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Supreme Court Set To Decide Whether Epic Systems Extends To PAGA Representative Claims

More than three years after its landmark decision in Epic Systems Corp. v. Lewis, the United States Supreme Court has granted certiorari in Viking River Cruises, Inc. v. Moriana to determine whether Epic Systems extends to arbitration agreements that include waivers of representative actions brought under the California Private Attorneys General Act (PAGA).

Employers with operations in California, who have been plagued by the filing of boilerplate PAGA actions, could be heard to breathe a sigh of relief.

PAGA is a unique statute that allows a single employee to file suit on behalf of all allegedly “aggrieved employees” for purported violations of California’s Labor Code and seek enormous penalties – and enormous attorneys’ fees – without having to go through the procedural requirements to proceed as a class action.

As we previously discussed, in Epic Systems, the Supreme Court delivered a tremendous victory to employers facing wage-hour class actions by upholding the use of class action waivers in arbitration agreements.  But whether such agreements are enforceable as to PAGA claims has been a hotly contested issue in California.

Before Epic Systems, and especially after the Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion, employers in California have increasingly used arbitration agreements with provisions whereby employees waive their right to bring or participate in not only class actions, but also PAGA representative actions.

In 2014, after Concepcion was decided, the California Supreme Court in Iskanian v. CLS Transp. Los Angeles, LLC held that, despite Concepcion’s essential holding that courts may not disregard or reshape traditional individualized arbitration, PAGA representative action waivers were not enforceable under California law.  Since Concepcion, multiple employers facing PAGA actions have argued that Iskanian runs afoul of Concepcion, going so far as petitioning the U.S. Supreme Court for writs of certiorari to decide the issue.  Those petitions were repeatedly denied.

Based on language in Epic Systems reaffirming the individualized nature of arbitration, employers have continued to argue that representative action waivers must be enforced according to their terms.  However multiple courts in California, as well as federal district courts following Ninth Circuit precedent, have rejected those employers’ contentions, adhering time and again to Iskanian.

But multiple judges in the Ninth Circuit have noted the tension between Epic Systems and Iskanian.  It appears the U.S. Supreme Court has now noticed that tension, too.

In September 2020 in Moriana v. Viking River Cruises, Inc., the California Court of Appeal followed Iskanian in holding that, despite Epic Systems, representative action waivers in arbitration agreements are still not enforceable.  Viking River petitioned the California Supreme Court for review but that petition was denied.  In May 2021, Viking River petitioned the U.S. Supreme Court for review – a petition that was supported by multiple amici curiae.  And on December 15, 2021, that petition was granted.

The Supreme Court’s decision to hear Viking River would seem likely to resolve the current dispute regarding the enforceability of representative action waivers.  It would provide some much-needed guidance to employers across California.  And because other states are considering enacting legislation similar to California’s PAGA, the impact of the Supreme Court’s decision in Viking River may well extend beyond California.

©2022 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume XI, Number 349
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About this Author

Michael S. Kun, epstein becker green, los angeles, labor, employment
Member

Mr. Kun's practice includes:

  • Litigating more than six dozen class actions and collective actions in California, New York, Georgia and Maryland involving a variety of employment issues, including discrimination and wage-hour claims, and successfully defeating motions for class certification on such claims. The sizes of the putative classes have ranged from 75 to approximately 15,000 employees.

  • Litigating a wide variety of employment-related claims, including discrimination, harassment,...

310-557-9501
Paul DeCamp, Epstein Becker Green, Labor & Employment Attorney
Member

PAUL DeCAMP is a Member of the Firm in the Employment, Labor & Workforce Management practice, in the Washington, DC, office of Epstein Becker Green. He is Co-Chair of the firm’s national Wage and Hour practice group. A former Administrator of the U.S. Department of Labor’s (DOL’s) Wage and Hour Division, Mr. DeCamp has more than two decades of experience representing employers and trade associations in the most complex and challenging wage and hour litigations, government investigations, and counseling matters.

Additionally, Mr. DeCamp has...

202-861-1819
Kevin Sullivan, Epstein Becker Green, labor, employment lawyer
Associate

KEVIN SULLIVAN is an Associate in the Labor and Employment practice, in the Los Angeles office of Epstein Becker Green. Mr. Sullivan focuses his practice on employment law; litigating all forms of employment law cases, with a concentration on wage and hour class and collective actions; and client counseling.

310-557-9576
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