Amicus Curiae Brief — Viking River Cruises, Inc., Petitioner v. Angie Moriana

No. 20-1573

IN THE

Supreme Court of the United States

____________________

VIKING RIVER CRUISES, INC.,

Petitioner,

v.

ANGIE MORIANA,

Respondent.

____________________

On Petition for a Writ of Certiorari

to the California Court of Appeal

____________________

BRIEF OF THE CALIFORNIA NEW CAR

DEALERS ASSOCIATION AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

____________________

ANNA-ROSE MATHIESON

Counsel of Record

JULIA PARTRIDGE

CALIFORNIA APPELLATE

LAW GROUP LLP

96 Jessie Street

San Francisco, CA 94105

(415) 649-6700

annarose@calapplaw.com

Counsel for Amicus CNCDA

i

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE........................... 1

INTRODUCTION AND SUMMARY OF

ARGUMENT ......................................................... 3

ARGUMENT ............................................................. 4

I.

Plaintiffs have been filing PAGA claims

in large numbers to avoid the arbitration

agreements they signed. ............................... 4

II. These PAGA cases harm individuals and

businesses throughout the country............... 9

III. California’s rule barring arbitration

waivers for PAGA actions is a

transparent attempt to disfavor

arbitration. .................................................. 11

IV. This Court should grant review. ................. 18

CONCLUSION ........................................................ 20

ii

TABLE OF AUTHORITIES

Page

CASES

Am. Exp. Co. v. Italian Colors Rest.,

570 U.S. 228 (2013) ............................................ 16

Armendariz v. Foundation Health Psychcare

Services, Inc.,

24 Cal. 4th 83 (2000) ........................ 12, 13, 14, 15

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) .................................... passim

Bautista v. Fantasy Activewear, Inc.,

52 Cal. App. 5th 650 (2020) ................................. 9

Brown v. Wal-Mart Stores, Inc.,

N.D. Cal. Case No. 5:09-cv-03339-EJD

(Mar. 28, 2019) ................................................... 11

Cuccia v. Superior Court,

153 Cal. App. 4th 347 (2007) ............................. 10

DIRECTV, Inc. v. Imburgia,

136 S. Ct. 463 (2015) .......................................... 18

EEOC v. Waffle House, Inc.,

534 U.S. 279 (2002) ...................................... 14, 15

Epic Sys. Corp. v. Lewis,

138 S. Ct. 1612 (2018) ........................................ 11

Herrera v. CarMax Auto Superstores

California, LLC,

No. EDCV-14-776-MWF (VBKx), 2014

WL 12567154 (C.D. Cal. Aug. 27, 2014) .............. 9

Huff v. Securitas Security Services USA, Inc.,

23 Cal. App. 5th 745 (2018) ................................. 9

iii

TABLE OF AUTHORITIES

(continued)

Page

Iskanian v. CLS Transportation Los Angeles,

LLC,

59 Cal. 4th 348 (2014) ................................ passim

Kelly v. Kiewit Infrastructure W. Co.,

No. CV 18-5807-MWF (AGRx), 2018 WL

6566555 (C.D. Cal. Sept. 12, 2018) ...................... 8

Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

137 S. Ct. 1421 (2017) ........................................ 11

McElhannon v. Carmax Auto Superstores W.

Coast, Inc.,

No. 3:19-CV-00586-WHO, 2019 WL

2354879 (N.D. Cal. June 4, 2019) ........................ 8

Nitro-Lift Techs., L.L.C. v. Howard,

568 U.S. 17 (2012) .............................................. 19

Perry v. Thomas,

482 U.S. 483 (1987) .................................... passim

Preston v. Ferrer,

552 U.S. 346 (2008) .................................. 3, 12, 18

Price v. Uber Technologies, Inc.,

Sup. Ct. Los Angeles Case No. BC554512

(Jan. 31, 2018).................................................... 10

Rivers v. Roadway Express, Inc.,

511 U.S. 298 (1994) ............................................ 19

Sakkab v. Luxottica Retail N. Am., Inc.,

803 F.3d 425 (9th Cir. 2015) .............................. 19

iv

TABLE OF AUTHORITIES

(continued)

