Duane Morris Private Attorneys General Act Review – 2024

collective actions, the plaintiffs’ class action bar identified work-arounds. The California Supreme Court cemented the PAGA as the frontrunner for generated employment-related claims with its 2014 decision in Iskanian, et al. v. CLS Transportation Los Angeles , 59 Cal.4th 348 (Cal. 2014), which seemingly immunized the PAGA from arbitration programs. In Iskanian , the California Supreme Court held that “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 Iskanian ruling 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. III. The Dagger Of Viking River In Viking River , the U.S. Supreme Court drove a dagger through the heart of this work-around 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 state-based rules. In Viking River , the U.S. Supreme Court found a conflict between the FAA and the PAGA's procedural structure. It recognized that the PAGA contains a “built-in mechanism of claim joinder,” which permits “aggrieved employees” to use the Labor Code violations they personally suffer 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. The Supreme Court 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 a rule. Id . Importantly, however, after finding that the employer in 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, thereby dealing a significant blow to the plaintiffs’ bar and its ability to pursue claims on a representative basis. IV. The California Supreme Court’s Adolph Decision On PAGA Standing In her concurrence in Viking River , Justice Sotomayor expressly opened the door to two potential solutions to the majority opinion. She suggested that, in its analysis of the parties’ contentions, the Supreme Court detailed “several important limitations on the preemptive effect of the [FAA],” meaning that “California is not powerless to address its sovereign concern that it cannot adequately enforce its Labor Code without assistance from private attorneys general.” Id . at 1925. First, she suggested that, if the majority was incorrect in its understanding that the plaintiff lacked “statutory standing” under the PAGA to litigate her

Made with FlippingBook - professional solution for displaying marketing and sales documents online