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Employment Tip of the Month – June 2023

Q: What are the implications of Viking River Cruises, Inc. v. Moriana for California’s Private Attorney General Act?

A: Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, has not yet proven to be the silver bullet that California employers have been waiting for to use against the Private Attorneys General Act (PAGA) plaintiffs in California. While the case has provided California employers with a tool to compel individual arbitration with PAGA plaintiffs, no reported California Court of Appeal or California Supreme Court opinion has yet upheld the dismissal of a PAGA plaintiff’s representative PAGA claims on this basis.

In fact, in March 2023, in the decision of Gregg v. Uber Technologies, a California Appellate court disagreed (citing to Viking River Cruises) with Uber’s contention that along with compelling plaintiff’s individual claims into Arbitration, the plaintiff’s non-individual PAGA claims should be dismissed. The Appellate court disagreed with Uber and held that the plaintiff did have standing to pursue non-individual PAGA claims as the plaintiff was an aggrieved employee. Shortly thereafter, another Court of Appeal decision came to the same conclusion (Seifu v. Lyft).

In Viking River Cruises, the United States Supreme Court overruled the California Supreme Court’s decision in Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal.4th 348, 380, to the extent that it precluded division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. According to Viking River Cruises, “Iskanian’s indivisibility rule effectively coerces parties to opt for a judicial forum rather than to “forgo the procedural rigor and appellate review of the courts to realize the benefits of private dispute resolution.”

Application of the Holding

Applying this holding, the Viking River Cruises court gave its opinion as to what should happen to the PAGA representative claim after the employee’s PAGA claim is compelled into individual arbitration:

“PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA’s standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action. When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.”

Yet, California courts have thus far refused to rely on this dicta to dismiss the unresolved PAGA representative claims. After compelling individual arbitration, California trial courts will now generally stay the representative PAGA claims, without deciding how these claims will ultimately be resolved. Moreover, given how the California Supreme Court has interpreted the standing issue in PAGA cases, there is little hope that the unresolved representative PAGA claims will be dismissed on the basis that a plaintiff’s individual PAGA claims have been settled or resolved in the employer’s favor, especially given how the California Appellate courts have recently ruled in the Gregg v. Uber Technologies case and the Seifu v. Lyft decisions previously addressed.

Under existing California law, it does not appear to matter whether a PAGA plaintiff still has a viable personal claim. So long as an employee was employed by the defendant employer and it is alleged that he personally suffered at least one Labor Code violation on which the PAGA claim was based, he is qualified to pursue a PAGA representative claim on the state’s behalf.

Furthermore, in Gavriiloglou v. Prime Healthcare Management, Inc. (August 26, 2022) 83 Cal.App.5th 595, the court held that an arbitrator’s decision in favor of the employer did not have any preclusive effect on that employee’s representative PAGA claim. The Gavriiloglou court reasoned that the employee “was litigating her own individual right to damages for Labor Code violations, whereas in the present PAGA action, she is litigating the state's right to statutory penalties for Labor Code violations. It follows that the arbitrator's findings cannot have preclusive effect.” “For purposes of both issue preclusion and claim preclusion, ‘[i]identity of parties means not only that they must be identical in person, but that the capacity in which they appear must be the same.’ A judgment for or against a party in one right or capacity cannot affect him when acting in another right or capacity.”

© 2023 Wilson ElserNational Law Review, Volume XIII, Number 155

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