Page

Sanchez v. Gruma Corp.,

No. 19-CV-02015-WHO, 2019 WL

2716539 (N.D. Cal. June 28, 2019) ...................... 8

Sonic-Calabasas A, Inc. v. Moreno,

51 Cal. 4th 659 (2011) .................................. 12, 15

Southland Corp. v. Keating,

465 U.S. 1 (1984) ................................................ 18

Stolt-Nielsen S.A. v. AnimalFeeds

International Corp.,

559 U.S. 662 (2010) ............................................ 17

Volt Info. Sciences, Inc. v. Bd. of Trustees of

Leland Stanford Junior Univ.,

489 U.S. 468 (1989) ............................................ 16

STATUTES

Federal Arbitration Act,

9 U.S.C. §§ 1 et seq. ................................... passim

Cal. Civ. Code § 3513 .............................................. 13

Cal. Lab. Code § 22 ............................................... 4, 5

California Private Attorneys General Act,

Cal. Lab. Code §§ 2698 et seq. ................... passim

OTHER AUTHORITIES

California Business & Industrial Alliance,

PAGA Notices, 2004-2018,

https://www.cabia.org/what-is-paga/ ................... 6

v

TABLE OF AUTHORITIES

(continued)

Page

California Business and Industrial Alliance,

PAGA Lawsuit Data,

https://www.cabia.org/firm/ ................................. 7

Law360, Calif. Judge OKs $7.75M Uber

Driver Deal Over Objections,

https://www.law360.com/articles/1002461/

calif-judge-oks-7-75m-uber-driver-dealover-objections ................................................... 11

Ivan Muñoz, Has PAGA Met Its Final

Match?,

60 Santa Clara L. Rev. 397 (2020) .............. 5, 6, 7

BRIEF OF THE CALIFORNIA NEW CAR

DEALERS ASSOCIATION AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

Amicus respectfully submits this brief in support

of petitioner Viking River Cruises, Inc. 1

0F

INTEREST OF AMICUS CURIAE

The California New Car Dealers Association

(CNCDA) is the nation’s largest state automobile

dealer association, representing nearly 1,200 franchised new car and truck dealers throughout California. CNCDA seeks to create a business environment

in which new car dealers can thrive, provide the best

products and services to consumers, and maintain

high employment rates. CNCDA also protects and

promotes the interests of franchised new car dealers

before government and regulatory agencies. To that

end, it represents the views of its members on important issues that arise in public forums, including

the courts.

Like many businesses throughout the United

States, CNCDA’s members enter into contracts with

their employees and consumers that adopt the timeand cost-saving options afforded by the Federal Arbitration Act (FAA) to resolve disputes promptly. Judicial decisions that undermine the FAA thwart these

1 No counsel for any party authored this brief in whole or in

part, and no person other than amicus or its counsel have made

any monetary contribution intended to fund the preparation or

submission of this brief. Amicus notified the parties of its intention to file this brief more than ten days before the due date, and

counsel for both parties granted consent to the filing of this brief.

2

efforts to achieve a swift, economical, and fair outcome when disagreements arise.

The ruling in this case frustrates the purposes of

the FAA and singles out arbitration agreements for

disfavored treatment. This Court should grant review for the reasons explained below and in the petition.

3

INTRODUCTION AND

SUMMARY OF ARGUMENT

California just won’t learn. This Court has repeatedly corrected California’s attempts to avoid the Federal Arbitration Act (FAA), reversing decision after

decision where California invalidated arbitration

agreements based on “important” state policies. See,

e.g., Perry v. Thomas, 482 U.S. 483, 491 (1987); Preston v. Ferrer, 552 U.S. 346, 353 (2008); AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 343 (2011). But California keeps trying to find ways around the FAA.

