California’s Private Attorneys General Act (PAGA) permits an aggrieved worker to bring an action on behalf of current or former workers to recover civil penalties for wage-related violations of California’s Labor Code. California case law insisted that PAGA claims are purely representative in nature and that companies cannot compel the individual arbitration of PAGA claims. This case law further held that the Federal Arbitration Act (FAA) did not preempt this rule because the FAA did not apply to PAGA claims, on the ground the FAA supposedly applied solely to private disputes whereas PAGA claims were public law enforcement actions brought by plaintiffs as proxies for the state.
Based on this case law, the trial court denied Lyft’s motion to compel the individual arbitration of a plaintiff’s PAGA claim. The California Court of Appeal affirmed on the same ground. Horvitz & Levy filed a cert petition with the United States Supreme Court, arguing that the FAA preempted this case law.
The Supreme Court granted the cert petition based on its recent decision on the same issue in Viking River Cruises v. Moriana. In Viking River, the Supreme Court held that the FAA applied to PAGA claims and preempted California law to the extent it prohibited arbitration of individual PAGA claims. The Supreme Court also held that, where plaintiffs are compelled to arbitrate their individual PAGA claims, their representative PAGA claims must be dismissed because PAGA does not authorize those plaintiffs to pursue representative PAGA claims under those circumstances.
The Supreme Court vacated the Court of Appeal’s ruling against Lyft and remanded for further consideration in light of Viking River.