Felix Shafir

The fallout in California on class action waivers in employment contracts' arbitration clauses post-Epic is squarely in Shafir's sights as he litigates appeals for Lyft Inc.

The Iskanian exception to class action waivers, endorsed by the state Supreme Court, could be doomed if Shafir's view prevails.

Shafir's argument in amicus briefing that the waivers are enforceable--endorsed by the U.S. Supreme Court in 2018 in its 5-4 ruling in Epic Systems Corp. v. Lewis--now may be tested in appeals over claims that Lyft misclassified drivers as independent contractors. In one of several such cases, Lyft petitioned to compel the plaintiff to arbitrate potential wage-and-hour class action claims; a trial judge granted the petition in part but denied it regarding the plaintiff's PAGA representative claim for wage-related penalties. Chester v. Lyft Inc., B295288 (2d DCA, filed Feb. 14, 2019).

As Shafir put it in his opening brief, filed in December 2019, "Due to intervening United States Supreme Court precedent, the Iskanian PAGA Rule prohibiting the enforcement of a representative-action waiver is no longer good law, and the trial court erred in following it. ...Epic Systems precludes the Iskanian PAGA Rule's outright ban on arbitration of representative PAGA claims."

The case could be key, but Shafir cautioned that because it's a state court case, it might not dispose of Iskanian entirely. "The [U.S.] Supreme Court sees federal cases as being a better vehicle for these questions. Whether the Lyft cases will get us there I can't say, but I do think the state courts of appeal are bound to follow Epic."

Meanwhile, another major unresolved employment law issue is on Shafir's docket. Following the state Supreme Court's 2018 Dynamex ruling that established an "ABC" test for distinguishing between employees and independent contractors, Shafir represents a public transit agency in a wage-and-hour potential class action that turns on whether Dynamex applies retroactively. A state appellate panel concluded the answer is yes; Shafir's client disagrees and petitioned the state Supreme Court to weigh in. It granted the petition in January 2020 and is holding the case pending its resolution of the retroactivity issue in a different case. Gonzales v. San Gabriel Transit, S259027 (Ca. S. Ct., petition granted Jan. 16, 2020).

In the case the state high court will decide on the retroactivity of Dynamex, Shafir represents the U.S. Chamber of Commerce as a friend of the court to argue that Dynamex cannot be retroactive. The case arrives from the 9th U.S. Circuit Court of Appeals. Vazquez v. Jan-Pro Franchising International Inc., S258191 (Ca. S. Ct., certified question accepted Nov. 21, 2019).

"The Dynamex test was an unexpected landmark surprise that upset settled law," Shafir said, outlining his key argument against retroactivity. "There was a reliance interest in this state on the law before Dynamex."

-- John Roemer