.) Indeed, the Court ofAppeal madenoeffort to distinguish Mitsubishi, Gilmer, and Randolph— seminal Supreme Court decisions that were extensively discussedin Petitioner’s briefs and not overruled by Concepcion. Indeed, the Supreme Court established, in the very first decision to hold statutory claims are arbitrable under the FAA,that statutory claimsare arbitrable only “so long as the prospectivelitigant effectively may vindicateits statutory right of action in the arbitral forum.” (Mitsubishi, 473 U.S.at 637.) This doctrine is the “standard by whicharbitration agreements andpractices are to be measured.” (Armendariz, 24 Cal.4th at 99-100.) Following Mitsubishi, the Supreme Court has repeatedly emphasizedthat the court should ensure that a litigant will “effectively [be able to] vindicate [her] statutory cause of action in the arbitral forum...” before an arbitration agreementwill be enforced. (Gilmer, 500 U.S. at 28.) Mitsubishi’s protections were also invokedin a case where the Supreme Court struck down an administrative prerequisite to a California Labor Codeprovision only after being assuredthat the plaintiff “relinquishes no substantive rights... California law may accord him.” (Preston v. Ferrer (2008) 552 US. 346, 359.) . Andin Randolph, the Court held thatif the plaintiff had been able to prove that she would be “required to bear prohibitive arbitration costs if she pursues her claims in an arbitral forum,” she would have been able to have the arbitration agreementset aside. (Randolph, 531 U.S. at 91-92.) The Second Circuit recently applied the Randolph analysis to invalidate a class action waiver that would have precluded consumers from vindicating their statutory rights if forced into individual arbitration. (AmEx III, 667 F.3dat 214.) Randolph thus remainsin 18 force after Concepcion to invalidatearbitration agreementsif, based on evidence, the plaintiff can demonstrate the she cannot vindicate her statutory rights in individualarbitration.” (Ibid.) As demonstrated by the consistent application of the “vindication of rights” doctrine by the U.S. Supreme Court andthe circuit courts to both state and federal claims, this doctrine is simply part and parcel of the FAA analysis to ensure that a party’s substantive rights are protected. This body of law forms the foundation of Gentry. For the Court of Appeal to haphazardly overrule a higher court’s ruling without contending withthisstill vital foundation is improper. B. The Court of Appeal Erred In Holding That The FAA May Be Applied To Eviscerate Petitioner’s Unwaivable Statutory Rights Concepcion did not abrogate all that came before, or establish a new categorical rule “requir[ing] that all class-action waivers be deemedperse enforceable.” (AmEx II, 667 F.3d at 214.) Rather, “since there is no indication...in Concepcion the Supreme Court intended to overturn either [Randolph] or Mitsubishi, both cases retain their binding authority.” (/d. at 217.) So notwithstanding Concepcion, Randolph continues to empowercourts to invalidate a class waiver if enforcement would extinguish statutory rights. (/d. at 219.) This is entirely consistent with Concepcion, which held that individual arbitration would not forfeit the plaintiffs’ statutory rights in that case. In Concepcion, AT&T’s unusually generous arbitration agreement provided double attorneys’ fees and a $7,500 premium if the award exceeded AT&T’s last offer.® > Othercircuit courts adopted the sameanalysis and in the context ofstate statutory rights. For instance, then-Circuit Judge Roberts held that a party may “resist[] arbitration [if] the terms of an arbitration agreementinterfere with the effective vindication ofstatutory rights” conferred by a state statute. (Bookerv. Robert HalfInt’l, Inc. (D.C.Cir. 2005) 413 F.3d 77, 81 [ensuring the vindication of rights under D.C. Code § 2-1401 et seq.]; see also Anderson v. Comcast Corp.(st Cir. 2007) 500 F.3d 66, 71.) ° In an article evaluating Concepcion while the decision was pending, Professor Nagareda, whose work heavily influenced the reasoning of Wal-Mart 19 Concepcion expressly foundthat the plaintiffs’ rights would be safeguarded by this procedure.’ (Concepcion, at 1745, 1753.) The AT&T agreement’s “terms... ensured [plaintiffs] could bring their claim... on an individualbasis.” (Sutherland, 2012 U.S.Dist.Lexis 5024, at *21.) Concepcionis thus limited to circumstances where upholding a class waiver would not forfeit substantive rights. Here, Petitioner would forfeit statutory rights in arbitration. Petitioner submitted competent evidence demonstrating that his rights wouldbe forfeited in individualarbitration (showing the small value of his claims andthe difficulty in finding an attorney) sufficient for Respondent to concede that this evidence satisfied the Gentry test.* (Slip Op. at 19.) Yet the Court ofAppeal brushed aside the evisceration of Petitionér’s stbstantive rights by stating that, whatever the “sound policy reasons”arefor protecting substantiverights, they are “insufficient to trump the far-reaching effect of the FAA.” (/d. at 10.) Such a conclusion can only be correct if the protections of substantive rights articulated in Mitsubishi and its progeny had been abrogated. They werenot. Stores, Inc. v. Dukes (2011) 131 S.Ct. 2541, found that AT&T’s generous arbitration agreement was not exculpatory, and would not have been found invalid under a Randolph analysis. Nagareda concluded that Randolph would be a more useful tool than Discover Bankin ferreting out and invalidating exculpatory waiversthat implicate substantive rights. (See Nagareda, The Litigation- Arbitration Dichotomy Meets the Class Action (2011) 86 Notre Dame L.Rev. 1069, 1124-1126.) J -The question presented in Concepcion—whether the FAA would preempt state law that would invalidate a class action ban whereclass wide treatmentis “not necessary to ensure that the parties to the arbitration agreementare able to vindicate their claims’”—also reflected the assumption that, in Concepcion, the plaintiffs’ rights would be vindicated. (Petition for Writ of Certiorari, AT&T Mobility, LLC v. Concepcion, No. 09-893 (U.S. Jan. 25, 2010) 2009 U.S. Briefs 893, at *i (emphasis added).) ® The Gentry test is this Court’s four-factor test to examine whether unwaivable statutory rights, such as to enforce overtime laws, can be vindicated in individualarbitration. (Gentry, 42 Cal.4th at 463.) By definition, when a party passes the Gentry test, he or she demonstrated that those rights cannot be so vindicated. 20 Indeed, Concepcion itself stressed that the FAA is intended to “place arbitration agreements on an equalfooting with other contracts.” (131 S.Ct.at 1745 [emphasis added].) Courts are not required to enforce ordinary contracts “according to their terms” without exception. For instance, overtime claims under the Labor Code cannot be waivedin an ordinary contract. (See Gentry, 42 Cal.4th at 456.) The Supreme Court has never held the FAA requires lower courts to rubber-stampall terms in an arbitration agreement. In holding otherwise, the Court of Appeal’s ruling conflicts with a large body of Supreme Court precedent, warranting this Court’s review. IH. THE COURT OF APPEAL’S REFUSAL TO FIND WAIVER DESPITE CLS’S DILATORY CONDUCT CONTRAVENES CALIFORNIA WAIVER LAW A. The Facts In This Case Were Some Of The Most Compelling Presented In Any Reported Waiver Case The Court of Appeal’s overhaul of the waiver doctrine is no less radical than its FAA holding, creating conflicts with essentially every published Court of Appeal decision where waiver was found. Generally, waiver hinges on whether the party seeking to arbitrate delayed invokinghis right to arbitrate, litigated the dispute before seeking to arbitrate, and caused prejudiceto the otherparty. (St. Agnes Medical Center v. PacifiCare ofCalifornia (2003) 31 Cal.4th 1187, 1196.) Underlying this doctrineis the principle that“in litigation as in life, you can’t have your cake andeat it too.” (Guess?, Inc. v. Super. Ct. (2000) 79 CalApp.4th 553, 555.) " This case presentsa particularly stark illustration of the prejudice arising from a party keepingits rightto arbitrate in its back pocket—only to springthis right on the other party at an opportune moment. CLSactually abandoned a previously-filed motion to compel arbitration, having refused to participate in an evidentiary showing of the Gentry factors. Had CLS followed throughon its original motion, Petitioner would have been assured of a forum,either arbitral or judicial. Had CLSprevailed, the action would have goneto arbitration. Had CLS 21 lost, then the parties-would have been securelitigating in court. Instead, CLS was able to have it both ways,“preserving”its right to arbitrate by abandoningits petition and actively litigating the matteras a class action. Petitioner had no choice but to reasonably rely on this conduct demonstrating CLS’sintent to litigate. And for the next three and a half years, Petitioner proceededtolitigate this matter in court as a class action in good faith. Yet the Court of Appeal held that Petitioner did not suffer prejudice when CLSabruptly cut off litigation and moved toarbitrate on the eve oftrial. By then, Petitioner had already expended considerable effort in certifying a class in reliance on CLS’s litigation conduct. Indeed, the following chart illustrates just how exceptionalthe facts are here: Class Class Merits MSJ Waiver Case” Delay Disc. Certified Disc. Filed Found Roberts 5 months Yes No No No Yes Lewis 4 months No No Yes No Yes Guess? 