Duane Morris Class Action Review - 2023 - Report - Page 70
the FAA imposes a duty on States to render all forms of representative standing
waivable by contract”). But the second rule did not: the “prohibition on contractual
division of PAGA actions into constituent claims,” the Supreme Court observed, “unduly
circumscribes the freedom of parties to determine ‘the issues subject to arbitration’ and
‘the rules by which they will arbitrate.’” Id. at 1923.
“If the parties agree to arbitrate ‘individual’ PAGA claims based on personally sustained
violations,” the Supreme Court continued, “Iskanian allows the aggrieved employee to
abrogate that agreement after the fact and demand either judicial proceedings or an
arbitral proceeding that exceeds the scope jointly intended by the parties.” Id. at 1924.
“As a result,” the Supreme Court held that “Iskanian’s indivisibility rule effectively
coerces parties to opt for a judicial forum,” which is “incompatible with the FAA.” Id.
The Supreme Court summarized its holding as follows:
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. The
agreement between Viking and [the plaintiff] purported to waive
‘representative’ PAGA claims. Under Iskanian, this provision was invalid if
construed as a wholesale waiver of PAGA claims. And under our holding,
that aspect of Iskanian is not preempted by the FAA, so the agreement
remains invalid insofar as it is interpreted in that manner.
Id. at 1924-25.
The Supreme Court invoked the severability clause in the parties’ agreement, which
required “any ‘portion’ of the [representative action] waiver that remains valid” to “be
‘enforced in arbitration.’” Id. at 1925. Based on that clause, the Supreme Court
determined that “Viking was entitled to enforce the agreement insofar as it mandated
arbitration of [the plaintiff’s] individual PAGA claim.” Id.
As for the remaining “non-individual” PAGA claims (i.e., violations allegedly committed
against other aggrieved employees), the Supreme Court held that those claims had to
be dismissed because plaintiff, having had her own PAGA dispute “pared away” from
the court action, “lack[ed] statutory standing to continue to maintain her non-individual
claims in court.” Id.
B.
Viking River Cruises’ Aftermath And Adolph, et al. v. Uber
Post Viking River Cruises, employers have been pursuing petitions to compel arbitration
of individual PAGA claims and requesting dismissal of representative PAGA claims for
lack of standing. While California courts have been granting the former requests, the
majority of courts have denied the latter requests for dismissal on the grounds that the
U.S. Supreme Court erred in its analysis of PAGA standing, an issue of state law.
In Adolph, et al. v. Uber, No. S274671, the California Supreme Court is currently
considering this PAGA standing issue. Given the California Supreme Court’s track
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© Duane Morris LLP 2023
Duane Morris Class Action Review – 2023