California’s latest gambit is to declare that employment claims under California’s Private Attorneys

General Act (PAGA) can’t be waived, because those

claims belong to the state and protect important policy interests. But employees control their PAGA suits

at every step of the process except the choice of

whether to consent to an arbitration agreement that

includes a waiver of representative actions—the employee can make all other litigation decisions in a

PAGA case, including dismissing the suit or settling,

with scant input from the state agency. And the public policy claim has little meaning because California

says virtually every labor-related statute protects important policy interests. PAGA allows employees to

sue for almost any violation of California’s 800+ page

Labor Code, and yet California has declared a strong

public interest in every one of these claims sufficient

to override the FAA.

These rulings have undermined the FAA in California, allowing an increasing number of plaintiffs to

rely on PAGA to avoid arbitration. In the five years

after California first announced the no-waiver-for-

4

PAGA-claims rule in Iskanian v. CLS Transportation

Los Angeles, LLC, 59 Cal. 4th 348 (2014), the average

number of PAGA claims more than doubled compared

to the five-year period before Iskanian. The total

value of PAGA claims went up even more, rising 600%

in the five years after Iskanian. And these are not

just coincidental increases; many plaintiffs who initially asserted only class action claims hastily added

PAGA claims after the defendant pointed out they

had signed an arbitration agreement waiving all class

and representative claims.

The Iskanian rule impacts millions of employers

and employees. It encourages employees to breach

their arbitration agreements. It thwarts the federal

policy expressed in the FAA. And it does real injury

to companies that seek the benefits of private dispute

resolution. This case provides the right opportunity

for this Court to review the Iskanian rule. This Court

should grant the petition for certiorari and require

California courts to follow federal law.

ARGUMENT

I.

Plaintiffs have been filing PAGA claims in

large numbers to avoid the arbitration

agreements they signed.

After California passed the Private Attorneys

General Act of 2004 (PAGA), Cal. Lab. Code §§ 2698

et seq., employees in California could file suit under

PAGA for the violation of nearly any provision of the

California Labor Code. Id. §§ 22, 2699(a).2 California

2 PAGA provides that “any provision of this code that provides for a civil penalty to be assessed and collected by the Labor

5

businesses paid out about $5 million in PAGA cases

each year from 2008 to 2013.3

But then in June 2014 the California Supreme

Court decided Iskanian. That decision reluctantly

recognized that California could no longer prohibit

employees from agreeing to waive class action rights

in arbitration agreements, since a recent decision

from this Court had squarely held that rule was

preempted by the FAA. Iskanian, 59 Cal. 4th at 364

(citing Concepcion, 563 U.S. at 352). But the court

held that California could still prohibit waivers of

PAGA representative actions in arbitration agreements. Id. at 360, 382-87.

Since the Iskanian decision California has seen a

dramatic surge in PAGA claims, as strategic plaintiffs

seek to avoid the arbitration agreements that they

signed.4 In the five years after Iskanian, the average

number of PAGA suits was more than double the

number in the five years before Iskanian:

and Workforce Development Agency . . . for a violation of this

code, may, as an alternative, be recovered through a civil action

brought by an aggrieved employee on behalf of himself or herself

and other current or former employees . . . .” Cal. Lab. Code

§ 2699(a). The code defines a “violation” as “a failure to comply

with any requirement of the code.” Id. § 22.

3 Ivan Muñoz, Has PAGA Met Its Final Match?, 60 Santa

Clara L. Rev. 397, 399 n.7, 422 (2020) (using data provided by

the California Department of Industrial Relations).

4 See Muñoz, supra note 3, at 422 n.202.

6

5

PAGA Notices, 2004-20185

6000

5161

5000

4248

4593

4317

3744

4000

3000

1812 2001

1743 1603

1448

1327

2000

1000

335

0

696

608

11

YEAR

And not only did the sheer number of PAGA suits

double after Iskanian, but the amount that businesses were forced to pay for PAGA suits increased by

more than 600% in the five years after Iskanian.6 In

fiscal year 2013-2014 PAGA suits collected about $5

million; by fiscal year 2017-2018 that figure was

nearly $35 million.7

5 Chart adapted from California Business & Industrial Alli-

ance, PAGA Notices, 2004-2018, https://www.cabia.org/what-ispaga/ (visited June 12, 2021).