4 months n/a n/a Yes No Yes Hoover 11-15 months Yes No Yes No Yes Continental Airlines 5 months n/a n/a Yes No Yes Augusta 6 months n/a n/a Yes No Yes Sobremonte 10 months n/a n/a Yes No Yes Burton 1] months n/a n/a Yes No Yes Adolph 6 months n/a n/a Yes No Yes Iskanian 3_years. All Yes Yes Yes No ” The cases not previously cited in this brief are: Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205; Augusta v. Heehn & Associates (2011) 193 Cal.App.4th 331; and Sobremonte v. Sup. Ct. (1998) 61 Cal.App.4th 980. 22 The Court ofAppeal dismissed the significance ofPetitioner’s completion of all class discovery and certifying a class as “not particularly germane.” (Slip Op. at 20.) This is supposedly because CLS wouldstill have the rightto bring a motion to de-certify the class. But the Court of Appeal overlooks both time and expense that goes into pursuing class certification, which is “rendered useless”in individualarbitration. (Roberts, 200 Cal.App.4th at 845.) Likewise in Hoover, the plaintiffs participation in class discovery wassufficient to establish prejudice, since “especially in class actions, the combination of ongoinglitigation and discovery with delay in seeking arbitration can result in prejudice.” (206 Cal.App.4th at 1205-1206.) The facts here are considerably stronger than in Roberts, Where the Court of | Appealfound ample evidence ofprejudice from the five-month delay between the time plaintiff propoundedhis class discovery and the time defendant movedto arbitrate. (200 Cal.App.4th at 845.) Moreover, the Court of Appeal conflated the waiver and futility analyses by finding no prejudicial delay due to CLS moving to “compelarbitration less than three weeksafter the Supreme Court rendered its decision in Concepcion.” (Slip Op. at 20.) However, the delay is not measured from the purported intervening act or change in law, but from the time the delaying party first began to act in a mannerinconsistent with an intent to arbitrate. (See Lewis, 205 Cal.App.4th at 446.) Correctly analyzed, the delay was not three weeks, but three years, the length of time from when CLS’s abandonmentofits motion to compelarbitration and its subsequent renewalofthat motion. If permitted to stand, this decision will create widespread confusion in future cases on waiver, because the lower California courts will be presented with a paradoxical-body of law where waiver was not found here on some of the most demonstrably prejudicial conduct documented, but found in a numberof other cases detailing far less dilatory conduct. 23 B. The Court Of Appeal Improperly Found Futility When It Was Not Legally Impossible To Compel Arbitration Prior To Concepcion The Court of Appeal also erred in crediting CLS’s futility defense, triggering yet another conflict. Under the futility doctrine, a party’s delay in seeking arbitration will be excusedif, prior to an intervening act or circumstance (here, a change in law), it would have been impossible for that party to have compelled arbitration of those claims. (Fisher v. AG Becker Paribas, Inc. (9th Cir. 1986) 791 F.2d 691, 696-697.) In Fisher, which established the futility defense, prior to an intervening changein law, the defendant had absolutely no right to arbitrate all of its claims. (/bid.) | This was not case with Concepcion. Both Roberts and Lewis held that, prior to Concepcion, there was no legal bar to class action waivers that would excuse a party’s resistance in asserting its right to arbitrate. However, nowhere in the decision did the Court of Appeal analyze, distinguish, or discuss either case, the only published California cases on point.'° In Roberts, the court squarely rejected defendant’s excuse that the issuance of Concepcionjustified its five-month delay, commentingthat “it should have promptly invoked arbitration regardless of the validity of the waiver provision in the arbitration provision..” (200 Cal.App.4th at 846, fn.10.) Lewis rejected the samefutility defense “becauseit relies on a clearly erroneousinterpretation” of pre-Concepcion law “as invalidating all arbitration agreementsthat include a class action waiver.” (205 Cal.App.4th at 447.) Lewis explained that it was notfutile to move to compelarbitration pre-Concepcion, singling out Walnut Producers of '° Federal district courts have limited Fisher to the scenario in which there wasnolegalright to arbitrate before the intervening change in law, making them unavailable for defendants invoking Concepcion to excusea belatedly-filed motion to compel arbitration. (See Kingsbury v. U.S. Greenfiber, LLC (C.D.Cal. June 29, 2012) 2012 U.S.Dist.Lexis 94854,*10-13; In re Toyota Motor Corp. Hybrid Brake Mktng. (C.D.Cal. 2011) 828 F.Supp.2d 1150, 1163.) Iskanian also conflicts with these cases. 24 California v. Diamond Foods, Inc. (2010) 187 Cal.App.4th-634, a pre-Concepcion decision granting a motion to compel individualarbitration.'! (Ibid.) The Court ofAppeal signaled that it has no intention ofrevisiting its erroneous conclusions or confronting the contrary on-point holdings by summarily rejecting the Petition for Rehearing. Review is necessary to preventthis outlier decision, on the most compelling set of facts documented, from potentially doing away with the waiver doctrine altogether. IV. THE COURT MUST CORRECT THE COURT OF APPEAL’S REFUSAL TO DEFER TO THE NLRB IN CONFLICT WITH THE SUPREME COURT’S ABFFREIGHTSYSTEMS AND KAISER STEEL DECISIONS, AMONG OTHERS Finally, the Court of Appeal lacks authority to hold that the Board’s decision on a matter of federal labor law is unlawful. Judicial review of decisions by the Board, the body authorized by Congress to interpret the NLRA,is exclusively committed to the federal courts of appeal. See 29 U.S.C. § 160(f). By “declin[ing] to follow the Board”(Slip Op. at 12), the Court of Appeal flouts Supreme Court’s mandate that the Board’s interpretation of the NLRA isentitled to the “greatest deference.” (ABF Freight System, Inc. v. NLRB (1994) 510 U.S. 317, 324; see also Chevron U.S.A. v. NRDC (1984) 467 U.S. 837, 842-843.) The stated excuse here is that the Horton Board’s conclusionsallegedly conflict with the FAA. (Slip Op. at 12.) But this explanation misapprehendsthe nature of the Board’s holding and the Petitioner’s contractual defense referencing the NLRA. In Horton, the Board analyzed a large body of consistent NLRB and court decisional law to concludethat “an individual whofiles a class or collective action regarding wages, hours or working conditions, whetherin court or before an '' Petitioner had briefed both Walnut Producers and Borrero v. Travelers Indem. Co. (E.D.Cal. October 15, 2010) 2010 U.S.Dist.Lexis 114004, both of which enforced class action waivers despite Gentry, to demonstrate that it was possible to compel individualarbitration prior to Concepcion. (AOBat 14.) The decision omits any mention of these cases, the existence of whichfatally underminesthe futility finding. 