Arbitration, PAGA: Supreme Court Holds In Viking Cruises v. Moriana That PAGA Claims Can Be Arbitrated

I Told You So.

        In my January 7, 2022 post about Viking Cruises, Inc. v. Moriana, I predicted that the employee Angie Moriana would lose  her argument that her Private Attorney General Act (PAGA) employment claim against her employer Viking Cruises, could avoid mandatory arbitration. I promised, "If my prediction proves to be accurate, I will let you know." So I'm letting you know. However, I somewhat simplistically based my "prediction" on the way the Supreme Court is currently constituted. But as we will see, the court's opinions in this case do not fall along simple left-right lines, and only Justice Clarence Thomas dissented.

        Justice Samuel Alito delivered the majority opinion of the court. Viking Cruises, 20-1573 (6/15/22). The opinion states: "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."

        Part I of the opinion is an introduction that describes the background of the case and Moriana's claim. Alito explains that PAGA provides for "representative" claims in two different respects: first, the plaintiff employee represents state interests; second, the employee represents  other employee's PAGA claims, which may be predicated on violations different from those  of the plaintiff employee. Part II is an exegesis on the FAA and PAGA. In Part II, Alito explains that the fact that an employee represents state interests is not incompatible with bilateral arbitration. Instead, he maintains it is representation in the second sense — representation of other claims by other claimants — that is incompatible with arbitration. Part III states, "We think that . . . a conflict between PAGA’s procedural structure and the FAA does exist, and that it derives from the statute’s built-in mechanism of claim joinder." Part IV repeats the holding, and concludes that Viking Cruises is entitled to arbitrate Moriana's individual PAGA claim. But the representative PAGA claims of other employees cannot be arbitrated under the PAGA scheme by Moriana, because only an aggrieved party can bring a PAGA claim, meaning only the other employees can bring their own individual PAGA claims — at least, that is how Alito interprets that PAGA statutory scheme.

        We have spent more time than usual describing the parts of the majority opinion, because it spawned a concurrence written by Justice Amy Coney Barrett,  joined by Justice Brett Kavanaugh and Chief Justice John Roberts (with the exception of a footnote), a concurrence by Justice Sonya Sotomayor, and a dissent by Justice Thomas.  Barrett concurred in Part III, but believed that parts I, II, and IV were unnecessary to the court's decision: "I agree that reversal is required under our precedent because PAGA’s procedure is akin to other aggregation devices that cannot be imposed on a party to an arbitration agreement." Chief Justice Roberts concurred in parts I and III.

        Justice Sotomayor concurred based on her understanding that, "As a whole, the Court’s opinion makes clear that California is not powerless to address its sovereign concern that it cannot adequately enforce its Labor Code without assistance from private attorneys general." She believes that in an appropriate case, California courts interpreting California law will get to decide whether the employee has "standing" to pursue representative PAGA claims, and that if necessary, the California legislature can "modify the scope of statutory standing under PAGA within state and federal constitutional limits." [Query whether the current case is an "appropriate case" in Sotomayor's understanding.] Sotomayor's concurrence seems to invite a continuing PAGA dialogue between the United States and California Supreme Courts.

        Justice Thomas dissents, based on his consistent position that the Federal Arbitration Act does not apply to the states. An explanation of his "iconoclastic" position can be found in an article by Brian Farkas, The Continuing Voice of Dissent:
Justice Thomas and the Federal Arbitration Act," Harvard Negotiation Law Review, vol 22:33 (2016). As the most conservative voice on the court, Thomas rejects a broad application of the Commerce Clause, accepts the limited interpretation of the Privilege and Immunities Clause of the 14th Amendment, and pretty much rejects incorporation of basic rights under the Due Process Clause of the 14th Amendment. He's a states rights guy. And so his position on the far-right spectrum of the Supreme Court bench would result in allowing California to limit arbitration to  protect employees. Presumably states following policies that do not protect employees as much as California does would also be protected by Thomas's deference to states' rights.