6 Muñoz, supra note 3, at 422.

7 Id.

7

8

PAGA Dollar Amount Collected

Per Fiscal Year8

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$0

Given PAGA’s broad reach, virtually any employment-related claim can be recharacterized as a PAGA

claim, and the statute allows suit for many other technical violations of the Labor Code that wouldn’t normally provide a basis for a civil suit. Cal. Lab. Code

§ 2699(a).9

And while PAGA doesn’t allow the

8 Chart adapted from Muñoz, supra note 3, at 399 n.7, 422

(using data provided by the California Department of Industrial

Relations).

9 These suits are largely being driven by opportunistic plaintiff-side law firms. Twelve law firms have each filed more than

500 PAGA suits, and one law firm filed over 1,000 suits. California Business and Industrial Alliance, PAGA Lawsuit Data,

https://www.cabia.org/firm/ (visited June 12, 2021). One lawyer

8

employee to collect the same types of damages as a

regular suit or class action, the penalties can be as

high or higher, with a statutory $100 penalty per employee per pay period for the first violation and $200

per employee per period for any later violations. Cal.

Lab. Code § 2699(f)(2). Plus, of course, attorney’s fees.

Id. § 2699(g)(1).

Countless plaintiffs have strategically added a

PAGA claim to avoid arbitration after the defendant

invoked the parties’ arbitration agreement. The petition provides several examples of this gamesmanship,

Pet. 26-27, and there are many more. E.g., Kelly v.

Kiewit Infrastructure W. Co., No. CV 18-5807-MWF

(AGRx), 2018 WL 6566555, at *1 & Dkt. 19, at 9 (C.D.

Cal. Sept. 12, 2018) (plaintiff initially brought putative class action, but after defendant sought to compel

arbitration plaintiff amended the complaint to include PAGA claim); McElhannon v. Carmax Auto Superstores W. Coast, Inc., No. 3:19-CV-00586-WHO,

2019 WL 2354879, at *1 (N.D. Cal. June 4, 2019) (after defendants moved to compel arbitration, two

plaintiffs filed an amended complaint stating they

would “forego their remaining claims in order to pursue only the PAGA claims”).

In many other cases, the plaintiffs simply filed a

new action seeking relief under PAGA when faced

with a motion to compel arbitration. E.g., Sanchez v.

Gruma Corp., No. 19-CV-02015-WHO, 2019 WL

2716539, at *1 (N.D. Cal. June 28, 2019) (after motion

even has “MR PAGA” license plates on his Rolls Royce. California Business & Industrial Alliance, In the News Jan. 27, 2020,

https://www.cabia.org/ca-lawyer-flaunts-mr-paga-license-plate/

(visited June 12, 2021).

9

to compel arbitration of state law employment claims

granted, plaintiff filed second suit alleging PAGA

claim based on same facts); Herrera v. CarMax Auto

Superstores California, LLC, No. EDCV-14-776-MWF

(VBKx), 2014 WL 12567154, at *1 (C.D. Cal. Aug. 27,

2014) (federal court compelled arbitration and dismissed original suit; two months later plaintiff filed a

second action in state court that “makes the same factual allegations as the Complaint in the First Action,

but only seeks remedies under” PAGA); see also Bautista v. Fantasy Activewear, Inc., 52 Cal. App. 5th 650,

653 (2020) (defendant moved to compel arbitration,

plaintiffs dismissed class action and kept only PAGA

claims, and arbitration of those claims was denied).

This strategic use of PAGA to avoid arbitration

stems from the California Supreme Court’s ill-considered Iskanian decision. Plaintiffs and their lawyers

can avoid arbitration agreements simply by bringing

representative claims instead of class claims. This

rule subverts the policies Congress sought to protect

in passing the FAA, and as explained below harms individuals and companies throughout the country.

II.

These PAGA cases harm individuals and

businesses throughout the country.

