SCOTUS: PAGA plaintiff must arbitrate

As I expected, the US Supreme Court has held (8-1) that the Federal Arbitration Act (FAA) preempts a rule of California law that invalidates contractual waivers of the right to assert representative claims under California's Labor Code Private Attorneys General Act (PAGA). Viking River Cruises v. Moriana (US Supreme Ct 06/15/2022) [PDF].

Moriana filed a PAGA action against her former employer. Because her employment contract contained a mandatory arbitration agreement, the employer moved to compel arbitration of Moriana's individual PAGA claim and to dismiss her other PAGA claims.

The California courts denied that motion, holding that categorical waivers of PAGA standing are contrary to California policy and that PAGA claims cannot be split into arbitrable "individual" claims and nonarbitrable "representative" claims, relying on Iskanian v. CLS Transp, 59 Cal. 4th 348 (2014).

The Supreme Court put its focus on that portion of Iskanian that precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. The Court said that "Iskanian's indivisibility rule effectively coerces parties to opt for a judicial forum rather than 'forgo[ing] the procedural rigor and appellate review of the courts in order to realize the benefits of private dispute resolution.' This result is incompatible with the FAA."

As for the claims that were not individual to Moriana, the Court pointed out that PAGA provides no mechanism to enable a court to adjudicate nonindividual PAGA claims once an individual claim has been committed to a separate proceeding. "As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims."