Supreme Court Review Whether Private Attorney General Action Can Be Waived by Arbitration Agreement

Continuing its focus on arbitration, the U.S. Supreme Court yesterday granted certiorari in Viking River Cruises v. Moriana, No. 20-1573, where the question presented is whether the Federal Arbitration Act 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).

The official issue presented:

Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the California Private Attorneys General Act.

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% to the state enforcement agency and 25% to the aggrieved employee. Cal. Lab. Code § 2699(i).

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.

The Court’s docket page for Viking River Cruises with filings is linked above. The Scotusblog page containing the lower court opinion and amicus briefs can be found here.

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It has been a busy week for arbitration at the Supreme Court, and with recent moves, the Court has provided itself a full arbitration docket, with six separate cases pending in five matters, only one of which has been argued, as the others await argument dates.

Last Friday, the Court accepted two cases and consolidated them into one argument, date to be announced, on a long-running issue about the reach of a federal law that provides discovery in foreign matters. Details on the Dec. 10 cert grant on the consolidated cases, which will determine whether the law applies to discovery in international arbitration matters, can be found at John Pinney, “International Arbitration Is Back at the Supreme Court with Today’s Cert Grant on Two Section 1782 Cases,” CPR Speaks (Dec. 10) (available here).

The Court on Friday also accepted a case on Federal Arbitration Act Sec. 1 that will examine the extent of the exception from the FAA involving workers in interstate commerce. For details on that new case, as well as a roundup of the six arbitration cases now at the U.S. Supreme Court, see Russ Bleemer, “Court Adds a Third Arbitration Case in Friday’s Cert Granted Order List,” CPR Speaks (Dec. 10) (available here).

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Mark Kantor is a member of CPR-DR’s Panel of Distinguished Neutrals. Until he retired from Milbank, Tweed, Hadley & McCloy, he was a partner in the firm’s Corporate and Project Finance Groups. He currently serves as an arbitrator and mediator. He teaches as an Adjunct Professor at the Georgetown University Law Center (Recipient, Fahy Award for Outstanding Adjunct Professor). He also is Editor-in-Chief of the online journal Transnational Dispute Management. He is a frequent contributor to CPR Speaks, and this post originally was circulated to a private list serv and adapted with the author’s permission.

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