Viking River Cruises, Inc. v. Moriana
596 U.S. 639
SCOTUS
2022

Background

  • California’s PAGA lets an “aggrieved employee” sue as a private attorney general on behalf of the State to recover civil penalties for Labor Code violations; the LWDA gets 75% of any recovery.
  • California precedent (Iskanian and related cases) treats PAGA suits as representative/qui-tam–style actions and effectively allows broad joinder: a plaintiff can aggregate penalties for violations suffered by other employees.
  • Angie Moriana sued Viking under PAGA alleging one personal Labor Code violation plus numerous other violations affecting other employees; her employment contract contained a mandatory arbitration clause with a representative/PAGA waiver and a severability clause allowing arbitration of any enforceable portion.
  • California courts (relying on Iskanian) held PAGA waivers invalid as against public policy and also ruled PAGA actions cannot be split into "individual" and "representative" components, so they refused to compel arbitration of Moriana’s individual claim.
  • The Supreme Court granted certiorari to decide whether the Federal Arbitration Act (FAA) preempts California’s rules (both the anti-waiver rule and the indivisibility/joinder rule) and reversed in part: FAA preempts the indivisibility/joinder rule but not the anti-waiver rule; Moriana’s individual PAGA claim must be arbitrated and her remaining PAGA claims were dismissed for lack of statutory standing.

Issues

Issue Plaintiff's Argument (Moriana) Defendant's Argument (Viking) Held
Whether the FAA preempts California’s rule invalidating pre-dispute waivers of PAGA representative standing Iskanian merely preserves substantive public enforcement rights; PAGA is a statutory cause of action, so FAA does not require enforcement of waivers of those substantive rights FAA/precedent require enforcement of waivers because PAGA functions like a class/collective proceeding; prohibiting waivers coerces class-style arbitration or no arbitration Court: FAA does not preempt California’s anti-waiver rule to the extent it invalidates wholesale waivers of PAGA standing (anti-waiver rule survives)
Whether the FAA preempts Iskanian’s rule forbidding contractual division of PAGA actions into "individual" and "non-individual" claims (the indivisibility/joinder rule) Splitting individual claims from representative claims undermines PAGA’s deterrent purpose; indivisibility preserves State enforcement goals Iskanian’s joinder/indivisibility rule forces parties into arbitrations with claims they did not agree to arbitrate and thus conflicts with FAA’s consent principle Court: FAA preempts the indivisibility/joinder rule — parties may agree to arbitrate individual PAGA claims separately
Is PAGA a class action/collective procedure or a statutory (qui tam–style) representative cause? PAGA creates a unitary private cause; not a class-action procedural device PAGA is representative (agent for the State) and has aggregation features analogous to class/collective procedures Court: PAGA is a representative/qui-tam–style statute (plaintiff acts for the State); it is not a class action, but its joinder mechanism causes the FAA conflict described above
Remedy after compelling arbitration of the plaintiff’s individual PAGA claim: can non-individual claims remain in court? Non-individual claims should proceed in court Arbitrator individualizes plaintiff’s claim; remaining non-individual claims lack PAGA standing if plaintiff’s individual claim is removed Court: Non-individual PAGA claims must be dismissed for lack of statutory standing once the plaintiff’s individual claim is sent to arbitration

Key Cases Cited

  • Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (class arbitration requires contractual basis; cannot be forced by state law)
  • AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (state rules cannot impose procedures incompatible with arbitration’s informal bilateral nature)
  • Granite Rock Co. v. Teamsters, 561 U.S. 287 (2010) (arbitration is a matter of consent)
  • First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (parties arbitrate only issues they agreed to submit)
  • Preston v. Ferrer, 552 U.S. 346 (2008) (arbitration agreements do not forfeit substantive statutory rights; they change forum/procedure)
  • Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (1985) (federal policy permits separable resolution of arbitrability and other claims)
  • Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong federal policy favoring arbitration and interplay with litigation)
  • Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) (background on qui tam/relator actions)
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