Not only can any employment claim be repackaged

as a PAGA claim, but once plaintiffs assert a single

PAGA claim they can assert all other possible PAGA

claims against their employer, even if the plaintiffs

weren’t affected by the other alleged violations at all.

Huff v. Securitas Security Services USA, Inc., 23 Cal.

10

App. 5th 745, 750-51 (2018).10 And, of course, under

Iskanian none of these claims can be subject to arbitration.

Small wonder that employees and their attorneys

are motivated to file PAGA actions, and small wonder

that employers seek to avoid them. From the employer’s point of view, there is little distinction between class actions, collective actions, and PAGA actions. All require the employer to engage in costly and

complicated litigation. All include the risk of significant liability. All can lead to substantial awards of

attorney’s fees. And all deprive the employer of the

benefit of the arbitration agreement they signed.

The post-Iskanian explosion of PAGA claims

causes deep harm to companies throughout the nation. The possibility of massive penalties for even inadvertent violations and the cost of defending such actions encourages early resolution, leading to settlement of dubious claims in agreements designed

mostly to line the pockets of plaintiffs’ attorneys.

In a PAGA claim against Uber, for example, the

parties eventually reached a $7.75 million settlement

where the plaintiffs’ lawyers got $2.3 million and the

Uber drivers got $1.08 each.11 In a PAGA claim

10 Under California’s court hierarchy, this decision finding

plaintiffs need only have standing for one PAGA claim in order

to bring every other possible PAGA claim against their employer

binds every trial court in the state. See Cuccia v. Superior Court,

153 Cal. App. 4th 347, 353-54 (2007).

11 Price v. Uber Technologies, Inc., Order Granting Approval

of PAGA Settlement and Judgment Thereon, Sup. Ct. Los Angeles Case No. BC554512 (Jan. 31, 2018); Law360, Calif. Judge

11

against Walmart for not providing chairs for its cashiers, the parties settled for $65 million; the plaintiffs’

attorneys got $21 million of that, while the employees

each received a small sum.12

Under the FAA and this Court’s precedent, if the

parties have agreed that disputes should be resolved

through individualized arbitration, then the dispute

should be subject to arbitration rather than some

other proceeding in a different forum.

III.

California’s rule barring arbitration

waivers for PAGA actions is a transparent

attempt to disfavor arbitration.

Congress passed the FAA nearly a hundred years

ago “in response to widespread judicial hostility to arbitration agreements.” Concepcion, 563 U.S. at 339.

The Act bars both explicitly disfavoring arbitration,

and “covertly accomplish[ing] the same objective,”

Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct.

1421, 1426 (2017), through “more subtle methods”

that “target arbitration,” Epic Sys. Corp. v. Lewis, 138

S. Ct. 1612, 1622 (2018).

Despite this Court’s repeated instruction, California’s courts remain hostile to arbitration. California

has tried several avenues for avoiding arbitration

agreements, from applying a per se rule barring

OKs

$7.75M

Uber

Driver

Deal

Over

Objections,

https://www.law360.com/articles/1002461/calif-judge-oks-775m-uber-driver-deal-over-objections (visited June 12, 2012).

12 Brown v. Wal-Mart Stores, Inc., Order and Final Judgment

Approving Settlement Between Settlement Class Plaintiffs and

Wal-Mart Stores, Inc., N.D. Cal. Case No. 5:09-cv-03339-EJD

(Mar. 28, 2019).

12

arbitration for labor law claims, Sonic-Calabasas A,

Inc. v. Moreno, 51 Cal. 4th 659, 669 (2011), cert.

granted, judgment vacated, 565 U.S. 973 (2011), to a

souped-up version of the unconscionability doctrine

that invalidated most arbitration agreements, Armendariz v. Foundation Health Psychcare Services,

Inc., 24 Cal. 4th 83, 100 (2000). For each of these

holdings California courts invoked the state’s “strong

public policy” interest in protecting employees.

This Court has struck down many of those attempts, repeatedly reminding California that states

may not apply “rules that stand as an obstacle to the

accomplishment of the FAA’s objectives.” Concepcion,

563 U.S. at 343; see also, e.g., Preston, 552 U.S. 346,

353; Perry, 482 U.S. 483, 491.

