ALF Challenges California Supreme Court Rule Blocking Arbitration Agreement Enforcement

Contrary to the Federal Arbitration Act (“FAA”) and U.S. Supreme Court precedent, the California Supreme Court repeatedly has tried to block the enforcement of private arbitration agreements. In Iskanian v. CLS Transportation Los Angeles, LLC, 327 P.3d 129 (Cal. 2014), the California Supreme Court held that as a matter of California public policy, the FAA does not apply to bilateral employer/employee arbitration agreements that waive an employee’s pursuit of representative actions, including under the California Private Attorneys General Act (“PAGA”). PAGA authorizes an employee to bring a civil penalty action on behalf of the State against an employer for alleged California Labor Code violations affecting the employee and similarly aggrieved fellow employees.

The U.S. Supreme Court has agreed to hear Viking River Cruises, Inc. v. Moriana, No. 20-1573, in order to decide whether the FAA preempts California’s Iskanian rule.  The Atlantic Legal Foundation (ALF)  and Washington Legal Foundation (WLF) have filed a joint amicus brief urging the Supreme Court to overturn the Iskanian rule.

Issue Areas:

Free Enterprise

Read the Amicus Brief:
Question(s) Presented:

Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the California Private Attorneys General Act (“PAGA”).


ALF’s Amicus Brief:

The joint ALF/WLF amicus brief in Viking River was authored pro bono by Felix Shafir, Peder Batalden, and John Querio of Horvitz & Levy LLP. In arguing that the FAA preempts the Iskanian rule, the amicus brief discusses substantial Supreme Court precedent repeatedly holding, contrary to the views of California state courts, that the FAA requires private arbitration agreements—including those that contain waivers of the right to bring class actions or other types of representative actions—to be enforced as written. In addition, the brief explains that California courts cannot circumvent the FAA, Supreme Court precedent, or bilateral arbitration agreements by labeling a PAGA representative claim as a “qui tam” claim, i.e., a claim brought by a private party on behalf of the State government. Nor can California state courts’ views on what “public policy” should be regarding representative action waivers in bilateral arbitration agreements override the plain terms of federal law.

Status:

Merits-stage briefing is underway in the Viking River case, which has not yet been set for oral argument.

In November 2021, the Horvitz & Levy drafted a joint petition-stage amicus brief on behalf of ALF/WLF in Coverall North America, Inc. v. Rivas, No. 21-268, urging the Supreme Court to address the same FAA preemption issue. The Court presumably will hold the Coverall petition in abeyance until after it renders its opinion in Viking River.

Date Originally Posted: February 5, 2022

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