Supreme Court to Hear Yet Another Arbitration Case

Continuing its focus on arbitration, the U.S. Supreme Court on December 15, 2021, granted certiorari in Viking River Cruises v. Moriana, Case No. 20-1573, where the question presented is whether the Federal Arbitration Act (FAA) requires enforcement of an arbitration agreement that waives a signatory's ability to bring a labor law claim on behalf of California labor law agencies in court pursuant to California's Private Attorneys General Act (PAGA).

Issue: Whether the FAA requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the PAGA.

PAGA enables an individual employee to seek a court judgment for breach of California labor laws as a "private attorney general" on behalf of the State of California. 

An employee bringing a PAGA action does so as the "proxy" or "agent" of California's labor law enforcement agencies, who are the real parties in interest. A successful employee-plaintiff may obtain civil penalties under PAGA for violations committed against similarly placed employees, Cal. Lab. Code § 2699(g)(1), just as the state could if it brought the enforcement action directly. Civil penalties recovered in a PAGA representative action must be allocated 75 percent to the state enforcement agency and 25 percent to the aggrieved employee. 

California state courts, and federal courts applying the California law, have held that a PAGA representative claim in court cannot be overcome by an arbitration agreement. Employers consider that jurisprudence to be contrary to U.S. Supreme Court precedent.

The Supreme Court will now take up that issue for review.