But in Iskanian the California Supreme Court

once again found a reason to circumvent the FAA.

The court held that an employee could pursue a representative action against his employer despite having agreed to submit all claims arising out of his employment contract to binding arbitration and waiving

all class or representative actions. Iskanian, 59 Cal.

4th at 360, 382-87. That decision is flatly wrong.

The plaintiff in Iskanian sought to pursue both a

class action lawsuit and a representative action under

PAGA. The California Supreme Court held that the

class action could not go forward but the PAGA claim

could, explaining that a waiver of PAGA violated state

law and that the FAA does not preempt a rule holding

PAGA waivers to be unenforceable. Id. at 360, 384.

In reaching this result the court acknowledged

that the FAA preempts suits brought by employees

who have agreed to arbitrate their disputes, and that

13

Iskanian was seeking redress for alleged employment

violations, but held that a PAGA action is “ ‘ “fundamentally a law enforcement action designed to protect

the public and not to benefit private parties.” ’ ” Id.

at 381. Although anyone may waive the advantage of

a law intended solely for his benefit, “ ‘ “a law established for a public reason cannot be contravened by a

private agreement.” ’ ” Id. at 382-83 (citing Cal. Civ.

Code § 3513 and Armendariz, 24 Cal.4th at 100). The

court then concluded “that California’s public policy

prohibiting waiver of PAGA claims, whose sole purpose is to vindicate the Labor and Workforce Development Agency’s interest in enforcing the Labor Code,

does not interfere with the FAA’s goal of promoting

arbitration as a forum for private dispute resolution.”

Id. at 388-89.

At the outset, the court’s insistence that a PAGA

action is a dispute between an employer and the state

is disingenuous. PAGA by its terms gives aggrieved

employees the right to bring suit. Cal. Lab. Code

§ 2699(a). PAGA does not confer that right on the

state.

More fundamentally, the state is not involved in

making litigation decisions for a PAGA suit after it

declines to pursue the alleged violation. Cal. Lab.

Code § 2699.3(a). The employee files suit, controls the

litigation, and if successful, receives an award of attorney’s fees and obtains a benefit for employees that

is shared with the state. Id. §§ 2699(a), (g)(1), (h)(1).

The employee can dismiss the suit or settle it, id.

§ 2699(l)—the state receives notice of settlements (id.

§ 2699(l)(2)), and can object, but the PAGA statute

does not give the state a role in crafting the settlement.

14

The Iskanian court reasoned that the right to

bring a PAGA action cannot be waived because that

right belongs to the state, and the state never agreed

to the waiver. Iskanian, 59 Cal. 4th at 386-87. But

that conclusion is nonsense. For every aspect of a

PAGA claim except the waiver, the right is controlled

by the employee. But, for the purpose of an arbitration agreement only, the right to bring a PAGA claim

is controlled by the state. There is no logic to this except that the California Supreme Court believes that

the waiver in the arbitration agreement should not be

enforced.13

The importance of who controls the claim was explained by this Court in EEOC v. Waffle House, Inc.,

534 U.S. 279, 291-96 (2002). The issue there was

whether the EEOC, which had filed an enforcement

action on behalf of an employee, was bound by the employee’s arbitration agreement. This Court held that

the EEOC was not bound by the agreement, but it explained that it would be different if “the EEOC could

prosecute its claim only with [the employee’s] consent,

or if its prayer for relief could be dictated by [the employee].” Id. at 280. Since the EEOC decided to prosecute the claim in its own name and “is in command

13 Indeed, the California Supreme Court made the height-

ened scrutiny it applies to arbitration agreements explicit, explaining in an earlier case that “arbitration agreements that encompass unwaivable statutory rights must be subject to particular scrutiny.” Armendariz, 24 Cal. 4th at 100. But this Court

has long made clear that states may not apply the unconscionability doctrine “in a fashion that disfavors arbitration,” Concepcion, 563 U.S. at 341, nor may states construe an arbitration

“agreement in a manner different from that in which it otherwise

construes nonarbitration agreements under state law,” Perry,

482 U.S. at 492 n.9.

15

of the process,” the employee’s waiver did not carry

over. Id. at 291.