25 arbitrator, seeks to initiate or induce groupaction andis engaged in conduct protected by Section 7.” (Horton, 2012 NLRB LEXIS 11, *13-14.) An employer’s interference with collective litigation, whether brought in court or in arbitration by seeking to enforce a mandatory collective action waiver, is thus an unfair labor practice infringing upon an employee’s right to concerted activity. (dd. at *16.) In short, a collective action waiver in a mandatory employment agreement violates the NLRA--a finding that a California court has no authority to reject. Whena term violates federal law, it “may not serve as the foundation of any action, either in law or in equity,” rendering it unenforceablein state court. (Kashani v. Tsann Kuen ChinaEnterprise Co. (2004) 118 Cal.App.4th 531, 541.) Moreover, under Supreme Court authority, an agreement containing a term that violates the NLRA cannotbe enforced. (See Kaiser Steel, 455 U.S. at 86 [holding that courts cannot enforce a contractual.term that would constitute an unfair labor practice under NLRA if given effect].) The Court of Appeal did not even attempt to grapple with Horton’s holding. Instead it mistakenly attacked the Board’s ruling on arbitrability grounds, relying on the recent CompuCredit decision. However, CompuCredit concerned whethera particular statutory claim is intended by Congressto be inarbitrable, not whether a particular federal statutory right, like the NLRA-protected right to concerted activity, can be forcibly waived. (See CompuCredit Corp.v. Greenwood (2012) 132 S.Ct. 665, 670-671.) Furthermore, because Petitioner does not assert an NLRA claim,’” and does not need onefor its contractual defense, CompuCredit is entirely inapposite. The Court of Appeal does not, and cannot, demonstrate where the Board goes wrongin interpreting previous Board decisions. And because Hortonis * Such a claim would have been preempted under San Diego Bldg. Trades Council v. Garmon (1959) 359 U.S. 236, 244. 26 aboutthe validity of a contractual term,its authority is not limited to claims with the Board, but extendsto all employment contracts that violate the NLRA. (Horton, at *38-39.) Mindful of the co-equal FAA, the Board wascareful to harmonize its reasoned conclusions with the FAA’s saving clause and the vindication of rights doctrine. (Horton, at *38-40.) Yet the Court of Appeal did not addressthis reasoningat all beforeinsisting that the Board mustyield to the FAA. The reasoning of the Court of Appealis circular. Starting with the premise that the FAA’s preemptiveforce is unlimited in scope, this premise necessarily dictates that the FAA trumpsall other laws, including a co-equal federal statute that protects employees’ right to concerted activity as its “central purpose.” By sweeping aside the NLRA through judicial fiat, the Court of Appeal violates the rule that “courts are notat liberty to pick and choose among congressional enactments.” (Morton v. Mancari (1974) 417 U.S. 535, 551.) This misreading of Horton conflicts with longstanding Supreme Court precedent and must be corrected by this Court. Otherwise, the core protections accorded by the NLRA, which covers employeesin California, will be forfeited. CONCLUSION For the foregoing reasons, Petitioner respectfully requests that this Court grant plenary review of the Court of Appeal’s decision,or in the alternative, grant review and hold for the upcoming Sanchez case. 27 Dated: July 13, 2012 am Respectfully submitted, Initiative Legal Group APC By: A0‘had— Marc Primo Glenn A. Danas Ryan H. Wu Attorneys for Plaintiff-Petitioner ARSHAVIR ISKANIAN 28 CERTIFICATE OF WORD COUNT Counsel of record herebycertifies that, pursuant to the California Rules of Court, Rule 8.204(c)(1) and 8.490, the enclosed Appellant’s Opening Brief was produced using 13-point Times New Romantype style and contains 8397 words. In arriving at that number, counsel has used Microsoft Word’s ““Word Count” function. Dated: July 13, 2012 Respectfully submitted, Initiative Legal Group APC Marc Primo Glenn A. Danas Ryan H. Wu Attorneys for Plaintiff-Petitioner ARSHAVIR ISKANIAN 29 EXHIBIT A CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATEDISTRICT DIVISION TWO ARSHAVIR ISKANIAN, B235158 Plaintiff and Appellant, (Los Angeles County Super. Ct. No. BC356521) Vv. CLS TRANSPORTATION COURT GF APPEAL » BEGOND BIBT. LOS ANGELES, LLC, is It IL ig, ID Defendant and Respondent. JOSEPH JUN0 4 2012 Clerk Deputy Clerk APPEAL from an orderofthe Superior Court ofLos Angeles County. Robert Hess, Judge. Affirmed. Initiative Legal Group, Raul Perez, Glenn A. Danas, Katherine W. Kehr for Plaintiff and Appellant. Fox Rothschild, David F. Faustman, Yesenia M. Gallegos, Namal Tantula for Defendant and Respondent. This is the second appealin this case. We issued our opinion on the first appeal soon after the California Supreme Court decided Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry), which held that a class waiver provision in an arbitration agr eement should not be enforcedif “class arbitration would be a significantly more effective way of vindicatingthe rights of affected employees than individual arbitration.”(/d. at p. 450.) In our prior opinion,in light of Gentry, we directed the trial court to reconsiderits order | granting a motion to compelarbitration and dismissing class claims. | In this appeal, we are faced with an essentially-identical order—defendant’s renewed motion to compelarbitration was granted and class claims were dismissed. The legal landscape, however, has changed. In April 2011, in AT&T Mobility LLCv. | Concepcion (2011) _ U.S. _ [131 S. Ct. 1740] (Concepcion), the United States | Supreme Court,reiterating the rule that the principal purpose of the Federal Arbitration Act (FAA)is to ensure that arbitration agreements are enforced accordingto their terms, held that “[rlequiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” (Ud. at p. 1748.) Applying this binding authority, we conclude that the trial court properly ordered this case to arbitration and dismissed class claims. . FACTUAL AND PROCEDURAL BACKGROUND Theplaintiff in this matter, Arshavir Iskanian, worked as a driver for defendant CLS Transportation Los Angeles, LLC (CLS), from March 2004 to August 2005. In December 2004, Iskanian signed a “Proprietary Information and Arbitration Policy/Agreement”(arbitration agreement) providing that “any and all claims”arising ‘out of his employment wereto be submitted to binding arbitration before a neutral arbitrator. The arbitration agreement provided for reasonable discovery, a written award, and judicial review of the award. Costs unique to arbitration, such as the arbitrator’s fee, wereto be paid by CLS. Thearbitration agreement also contained a class and representative action waiver, which read: “[E]xcept as otherwise required under applicable law, (1) EMPLOYEE and COMPANY expressly intend and agreethatclass action and representative action procedures shall not be asserted, nor will they apply,in 2 any arbitration pursuantto this Policy/Agreement; (2) EMPLOYEE and COMPANY agree that each will not assert class action or representative action claims against the other in arbitration or otherwise; and (3) each ofEMPLOYEEand COMPANY shall only submit their own, individual claims in arbitration andwill not seek to represent the interests of any other person.” On August 4, 2006, Iskanian filed a class action complaint against CLS,alleging that it failed to pay overtime, provide meal and rest breaks, reimburse business expenses, provide accurate and complete wage statements, and pay final wages in a timely manner. In its March 2007 order granting CLS’s motion to compelarbitration, the trial court found that the arbitration agreement was neither procedurally nor substantively unconscionable. Gentry, however, was decided soonafter the trial court renderedits . order, and weissued a writ of mandate directingthe superior court to reconsiderits ruling in light of the new authority. Apparently, following remand, CLS voluntarily withdrew its motion to compel arbitration, making it unnecessary forthetrial court to reconsider its prior order. The parties proceededto litigate the case. On September 15, 2008,Iskanianfiled a consolidated first amended complaint, alleging seven causesof action for Labor Code violations! and an unfair competition law claim (UCL) (Bus. & Prof. Code, § 17200 et seq.). Iskanian broughthis claimsas an individual, as a putative class representative, and (with respect to the Labor Code claims) in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (the PAGA).* 1 These were: Labor Codesections (1) 510 and 1198 (unpaid overtime); (2) 201 and 202 (wagesnot paid upon termination; (3) 226, subdivision (a).(improper wage statements); (4) 226.7 (missed rest breaks); (5) 512 and 226.7 (missed mealbreaks);(6) 221 and 2800 (improper withholding ofwages and nonindemnification of business expenses); and (7) 351 (confiscation of gratuities). 2 The PAGA(Lab. Code, § 2698et seq.) allows an aggrieved employeeto bring an action to recover civil penalties for Labor Code violations on his or her own behalf and on behalfof current or former employees. After conducting discovery, Iskanian movedto certify the class. CLS opposed the motionforclass certification. By order dated October 29, 2009,thetrial court granted Iskanian’s motion, certifying the case as a classaction. . On April 27, 2011, the United States Supreme Court decided Concepcion. Soon after, CLS renewedits motion to compelarbitration and dismiss the class claims, arguing that Concepcion was new law that overruled Gentry. CLS contended that, pursuantto Concepcion, enforcement ofthe arbitration agreement on its terms was required, and therefore the class and representative action waivers were effective. Iskanian opposed the motion, arguing amongotherthings that Gentry was still good law and, in anyevent, that CLS had waivedits right to seek arbitration by withdrawing the original motion. The trial court found in favor of CLS. On June 13, 2011, it entered an order requiring the parties to arbitrate their dispute and dismissing the class claims. 