June 15, 2022
Decided June 15, 2022
Viking River Cruises, Inc. v. Moriana, No. 20-1573
Today, the Supreme Court held that individual claims arising under California’s Labor Code Private Attorneys General Act (“PAGA”) can be compelled to arbitration.
Background: PAGA permits an employee to sue her employer for Labor Code violations on behalf of the State of California and share in the recovery. Moriana, an employee of Viking River Cruises, agreed to arbitrate all disputes and waived her ability to bring class-wide, representative, or PAGA claims. She nevertheless brought a PAGA claim in California state court after her employment ended, alleging Labor Code violations affecting her and other employees and seeking aggregated penalties for all of the alleged violations. The California Court of Appeal allowed the case to proceed, holding that under the California Supreme Court’s decision in Iskanian v. CLS Transport Los Angeles, LLC (2014), the waiver of representative PAGA claims in Moriana’s arbitration agreement was unenforceable. Because under Iskanian, a PAGA claim cannot be divided into “individual” and “representative” claims brought in separate proceedings, the court permitted all of Moriana’s claims to proceed in court.
Issue: Does the Federal Arbitration Act require enforcement of a bilateral arbitration agreement with respect to an individual claim under PAGA?
Yes. The FAA preempts the California Supreme Court’s Iskanian decision insofar as it precludes the division of PAGA actions into individual and non-individual claims. Viking may compel arbitration of Moriana’s individual PAGA claim, and the remaining non-individual PAGA claims must be dismissed because Moriana lacks statutory standing under PAGA without her having an individual claim in the action. The FAA, however, does not preempt Iskanian’s prohibition on wholesale waivers of PAGA claims.
“We hold that the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. This holding compels reversal in this case.”
Justice Alito, writing for the Court
What It Means:
The Court’s opinion is available here.
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