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US Supreme Court will decide whether
FAA requires individual arbitration of
Private Attorney General Act claims |
Viking River Cruises v. Moriana (US
Supreme Ct cert granted 12/15/2021)
http://case.lawmemo.com/us/Viking.pdf
Sent to Custom
Alerts™ subscribers on 12/15/2021
The US Supreme Court has
agreed to decide whether the Federal Arbitration Act (FAA)
requires enforcement of a bilateral arbitration agreement
providing that an employee cannot raise representative claims,
including under California's Private Attorney General Act (PAGA).
Moriana sued under PAGA on behalf of the state and all other
similarly situated employees, alleging various California Labor
Code violations.
Moriana had agreed to submit any dispute
to arbitration and the agreement required her to waive any right
to bring a class, collective, representative, or private attorney
general action.
The trial court denied the employer's
motion to compel arbitration; the California Court of Appeal
affirmed. Moriana v. Viking River Cruises (California Ct
App 09/18/2020) [Unpublished
opinion].
There is definitely a clash between what the
US Supreme Court has said and what the California Supreme Court
has said.
In Epic Systems
Corp. v. Lewis, 138 S.Ct. 1612 (2018) [PDF],
an employee had signed an arbitration agreement that provided for
individualized, one-on-one arbitration proceedings. He sought to
litigate on behalf of a nationwide class under the Fair Labor
Standards Act collective action provision, 29 U. S. C. §216(b).
The employer replied with a motion to compel arbitration. The US
Supreme Court sided with the employer in a 5-4 decision, saying,
"courts may not allow a contract defense to reshape traditional
individualized arbitration by mandating class-wide arbitration
procedures without the parties’ consent. *** The policy may be
debatable but the law is clear: Congress has instructed that
arbitration agreements like those before us must be enforced as
written."
Yet the California Supreme Court had already
decided that "an arbitration agreement requiring an employee as a
condition of employment to give up the right to bring
representative PAGA actions in any forum is contrary to public
policy," and that "the FAA does not preempt a state law that
prohibits waiver of PAGA representative actions in an employment
contract." Iskanian v. CSL Transportation, 59 Cal.4th 348 (Cal.
2014) [PDF].
In part this is because the California court reasoned that a PAGA
suit involves a dispute between the employer and the state rather
than between the employer and the employee. California
courts have followed the Iskanian rule even after the US
Supreme Court decided Epic Systems.
The employer's view,
expressed in its petition for a writ of certiorari, is that this
is a "transparent effort to avoid the FAA's preemptive effect,"
and "conflicts with this Court's cases, which squarely hold that
states may not categorically place specific claims beyond the
FAA's reach by conceptualizing them as particularly intertwined
with state interests."
The US Supreme Court is expected to
decide this case before summer 2022.
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