University of Chicago Legal Forum


The Ninth Circuit recently challenged a well-established notion that state laws cannot disrupt arbitration agreements by invaliding an arbitration contract under California’s Private Attorneys General Act (PAGA), a statute designed to enforce the state’s labor code. Just four years earlier, the Supreme Court held in AT&T Mobility v. Concepcion that state laws cannot nullify the procedural benefits of arbitration. The Ninth Circuit distinguished this case by noting that PAGA is a qui tam law, which makes the government a party to the litigation and implicates the state’s power to enforce the labor code. If left intact, this decision has potential to unsettle millions of arbitration agreements. If overruled, the decision could weaken state governments and our federalist system of governance. This Comment asserts that the Ninth Circuit reached the correct conclusion, but could have better supported its decision on federalism and statutory interpretation grounds. In addition, the court could have contemplated other approaches to reconcile arbitration agreements with PAGA, more convincingly addressed the concerns of arbitration advocates, and endorsed the Supreme Court’s distinction between procedural rights that may be waived in arbitration and substantive ones that may not. Last, this Comment explores the arbitration of qui tam claims under an implicit consent theory and envisions how these claims could be arbitrated.

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