7 DISCUSSION Iskanian appeals from the June 13, 2011 order. Although an order compelling arbitration ordinarily is not appealable (see Melchor Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587, 591), the order here dismissed class claims. It therefore constitutes a “death knell”for the class claims, and accordingly is appealable. (Francov. Athens Disposal Co., Inc. (2009) 171 Cal-App.4th 1277, 1288; In re Baycol Cases I & II (2011) 51 Cal.4th 751, 757.) In the absence of material, conflicting extrinsic evidence, we apply our independent judgment to determine whetheranarbitration agreement applies to a given controversy. (Amalgamated Transit Union Local 1277 v. Los Angeles County Metropolitan Transportation Authority (2003) 107 Cal.App.4th 673, 685.) If thetrial court’s decision on arbitrability depended on resolution of disputed facts, we review the decision for substantial evidence. ([bid.) The party opposingarbitration has the burden of showingthat an arbitration provision is invalid. (Franco v. Athens Disposal Co., Inc., supra, 171 Cal.App.4th at p. 1287.) Here, the dispute is largely a question of whether the subject arbitration agreement—includingits prohibition of class and representative claims—is enforceable 4 under the law. Wetherefore must independently review the applicable law to dete rmine whetherthetrial court’s order wascorrect. 1. The FAA andCalifornia arbitrationlaw Section 2 of the FAA makes agreementsto arbitrate “valid, irrevocable, a nd enforceable, save upon such groundsasexist at law or in equity forthe revocation of any contract.” (9 U.S.C. § 2) This provision reflects a “‘liberal federal policy favoring arbitration,’ . . . and the ‘fundamentalprinciple that arbitration is a matter of contr act.’” (Concepcion, supra, 131 S.Ct. at pp. 1742, 1745.) Arbitration agreements, accordingly, are enforced according to their terms, in the same manner as other contracts. bid.) Not all arbitration agreementsare necessarily enforceable, however. Section 2’s “saving clause” permits revocation of an arbitration agreement if “generally applic able contract defenses, such as fraud, duress, or unconscionability” apply. (Concepcion, atp. 1746.) California law similarly favors enforcementofarbitration agreements, sav e upon groundsthat exist at law or in equity for the revocation of any contract, s uch as unconscionability. (Code Civ. Proc., § 1281; Armendariz v. Foundation H ealth Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113-114.) Under Californi a law, unconscionability, in the context of arbitration agreements as well as contrac ts in general, “chas both a “procedural”and a “substantive” element,’ the former focus ing on ““oppression’”or “‘surprise”’ due to unequal bargaining power, the latter on “overly harsh”or “one-sided”results.” (/d. at p. 114.) Il. Concepcion In Concepcion, supra, 131 S.Ct. 1740, the United States Supreme Court exa mined the validity of the “Discover Bank rule,” a rule enunciated inthe case Disco ver Bankv. Superior Court (2005) 36 Cal.4th 148, 153 (Discover Bank), in whichth e California Supreme Court held: “at least under some circumstances, the law in Ca lifornia is that class action waivers in consumer contracts of adhesion are unenf orceable, whether the consumer is being asked to waive the right to class action litigation or the right to classwidearbitration.” Noting the deterrent effect of class actions (“‘“class act ion is often the only effective way to halt and redress . . . exploitation’”””) (id. at p. 156), the 5 California Supreme Court explained the reason for its holding in Discover Bank as follows: “{WJhenthe[class action] waiver is found in a consumer contract of adh esion in a setting in which disputes between the contracting parties predictably involvesmall amounts of damages, and whenit is alleged that the party with the superior bargaining powerhas carried out a schemeto deliberately cheat large numbers of consumers out o f individually small sums ofmoney, then . . . the waiver becomes in practice the exemptio n of the party ‘from responsibility for [its] own fraud, or willful injury to the person or property of another.’ (Civ. Code, § 1668.) Underthese circumstances, such wai versare unconscionable under California law and should not be enforced.” (36 Cal.4th at pp. 162-163.) Discover Bank foundthatclass arbitration was “workable and appropri ate in some cases,” and that class arbitration could be compelled when an otherwise valid arbitration agreement contained an unconscionable class waiverprovision. (/d. at p. 172.) The issue before the United States Supreme Court in Concepcion was whether the FAA prohibited a state rule, such as the one expressed in Discover Bank, that con ditioned “the enforceability of certain arbitration agreements on the availability of class-wi de arbitration procedures.” (Concepcion, supra, 131 S.Ct.atp. 1744.) Concepcionidentified two types ofstate rules preempted by the FAA. Thefirst type wasrelatively simple to recognize: “Whenstate law prohibits outright the arbitration of a particular type ofclaim,the analysis is straightforward: The confli cting rule is displaced by the FAA.” (dd. at p. 1747.) The second type required a mor e nuanced inquiry. It occurred when a defense seemingly allowed by the FAA s ection 2 saving clause, such as unconscionability, was “alleged to have been applied in a fashion that disfavors arbitration.” (Concepcion, at p. 1747.) Such a defense could r un afoul of the rule “that a court ‘may not rely on the uniqueness of an agreementto ar bitrate as a basis for a state-law holding that enforcement would be unconscionable, for thiswo uld enable thecourt to effect what . . . the state legislature cannot.’” (/bid., quot ing Perry v. Thomas (1987) 482 U.S. 483, 493,fn. 9.) Accordingly, the Supreme Court held: “Although § 2’s saving clause preserves generally applicable contract defenses, nothing 6 in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives.” (Concepcion, supra, 131 S.Ct. at p. 1748.) Onthis basis, the Concepcion court found that the Discover Bank rule was preempted. The rule interfered with the “overarching purpose” of the FAA: “to ensure the enforcementofarbitration agreements accordingto their termsso as to facilitate streamlined proceedings.” (Conception, supra, 131 S.Ct. at p. 1748.) Til. Gentry Concepcion expressly overturned Discover Bank. Gentry, the case which we previously directed the trial court to consider on remand, was not referencedin Concepcion’s majority opinion. Iskanian submits that a portion of Gentry was directly based on Discover Bank and therefore is no longer valid law. He contends, however, t hat Concepcion waslimited in scope, and that Gentry remains good law to the extentthatit prohibits arbitration agreements from “interfering with a party’s ability to vindicate statutory rights” through class action waivers. 