Private Attorneys General Act Review – 2023 - Report - Page 14
Enacted in 2004, the PAGA authorizes aggrieved employees to file lawsuits to recover
civil penalties for violations of the California Labor Code on their own behalf and on
behalf of other current or former employees. Cal. Labor Code § 2699. Where no specific
civil penalty attaches to a Labor Code violation, the PAGA penalty is $100 for each
aggrieved employee per pay period for an initial violation, and $200 for every further
violation. Cal. Labor Code § 2699(f)(2). The penalties, which are discretionary, are
divided between aggrieved employees and the state of California, with the state
receiving 75%. Cal. Labor Code § 2699(i).
There was a surge of PAGA case filings following the California Supreme Court’s
decision in Arias, et al. v. Superior Court, 46 Cal.4th 969 (2009), which held that PAGA
plaintiffs need not satisfy class action requirements. PAGA actions became even more
prevalent following the California Supreme Court’s decision in Iskanian, et al. v. CLS
Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). Iskanian held that, while class
claims can properly be waived via an arbitration agreement, a PAGA claim cannot. Id.
at 384. The California Supreme Court reasoned that such a rule did not run afoul of the
FAA because PAGA claims, unlike class action claims, are brought on the state’s
behalf. Id.
The parties in Iskanian also debated whether “individual PAGA claims” were cognizable,
but the California Supreme Court did not decide the issue. Id. Subsequent authority,
however, uniformly interpreted the PAGA as prohibiting any splitting of the claim into
“individual” and “representative” components. See, e.g., Kim, et al. v. Reins
International California, Inc., 9 Cal.5th 73, 88 (2020) (noting that “[a]ppellate courts have
rejected efforts to split PAGA claims into individual and representative components”).
Whereas PAGA lawsuits filed in California in 2005 totaled 700, by 2021-2022, there
were more than 6,000 filings. It was against this backdrop that the U.S. Supreme Court,
in late 2021, agreed to hear California employers’ calls for clarity regarding the inherent
inconsistencies between Iskanian and the FAA in granting review in Viking River
Cruises.
ii.
The Viking River Cruises Decision
The plaintiff in Viking River filed a PAGA action in state court, which Viking sought to
compel to arbitration on an “individual” basis. Viking River, 142 S.Ct. at 1916. The
parties’ arbitration agreement contained a representative action waiver, as well as a
severability clause specifying that if the waiver was found invalid, any representative
action would presumptively be litigated in court, but any “portion” of the waiver that
remained valid would be “enforced in arbitration.” Id. The trial court, relying on
Iskanian, denied Viking’s motion, “holding that categorical waivers of PAGA standing
are contrary to state policy and that PAGA claims cannot be split into arbitrable
individual claims and nonarbitrable ‘representative’ claims.” Id. The U.S. Supreme
Court reversed. Id. at 1917.
The Supreme Court first invalidated Iskanian’s view that a “PAGA action lies outside the
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© Duane Morris LLP 2023
PAGA Litigation Review – 2023