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State law cannot condition the enforceability of an arbitration agreement on the availability of a procedural mechanism that would permit a party to expand the scope of the arbitration by introducing claims that the parties did not jointly agree to arbitrate
Respondent filed a PAGA action against her former employer (petitioner) alleging a California Labor Code violation. Her employment contract with petitioner contained a mandatory arbitration agreement, with a “Class Action Waiver” and severability clause. Petitioner moved to compel arbitration of respondent’s individual PAGA claim and to dismiss her other PAGA claims.
Did the FAA preempted California’s Iskanian rule as it precluded a division of PAGA on actions into individual and non-individual claims through an agreement to arbitrate?
The Court held that a reversal was warranted as the agreement's severability clause provided that any portion of the waiver that remained valid had to be enforced in arbitration. Thus, an employer was entitled to enforce the agreement insofar as it mandated arbitration of n employee’s individual PAGA claim.