Duane Morris Class Action Review - 2023 - Report - Page 68
Sixth, how do courts interpret the FAA’s purpose of protecting parties’ rights to arbitrate
claims when legal disputes arise where the facts implicate other federal statutes whose
purpose is to protect parties’ rights to pursue class action litigation?
In short, this review of arbitration decisions in class actions in 2022 provides information
that companies in nearly every industry will find helpful for their arbitration programs,
both as they relate to their workforce and to their customers, vendors, trading partners,
financial institutions and more.
II.
Significant Arbitration Rulings In Class and Representative
Actions
A.
Viking River Cruises
In June 2002, the U.S. Supreme Court provided clarity regarding the arbitrability of
claims brought under California’s Private Attorneys General Act (PAGA) in Viking River
Cruises, Inc. v. Moriana, et al., 142 S. Ct. 1906 (2022). The Supreme Court explained
that PAGA actions are severable into individual and non-individual claims, and
employees with enforceable arbitration agreements must pursue their individual PAGA
claims in arbitration. The Supreme Court further held that arbitration agreements cannot
foreclose non-individual representative claims, but those claims nevertheless should be
dismissed for lack of standing once an individual claim is pending in arbitration.
Background
Enacted in 2004, the PAGA authorizes aggrieved employees to file lawsuits to recover
civil penalties for violations of the California Labor Code on their own behalf and on
behalf of other current or former employees. Cal. Labor Code § 2699. Where no specific
civil penalty attaches to a Labor Code violation, the PAGA penalty is $100 for each
aggrieved employee per pay period for an initial violation, and $200 for every further
violation. Cal. Labor Code § 2699(f)(2). The penalties, which are discretionary, are
divided between aggrieved employees and the state of California, with the state
receiving 75%. Cal. Labor Code § 2699(i).
There was an explosion of PAGA case filings following the California Supreme Court’s
decision in Arias, et al. v. Superior Court, 46 Cal.4th 969 (2009), which held that PAGA
plaintiffs need not satisfy class action requirements. PAGA actions became even more
prevalent following the California Supreme Court’s decision in Iskanian, et al. v. CLS
Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). Iskanian held that, while class
claims can properly be waived via an arbitration agreement, a PAGA claim cannot. Id. at
384. The California Supreme Court reasoned that such a rule did not run afoul of the
FAA because PAGA claims, unlike class action claims, are brought on the state’s
behalf. Id.
The parties in Iskanian also debated whether “individual PAGA claims” were cognizable,
but the California Supreme Court did not decide the issue. Id. Subsequent authority,
however, uniformly interpreted the PAGA as prohibiting any splitting of the claim into
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© Duane Morris LLP 2023
Duane Morris Class Action Review – 2023
