Viking River Cruises, Inc. v. Moriana
Headline: Federal law limits California’s PAGA rule, letting employers force arbitration of an employee’s individual labor‑penalty claim while representative claims on behalf of the state may be split or dismissed.
Holding: The Court held that the Federal Arbitration Act preempts California’s rule that bars splitting PAGA claims, so employers can compel arbitration of an employee’s individual PAGA claim while non‑individual claims may be dismissed.
- Allows employers to compel arbitration of individual PAGA claims.
- Representative PAGA claims may be dismissed if individual claims go to arbitration.
- California cannot enforce wholesale waivers of PAGA standing.
Summary
Background
A cruise company and a former sales representative clashed over California’s Private Attorneys General Act (PAGA). The former employee sued under PAGA for a missed final wage and many other alleged Labor Code violations affecting other workers. Her employment contract had a mandatory arbitration agreement with a clause barring class, collective, or representative PAGA actions and a severability clause saying any valid portion would be enforced in arbitration. California courts, relying on Iskanian, refused to force arbitration and treated PAGA as a representative action that could not be split.
Reasoning
The central question was whether the Federal Arbitration Act (FAA) overrides California’s rule that bars splitting PAGA claims into individual and representative parts. The Court held that the FAA preempts the California rule only to the extent it forbids dividing a PAGA action by agreement so that an individual claim can be arbitrated separately. The Court explained that PAGA’s broad joinder of other violations can coerce parties out of arbitration by expanding arbitral proceedings beyond what the parties agreed to. At the same time, the Court left in place California’s rule that wholesale waivers of PAGA standing are invalid.
Real world impact
The practical result is that the cruise company could force arbitration of the employee’s individual PAGA claim, and the employee’s remaining non‑individual PAGA claims must be dismissed for lack of statutory standing once the individual claim is sent to arbitration. The case was reversed and sent back for further proceedings consistent with that ruling.
Dissents or concurrances
The opinion drew separate views: a Justice concurred in part, one Justice wrote a separate concurrence emphasizing limits, and one Justice dissented arguing the FAA does not apply to state courts.
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