3 Iskanian asserts that the trial court should have applied Gentry in ruling on CLS’s renewed motionto compelarbitration, and that if it had done so it would not have dismissed the class claims. Asin this case, the plaintiff in Gentry brought a class action claim for violations of the Labor Code, even though he had entered into an arbitration agreement with class 3 Iskanian also argues that Concepcion does not apply in state courts. Citing to Justice Thomas’s dissentin Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, 285-286 (Allied-Bruce), Iskanian surmises that if the Concepcion case had reached the United States Supreme Court from state court, Justice Thomas (whoprovidedthe fifth vote) would not have found preemption. This is pure speculation, andit is belied by Justice Thomas’s concurring opinion in Concepcion, which contains no indication that the holding should apply only in federal court (indeed, Justice Thomasasserted that the _FAA hasa broader preemptive effect than found by the majority). We also note that - Justice Scalia, who authored the Concepcion opinion,joined in Justice Thomas’s dissent in Allied Bruce. Furthermore, following Concepcion,the United States Supreme Court has grantedpetitions for writ of certiorari vacating judgments arising in state courts, and directing the courts to consider Concepcion. (See Sonic-CalabasasA, Inc. v. Moreno (2011) __ US. __ [132 S.Ct. 496]; Marmet Health Care Center, Inc. v. Brown (2012) ___ U.S. __ [132 S.Ct. 1201].) waivers. The Gentry court, findingthat the statutory right to receive overtime pay is unwaivable, concluded that under some circumstances a class arbitration waiver “would. impermissibly interfere with employees’ ability to vindicate unwaivable rights and to enforce the overtime laws,” and that such a waiver wascontrary to public policy. (42 Cal.4th at pp. 453, 457.) The Gentry court laid out a four-factortest for determining whether a class waiver should be upheld: “whenit is alleged that an employer has systematically denied proper overtimepayto a class of employeesanda class actionis requested notwithstanding an arbitration agreement that containsa class arbitration waiver, the trial court mustconsider the factors discussed above: the modest size of the potential individual recovery, the potential for retaliation against membersoftheclass, the fact that absent membersofthe class maybeill informed abouttheir rights, and other real world obstacles to the vindication of class members’rights to overtime pay through individual arbitration. If it concludes, based on thesefactors, that a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individuallitigation or arbitration, and finds that the disallowanceofthe class action will likely lead to a less comprehensive enforcementof overtime lawsfor the employeesalleged to be affected by the employer's violations,it must invalidate the class arbitration waiver to ensure that these employees can ‘vindicate [their] unwaivablerights in an arbitration forum.’” (/d.atp. 463.) We previously remandedtheinstant case to the trial court with instructionsto reconsiderits ruling in light of this “Gentry test.” Now,wefind that the Concepcion decision conclusively invalidates the Gentry test. First, under Gentry,if a plaintiff was successful in meeting thetest, the case would be decided in class arbitration (unless the plaintiff could show that the entire arbitration agreement was unconscionable,in which case the agreement would be wholly void) . But Concepcionthoroughly rejected the conceptthat class arbitration procedures should be imposed on a party who never agreed to them. (Concepcion, supra, 131 S.Ct. at pp. 1750-1751.) The Concepcioncourt held that nonconsensualclass arbitration was inconsistent with the FAA because: (i) it “sacrifices the principal advantage of arbitration—informality—and makes the process slower, more costly, and morelikely to generate procedural morass than final judgment”; (ii) it requires procedural formality since rules governingclass arbitration “mimic the Federal Rules of Civil Procedure for classlitigation”; and(iii) it “greatly increases risks to defendants,” since it lacks the multilevel review that exists in a judicial forum. (Jd. at pp. 1751-1752; see also Stolt- Nielsen S. A. v. AnimalFeeds Int'l Corp. (2010) 130 S. Ct. 1758, 1775 [a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so”].) This unequivocalrejection of court-imposedclass arbitration applies just as squarely to the Gentry test as it did to the Discover Bank rule. Second, Iskanian argues that the Gentry rule rested primarily on a public policy rationale, and not on Discover Bank’s unconscionability rationale. While this pointis basically correct, it does not mean that Gentry falls outside the reach of the Concepcion decision. Gentry expressed the following reason forits four-factor test: “[{C]lass arbitration waivers cannot . . . be used to weaken or underminethe private enforcementof overtimepay legislation by placing formidable practical obstacles in the way of employees’ prosecution of those claims.” (/d. at p. 464.) Concepcion, though, found that | nothing in section 2 of the FAA “suggests an intent to preservestate-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives,” which are “to ensure the enforcementof arbitration agreements according to their termsso as to facilitate streamlined proceedings.” (131 S.Ct. at p. 1748.) A rule like the one in Gentry— requiring courts to determine whether to impose class arbitration on parties who contractually rejected it—cannot be considered consistent with the objective of enforcing arbitration agreements accordingto their terms. Third, the premise that Iskanian brought a class action to “vindicate statutory rights”is irrelevant in the wake of Concepcion. As the Concepcion court reiterated, “States cannot require a procedure that is inconsistent with the FAA, even if it is desirablefor unrelated reasons.” (131 S.Ct. at p. 1753.) The sound policy reasons identified in Gentry for invalidating certain class waivers are insufficient to trump the far- 9 reaching effect of the FAA, as expressed in Concepcion. Concepcion’s holding in this regard is consistent with previously established law. (See Perry v. Thomas, supra, 482 US. at p. 484 [finding that § 2 of the FAA preempts Lab. Code, § 229, which provides that actions for the collection ofwages “may be maintained ‘without regard to the existence of any private agreementto arbitrate’”]; Southland Corp. v. Keating (1984) 465 U.S. 1, 10-11 [holdingthat the California Supreme Court’s interpretation ofthe Franchise Investment Lawas requiring judicial consideration despite the terms of an arbitration agreementdirectly conflicted with section 2 ofthe FAA and violated the Supremacy — Clause]; Preston v. Ferrer (2008) 552 U.S. 346, 349-350 [holding, “when parties agree t o arbitrate all questions arising undera contract, state laws lodging primary jurisdiction in anotherforum, whether judicial or administrative, are superseded by the FAA”].) Because this matter involves analysis ofthe effect of a federal law, the FAA, on a state rule, we must follow the United States Supreme Court’s lead. “Decisions ofthe United States Supreme Court are binding notonly on all of the lower federal courts [citation], but also on state courts when a federal questionis involved ....’” (Elliotv. Albright (1989) 209 Cal.App.3d 1028, 1034;see also Chesapeake & Ohio Ry. v. Martin (1931) 283 U.S. 209 [“The determination by this court of [a federal] question is binding upon the state courts and must be followed,any state law, decision, or rule to the contrary notwithstanding”); Perkins Mfg. Co. v. Jordan (1927) 200 Cal. 667, 679 [we must bow to the supremacyofthe federal constitution in this matter as interpreted by the highest court of our country”].) Accordingly, we.find that the trial court here properly applied the Concepcion holding—and properly declinedto apply the Gentry test—by enforcingthe arbitration agreement accordingto its terms. Thetrial court correctly found that the arbitration agreement and class action waivers were effective, and ruled appropriately in granting the motion to compelarbitration and dismissing Iskanian’s class claims.4£ 4 Iskanian did not contend thatthe arbitration agreement was unconscionable on a basis governing all contracts, rather than a basis premised on the uniqueness of 10 IV. D.R. Horton After Iskanian’s opening brief on appeal wasfiled, the National Labor Relations Board (NLRB or Board) issued a decision analyzing whether and how Concepcion and related authority apply to employment-related class claims. In his reply brief, Iskanian contendsthat this decision, D. R. Horton (2012) 357 NLRB No.184 [2012 NLRB LEXIS 11] (D. R. Horton), mandatesa finding thatthe class waiverin the CLSarbitration agreement cannot be enforced. | In D.R. Horton, the NLRB held that a mandatory, employer-imposed agreement requiring all employment-related disputes to be resolved through individualarbitration (and disallowing class or collective claims) violated the National Labor Relations Act “(NLRA)becauseit prohibited the exercise of substantive rights protected by section 7 of the NLRA. (D.R. Horton, supra, 2012 NLRB LEXISat p. *6.) Section 7 provides in part that employees shall havetheright “to engage in . . . concerted activities for the purposeofcollective bargaining or other mutual aid or protection ....” (29 U.S.C. § 157.) The NLRB foundthat “employees whojoin togetherto bring employment- related claims on a classwide or collective basis in court or before an arbitrator are exercising rights protected by Section 7 ofthe NLRA.” (2012 NLRB LEXIS,at p. *9.) If D.R. Horton only involved application of the NLRA we would most likely defer to it. (See NLRB. v. Advanced Stretchforming Intern., Inc. (9th Cir. 2000) 233 F.3d 1176, 1180 [‘“We defer to the Board’s interpretation of the NLRA if it is ‘reasonable and not precluded by Supreme Court precedent’”]; Haney