California Private Attorneys General Act (PAGA) Suffers Knockout With SCOTUS’ ‘Viking’ Decision – Opinion

You can see it here It is reallyThis is good news especially for small businesses located in once-Golden states.

RedState reported the story of Viking River Cruises v. MorianaAnd the Supreme Court oral argument which took place in March. In particular, the California Business and Industrial Alliance (CABIA), submitted an amicus brief for the case, as well as rallied on the Supreme Court steps in support of this case and PAGA’s repeal.

The Supreme Court granted certiorari (opted to review the case) to decide whether the Federal Arbitration Act (FAA) preempts California’s Private Attorneys General Act (PAGA) law.

In my piece IN MY ORBIT – The California Private Attorneys General Act gets the SCOTUS treatment, I revealed exactly why this case was crucial for the repeal of PAGA.

In the instance of Viking River Cruises, Inc. v. Moriana seeks to cut PAGA off at the knees by answering whether the Federal Arbitration Act (FAA) and any decisions that have supported it can be used to enforce these agreements and prevent an employee from raising representative claims under PAGA.

You can find the Viking case, plaintiff Angie Moriana had signed an arbitration agreement which included a “Class Action Waiver.” This is one of the ways that California companies make efforts to protect themselves against the vagaries of the PAGA law. CABIA helped many small businesses to create this kind of agreements in the past. Wednesday’s launch of a new website allows employers to quickly and easily prepare an arbitration agreement.

PAGA is a law that allows employees to sue their employers on their own behalf. They and their coworkers for violating even the smallest provision of the California Labor Code — a 1,100-plus page behemoth. The employer can be found liable for any incidental or accidental violations, and all employees are subject to the law. For large corporations that have a division of labor law attorneys, it’s just another day at brunch. What about small businesses that have revolving revenues but smaller margins? This could be disastrous.

Here is language from Justice Samuel Alito’s opinion:

Although PAGA actions allow for multiple claims to be adjudicated in one suit, their structures are completely different. While a class action plaintiff could raise many different claims, because they represent a number of people absent, a PAGA Plaintiff represents the LWDA as the principal and has multiple claims. Because of this structural distinction, PAGA lawsuits exhibit almost no procedural characteristics similar to class actions. There is no requirement for certification because the plaintiff doesn’t represent any class of individuals who have been injured. PAGA judgments are binding only with respect to the State’s claims, and are not binding on nonparty employees as to any individually held claims.

Moriana’s arbitration agreement included that class action waiver mentioned above, stating that if Moriana decided to engage in any arbitral proceeding, she could not bring a separate class-action suit or PAGA actions. Moriana left Viking shortly after she was fired and then filed a PAGA lawsuit, directly violating the arbitration agreement.

Moriana was seeking individual status in the case against Viking. She also wanted to keep her PAGA suit. On Wednesday, the court added an additional layer to precedents established in 2011. AT&T Mobility LLC v. ConcepcionThe 2006 Iskanian v. CLS Transp. Los Angeles SCOTUS decisions.

The Supreme Court’s 8-1 decision essentially states that Viking is allowed to compel arbitration of Moriana’s individual claim. The FAA is more important than PAGA. This SCOTUS ruling allows employees and businesses to agree to arbitrate any potential claims falling under PAGA. Instead of the lengthy and costly class-action litigation currently being waged, it is possible to swiftly and fairly resolve these disputes.

These are the key points to take away from this ruling

The Court rejects both of these interpretations. Moriana’s premise that PAGA creates a unitary private cause of action is irreconcilable with the structure of the statute and the ordinary legal meaning of the word “claim.” A PAGA action asserting multiple violations under California’s Labor Code affecting a range of different employees does not constitute “a single claim” in even the broadest possible sense. Viking’s position, on the other hand, elides important structural differences between PAGA actions and class actions. The class-action plaintiff may have many claims, as he/she represents multiple absent people. A PAGA plaintiff on the other hand represents only one principal, which is the LWDA. This plaintiff has many claims. PAGA lawsuits are not subject to the same procedural rules as class actions.

SCOTUS has ruled that PAGA is not compatible with a class action suit. It is impossible to bring a class-action lawsuit without having the entire class vetted. Also, you cannot participate in said class action while continuing to claim your personal rights. It’s an either/or proposition, and Moriana’s attorneys wanted it both ways.

PAGA’s built-in mechanism of claim joinder is in conflict with the FAA.

An arbitration agreement signed by an employee under the FAA will supersede any PAGA claims.

Justice Clarence Thomas affirmed Constitutional federalism and offered his scathing dissent.

JUSTICE THOMAS, dissenting.
I continue to adhere to the view that the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq., does not apply to proceedings in state courts. See Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265, 285–297 (1995) (THOMAS, J., dissenting); see also Kindred Nursing Centers L. P. v. Clark, 581 U. S. 246, 257 (2017) (THOMAS, J., dissenting) (collecting cases). Accordingly, the FAA does not require California’s courts to enforce an arbitration agreement that forbids an employee to invoke the State’s Private Attorneys General Act. So, I agree with the California Court of Appeal.

Even though some Californians were critical of the decision, they still deemed it to be a good one. There is not much here, this is a huge victory for California employers—particularly the small businesses—which have been targeted by plaintiff’s lawyers under the cudgel of PAGA.

RedState reached out to Tom Manzo (founder and president of CABIA), who released this statement.

“PAGA is a toxic policy that leaves both employers and employees with less while trial attorneys make more,” Manzo said.

“The financial impacts of PAGA have devastated businesses of all sizes in California, and we are grateful to the Court for hearing our arguments and rightfully ruling that businesses and employees should be allowed to resolve their disputes bilaterally and through arbitration, rather than through abusive, and often frivolous PAGA lawsuits.”

The words of an organization who has successfully represented small business in this battle. It was a unanimous decision VikingThis pave the way for PAGA’s repeal.