No one disputes that, if California decided to sue

Viking River Cruises, the state would not be bound by

the arbitration waiver that Moriana signed. But the

state decided not to sue. Moriana is the only person

suing Viking, and she signed an agreement promising

to arbitrate any claims arising out of her employment.

California cannot now invoke the state’s interest in a

case it declined to pursue in order to void the arbitration agreement that Moriana signed.

Besides stressing the state’s interest in the case,

California says it is important as a public policy matter to allow PAGA suits to proceed in court. But California always invokes public policy when deciding to

ignore arbitration agreements. See, e.g., Armendariz,

24 Cal. 4th at 100-01 (holding there was “no question”

that the state’s Fair Employment and Housing Act is

an important public policy statute and so its provisions cannot be waived by arbitration agreements);

Sonic-Calabasas A, 51 Cal. 4th at 684, 689. When you

claim a public policy interest in enforcing the entire

labor code, and the major effect of that public policy is

to void arbitration agreements, it looks much less like

a traditional public policy and more like an anti-arbitration policy.

While California may wish to enforce its labor laws

through PAGA actions, “[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is

desirable for unrelated reasons.” Concepcion, 563

U.S. at 351. As explained above California’s claimed

justifications do not hold up, and regardless California’s rule barring any waiver of PAGA claims in an

16

arbitration agreement both directly and indirectly interferes with the FAA.

Most basically, an employee who has agreed to

submit claims to individualized arbitration but who

instead brings a PAGA action violates the terms of his

or her employment agreement. “The ‘principal purpose’ of the FAA is to ‘ensur[e] that private arbitration

agreements are enforced according to their terms.’ ”

Concepcion, 563 U.S. at 344 (citing Volt Info. Sciences,

Inc. v. Bd. of Trustees of Leland Stanford Junior

Univ., 489 U.S. 468, 478 (1989)); Perry, 482 U.S. at

490.

For this reason, the text of the FAA “reflects the

overarching principle that arbitration is a matter of

contract. And consistent with that text, courts must

‘rigorously enforce’ arbitration agreements according

to their terms, including terms that ‘specify with

whom [the parties] choose to arbitrate their disputes,’

and ‘the rules under which that arbitration will be

conducted.’ ” Am. Exp. Co. v. Italian Colors Rest., 570

U.S. 228, 233 (2013) (citations omitted).

Moriana agreed to submit any dispute to binding

arbitration and expressly agreed to waive any right to

bring a class, collective, representative, or private attorney general action. Pet. App. 3, 14. And yet by filing her PAGA action Moriana sought to bring her dispute before a different forum and to transform it from

an individualized proceeding into a collective one, violating the terms of the arbitration agreement. Permitting such cases to go forward violates a basic tenet

of the FAA.

Allowing an employee to pursue a PAGA action despite a contractual agreement to refrain from

17

representative actions also undermines the FAA in

more subtle ways. As this Court has noted, allowing

classwide proceedings “sacrifices the principal advantage of arbitration—its informality—and makes

the process slower, more costly, and more likely to

generate procedural morass than final judgment.”

Concepcion, 563 U.S. at 348. In traditional bilateral

arbitration, “ ‘parties forgo the procedural rigor and

appellate review of the courts in order to realize the

benefits of private dispute resolution: lower costs,

greater efficiency and speed, and the ability to choose

expert adjudicators to resolve specialized disputes.’ ”

Id. (quoting Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662, 685 (2010)). It is of no

matter that California may believe an alternative to

arbitration might better protect employee’s rights.

“States cannot require a procedure that is inconsistent with the FAA, even if it desirable for unrelated

reasons.” Id. at 351.

