Viking River Cruises v. Moriana

The PAGA is a California state law that empowers an individual employee to “step into the shoes” of the State’s labor law enforcement agencies and bring a private lawsuit against an employer for violations of state labor law they may have committed.  The “aggrieved employee” (as the plaintiff in a PAGA case is called) must have personally experienced at least one violation of the law in order to be able to sue, but at the same time he or she can recover broadly on behalf of all other “aggrieved employees” (i.e., anyone else whom the employer has subjected to Labor Code violations within a year preceding the beginning of the lawsuit).

The Legislature passed PAGA into law almost two decades ago in 2004 in an effort to shore up California’s worker protections, which were suffering due to a severe shortage in the State’s resources available for enforcement.  Since then, the State’s lack of any real capacity to enforce its own labor laws has hardly gotten any better: in 2016, for example, it was reported that workers in Los Angeles County who complained about an employer’s wage theft had to wait an average of 495 days just to get an initial hearing with the Labor Commissioner, simply because the system was so backed up.  The persistent scarcity of public resources available to address this issue means that private plaintiffs suing under PAGA are an essential part of enforcing the State’s labor laws.

California’s rule leading up to the decision in Viking River was that an individual employee cannot give up his or her right to file suit under PAGA.  As a result, even when an employee had signed what is known as an “arbitration agreement” with his or her employer giving up the right to bring a PAGA claim in court, California courts generally refused to honor such an agreement.  The central issue before the Supreme Court in Viking River was whether this rule could stand.

“Arbitration” is a type of informal dispute resolution outside of the court system where the process is significantly shortened, streamlined, and narrowed in several ways.  Unlike in a class action or a PAGA lawsuit in a court, an employee suing his or her employer in arbitration can only ever bring claims on behalf of one person⸺himself or herself.  Apart from the obvious reason that an employer would rather defend against a single person’s claims instead of a group’s, employers typically prefer to arbitrate employee claims rather than to litigate them in court because arbitrators often tend to be more employer-friendly than a civil jury in court might be.

The Supreme Court ruled to override California’s rule protecting individual employees’ rights from being forced into arbitration.  The decision fits into a series of cases over the past several years in which the Supreme Court has favored arbitration over permitting individuals to proceed with their claims in court.

Interestingly, the Supreme Court did not find that all of an employee’s PAGA claims could be waived by signing an arbitration agreement.  Rather, the Supreme Court decided, an employee’s PAGA claims could be split up into “individual” and “non-individual” groups, with the “individual” claims being permitted to be subject to arbitration.  The latter, “non-individual” claims of other aggrieved employees were then dismissed from the case because, like we said before, a plaintiff suing under PAGA must have experienced at least one violation of the law to be able to sue on behalf of others.

Ultimately, this ruling means that it will be easier for your employer to persuade a court to kick your claims out of litigation and into arbitration.  Because PAGA is one of the most important laws permitting you to sue not only on your own behalf but also on behalf of all other employees affected by your employer’s violation of the law, not having as strong a version of PAGA available will also likely lead to lower settlement amounts, should you decide to sue.

Obviously, it’s hard to tell.  In her separate opinion filed in Viking River, however, Supreme Court Justice Sonia Sotomayor brought up the possibility that the California Legislature or courts could come up with a creative solution to the problem.  Anything is possible, and in an area of law that has changed so much so recently, there are reasons to hope that further change will be to workers’ benefit.