This Report summarizes an opinion issued on December 10, 2021 (Part I); and cases granted review on December 10 and 15, 2021 (Part II).
Cases Granted Review: Viking River Cruises, Inc. v. Moriana, 20-1573
Viking River Cruises, Inc. v. Moriana, 20-1573. The question presented is “[w]hether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under [the California Private Attorneys General Act].” The California Private Attorneys General Act (PAGA) is akin to a qui tam law, enlisting individual plaintiffs as private attorneys general to recover civil penalties for the state for violations of California’s Labor Code, with a share going to affected employees. Respondent Angie Moriana worked as a sales representative for petitioner Viking River Cruises. Ms. Moriana filed a lawsuit in state court in 2018 under PAGA alleging numerous violations of the California Labor Code and sought relief on behalf of hundreds of other “aggrieved current and former employees.” Viking moved to compel arbitration, pointing to Moriana’s employment agreement, which contained a provision agreeing to resolve all future employment-related disputes with Viking via bilateral arbitration. The arbitration provision specifically stated that, in arbitration, the parties would use individualized rather than class, collective, representative, or private attorney general action procedures. The trial court denied the motion, holding that Moriana’s “representative PAGA claims cannot be compelled to arbitration under California law.” The California Court of Appeal affirmed, relying on the California Supreme Court’s ruling in Iskanian v. CLS Transp. Los Angeles, LLC, 327 P.3d 129 (Cal. 2014), which held that the right to bring a PAGA action cannot be waived prospectively, whether in an arbitration agreement or any other type of contract. The California Supreme Court denied review.
In AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the Court addressed a California rule that bans on class-action procedures in arbitration were deemed unconscionable. Concepcion held that rule preempted by the FAA because it “‘interfere[d] with fundamental attributes of arbitration,’ by imposing formal classwide arbitration procedures on the parties against their will.” In Iskanian, the California Supreme Court concluded that Concepcion did not apply to bans on PAGA suits, which it found unenforceable under state law. The court reasoned that the real party in interest under PAGA is the state, on whose behalf the PAGA plaintiff seeks penalties. Because “a PAGA action is a dispute between an employer and the state Labor and Workforce Development Agency,” and because the state is not a party to the agreement invoked to bar the claim, the court held that permitting the PAGA action to proceed would not conflict with the FAA’s requirement that private arbitration agreements be enforced as between the parties. The court cited EEOC v. Waffle House, Inc., 534 U.S. 279 (2002), which held that a lawsuit brought by the Equal Employment Opportunity Commission to vindicate injury to an employee was not precluded by the employee’s arbitration agreement.
Viking argues in its petition that the Iskanian rule directly conflicts with Concepcion and Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), which reaffirmed that, in the FAA, “Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” States Viking: “there is no meaningful distinction between the class action in Concepcion, the collective action in Epic, and the representative PAGA action here. Each one involves a plaintiff who insists that her right to litigate on behalf of others trumps her agreement to arbitrate individually. Each effort is equally preempted by the FAA.” According to Viking, “[r]epresentational PAGA claims are no more compatible with traditional bilateral arbitration agreements and the characteristic features of arbitration than class actions.” And Viking finds EEOC v. Waffle House, Inc. readily distinguishable: “PAGA proceedings are initiated by the very person who agreed to arbitrate bilaterally, not by a government agency that was a stranger to the agreement.”
[Editor’s note: Some of the language in the background section of the summary above was taken from the petition for writ of certiorari and brief in opposition.]