Private Attorneys General Act Review – 2023 - Report - Page 12
“where an employment agreement compels the waiver of representative claims under
the PAGA, it is contrary to public policy and unenforceable as a matter of state law.” Id.
at 384. Whereas the California Supreme Court acknowledged Concepcion, it
nevertheless reasoned that the rule against PAGA representative action waivers did not
frustrate the FAA’s objectives because, whereas the FAA aims to ensure an efficient
forum for the resolution of private disputes, a PAGA action “is a dispute between an
employer and the state Labor and Workforce Development Agency.” Id.
The ruling likely fueled the filing of PAGA notices in 2014 and thereafter, as it cleared
the PAGA as a mechanism by which to maintain a representative action unhindered by
agreements to arbitrate on an individual basis. The PAGA workaround suffered its first
significant set-back in 2022 with the U.S. Supreme Court’s highly anticipated decision in
Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022), which addressed the
arbitrability of PAGA claims.
C.
The Dagger Of Viking River
In Viking River, the U.S. Supreme Court drove a dagger through the heart of this workaround by continuing its trend of enforcing the FAA over state efforts to avoid or flat-out
prohibit arbitration. See, e.g., Cal. Lab. Code § 229 (“Actions to enforce the provisions
of this article for the collection of due and unpaid wages claimed by an individual may
be maintained without regard to the existence of any private agreement to arbitrate.”).
The U.S. Supreme Court confirmed that, whether judicial or legislative in nature, where
the FAA is in play, it preempts efforts to enforce those rules.
In Viking River, the U.S. Supreme Court found a conflict between the FAA and PAGA's
procedural structure. It recognized that the statute contains a “built-in mechanism of
claim joinder,” which permits “aggrieved employees” to use the Labor Code violations
they personally suffered as a basis to join to the action any claims that could have been
raised by the State in an enforcement proceeding. Id. at 1923. It held that, to the extent
that Iskanian precludes division of PAGA actions into individual and non-individual
claims, and thereby “prohibits parties from contracting around this joinder device,” the
FAA preempts such rule. Id.
Importantly, however, after finding that Viking River should have been able to compel
arbitration of plaintiff’s individual claim, the U.S. Supreme Court addressed “what the
lower courts should have done with Moriana's non-individual claims.” Id. at 1925. It
ruled that, once an individual claim has been committed to a separate proceeding, the
employee is no different from a member of the general public, and the PAGA provides
no mechanism for such person to maintain suit. As a result, the correct course was to
dismiss the remaining claims. Id.
As a result, the U.S. Supreme Court eviscerated perhaps the most popular work-around
to workplace arbitration, dealing a significant blow to the plaintiffs’ bar and its ability to
pursue claims on a representative basis.
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© Duane Morris LLP 2023
PAGA Litigation Review – 2023
