SCOTUS will decide FAA vs. PAGA arbitration case

UPDATE: 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). Latest blog post HERE.

The US Supreme Court has agreed to decide whether the Federal Arbitration Act (FAA) requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under California's Private Attorney General Act (PAGA).

The case is Viking River Cruises v. Moriana (US Supreme Ct cert granted 12/15/2021) [Briefs].

I expect a decision by summer.

Moriana sued under PAGA on behalf of the state and all other similarly situated employees, alleging various Labor Code violations.

Moriana had agreed to submit any dispute to arbitration and the agreement required her to waive any right to bring a class, collective, representative, or private attorney general action.

The trial court denied the employer's motion to compel arbitration; the California Court of Appeal affirmed. Moriana v. Viking River Cruises (California Ct App 09/18/2020) (unpublished) [Opinion]

The US Supreme Court has held that the FAA requires arbitration agreements to be enforced as written – including terms that prohibit class or collective arbitrations.

However the California Supreme Court (see Iskanian v. CLS Transp, 327 P.3d 129 (Cal. 2014)) held that a waiver of the right to pursue PAGA actions violates California public policy and is unenforceable.

The California court's reasoning is that a PAGA suit involves a dispute between the employer and the state rather than between the employer and the employee.

The employer's view is that this is a "transparent effort to avoid the FAA's preemptive effect," and "conflicts with this Court's cases, which squarely hold that states may not categorically place specific claims beyond the FAA's reach by conceptualizing them as particularly intertwined with state interests."

I don't see how the employee can prevail in this case. The Federal Arbitration Act preempts state law. For the California courts to say that a waiver of the right to pursue PAGA actions violates California public policy simply sets up a direct conflict between state law and federal law. And federal law is the supreme law of land. So the employer should win this one.

(And why am I going on record to predict a Supreme Court outcome?)