US Supreme Court deals heavy blow to California’s mass labor cases

Security fencing outside the US Supreme Court in Washington, DC, US, June 14, 2022. REUTERS/Sarah Selbiger

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  • Judges say federal arbitration law outperforms California ruling
  • The ruling is likely to lead to an explosion in working class litigation

June 15 (Reuters) – The U.S. Supreme Court said on Wednesday that a unique California law that allows workers to sue their employers in the name of the state does not allow them to circumvent agreements to file legal disputes in individual arbitration rather than in the courts.

The 8-1 court ruling in a case involving Viking River Cruises Inc is a major victory for the business groups that have backed the company, and will likely stem a torrent of lawsuits in recent years accusing the companies of widespread violations of the wage law.

Judge Samuel Alito wrote to the court that the Federal Arbitration Act, which requires enforcement of agreements signed by many workers to arbitrate legal claims, is superior to the rule established by California courts that requires claims under state attorney general law to remain in court.

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Viking River and its attorneys did not immediately respond to requests for comment. Nor have the lawyers for Angie Moriana, a former Viking River employee, who has accused the company of a raft of wage law violations.

PAGA allows workers to sue companies for violating various state employment laws and withhold a quarter of the damages if they prevail, and the rest goes to the state.

The number of PAGA lawsuits filed in California on behalf of worker groups has risen dramatically since 2014, when the California Supreme Court held that because PAGA plaintiffs interfere in state venue, their claims could not be enforced in individual arbitration.

More than half of private sector workers have signed agreements to raise legal disputes in individual arbitration and refrain from joining class actions, and the Supreme Court has in recent years rejected various attempts by plaintiffs to circumvent them.

PAGA has been a major means of keeping class actions in court in California, which is especially critical when individual claims are too small for workers to pursue.

But the Supreme Court on Wednesday said PAGA plaintiffs can only prove their capacity to sue by first claiming an individual claim; Moriana, for example, accused Viking River of failing to pay her final wages in a timely manner after she quit her job.

Alito wrote that because the FAA requires arbitration of those individual claims when workers sign arbitration agreements, plaintiffs like Moriana cannot handle claims involving larger groups of workers.

Viking River has appealed a California appeals court ruling that Moriana’s claim cannot be forced into arbitration.

Judge Clarence Thomas said in a brief dissent that he believed the FAA did not apply to cases in state courts.

The case is Viking River Cruises Inc. v. Moriana, US Supreme Court, No. 20-1573.

For River Vikings: Paul Clement of Kirkland and Ellis

For Moriana: Scott Nelson of Public Citizen

Read more:

Viking River Cruises urges Supreme Court to rein in California. worker claims

The Supreme Court will review the exemption from arbitration under the new California law. Law

Cliff. AG tells SCOTUS arbitration waiver key to enforce labor laws

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SCOTUS suddenly became very interested in the California Special Prosecutors’ Law

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Daniel Wisner

Thomson Reuters

Danwiessner reports on labor, employment and immigration law, including litigation and policy making. He can be contacted at daniel.wiessner@thomsonreuters.com.

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