{"id":113,"date":"2022-10-11T22:16:18","date_gmt":"2022-10-12T02:16:18","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=113"},"modified":"2022-10-17T09:50:33","modified_gmt":"2022-10-17T13:50:33","slug":"california-dreaming-for-employers-u-s-supreme-court-orders-california-state-court-of-appeal-to-reconsider-denial-of-arbitration-in-paga-case","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2022\/10\/11\/california-dreaming-for-employers-u-s-supreme-court-orders-california-state-court-of-appeal-to-reconsider-denial-of-arbitration-in-paga-case\/","title":{"rendered":"California Dreaming For Employers:\u00a0 U.S. Supreme Court Orders California State Court of Appeal To Reconsider Denial Of Arbitration In PAGA Case"},"content":{"rendered":"

\"\"<\/a><\/em>By: Gerald L. Maatman, Jr., Jennifer A. Riley, and Rebecca S. Bjork\u00a0<\/strong><\/p>\n

Duane Morris Takeaways:<\/em><\/strong> On October 3, 2022, the Supreme Court of the United States granted certiorari, reversed, and remanded<\/a> a case seeking review of a\u00a0motion to compel arbitration in a California Private Attorney General Act (\u201cPAGA\u201d) labor law case entitled Dolgen California, LLC v. Galarsa, No. 21-1444 (U.S. Order List, Oct. 3, 2022).\u00a0 Granting Dollar General\u2019s specific request, the Supreme Court ordered the California Court of Appeal to reconsider its decision affirming a trial court\u2019s denial of the company\u2019s motion to compel arbitration.\u00a0 That court held that the waiver of representative actions in the plaintiff\u2019s arbitration agreement was unenforceable under California law.\u00a0 This is only one of several cases pending in California courts involving arbitration agreements that waive an employee\u2019s right to bring a representative action under the PAGA that are being revisited in light of the U.S. Supreme Court\u2019s ruling in Viking River Cruises, Inc. v Moriana (No. 20-1573, June 15, 2022).\u00a0 As a result, employers will soon have a better understanding of how PAGA representative action waivers will be interpreted in California within the now-controlling framework of the Federal Arbitration Act. <\/em><\/p>\n

The Holding In Viking River Cruises, Inc. v. Moriana<\/em><\/strong><\/p>\n

Earlier this year, on June 15, 2022, the U.S. Supreme Court issued its long-awaited ruling<\/a> in Viking River Cruises, Inc. v. Moriana<\/em>. Companies with California-based workforces watched the case closely because it represented an opportunity to clarify the extent to which a court-made rule established by the California Supreme Court back in 2014 could co-exist with the Federal Arbitration Act (\u201cFAA\u201d).\u00a0 The FAA has long been found to favor the enforcement of arbitration agreements, including waivers of class and other representative claims.\u00a0 But the California Supreme Court\u2019s decision made it impossible for class waivers to be enforceable under state law as a result of its decision in Iskanian v. CLS Transp. Los Angeles, LLC<\/em>, 59 Cal. 4th 348, 387-88 (2014) (holding that a \u201cPAGA claim lies outside the [FAA]\u2019s coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship,\u201d but is instead \u201ca dispute between an employer and the state\u201d).<\/p>\n

In a complex and lengthy opinion, the Supreme Court held in Viking River<\/em> that \u201cthe FAA preempts the rule of Iskanian<\/em> insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.\u201d\u00a0 (Slip Op. at 20.)\u00a0 \u201cThis prohibition on contractual division of PAGA actions into constituent claims unduly circumscribes the freedom of parties to determine \u2018the issues subject to arbitration\u2019 and \u2018the rules by which they will arbitrate,\u2019 and does so in a way that violates the fundamental principle that \u2018arbitration is a matter of consent[.]\u2019\u201d\u00a0 (Id<\/em>. at 18 (citations omitted).)\u00a0 In short, representative PAGA claims can now be subject to waiver in an arbitration agreement because \u201cstate law cannot condition the enforceability of an arbitration agreement on the availability of a procedural mechanism that would permit a party to expand the scope of the arbitration by introducing claims that the parties did not jointly agree to arbitrate.\u201d\u00a0 (Id<\/em>.)<\/p>\n

Dollar General\u2019s Petition For Certiorari<\/em><\/strong><\/p>\n

Dollar General filed a petition for certiorari<\/em> while Viking River <\/em>was pending, expressly asking the Supreme Court to hold the petition pending a decision in that case.\u00a0 It requested that once Viking River<\/em> was decided, the Supreme Court should at that time grant Dollar General\u2019s petition, vacate the California Court of Appeal decision below, and remand the case to that court for reconsideration in light of Viking River <\/em>(known to Supreme Court practitioners as a \u201cGVR\u201d order). The facts in the Dollar General case are strikingly similar to those at issue in Viking River<\/em>, and the company\u2019s petition described the question presented as \u201cDoes the FAA require enforcement of a bilateral arbitration agreement providing that an employee cannot assert representative claims, including under PAGA?\u201d<\/p>\n

The U.S. Supreme Court\u2019s GVR Order<\/strong><\/p>\n

On October 3, 2022, the Supreme Court did what Dollar General expressly asked it to do.\u00a0 (See <\/em>Order List, Oct. 3, 2022.)<\/p>\n

As is typical with GVR orders, there is no explanation of the reasoning behind the order, except that the California Court of Appeal is instructed to apply the reasoning of Viking River<\/em> on remand.\u00a0 The California Court of Appeal now will soon reconsider its affirmation of the trial court\u2019s denial of Dollar General\u2019s motion to compel the plaintiff\u2019s claim to an individual, non-representative arbitration proceeding.<\/p>\n

Implications For Employers<\/strong><\/p>\n

Employers have long known that if they have operations in California, special attention must be paid to state law provisions that impose restrictions on employment practices unlike those in any other state.\u00a0 Now that the U.S. Supreme Court has ruled that the FAA preempts the court-made rule of Iskanian<\/em> that precluded splitting representative PAGA claims from individual claims, it is likely that California courts will modify their enforcement of representative action waivers in arbitration agreements.\u00a0 But because this is California, wary employers would be wise to stay tuned for further developments in this rapidly changing area of the law.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By: Gerald L. Maatman, Jr., Jennifer A. Riley, and Rebecca S. Bjork\u00a0 Duane Morris Takeaways: On October 3, 2022, the Supreme Court of the United States granted certiorari, reversed, and remanded a case seeking review of a\u00a0motion to compel arbitration in a California Private Attorney General Act (\u201cPAGA\u201d) labor law case entitled Dolgen California, LLC … <\/p>\n

Continue reading “California Dreaming For Employers:\u00a0 U.S. Supreme Court Orders California State Court of Appeal To Reconsider Denial Of Arbitration In PAGA Case”<\/span><\/a><\/p>\n","protected":false},"author":583,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[41],"tags":[],"ppma_author":[30,7,9,11],"class_list":["post-113","post","type-post","status-publish","format-standard","hentry","category-arbitration-issues"],"authors":[{"term_id":30,"user_id":583,"is_guest":0,"slug":"classactiondefense","display_name":"Class Action Defense","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2020\/10\/dmlogo.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":7,"user_id":575,"is_guest":0,"slug":"gmaatman","display_name":"Gerald L. Maatman, Jr.","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/maatmangerald-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":9,"user_id":576,"is_guest":0,"slug":"jariley","display_name":"Jennifer A. Riley","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2023\/08\/rileyjennifer-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":11,"user_id":579,"is_guest":0,"slug":"rsbjork","display_name":"Rebecca S. Bjork","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/bjorkrebecca-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/583"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=113"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/113\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=113"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}