June 17, 2022
On June 15, 2022, the United States Supreme Court decided the highly anticipated, now landmark, Viking River Cruises, Inc. v. Moriana case. In short, the Court held that the Federal Arbitration Act (“FAA”) precludes representative Private Attorneys General Act (“PAGA”) actions brought by an individual litigant who is subject to an enforceable arbitration agreement. This decision is a big win for California employers because employees who agree to arbitrate employment disputes and waive class and representative actions will be compelled to bring claims in arbitration on an individual basis only. They cannot act as a class action plaintiff or member and can no longer act as a PAGA representative in court.
In Viking River, the U.S. Supreme Court found that PAGA has a built-in mechanism of claim joinder, which conflicts with the FAA. On this basis, the Court concluded that Viking River was entitled to compel arbitration of Moriana’s individual PAGA claim. As such, Moriana no longer had standing to bring the representative PAGA action in superior court and her representative action should therefore be dismissed.
In light of Viking River, arbitration agreements are now more critical than ever for employers to implement to streamline employer-employee disputes. Prior to the ruling, an employee who asserted individual and PAGA claims against their employer was essentially entitled to a two-track litigation: arbitration for the individual claims and superior court for the PAGA action. The expense and risk of defending claims in both forums forced many employers to overpay on PAGA settlements to avoid the risk. However, now, employees who enter into or have entered into enforceable arbitration agreements with viable class and representative waivers are no longer able to assert PAGA claims in superior court.
We will be circulating additional details related to this breakthrough decision, including best practices and how to prepare arbitration agreements moving forward, in the coming days. In the meantime, please contact Pearlman, Brown & Wax’s Employment Law Department for further guidance and assistance related to Viking River, or any other employment law-related issue.