Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 191 FAA requires enforcement of an arbitration agreement which provides that an employee cannot raise representative claims, including under PAGA. On June 15, 2022, the U.S. Supreme Court held that individual claims under PAGA can be compelled to arbitration under the FAA, partially preempting the California Supreme Court’s longstanding Iskanian decision.937 The Supreme Court concluded that the FAA preempts Iskanian’s rule that PAGA claims cannot be divided into individual and non-individual actions through an arbitration agreement. Because individual PAGA claims can be split from separate, “representative” PAGA claims, the Court held that Viking River was entitled to enforce the agreement insofar as it mandated arbitration of Moriana’s individual PAGA claim. Given that Moriana’s individual PAGA claims were required to be enforced in arbitration, the Court then concluded that Moriana lacked statutory standing to continue to maintain her representative PAGA claims in court, and the correct course was to dismiss her remaining claims. The rationale for this holding is that “PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding” (i.e., arbitration). Under PAGA’s standing requirement, plaintiffs can maintain representative PAGA claims “only by virtue of also maintaining an individual claim in that action.” So, “if an employee’s own individual dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.” Important to the Supreme Court’s decision was that Viking River’s severability clause provided that if the PAGA waiver was invalid, then any portion of the waiver that remains valid must be enforced in arbitration. The Court, however, held that a waiver of “representative” PAGA claims was still invalid under Iskanian if construed as a “wholesale waiver” of such PAGA claims, and that this aspect of Iskanian was not preempted by the FAA. One of the more troubling portions of the Viking River decision was the concurrence by Justice Sotomayor. There, Justice Sotomayor highlighted the uncertainty and questions that still linger for how representative PAGA claims can proceed. She referenced the majority opinion’s holding that the FAA poses no bar to the adjudication of “non-individual” PAGA claims and that Moriana lacks “statutory standing” under PAGA to litigate her “nonindividual” claims separately in state court. However, Justice Sotomayor warned that the Court’s “understanding of state law” on this issue may be wrong, and that “California courts, in an appropriate case, will have the last word.” Alternatively, Justice Sotomayor hinted that if the lack of standing was correct, then the “California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.” G. The California Supreme Court Counters Viking River – The Adolph Decision In view of Justice Sotomayor’s concurrence, trial courts were split in the immediate aftermath of Viking River on issue of whether the remaining PAGA claims must be dismissed (as commanded by Viking River) or whether they 937 Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022), reh'g denied, No. 20-1573, 2022 WL 3580311 (U.S. Aug. 22, 2022)
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