Viking River Cruises, Inc. v. Moriana
Overview
Overview
Viking River Cruises, Inc. v. Moriana (2022) held 8-1 that the Federal Arbitration Act preempts California's rule preventing employers from compelling arbitration of the individual-plaintiff portion of a PAGA (Private Attorneys General Act) claim, which allows employees to sue on behalf of the state for Labor Code violations. California's categorical rule against PAGA waivers in arbitration agreements was preempted to the extent it blocked individual PAGA arbitration, though the non-individual (representative) portion of PAGA claims remained a live issue.
The Facts
Facts
Angie Moriana sued Viking River Cruises under PAGA, which deputizes private employees to sue employers on behalf of the state for labor violations and collect a portion of the penalties. Viking River's employment contract contained a PAGA waiver, a prohibition on PAGA claims in any forum, and required individual arbitration. California courts refused to enforce PAGA waivers under the Iskanian rule. The California Supreme Court held that PAGA claims could not be split into individual and non-individual components for arbitration purposes.
The Issue
Issue
Whether the Federal Arbitration Act preempts California's Iskanian rule barring enforcement of PAGA waivers in arbitration agreements, as applied to the individual (as opposed to representative) portion of a PAGA claim.
The Rules
Rule
9 U.S.C. § 2 (Federal Arbitration Act) mandates enforcement of arbitration agreements according to their terms, preempting state law defenses that single out arbitration for disfavor. Iskanian v. CLS Transportation Los Angeles, LLC (Cal. 2014) held PAGA waivers unenforceable because PAGA claims belong to the state, not the employee. FAA preemption applies to state rules that interfere with bilateral arbitration of claims, including the categorical bar on PAGA individual waivers.
The Application
Analysis
Under the FAA, arbitration agreements must be enforced according to their terms and cannot be singled out for disfavor by state law. California's Iskanian rule categorically barred PAGA waivers in all contexts, preventing Viking from enforcing the arbitration clause in its employment contract even as to Moriana's individual claims. The Court found that this categorical state-law ban on PAGA waivers constituted precisely the kind of arbitration-hostile state rule that the FAA preempts. It targeted arbitration specifically by refusing to enforce a bilateral arbitration agreement containing a PAGA waiver. Applying the FAA's preemption doctrine, the Court held that employers may compel individual PAGA claims to arbitration, narrowing California's blanket prohibition, though the Court left unresolved the treatment of representative PAGA claims brought on behalf of other employees.
The Conclusion
Conclusion
The 2022 ruling allows employers to compel individual PAGA claims to arbitration, though the non-individual (representative) claims, brought on behalf of other employees, were remanded for further analysis of California standing rules. The decision narrowed the Iskanian rule and gave employers a partial tool to limit PAGA exposure through arbitration agreements, while leaving open the fate of representative PAGA claims.
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