Does the Federal Arbitration Act Preempt California’s Private Attorneys General Act? Supreme Court Takes Up Million-Dollar Question

On March 30, 2022, the Supreme Court of the United States will hear the matter of Viking River Cruises, Inc. v. Moriana, Case No. 20-1573. The Court will answer the question, “Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.”

The high court’s decision in this case has potentially massive implications for employers. Simply, the Court may hold that mandatory employment arbitration agreements that include a representative action waiver, which effectively prohibit parties from bringing class, collective, or representative actions, may be enforced in cases involving California’s Private Attorneys General Act (PAGA). PAGA claims often originate from simple oversights such as a missing date on wage statements and can expose employers to millions of dollars in potential penalties. Viking River Cruises, combined with a properly prepared arbitration agreement, also has the potential to provide employers with relief and protection against PAGA claims.

The setting of oral argument for the end of March makes it extremely likely that a decision will be issued before the Court recesses in late June or early July.

Ogletree Deakins will continue to monitor developments with regard to Viking River Cruises, and will post updates on the firm’s Arbitration and Alternative Dispute Resolution, Class Action, and California blogs as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.