The U.S. Supreme Court in an 8-1 decision backed the arguments of Viking River Cruises Inc. in a closely watched case that impacts a state law which allows employees of a business to sue over labor law violations even if they were not impacted by the violations.
The court’s ruling in Viking River Cruises, Inc. v. Moriana sends the case back to a lower state court.
Writing for the majority, Justice Samuel Alito said that the court found for Viking, in Woodland Hills, since Angie Moriana, a former Viking sales representative did not have standing to continue with her non-individual claims against the company under the Private Attorney General Act (PAGA).
“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,” the 22-page opinion concluded.
The cruise company was sued in 2018 by Moriana, on behalf of hundreds of workers, claiming the company violated several provisions of California’s wage-and-hour laws. Viking countered that Moriana and the other employees had agreed to arbitration and had waived any right to a class or private attorney general action.
A Los Angeles Superior Court judge and the state appellate court refused to dismiss the lawsuit. So Viking appealed to the Supreme Court.
Viking said in its petition to the high court that the California Supreme Court was wrong in a 2014 case that ruled an individual employee did not have to submit to arbitration, which they agreed to, after filing a PAGA claim.
The 2014 case was in opposition to two Supreme Court rulings from 2011 and 2018 that found the Federal Arbitration Act (FAA) superseded the California case, the company’s petition said.
Justice Clarence Thomas dissented from the majority opinion based on his belief that the FAA does not apply to proceedings in state courts.
“Accordingly, the FAA does not require California’s courts to enforce an arbitration agreement that forbids an employee to invoke the State’s Private Attorneys General Act,” Thomas wrote in his brief, one-page dissent.
Tom Manzo, founder and president of the California Business and Industrial Alliance, said in an email to the Business Journal that PAGA was “a toxic policy” that leaves employers and employees with less while trial attorneys make more.
“The financial impacts of PAGA have devastated businesses of all sizes in California, and we are grateful to the Court for hearing our arguments and rightfully ruling that businesses and employees should be allowed to resolve their disputes bilaterally and through arbitration, rather than through abusive, and often frivolous PAGA lawsuits,” wrote Manzo, who started the group, based in Sunland, in 2017 to specifically oppose the state law.