v. Aramark Uniform Services, Inc. (2004) 121 Cal.App.4th 623, 635 [“we,like the federal courts, defer to the statutory construction adopted by the agency responsible for enforcing the legislation”].) The D.R. Horton decision, however, went well beyond an analysis of the relevant sections of the NLRA.Crucially, the decision interpreted the FAA,discussing Concepcion and other arbitration. Our opinion,therefore, is not inconsistent with Sanchezv. Valencia Holding Co., LLC (2011) 201 Cal.App.4th 74, 87-89, review granted March 21, 2012, $1991 19, in which Division One ofthis Court held that an arbitration provision was unconscionable for reasons that would apply to any contract in general 1] FAA-related authority in finding that the FAA did not foreclose employee-initiated class or collective actions. (See D. R. Horton, supra, 2012 NLRB LEXIS11 at pp. *32-*55.) As the FAA is not a statute the NLRB is charged with interpreting, we are under no obligation to defer to the NLRB’s analysis. “[C]ourts do not owe deference to an agency’s interpretation ofa statute it is not charged with administering or when an agency resolves a conflict between its statute and another statute.” (Association of Civilian Technicians v. F.L.R.A. (9th Cir. 2000) 200 F.3d 590, 592; see also Hoffman - Plastic Compounds, Inc. v. N.L.R.B. (2002) 535 U.S. 137, 144 [“we have accordingly never deferred to the Board’s remedial preferences where such preferences potentially trench upon federal statutes andpolicies unrelated to the NLRA”]; N.L.R.B.v. Bildisco & Bildisco (1984) 465 U.S. 513, 529,fn. 9 [“While the Board’s interpretation of the NLRA ~° should be given some deference, the proposition that the Board’s interpretation of statutes outsideits expertise is likewise to be deferred to is novel”].) | Wedecline to follow D.R. Horton. In reiterating the general rule that arbitration agreements must be enforced according to their terms, Concepcion (whichis binding authority) made no exception for employment-related disputes. Furthermore, the | NLRB’s attempt to read into the NLRA a prohibition of class waivers is contrary to another recent United States Supreme Court decision. In CompuCredit Corp.v. Greenwood (2012) _ US. _, _ [132 S.Ct. 665, 668] (CompuCredit), plaintiff consumersfiled suit against a credit corporation anda bank, contending that they had violated the Credit Repair Organizations Act (CROA)(15 U.S.C. § 1679 et seq.).> The plaintiffs brought the matter as a class action, despite having previously agreed to resolve all disputes by binding arbitration. The Supreme Court rejected their efforts to avoid arbitration, finding that unless the FAA’s mandate has been “‘overridden by a contrary congressional command,’” agreements to arbitrate must be enforced according to their terms, even when federal statutory claims are at issue. (CompuCredit, at p. 669, citing 5 D.R. Horton was issued on January 3, 2012. CompuCredit was issued on January 10, 2012. 12 Shearson/American Express Inc. v. McMahon (1987) 482 U.S.220, 226.) The Supreme Court held: “Because the CROAis silent on whether claims under the Act can proceedin an arbitrable forum, the FAA requiresthe arbitration agreementto be enforced according to its terms.” (CompuCredit, at p. 673.) The D.R. Horton decision identified no “congressional command”in the NLRA prohibiting enforcementofan arbitration agreement pursuant to its terms. D.R. Horton's holding—that employment-related class claims are “concerted activities for the purpose of collective bargaining or other mutual aid or protection”protected by section 7 ofthe NLRA,so that the FAA does not apply—elevates the NLRB’sinterpretation ofthe NLRA oversection 2 ofthe FAA. This holding does not withstand scrutiny in light o f Concepcion and CompuCredit. ° V. The PAGA claims — The arbitration agreementthat Iskanian signed contains a waiver of both class claims and representative claims. In addition to bringing the case as a class action , Iskanian also broughthis claims for Labor Codeviolations in a representative capacit y under the PAGA. He contendsthat the claims brought pursuant to the PAGA are inarbitrable. The PAGA authorizes an aggrieved employeeto bringa civil action to recover civil penalties “on behalf of himself or herself and other current or former employe es.” (Lab. Code § 2699, subd. (a).) This provision has been interpreted as authorizing an aggrieved employee to recovercivil penalties for the violation of his or her ownrights , and “to collect civil penalties on behalf of other current andformer employees.” (Fr anco y. Athens Disposal Co., Inc., supra, 171 Cal-App.4th at p. 1300.) Division Three ofthis Court has observed: “T]he PAG Act empowers or deputizes an aggrieved employeeto sueforcivil penalties ‘on behalf of himsel f or herself and other current or former employees’ (§ 2699, subd. (a)), as an alternative t o enforcement by the LWDA[Labor and Workforce Development Agency]. [{] The Legislature declaredits intent as follows: *(c) Staffing levels for state labor law enforcement agencies have, in general, declined overthelast decade andare likely to fail 13 to keep up with the growth ofthe labor marketin the future. [{] (d) Jt is therefore in the public interest to provide thatcivil penaltiesfor violations ofthe Labor Code may also be assessed and collected by aggrieved employees acting as private attorneys general, while also ensuring that state labor law enforcement agencies’ enforcement actions have primacy overany private enforcement efforts undertaken pursuantto this act.’ (St ats. 2003, ch. 906, § 1, italics added.)” (Dunlap v. Superior Court (2006) 142 Cal.App.4th 330, 337-338.) | . In summary, there is no question that the PAGA wasenactedwith the intent of promoting the public interest. The PAGA expressly provides for representative actions so that aggrieved employees can pursue violationsthat state agencies lack the fun ding to address. Iskanian contendsthat, given the clear intent ofthe Legislature to benefit the public by providing for representative actions under the PAGA,the “public right”of representative actions under the PAGAis unwaivable. . Iskanian’s view is supported by Division Five’s majority opinion in Brown v. Ralphs Grocery Co. (2011) 197 Cal-App.4th 489 (Brown). Brown held that the Concepcion holding doesnot apply to representative actions under the PAGA, and therefore a waiver of PAGArepresentative actions is unenforceable under Califor nia law. (Brown, at p. 494.) | The claims at issue in Brown were similar to those here. Theplaintiff soughtcivil penalties (on behalf of herself and others) pursuant to the PAGA for alleged Labo r Code violations. The Brown majority noted the differences betweenclass actions and PAGA representative actions. “The representative action authorized by the PAGAis an enforcementaction, with one aggrieved employeeacting as a private attorney gen eral to collect penalties from employersthat violate the Labor Code. ... ‘Restitution is not the primary object of a PAGAaction,asitis in most class actions.’ [Citation.] . . . Our Supreme Court has distinguished class actions from representative PAGAaction s in holding that class action requirements do not apply to representative actionsb rought under the PAGA.” (197 Cal.App.4th at p. 499.) 14 In finding that Concepcion did not apply to PAG Arepresentative claims, the Brown majority wrote: “[Concepcion} does not purport to deal with the FAA’s possible preemption of contractual efforts to eliminate re presentative private attorney general actions to enforce the Labor Code. Asnoted,th e PAGAcreatesa statutory rightforcivil penalties for Labor Code violations ‘that otherwi se would be soughtby state labor law enforcement agencies.’ ... This purpose contra sts with the private individual right ofa consumerto pursue class action remedies in court or arbitration, which right, according t o [Concepcion], may be waived by.agreements o as not to frustrate the FAA—a law governing private arbitrations. [Concepcion ] does not provide that a public right, such a s that created under the PAGA,can be waived if such a waiver is contrary to state law.” "(197 Cal.App.4th at p. 500.) Respectfully, we disagree with the majority’ s holding in Brown. Werecognize that the PAGAservesto benefit the public a nd that private attorney general laws may be severely undercut by application of the FAA. But webelieve that United States Supreme Court has spoken on the issue, and weare re quired to follow its binding authority. In Southland Corp. v. Keating, supra, 465 U.S.a t pages 10-1 1, the United States Supreme Court overruled the California Suprem e Court’s holding that claims brought underthe Franchise Investment Law required ju dicial consideration and were not arbitrable. The United States Supreme Court held: “In enacting § 2 of the [FAA], Congress declared anational policy favori ng arbitration and withdrew the powerofth e states to require ajudicialforumfor the re solution ofclaims whichthe contracting parties agreed to resolve by arbitration.” ( Id. at p. 10, italics added.) The Court furthe r clarified the reach of the FAA in Concepcio n by holding: “Whenstate law prohibits outright the arbitration of a particular type o f claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.” (Concepcion, supra, 131 S.Ct at p. 1747.) Iskanian argues that a PAGAaction can only effectively benefit the public if it takes place in a judicial forum, outside of arbitr ation. Iskanian could becorrect, buthis pointis irrelevant. Under Southland Corp. v. K eating, supra, 465 U.S.1, and 15 Concepcion, supra, 131 S.Ct. 1740, anystate rule prohibiting the arbitration of a PAGA claim is displaced by the FAA. The Ninth Circuit Court of Appeals recently came to a similar conclusion in Kilgore v. KeyBank, N.A.(9th Cir. 2012) 673 F.3d 947 [2012 U.S. App. LEXIS 4736]. (Kilgore), in whichit examined the continuing vitality of the California “Broughton-Cruz rule” in light of Concepcion. Thatrule wasfirst expressedin Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1083, which held that prohibiting the arbitration of Consumers Legal Remedies Act(CLRA)claims for injunctiverelief did not contravene the FAA because the United States Supreme Court “has never directly decided whether a [state] legislature mayrestrict a private arbitration agreement when it inherently conflicts with a public statutory purpose that transcends private interests.” The rule was extended” in Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 307, to include claims for public injunctive relief under the UCL. | In Kilgore, the plaintiffs brought a class action alleging UCL violations. The district court declined to enforce arbitration agreements between the plaintiffs and defendants. The Ninth Circuit Court of Appeals reversed, finding that the Broughton- Cruz rule was preempted by the FAA. The court heldthat “the very nature of federal preemption requires that state law bend to conflicting federal law—no matter the purpose ofthe state law. It is not possible fora state legislature to avoid preemption simply because it intends to do so. The analysis of whether a particular statute precludes waiver of the right to a judicial forum—and thus whetherthatstatutory claim falls outside the FAA’s reach—applies only tofederal, notstate, statutes.” (2012 U.S. App. LEXIS 4736 at p. *33.) The court observed that some membersofthe United States Supreme Court ~ had expressed the view that section 2 of the FAA should be interpreted in a manner that wouldnotpreventstates from prohibiting arbitration on public policy grounds, but that view did notprevail. (2012 U.S. App. LEXIS 4736,at p. *34.) “We read the Supreme Court’s decisions on FAA preemption to meanthat, other than the savings clause,the only way a particular statutory claim can be held inarbitrable is if Congress intended to 16 keep thatfederal claim outofarbitration proceedings ...2” (2012 U.S. App. LEXIS 4736,. at pp. *34-*35.) This reasoning is directly applicable here. Following Concepcion,the public policy reasons underpinning the PAGA do notallow a court to disregard a binding arbitration agreement. The FAA preempts any attempt by a court or state le gislature to insulate a particular type of claim from arbitration. Therefore, giving effect to the terms of the arbitration agreementhere, Iskanian may notpursue representative claims against CLS. Thelaw prohibiting s uch claims applies to both Iskanian’s PAGAclaims® and his UCL claim.” VI. Thetrial court’s finding of no waiver. As he did in thetrial court, Iskanian argues on appealthat, regardless o f the effect of Concepcion, CLS waived the right to arbitrate by failing to pursue it. Following our prior remand, CLS voluntarily withdrew its motion to compel arbitr ation. CLS only renewed the motionafter the issuance of the Concepcion opinion. In gr anting CLS’s renewed motion,thetrial court found that CLS had not waived its right to arbitration.8 6 Although Iskanian maynot pursue a representative action, w e find that he may pursuehis individual PAGAclaims in arbitration. Nothing in the arbitration agreement prevents Iskanian from bringing individualclaims for civil penaltie s. We recognize that it has been held that a PAGA claim maynot be pursued on an ind ividual basis because of the language ofLabor Code section 2699, subdivision (a), which a llows an aggrieved employee to bring the action “on behalf of himself or herself and other current or former employees.” (Italics added.) (See Reyesv. Macy’s Inc. (2011) 202 Cal.App.4th 1 119, _ 1123-1124.) We, however, read the function of the word “and” here in a different sense: its purposeis to clarify that an employee may pursue PAGAclaim son behalf ofothers - only if he pursuesthe claims on his ownbehalf. (See Quevedo v. Macy 's, Inc. (C.D.Cal. 2011) 798 F.Supp.2d 1122, 1141.) We do not believe that an ind ividual PAGAactionis precludedbythe language ofthe statute. 7 Iskanian has soughtonly restitution and disgorgement in c onnection with his UCL claim, and not injunctive relief. His individual UCL claim is a rbitrable. (See Cruz v. PacifiCare Health Systems, Inc., supra, 30 Cal.4th at p. 317.) 8 Thetrial court was not prevented by our prior opinion f rom granting the renewed motion by the “law of the case” doctrine, because the doctrine a pplies only when no 17 Under both the FAA andstate law, a finding of waiver is disfavored. (St. Agnes Medical Centerv. PacifiCare ofCalifornia (2003) 31 Cal.4th 1187, 1195 (St. Agnes).) Any doubts regarding a waiver allegation are to be resolved in favor of arbitration. (Moses H. Cone Hospital v. Mercury Constr. Corp. (1983) 460 USS. 1, 25.) “State law , like the FAA,reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny ofwaiver claims. [Citation.] Although a court may deny a petition to compel arbitration on the ground ofwaiver ([Code Civ.Proc.,] § 1281.2, subd.(a)), waivers are notto be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes, supra,at p. 1195.)? Thereis no single test to determine whether a waiver of arbitration has occurred (St. Agnes, supra, 31 Cal.4th at p. 1195), though our Supreme Court hasidentified a numberoffactors that may properly be considered: “““(1) whether the party’s action s are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has bee n substantially invoked’ andthe parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party eithe r requested arbitration enforcementclose to the trial date or delayed for a long perio d before seeking a stay; (4) whether a defendant seekingarbitration filed a counterclai m without asking for a stay of the proceedings; (5) ‘whether important intervening step s [e.g., taking advantage ofjudicial discovery procedures notavailable in arbitration] had taken place’; and (6) whether the delay “affected, misled, or prejudiced’ the opposin g party.”” [Citation.]” (Id. at p. 1196.) In cases where the facts are undisputed, a ruling on waiver ofarbitration is subject to de novo review. (See St. Agnes, supra, 31 Cal.4th at p. 1196.) The determination of “intervening change in the law”has occurred. (Puritan Leasing Co. v. Superior Court (1977) 76 Cal.App.3d 140, 146.) 9 Waiver in this contextis not used in the ordinary sense of a voluntary relinquishment of a knownright, but rather as shorthandfor the conclusion that a contractual right to arbitration has been lost. (St. Agnes, supra, at p. 1 195, fn. 4.) 