Duane Morris Class Action Review - 2023 - Report - Page 69
“individual” and “representative” components. See, e.g., Kim, et al. v. Reins
International California, Inc., 9 Cal.5th 73, 88 (2020) (noting that “[a]ppellate courts have
rejected efforts to split PAGA claims into individual and representative components.”).
Whereas PAGA lawsuits filed in California in 2005 totaled 700, by 2021-2022, there
were more than 6,000 filings. It was against this backdrop that the U.S. Supreme Court,
in late 2021, agreed to hear California employers’ calls for clarity regarding the inherent
inconsistencies between Iskanian and the FAA in granting review in Viking River
Cruises.
The Viking River Cruises Decision
The plaintiff in Viking River filed a PAGA action in state court, which Viking sought to
compel to arbitration on an “individual” basis. Viking River, 142 S.Ct. at 1916. The
parties’ arbitration agreement contained a representative action waiver, as well as a
severability clause specifying that if the waiver was found invalid, any representative
action would presumptively be litigated in court, but any “portion” of the waiver that
remained valid would be “enforced in arbitration.” Id.
The trial court, relying on Iskanian, denied Viking’s motion, “holding that categorical
waivers of PAGA standing are contrary to state policy and that PAGA claims cannot be
split into arbitrable individual claims and nonarbitrable ‘representative’ claims.” Id. The
U.S. Supreme Court reversed. Id. at 1917.
The Supreme Court first invalidated Iskanian’s view that a “PAGA action lies outside the
FAA’s coverage.” Id. at 1919, n. 4. Turning to the FAA preemption question, the
Supreme Court began by explaining the “two distinct ways” in which the term
“representative” is used in PAGA actions. Id. at 1916. “In the first sense, PAGA actions
are ‘representative’ in that they are brought by employees acting as representatives that is, as agents or proxies - of the State,” and in that sense “‘every PAGA action is . . .
representative.’” Id.
In the second sense, PAGA actions are “‘representative’ when they are predicated on
code violations sustained by other employees.” Id. at 1916. When the term is “used in
the second way,” the Supreme Court explained, “it makes sense to distinguish
‘individual’ PAGA claims, which are premised on Labor Code violations actually
sustained by the plaintiff, from ‘representative’ (or perhaps quasi-representative) PAGA
claims arising out of events involving other employees.” Id.
Iskanian, the Supreme Court noted, prohibited waivers of “representative” PAGA claims
in both senses of the word: (a) “it prevent[ed] parties from waiving representative
standing to bring PAGA claims in a judicial or arbitral forum,” and (b) it “invalidate[d]
agreements to separately arbitrate or litigate ‘individual PAGA claims for Labor Code
violations that an employee suffered.’” Id. at 1916-17 (quoting Iskanian, 59 Cal.4th at
383).
The Supreme Court held that the first rule - prohibiting wholesale waivers of PAGA
actions in any forum - survived FAA preemption. Id. at 1922 (“we have never held that
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Duane Morris Class Action Review – 2023
