The U.S. Supreme Court will hear a case involving a San Fernando Valley business that could impact the Private Attorney General Act, a law that went into effect in 2004 and which allows employees of a business to sue over labor law violations even if they were not impacted by the violations. At issue in the case is the validity in California of employer-employee arbitration agreements.

In the underlying case of Moriana v Viking River Cruises Inc. a company in Woodland Hills, Angie Moriana sued her former employer Viking River Cruises, Inc. seeking recovery of civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).

Viking moved to compel Moriana’s claims into arbitration. The trial court denied Viking’s motion and the 2nd district Court of Appeal affirmed in the unpublished opinion which will now be reviewed by the U.S. Supreme Court.

Viking argued that the United States Supreme Court’s decision in Epic Systems Corp. v. Lewis (2018) overruled the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, in which the California Supreme Court held “that an employee’s right to bring a PAGA action is unwaivable,” and that “where . . . an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.”

Epic Systems Corp. v. Lewis was one of three cases consolidated by the United States Supreme Court in 2017 that raised the issue of the Federal Arbitration Act’s preemptive effect over private employment arbitration agreements prohibiting class and collective actions.

Numerous California Courts of Appeal have rejected the contention that Iskanian is no longer good law in the wake of Epic. On federal questions, intermediate appellate courts in California must follow the decisions of the California Supreme Court, unless the United States Supreme Court has decided the same question differently. Thus the 2nd District Court of Appeal rejected Viking’s arguments on forcing the case to arbitration, and followed Iskanian instead of Epic Systems.

The cruise line argued in its petition to the U.S. Supreme Court “whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.” And that the California Supreme Court was wrong in the 2014 Iskanian case.

In an email to the members of the California Business and Industrial Alliance, the group’s founder and president, Tom Manzo, said that the implications of a Supreme Court decision in Viking’s favor cannot be understated.

“If PAGA cases are subject to arbitration, it offers a clear pathway for employers to obtain relief from frivolous PAGA lawsuits,” wrote Manzo, who started the group, based in Sunland, in 2017 to specifically oppose the state law.

“In advance of the Supreme Court’s oral arguments next spring, we plan to submit a comprehensive amicus brief marshaling all of the data, stories and arguments that you – our members – have helped support these past few years,” Manzo wrote in the email.

According to its website “The California Business and Industrial Alliance (CABIA) is the only trade group exclusively focused on fixing the Private Attorneys General Act (PAGA).” Now that the U.S. Supreme Court has agreed to resolve the dispute between state and federal law, it is likely that CIABA will indeed achieve its mission.

The California Department of Industrial Relations maintains an online database on PAGA notices filed.