18 waiveris generally a question of fact, however, in which eventthetrial court’s finding will be upheld if supported by substantial evidence. (Ibid.; Burton v. Cruise (2 010) 190 Cal.App.4th 939, 946; Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, 841.) Reviewing the evidence andthe history ofthis case, wefindthat the trial court d id not err by declining to imposethe disfavored penalty of waiver. Substantial evidence supported a finding that CLS acted consistently with its right to arbitrate. CL S originally moved to compelarbitration soon after the case wasfiled. It likely would have been successful in that effort if not for the issuance of Gentry while the case was on appeal . Iskanian argues that despite its original attempt, CLS thereafter abandoned arbitration by withdrawingits motion to compel. CLS counters that pursuing arbitrati on at that point would have been futile. It concedes that Iskanian would havesatisfied h is burden underthe Gentry test, and arguesthat prior to the Concepcion decision , any attempt to pursue arbitration would have been pointless. We agree with CLSth atit did not act inconsistently with the right to arbitrate by failing to seek enforcemento fthe arbitration agreement when,as both parties agree, Iskanian would havesatis fied his burden under Gentry. (See Fisher v. A.G. Becker Paribas Inc. (9th Cir. 1986) 791 F.2d 691, 697 [defendantdid notact inconsistently with the contractual right to seek arbitration by moving to compelarbitration only after an intervening change in the law].) Under Gentry, even if CLS wasable to have the case heardin arbitrati on, it would have been required to arbitrate the case on a classwide basis (see Gentry, sup ra, 42 - Cal.4th at p. 463), despite the class waivers in the parties’ arbitration agreem ent. Concepcion represented controlling new law,asit clarified that arbitration ag reements generally must be enforced accordingto their terms, and it prohibited the so rt of unbargained-for class arbitration that could have been compelled by applic ation of the Gentry test. (Concepcion, supra, 131 S.Ct. 1740, 1748, 1750-1751.) In Quevedo v. Macy’s, Inc., supra, 798 F.Supp.2d 1122, the Central District of © California addressed a waiver argumentnearly identical to the one at issue here. In concluding that the movant did not waivearbitration by failing to pursue it prior to 19 Concepcion, the Central District court observed: “In light of these disadvantageso fclass arbitration, it is no surprise that Macy’s declined to enforce its arbitration agreement, reasonably believing that, under Gentry, it would have to arbitrate Quevedo ’s claims on a class basis. If Macy’s waived any right, it wasthe right to defend against Quevedo’ s class and collective claimsinarbitration. Because Macy’s did notbelievethatit had the option to defend against Quevedo’s individual claims in arbitration,its failur e to seek to enforcethe arbitration agreementdid notreflect any intentto forego that option.” (ld. at pp. 1130-1131.) Similarly, after Gentry and prior to Concepcion, CLS had no reason able basis to believe that only Iskanian’s individual claims would be arbitrated. CLS, therefore, did not waiveits right to arbitrate these individual claims by renewingits motion followingtheissuance of Concepcion. | Likewise, there is no basis to find that CLS unreasonably delayed i n renewingits motion to compelarbitration. The issue of whethera party has sought ar bitration within a reasonable timeis a question of fact. (Burton v. Cruise, supra, 190 Cal.Ap p.4th atp. 945.) CLS sought to compelarbitration less than three weeks after the Supr eme Court rendered its decision in Concepcion. Thetrial court wascertainly justified in not finding this an unreasonable delay. | Nor do we discern that Iskanian will suffer any undue prejudice by enforcement o f the arbitration agreement. Merely participating in litigation does not result in w aiver, and “courts will not find prejudice wherethe party opposing arbitration shows only th at it incurred court costs and legal expenses.” (St. Agnes, supra, 31 Cal.4th at p. 1 203.) The fact that Iskanian conducted discovery and submitted extensive briefing in connection with his class certification motion is not particularly germanesince, even outs ide the context of competing arbitration agreements,class certification is not definitively final— defendants may make successive motions to decertify. (See Safaie v. Jacuzzi Whirlpool Bath, Inc. (2011) 192 Cal.App.4th 1160, 1171-1172.) Furthermore, al though prejudice may lie when the moving party’s conducthassubstantially undermined the public policy favoring arbitration as aspeedy andrelatively inexpensive meansofdis pute resolution (St. Agnes, at p. 1204), those concerns are not present here. CLS has not s ought to 20 underminethe efficient nature of arbitration; rather, it has quickly soughtarbitration whenpresented with the opportunity. Moreover, we see no reason to suspect that CLSintentionally delayed seeking arbitration to gain some unfair advantage. Prejudice may occur whena party uses the judicial process to obtain discovery that it would not be able to get in arbitration. (St. Agnes, supra, 31 Cal.4th at p. 1204.) But that does not appear to be an issue for concern here—the parties’ arbitration agreement allows for reasonable discovery. In addition,i t appears from the record that the parties havelitigated very little, if any, of the merits of Iskanian’s claims. Thus,arbitration still stands as the more efficient venue for addressing the claims. (See [bid.) | In sum, the evidence amply supports a finding that CLS did not waiveits right to arbitration. : DISPOSITION The June 13, 2011 order granting defendant’s motion to compel arbitration and dismissing class claimsis affirmed. CERTIFIED FOR PUBLICATION. BOREN,P.J. We concur: DOI TODD,J. CHAVEZ,J. 21 Raul Perez Initiative Legal Group APC 1800 Century Park East - 2nd FI. Los Angeles, CA 90067 Division 2 ARSHAVIR ISKANIAN, Plaintiff and Appellant, v. CLS TRANSPORTATION OF LOS ANGELES, Defendant and Respondent. B235158 1 8 0 0 C E N T U R Y P A R K E A S T , S E C O N D F L O O R , L O S A N G E L E S , C A L I F O R N I A 9 0 0 6 7 o 2 S NS N DB O WO W B P W Y NY O — N O R Q BR O R Q e e e PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employedin the State of California, County of Los Angeles. I am over the age of 18 and not a party to the within suit; my business address is 1800 Century Park East, 2™ Floor, Los Angeles, California 90067. On July 13, 2012, I served the document(s) described as: 1) PETITION FOR REVIEW on the interested parties in this action by sending [ ] the original [or] [W] a true copythereof [ ] to interested parties as follows [or] [VY] as stated on the attached servicelist: SEE ATTACHED SERVICELIST [¥] BY MAIL (ENCLOSEDIN A SEALED ENVELOPE):I deposited the envelope(s) for mailing in the ordinary course of business at Los Angeles, California. I am “readily familiar” with this firm’s practice of collection and processing correspondence for mailing. Underthat practice, sealed envelopes are deposited with the U.S. Postal Service that same day in the ordinary course of business with postage thereon fully prepaid at Los Angeles, California. [ ] BY E-MAIL:I hereby certify that this document was served from Los Angeles, California, by e-mail delivery on the parties listed herein at their most recent knowne- mail address or e-mail of recordin this action. [ ] BY FAX:| hereby certify that this document was served from Los Angeles, California, by facsimile delivery on the parties listed herein at their most recent fax number of record in this action. [ ] BY PERSONAL SERVICE:I delivered the document, enclosed in a sealed envelope, by hand totheoffices of the addressee(s) named herein. [ ] BY OVERNIGHT DELIVERY:I am “readily familiar” with this firm’s practice of collection and processing correspondencefor overnightdelivery. Underthat practice, overnight packagesare enclosed in a sealed envelope with a packing slip attached thereto fully prepaid. The packagesare picked upby the carrier at our offices or delivered by ouroffice to a designated collectionsite. _I declare under penalty of perjury under the lawsofthe State of California that the foregoingis true andcorrect. Executed this July 13, 2012, at Los Angeles, California. Rashan R. Barnes TT,Type or Print Name SignaturePage |PROOFOF SERVICE H I N D I D I A A L I V E D B R R V A L . S e m V u r r l A b M e 1 8 0 0 C E N T U R Y P A R K E A S T , S E C O N D F L O O R , L O S A N G E L E S , C A L I F O R N I A 9 0 0 6 7 i w ~ I n N 10 1] 12 13 14 15 16 17 18 19 20 2) 22 23 24 25 26 27 28 SERVICE Yesenia Gallegos, Esq. Attorneys for David Faustman, Esq. Defendant/Respondent CLS FOX ROTHSCHILD LLP 1800 Century Park East, Suite 300 Los Angeles, CA 90067 Telephone: (310) 598-4159 Facsimile: (310) 556-9828 E-mail: Ygallegos@foxrothschild.com dfaustman@foxrothschild.com Transportation of Los Angeles 1 Copy Appellate Coordinator Office of the Attorney General ConsumerLaw Section 300 South Spring Street Fifth Floor, North Tower Los Angeles, CA 90013 Office of the Attorney General 1 Copy Office of the District Attorney County of Los Angeles Appellate Division 210 West Temple Street, Suite 18000 Los Angeles, CA 90012 District Attorney of the county in which the lower proceeding was filed 1 Copy The Hon. Robert Hess Department 24 c/o Clerk of the Court Los Angeles Superior Court 111 North Hill Street Los Angeles, CA 90012 1 Copy California Court of AppealSecond Appellate District, Div. 2300 S. Spring StreetNorth Tower, 2™ FloorLos Angeles, CA 90013 1 Copy Page 2PROOFOF SERVICE