Iskanian Escapes, Only Wounded, and Probably Less Wounded than Justice Alito Thinks

Viking River Cruises v. Moriana, No. 20-1573 (U.S. Jun. 15, 2022).

As I mentioned a few weeks ago, it seemed like the U.S. Supreme Court was poised to nuke the Iskanian rule, which says that PAGA claims cannot be compelled to arbitration because they actually belong to the state. But the ruling dropped. And the Court didn’t quite go all the way there. 

In a dense ruling by Justice Alito, whose core holding carries eight members of the Court, the Court says that PAGA’s rule that the claims based on violations that actually injured the aggrieved employee must be joined with any other representative claims against that employer is preempted by the FAA. So the claims that affect the aggrieved employee can be severed out and compelled to arbitration. The other claims against that employer, however, are aggregated claims that are inconsistent with arbitration, so those stay in state court.

The Court presumes that PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been compelled to arbitration. As Justice Alito explains it, “[u]nder 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.”  As a result, the Plaintiff “lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims.”

Justice Sotomayor concurs, specifically noting that the Court’s view of California law on PAGA standing doesn’t bind California’s courts, and even were it right, the Legislature can step in to afford a different solution.

Justice Barrett joined by Justice Kavanaugh and the mostly the Chief Justice also concur, noting they are only signing on the core holding part of the Court’s opinion.

And Justice Thomas dissents because he doesn’t think the FAA applies in state court. That guy might have looney views about other stuff, but he has big respect for state courts, which I have to say I admire, at least when it is not being employed to gut habeas corpus.

Reversed.

It seems pretty clear to me, at least, that the Court’s view of PAGA standing is probably wrong as a matter of state law. In Kim v. Reins Int’l California, Inc., 9 Cal. 5th 73, 84 (2020), the California Supreme Court addressed a similar question. The employee settled his individual claims, and the employer argued that deprived him of standing to bring other representative claims against the employer. But the Court rejected that contention. Provided the employee was a statutory “aggrieved employee”—i.e., he is employed by the defendant and can allege that he personally suffered at least one Labor Code violation on which the PAGA claim is based—he has standing to litigate representative claims even after his personal claims were settled. 

The same logic would seemingly apply to an aggrieved employee’s standing to litigate representative claims after her individual claims are compelled to arbitration. Court of Appeal cases extending Kim further hint at that. See Johnson v. Maxim Healthcare Servs., Inc., 66 Cal. App. 5th 924, 930 (2021) (extending Kim in case where plaintiff’s claim was barred by the statute of limitations); Zuniga v. Alexandria Care Ctr., LLC, 67 Cal. App. 5th 871, 883 (2021) (applying Kim in case where employee’s individual claims were settled after they were compelled to arbitration).

Kim v. Reins Int'l California, Inc., 9 Cal. 5th 73, 84 (2020)

So perhaps the Court should stick to its core competencies of disemboweling the administrative state, suspending the writ of habeas corpus, and limiting individual rights to those held in 13th century England. Leave the California-ing to the Californians.