This Court has also warned that mass actions are

likely to discourage arbitration. “[T]here is little incentive for lawyers to arbitrate on behalf of individuals when they may do so for a class and reap far

higher fees in the process. And faced with inevitable

class arbitration, companies would have less incentive to continue resolving potentially duplicative

claims on an individual basis.” Id. at 348. This problem can prove even more serious when the representative pursues a PAGA claim, which can result in

a far greater recovery (at least for the employee’s attorney, and sometimes for the employee) than the employee would receive in a private arbitration of the

employee’s personal claims.

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IV.

This Court should grant review.

California has a disturbing history of elevating

state substantive or procedural policies over those

promoted by the FAA. This Court has repeatedly explained to the state’s courts that the FAA preempts

state laws that void the parties’ arbitration agreement despite the state’s alleged policy interests. See,

e.g., Preston, 552 U.S. 346, 359 (California held that

FAA does not preempt a state law vesting initial adjudicatory authority on an administrative agency;

this Court reversed); Perry, 482 U.S. 483, 491 (California concluded the FAA does not preempt California

employment law; this Court reversed); Southland

Corp. v. Keating, 465 U.S. 1, 10 (1984) (California held

FAA did not preempt law requiring judicial consideration of tax claims; this Court reversed).

This Court has also repeatedly explained to the

state that an agreement to forgo class or collective actions must be honored if it is part of an arbitration

provision, irrespective of whether California’s courts

believe some other way of pursuing the claim is preferable. See, e.g., Concepcion, 563 U.S. at 352 (reversing Ninth Circuit decision that applied California Supreme Court ruling holding class arbitration waivers

unconscionable); DIRECTV, Inc. v. Imburgia, 136 S.

Ct. 463, 466 (2015) (reversing California decision

finding class arbitration waiver unconscionable even

after Concepcion).

California continues to ignore this Court’s instructions. In Iskanian, California has again elevated a

state rule over the FAA. But “ ‘[i]t is this Court’s responsibility to say what a statute means, and once the

Court has spoken, it is the duty of other courts to

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respect that understanding of the governing rule of

law.’ ” Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S.

17, 21 (2012) (quoting Rivers v. Roadway Express,

Inc., 511 U.S. 298, 312 (1994)). As this case demonstrates, California will continue to thumb its nose at

the FAA and this Court’s decisions unless this Court

acts.

As the petition shows, this case is an apt vehicle

for review of this issue, and there is no point in waiting further. California will not sort this out itself; the

court of appeal and trial court both thought themselves bound by prior California precedent holding

PAGA waivers void. Pet. App. 5 & n.1 (holding Iskanian “remains good law” and noting California intermediate appellate courts are bound by prior decisions of the California Supreme Court on issues of federal law); Pet. App. 15 (holding that prior appellate

decision finding Iskanian is still good law “is a published opinion that constitutes binding authority

upon this court”). The California Supreme Court can

continue to deny petitions raising this issue, as it did

in this case. Pet. App. 1. And the Ninth Circuit has

jumped on board, agreeing with California that California employees may not agree to bilateral arbitration and give up PAGA rights. Sakkab v. Luxottica

Retail N. Am., Inc., 803 F.3d 425, 427 (9th Cir. 2015).

This Court has noted that “State courts rather

than federal courts are most frequently called upon to

apply the [FAA], including the Act’s national policy

favoring arbitration. It is a matter of great importance, therefore, that state supreme courts adhere

to a correct interpretation of the legislation.” NitroLift Techs., 568 U.S. at 17-18. When state courts have

20

refused to follow these directives, this Court has not

hesitated to step in.

The Court should grant certiorari to establish that

the FAA preempts a state-created rule holding PAGA

waivers in arbitration agreements unenforceable.

CONCLUSION

For all the reasons set out above and in the petition, the Court should grant certiorari and require

California to follow federal law.

Respectfully submitted,

ANNA-ROSE MATHIESON

Counsel of Record

JULIA PARTRIDGE

CALIFORNIA APPELLATE LAW GROUP LLP

96 Jessie Street

San Francisco, CA 94105

(415) 649-6700

annarose@calapplaw.com

Attorneys for Amicus California New Car

Dealers Association

June 2021