Viking River Cruises, Inc. v. Moriana

"[T]he FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate."

At the start of her employment with Petitioner, Respondent signed a class action arbitration waiver, with a severability clause for valid portions remaining should any part be ruled invalid. Respondent asserted state code violations stemming from her employment, as well as code violations experienced by other current employees, under the Labor Code Private Attorneys General Act (PAGA). PAGA allows private citizens to enforce civil penalties against employers in lieu of the state after exhausting administrative remedies, and add “representative” actions for code violations to other employees, including those arising outside of a common transaction or nucleus of facts. The trial court denied Petitioner’s motion to compel arbitration for the “individual” claim, and dismiss the “representative” claims; the Court of Appeals affirmed based on Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348, precedent that precluded splitting the two kinds of claims, requiring them to be litigated or arbitrated together. On appeal, the Supreme Court held that the Federal Arbitration Act (FAA) preempts the Iskanian rule precluding division of “individual” and “representative” actions. The rule against splitting PAGA actions allows one party to unilaterally expand the scope of arbitration beyond what was intended, becoming coercive to parties to keep all PAGA claims from arbitration. REVERSED and REMANDED.