We previously blogged about Viking River Cruises, Inc. v. Moriana, in which the U.S. Supreme Court held that individual employee claims under California’s Labor Code Private Attorneys General Act (PAGA) are subject to arbitration under the Federal Arbitration Act (FAA). While the Court further ruled that representative employee PAGA claims are not preempted by the FAA, it nevertheless dismissed those claims for lack of standing based on its interpretation of California standing law.
Recently, the California Supreme Court held in Adolph v. Uber Technologies, Inc. that Viking River misinterpreted California standing law and that employees may pursue representative PAGA claims in court even if their individual PAGA claims are subject to arbitration. Several of our Ballard Spahr colleagues have published an excellent analysis of Adolph which we highly recommend. As they point out, even though the court ruled in favor of the employee, it did offer employers “welcome guidance” in noting that trial courts have discretion to stay the representative PAGA claims while the individual claims are arbitrated, and if the arbitrator determines that the employee is not an “aggrieved employee” under PAGA and the trial court confirms that determination and reduces it to a final judgment, then the employee “could no longer prosecute his non-individual claims due to lack of standing.”
We bring Adolph to your attention not only to close the loop on Viking River, but also to remind financial services companies that the scope of FAA preemption continues to be a hotly contested battleground. While plaintiffs’ lawyers will undoubtedly cheer the result in Adolph, the fact remains that the U.S. Supreme Court did require arbitration of the plaintiff’s individual PAGA claims in Viking River, and its analysis of the representative claims was driven in large part by the unique structure and legislative history of PAGA. Those aspects of Viking River need to be kept in mind if plaintiffs’ lawyers argue that Viking River and Adolph should be interpreted broadly and create some sort of roadmap for consumer plaintiffs (whether in California or other states) to try to circumvent the FAA and the U.S. Supreme Court’s holding in AT&T Mobility LLC v. Concepcion and its progeny that under the FAA class action waivers in consumer arbitration agreements are valid and enforceable. No such roadmap can be drawn from those cases. On the contrary, Viking River reinforced that “States cannot coerce individuals into forgoing arbitration by taking the individualized and informal procedures characteristic of traditional arbitration off the table,” and Adolph acknowledged that “[t]he ‘principal purpose’ of the FAA is to ‘ensur[e] that private arbitration agreements are enforced according to their terms.”