Viking River Cruises, Inc. v. Moriana
The Federal Arbitration Act preempts Iskanian insofar as it bars dividing a PAGA action into individual and non-individual claims, so an employer may compel the employee’s individual PAGA claim to arbitration.
Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639
Arbitration
PAGA
FAA Preemption
Federal
Reversed & Remanded
In brief. The Court held that the 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.” (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662.) An employer may therefore compel the employee’s individual PAGA claim to arbitration. (Id. at pp. 659–662.) The Court then concluded (on its reading of California standing law) that the proper course was to dismiss the remaining representative claims — a point later rejected by the California Supreme Court in Adolph. (Id. at pp. 662–663.)
Facts
Angie Moriana worked as a sales representative for Viking River Cruises. (596 U.S. at pp. 648–649.) Her employment contract contained a mandatory arbitration agreement with a “Class Action Waiver” — barring any class, collective, or representative PAGA action — and a severability clause providing that if the waiver were invalid in part, any valid “portion” would still be “enforced in arbitration.” (Ibid.) Moriana sued under PAGA, asserting a Labor Code violation she personally suffered plus “a wide array of other violations allegedly sustained by other Viking employees.” (Ibid.) Viking moved to compel arbitration of Moriana’s individual PAGA claim and to dismiss the others. (Id. at p. 649.)
Procedural history
Applying Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, the California courts denied the motion, holding that categorical waivers of PAGA standing are contrary to state policy and that PAGA claims cannot be split into arbitrable individual and nonarbitrable representative components. (596 U.S. at pp. 649–650.) The United States Supreme Court granted certiorari and reversed in part. (Id. at pp. 650, 662–663.)
Issue
Does the Federal Arbitration Act preempt the Iskanian rule that invalidates contractual waivers of the right to bring representative PAGA claims and that prohibits dividing a PAGA action into arbitrable individual and nonarbitrable representative claims? (596 U.S. at pp. 647–648.)
Holding
The FAA partly preempts Iskanian. The Court reaffirmed that Iskanian’s core “prohibition on wholesale waivers of PAGA claims is not preempted by the FAA,” but held that “the 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.” (596 U.S. at pp. 659, 662.) Viking was thus “entitled to compel arbitration of Moriana’s individual claim.” (Id. at p. 662.) The Court further reasoned that, under PAGA’s standing requirement as it understood it, once the individual claim was removed to arbitration Moriana “lack[ed] statutory standing” to pursue the other claims, so “the correct course [was] to dismiss her remaining claims.” (Id. at pp. 662–663.) Reversed and remanded. (Id. at p. 663.)
Reasoning
1. Two features of Iskanian. The Court distinguished two aspects of Iskanian: a “principal rule” prohibiting wholesale, pre-dispute waivers of the right to bring any PAGA claim, and a “secondary rule” barring contractual division of a PAGA action into individual and representative components. (596 U.S. at pp. 656–659.) The first survived; the second did not. (Ibid.)
2. The anti-division rule conflicts with the FAA. The Court held the secondary rule — that PAGA claims cannot be split, so an agreement to arbitrate the individual claim is unenforceable unless the entire representative action goes with it — “unduly circumscribes the freedom of parties to determine the issues subject to arbitration and the rules by which they will arbitrate,” contrary to the FAA’s command to enforce arbitration agreements according to their terms. (596 U.S. at pp. 659–662.) By forcing an all-or-nothing choice, the rule coerced parties either to arbitrate a sprawling representative action or to forgo arbitration entirely — an interference with arbitration’s fundamental attributes under AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333. (Ibid.)
3. Effect of the agreement here. Although Viking’s wholesale PAGA waiver was invalid under the surviving part of Iskanian, the agreement’s severability clause preserved arbitration of any valid “portion” — namely, Moriana’s individual PAGA claim. (596 U.S. at pp. 662.) Viking could therefore compel that claim to arbitration. (Ibid.)
4. The standing conclusion (later corrected by California). The Court then addressed the fate of the non-individual claims. Reading PAGA to require that a plaintiff maintain an individual stake in the action, it reasoned that once the individual claim went to arbitration Moriana was no longer “an aggrieved party” with standing in the judicial action, so the remaining claims should be dismissed. (596 U.S. at pp. 662–663.) Justice Sotomayor concurred to emphasize that this conclusion turned on a question of California law that “California courts . . . will have the last word” on, and that the Legislature could also revise PAGA’s standing rules. (Id. at pp. 663 et seq. (conc. opn. of Sotomayor, J.).) Justice Thomas dissented, reiterating his view that the FAA does not apply in state courts. (Id. at p. 666 (dis. opn. of Thomas, J.).)
Significance
Viking River reshaped PAGA practice by allowing employers, through an arbitration agreement with a severability clause, to compel the employee’s individual PAGA claim to arbitration — something Iskanian had foreclosed. But its impact was sharply limited a year later: the California Supreme Court in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 held, as a matter of state law (the law Viking River itself said controls), that a plaintiff whose individual claim is sent to arbitration retains standing to litigate the non-individual PAGA claims in court. The practical result is a bifurcated structure: the individual PAGA claim is arbitrated, while the representative claims proceed (usually stayed) in court. Viking River thus belongs to the trilogy with Iskanian and Adolph that defines PAGA’s relationship to the FAA, alongside Concepcion and Epic Systems Corp. v. Lewis (2018) 584 U.S. 497. The 2024 PAGA reforms add a further overlay on penalties, cure, and manageability. See the Review’s coverage of the arbitration and PAGA lines.
Key quotes
“[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.” (Viking River, supra, 596 U.S. at p. 662.)
Iskanian’s “prohibition on wholesale waivers of PAGA claims is not preempted by the FAA.” (Id. at p. 659.)
“California courts . . . will have the last word” on PAGA standing. (Id. at p. 663 (conc. opn. of Sotomayor, J.).)
Practice pointer
Plead PAGA expecting bifurcation. After Viking River and Adolph, a defendant with a well-drafted arbitration agreement (including a severability clause) can compel the plaintiff’s individual PAGA claim to arbitration — but the non-individual representative claims remain in court under Adolph, typically stayed pending the arbitration. Plaintiffs should resist any reading of Viking River that dismisses the representative claims for lack of standing; cite Adolph. Defendants should ensure their agreements actually permit division and arbitration of the individual claim. Litigate the stay, the preclusive effect of the arbitration on standing, manageability, and the 2024 PAGA amendments. A wholesale PAGA waiver remains void under surviving Iskanian.
Open questions
Key questions remain after the trilogy: whether and how an adverse arbitration result on the individual claim affects standing for the representative claims; how courts manage stays and sequencing; the manageability of large representative PAGA actions; and the effect of the 2024 PAGA reforms. The continuing tension between Concepcion’s arbitration policy and PAGA’s public-enforcement design ensures further litigation.
See also: Westmoreland v. Kindercare